Nevada May Repeat Other States' Mistakes in Privatizing Mental Health Services

Nevada is exploring privatization of its mental health services, citing the difficulty of finding psychiatrists for its state-operated psychiatric hospital and a shortage of mental health care services in rural communities. Yet, privatization is not the easy fix it's often sold as and raises concerns of accountability and quality inherent in contracting out public services to private firms.

In 2006, Nevada's mental health care services earned a D-grade from the National Alliance for Mentall Illness (NAMI), the nation's largest mental illness advocacy organization. The group, however, praised the state for its candidness, transparency, and other efforts to address the problems in its mental health care system, which largely stem from underfunding of programs and a lack of service infrustracture. This indicates that the culprit is funding, rather than public administration. NAMI does not offer privatization as a solution for Nevada's system, rather it urges lawmakers to focus on improving access to services for mentally ill people in rural areas, reducing the burden on emergency rooms for treating and housing mentally ill patients, and increasing housing for the homeless mentally ill.

Lessons in Privatization from Michigan and North Carolina:  Opinions on privatization vary, but experiences in a few states serve as a warning for lawmakers considering privatization of mental health care services. NAMI's Michigan chapter in 2002 cited years of privatization of the state's mental health services as a key reason for a dysfunctional, inefficient and unaccountable system:

...a policy of decentralization and privatization has resulted in a shifting of responsibility and control from the state to the local community mental health programs, and in turn to contracting agencies. This has produced multiple layers of administrative overhead, duplication of efforts, fragmented and ill-defined programs and loss of control over the management of public funds. The management of these funds is thereby removed from public scrutiny otherwise enabled by the Freedom of Information Act, the Open Meetings Act and competitive bidding.

The Michigan chapter made a laundry list of recommendations for improving the mental health system that centered around increased state oversight, management and accountability. 

Six years ago, North Carolina began a broad reform of its mental health services that hinged on outsourcing services and management to private firms. Recent news regarding the reform, however, are cause for concern. A consultant's report found that the neediest patients are falling through the "safety net privatization was expected to provide" and recent state audits show that privatization has led to overbilling the state by millions of dollars amid a breakdown of oversight. The audits found that up to 185 private firms providing direct care to patients as part of the community-support services (CSS) program overbilled taxpayers to the tune of $45 million since March 2006. Compounding the problem, ValueOptions, the private firm hired to run the CSS program and determine eligibility, has been cited by critics as failing in its management duties. Mismanagement resulted in thousands of residents, many of whom were children, waiting for treatment.

All of this led the Daily Advance of Elizabeth City, North Carolina, to editorialize:

Privatization of mental health services is a disaster. It's time to reform the reforms. 

In related news, North Carolina took a significant step forward this year to ensuring access to health insurance coverage for mental health illnesses by enacting mental health parity, which requires insurance companies to cover mental health needs the same way they cover physical needs. 

Nevada should look to these lessons before it repeats the mistakes of other states by buying into the idea that privatization is a simple solution to much deeper problems of funding and reform of its mental health services.

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