Mental Health

Mental health reform began in 2001 with a goal of moving from a hospital-based public system to a community-based public system, but has had disappointing results. Despite claims to the contrary, privatization is not the problem.

The main problem is hubris among reformers who too often have forgotten the first rule of medicine — do no harm.

Each reform so far has provided an initial shock to the system followed by new problems and another round of revisions. Even when well intentioned, these changes have tended to make the system more complicated and less responsive to consumer needs.

Reforming mental health the right way depends on establishing responsibility at the right level and providing the right incentives for everyone in the system to seek better patient outcomes.


Reformers hoped the state would be able to consolidate to three hospitals from the current four. Poor planning and timing, however, have left state mental hospitals more taxed than before reform.

Instead of building the community-based system first and ensuring its viability, the 2001 reforms counted being able to close beds and save money in state mental hospitals to pay for the new community care options.

The result was a perverse incentive early in the reform process for state hospitals to reduce their resident populations by discharging long-term patients into the community and dealing only with the immediatecrisis for many newly admitted individuals.

Half of discharges in fiscal 2007 were patients who were in the hospital for one week or less, compared to less than one-third before reform.


Local Management Entities (LMEs) are supposed to direct patients to the most appropriate source of care, work to build the network of providers available, and ensure that patients receive appropriate care from one of those providers.

Without the care provision function, LMEs were virtually shut out of a significant portion of the Medicaid payment system. This portion grew as providers realized that once they were approved by the LME for services they could bill straight to Medicaid.

Community support services have been criticized for wasted spending, but much of this was outside the control of LMEs. Higher Medicaid payments directly to providers reflect the increase in community support services. Piedmont Behavioral Health (PBH) controlled its own Medicaid spending, so it did not have the same problems the rest of the system had in this area.

In contrast to PBH's prudent management of resources, Southeastern Center for Mental Health, Developmental Disabilities, and Substance Abuse Services and the ten-county Albemarle Mental Health Association in northeastern North Carolina provided egregious examples of LMEs gone wild.

Southeastern failed to spend one-third of its state allocation in fiscal 2007, but was surprised when its funding for fiscal 2008 did not return to the previous level. Also, the ten-county Albemarle Mental Health Center was earlier investigated over the $319,000 it paid Director Charlie Franklin.

Secretary of Health and Human Services Dempsey Benton presented a plan in April 2008 that would give much more power to the state government in overseeing LMEs and directing mergers between LMEs, but the number and scale of care management organizations is less important than the ability of those organizations to manage care.

This means not just getting control of the multiple money streams, but also ensuring that staff in the organization have the authority and resources to work with consumers in an effective way.

Jail Diversion

Crisis intervention teams (CIT) improve treatment outcomes and public safety with less recidivism. The police officer or deputy trained in this technique, as a first responder, can evaluate a situation himself and act instead of waiting for a social worker or others to arrive, and can keep a situation in check with less risk of violence or injury.

Because the intervention occurs in the field, it can preempt all of the costs of jail for some of the 16 percent of inmates with serious mental illness. This last is significant because jail inmates with mental illness cost more to detain per day and have longer detentions than other inmates.

Post-booking methods, such as mental health courts, are for individuals who cannot be diverted earlier but for whom mental health treatment could be an acceptable alternative to a criminal sentence, with actual prison time the next step if a person does not comply.


Local crisis centers closed as the providers formerly tied to LMEs lost their ability to cross-subsidize services. Advocates and the North Carolina Psychiatric Association say that community psychiatrists went into private practice or other venues instead of taking a risk in an LME-supported provider.

Despite these difficulties and a decline in the number of psychiatrists per 10,000 population since 1999, North Carolina still ranked in the top 20 states on this measure in 2004.

Easing regulations to incorporate primary care physicians and allied health professionals such as nurse practitioners in the continuum of mental health care could improve access, particularly in 17 counties with no psychiatrists and the 65 counties with less than one psychiatrist per 10,000 residents.


1. Expand the 1915(b) waiver currently used by Piedmont Behavioral Health to other local management entities (LMEs).

2. Allow LMEs to compete and expand across geographic boundaries.

3. Encourage more counties and LMEs to adopt crisis intervention teams as a way to improve the community-care system, improve public safety, and allow jails to be used for other offenses.

4. Ease restrictions on scope of practice that limit the ability of nurses and doctors to provide access to psychiatric care in more places at less cost.

5. Keep Dorothea Dix Hospital open indefinitely, and adjust staffing and training at state mental hospitalsto the evolving role of hospitals as crisis centers with some long-term patients.