Managing competition in public and private mental health agencies: implications for services and policy

There were clear differences in our study between the management strategies employed by public agencies and those favored by private agencies. These differences, however, appeared to reflect the realities of financing rather than any fundamental differences in their orientation toward public service. There was no clear evidence that particular management practices affected an agency's performance on measures of financial access or acceptance of referrals from public hospitals. Government regulation and pressure from advocacy groups probably helped to maintain private agencies' focus on these and other public goals. From a public policy perspective, choosing a provider solely on the basis of ownership status is, at best, a naive approach to providing public mental health treatment. Not only is there great variation in process and practices within both private and public groups, but external factors such as competition from private practitioners may also exert a stronger influence on agency behavior than does ownership status. Because most current proposals for health care reform rely heavily on increased competition among providers to achieve their goals, the importance of ownership status as a predictor of conduct or performance may be further diminished. The emphasis on competition could increase differences between urban agencies and those in rural areas where there is less competition and, therefore, require different contracting approaches. As we move toward a health care system based on competition, administrators and policy makers will be forced to abandon their reliance on stereotypical public/private agency behavior as guides for policy decisions. Instead, they will have to consider more carefully the effects of political and market influences as well as agency characteristics when choosing community mental health providers.