READ MORE: TAMHSS Newsletter Vol.1 Issue.3

EDITORIAL: August 2012

Mental Health Reform: Is it really possible?

Advocating for change in mental health: Why do some problems in mental health get fixed while other ideas never get off the ground?

It is easy to feel overwhelmed by the challenges of advocating for systemic change in mental health services. Our members have expressed concern that their efforts seem to be falling on deaf ears. This is despite having identified problems clearly and having sensible solutions on offer. In this article we will introduce a well-known theory of government policy development and implementation which can help explain many of the problems and frustrations encountered by people seeking change in the mental health field. We will provide one answer to the following question: How and why do some issues get onto the agenda of services and government and drive real change, while other issues are neglected? We hope it will assist you in your thinking about systemic change in mental health, and we invite you to contact us with your own ideas, success stories and challenges in your own efforts towards change.


EDITORIAL: March 2012

The Commonwealth government is proposing a new funding system for mental health services called casemix or activity-based funding (ABF). This system is set to partially replace the current process of providing block grants to public hospitals and local health districts. We argue that the new funding system proposed by the Commonwealth government is not appropriate for mental health. If ABF is introduced in its current form, it will encourage hospital-centric instead of community based care, and work against current efforts to create a mental health system centred on the changing needs of individual consumers and their families.

What is Activity-Based Funding?

Activity-based funding (ABF) is a system of allocating health funding in which each health procedure (e.g. surgery, knee replacement) or diagnostic category (known as a diagnostic-related group or DRG) is given a set price. In the proposed system, this price will be set by a new government agency, the Independent Hospital Pricing Authority (IHPA). Hospital funding will be split between the Commonwealth and the states, with the Commonwealth initially taking on 40%, then an increased share in the future. The Commonwealth is proposing to include acute and inpatient mental health services in this generic funding system from July 2012, and possibly make adjustments to the mental health pricing system after one year. At the moment it is not clear whether such adjustments will eventually be made, and it is also not yet determined what kinds of mental health services will be covered by the new system.

 How are hospital-based mental health services currently funded?

Currently NSW hospitals and area health districts receive block grants to provide health services. While some healthcare activities performed by hospitals will continue to be block funded under the new scheme, the intention is for most if not all acute and hospital-based mental health services to be funded according to the ABF system within a few years. 

1.The proposed funding system can’t accurately estimate how much it costs to provide services to mental health consumers. Whereas the costs of many health procedures are relatively easy to estimate, the cost of providing services to mental health consumers is very difficult to predict. The current mental health categories are worse at predicting health costs than any of the other medical and surgical categories in the proposed new funding system. In spite of this, the IHPA is proposing to use this system for acute and inpatient mental health services from July 1 2012, arguing that it is better to get a system up and running and iron out any problems over time. But the system is so poor at predicting mental health expenditure and it excludes so many integrated acute / community care services that it could severely disrupt and fragment a system already under pressure. The research clearly shows that integration between acute and community teams is more effective for consumers and also more cost-effective. Instead, the generic ABF system sends all the wrong signals to health managers, favouring hospital-based care.

2. Piecemeal implementation of this ABF system will encourage mental health services to focus on those services or activities that attract Commonwealth funding, instead of integrating acute mental health care with community-based services such as assertive community treatment teams, community based 24hr supported residential respite facilities (which are an alternative to hospital admission), as well as other supported housing and vocational programs. The proposed system will work against current efforts to provide effective transitions for consumers between hospital- and community-based care.

3. The proposed funding system will officially allow the CEOs of local health districts to move resources received from the Commonwealth for mental health activities to be moved out of mental health and into other budgets. Information supplied by the IHPA also fails to outline how the new system will anticipate and prevent “gaming”, i.e. playing the system to get more funding by diverting consumers to more lucrative emergency department and inpatient services. This will also add considerably to the current problems with access block in emergency departments and inpatient beds.


Mental Health Services do need an appropriate form of ABF: they need an accurate and reform-shaping casemix funding system. The new generic DRG-based funding system proposed by the Commonwealth government for mental health will contribute to dismantling services. If ABF is introduced in its current form, it will encourage more hospital-centric activity and work against the integration of mental health services, undermining current efforts to create a mental health system centred on the changing needs of individual  service users and their consumers and their families.

READ MORE: TAMHSS Newsletter Vol.1 Issue.2 pdf


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