The Dim-Post

June 2, 2015

Public choice theory and mental health care

Filed under: Uncategorized — danylmc @ 10:33 am

Via the Herald:

Private investors will soon be given the opportunity to invest in mental health services, Government confirmed this morning.

Finance Minister Bill English and Health Minister Jonathan Coleman have announced plans for New Zealand’s first social bond, which will focus on the mental health sector.

The Labour Party described the new policy as an untested experiment which used New Zealand’s most vulnerable people as “guinea pigs”.

Social bonds allow Government to contract out services and funding to non-government or private organisations, with agreed targets and timeframes.

If the targets are met, Government pays back the investors, and also pays a return on their investment. The return depended on the level of results, up to an agreed maximum.

“Where we succeed, there are opportunities to help people fulfil their potential, a chance to break inter-generational cycles of dependency and, in the long term, potential savings for taxpayers.

“So social bonds are a consistent fit with our wider social investment approach which aims to better understand both the drivers and risks of social dysfunction and where we can have the greatest impact in improving people’s lives.”

The thinking behind this policy comes from a branch of economics called public choice theory; it’s still influential on the right and the logic goes like this: What if all those social workers and doctors and carers and psychiatric nurses in the state-funded mental health sector are all rational, selfish individuals? They have no incentive to actually help their patients recover from their illnesses and re-enter the workforce, because their income is reliant on the mentally ill remaining ill and requiring ongoing care! If they cure all their patients then they’re out of a job! Why not then, turn to the limitless ingenuity of the market and instead of leaving the care of the mentally ill to a bunch of corrupt, fat-cat doctors and social workers, incentivise our wealth-creating business leaders and executives to simply cure severe schizophrenics and manic-depressives, somehow, so they can re-enter the workforce as happy productive citizens!

The flaw, as usual, is the assumption that everyone thinks like economists and that people become mental health workers for the enormous profits, rather than motives of, say, compassion or humanity. And again, as usual, there’s magical thinking around the role of the market and our business class. Sure, businesses that win tenders for these services could work hard and find a way to cure all their clients, but what they’re more likely to do is hire lobbyists and lawyers, find a way to game the system and make a lot of money while inflicting misery on a bunch of very vulnerable people.

67 Comments »

  1. Only the most fervently-ignorant market devotee could try to impose profit as an ‘accountability’ and innovation lever in the social care of vulnerable people. Unfortunately there are enough plonkers in our current cabinet who are that stupid.

    Comment by Sacha — June 2, 2015 @ 10:37 am

  2. There are already a lot of non-government providers in social services and having worked in this area at the beginning of my career when mental health services were almost entirely a state monopoly I am not so sure that the all wise, all knowing state is exactly the best model for the “social care of vulnerable people”. Back in the day – 1988 or 89 – Metro magazine did some great stuff on the innovative State entrusting the psychiatric care of Maori in Auckland to one Titewhai Harawira, with entirely predictable results and a 9 month gaol sentence for Titewhai.

    Comment by Tinakori — June 2, 2015 @ 10:51 am

  3. Yes, but those ngo providers are paid to care for ‘mental health consumers’. not ‘fix’ them.

    Comment by danylmc — June 2, 2015 @ 10:55 am

  4. It’s been said here before but I guess it’s up to me to undertake the tedious task of repeating it: Not all economists assume that all people are rational actors with full information at all times. That’s a massive strawman.

    Comment by kalvarnsen — June 2, 2015 @ 11:01 am

  5. The primary health system is already gamed pretty effectively under the PHO capitation model, which is why you see a bunch of very wealthy practices serving educated, white, wealthy, urban folks – you know, the ones least likely to need basic healthcare – and practices is poor, brown urban and rural areas going broke or turning patients away.

    Saying that, I was utterly gobsmacked to hear this on RNZ this morning.
    The first thing that occurred to Mrs. W when she heard this (unsurprisingly given that she works in the public health sector) was “Why don’t they just look to raise taxes to cover the funding shortfall?”.
    She has explained to me on numerous occasions that most of inefficiency in her area is primarily down to DHB cost cutting measures in the wrong areas (i.e. using cheapy disposables that are less efficacious and lead to surgical rework) and ridiculous process overhead.

    Comment by Gregor W — June 2, 2015 @ 11:01 am

  6. “…Back in the day – 1988 or 89 – Metro magazine did some great stuff on the innovative State entrusting the psychiatric care of Maori in Auckland to one Titewhai Harawira,…”

    Whereas these days it’ll be SERCO, who will “manage” the mentally ill back into society, where they can sleep in parks, frighten small children and eventually die an unlamented death.

    Comment by Sanctuary — June 2, 2015 @ 11:02 am

  7. We could have a a huge state funded mental health sector; that won’t lead to cases of abuse and torture or anything will it? Perhaps given the history of psychiatric care in New Zealand, one small experiment in doing it differently isn’t so bad.

    Comment by rsmsingers — June 2, 2015 @ 11:27 am

  8. Whereas these days it’ll be SERCO, who will “manage” the mentally ill back into society, where they can sleep in parks, frighten small children and eventually die an unlamented death.

    Or perhaps manage them onto blog sites where they can scream and scream into the vast, inchoate silence of bemused comment sections. A form of sanctuary as the baseline measure of success.

    Comment by Tom Hunter — June 2, 2015 @ 11:32 am

  9. As an investor in HappiKiwi (a new market-driven mental health provider) I am confident that I will see a good return, because those unhelpful cases which threaten our Achievement Target Going Forward, will all be siphoned off to NastiKiwi, the new market-driven criminal incarceration provider.

    Comment by sammy 3.0 — June 2, 2015 @ 11:40 am

  10. @rmsingers: What makes you think private mental health providers are less prone to patient abuse?

    Comment by kalvarnsen — June 2, 2015 @ 11:40 am

  11. exactly

    Comment by Rick Bryant — June 2, 2015 @ 11:42 am

  12. If worst comes to worst, I can easily see insanity defence lawyers rubbing their hands in glee and visiting the nearest BMW or Mercedes dealership.

    Comment by Kumara Republic (@kumararepublic) — June 2, 2015 @ 11:44 am

  13. You’ve said a few times recently Danyl that this is not a neoliberal government. That’s true if we focus on the more traditional forms of corporate welfare (Rio Tinto, Sky City, flying sheep etc) but the only real difference between such blatant “facilitation payments” and the neoliberal thinking behind charter schools and this latest plan is that they pick the actual specific winners rather than punting all that messy stuff to a tendering process.

    Comment by John Small (@smalltorquer) — June 2, 2015 @ 11:56 am

  14. The biggest advantage of using private providers is that in the event of problems we can stop payments to them.

    Comment by unaha-closp — June 2, 2015 @ 12:00 pm

  15. @unaha-closp: “The biggest advantage of using private providers is that in the event of problems we can stop payments to them.”

    The biggest advantage of using public providers is that in the event of problems we can fix them.

    Comment by RJL — June 2, 2015 @ 12:10 pm

  16. I detect the dead hand of Paula Rebstock here.

    Comment by Neil Miller — June 2, 2015 @ 12:21 pm

  17. NGOs have been contracting health services for quite some time now. I don’t have much of a problem with trying this funding system in small areas not currently catered for. If it works it works, if it doesn’t it doesn’t and it makes no sense not try new ideas.

    Comment by NeilM — June 2, 2015 @ 12:26 pm

  18. “That’s a massive straw man.”

    Danyl is one of the leading private sector providers of straw men

    Comment by Tinakori — June 2, 2015 @ 12:42 pm

  19. Tinakori, butter wouldn’t melt in your mouth.

    but I digress…

    NGOs have been contracting health services for quite some time now.

    True, but not particularly relevant.
    And it’s also not like mental health “isn’t catered for” in an abstract sense. It’s not well managed because funding has been cut over many years for dedicated mental health services for ideological reasons, to be replaced by notions of ‘care in the community’, aka shifting the costs.

    This is just the other side of that cost shifting paradigm, to whit, changing the incentives to privatise the profits.
    And the trouble with that is when the profits leave or it all gets too hard, the providers leave and the State (read taxpayer) is left picking up the pieces….again.

    Comment by Gregor W — June 2, 2015 @ 12:48 pm

  20. @Gregor, saying there is only one reason that mental health services have been mismanaged would be naive in the extreme. I do love the way everyone is pushing their own favourite strawman though.

    Comment by rsmsingers — June 2, 2015 @ 1:48 pm

  21. Back in the day – 1988 or 89 – Metro magazine did some great stuff on the innovative State entrusting the psychiatric care of Maori in Auckland to one Titewhai Harawira, with entirely predictable results…

    A fine example of the risks inherent in outsourcing mental health care to private providers, and one that certainly wouldn’t have been prevented by the prospect of Harawira losing her incentive bonuses.

    Comment by Psycho Milt — June 2, 2015 @ 1:55 pm

  22. @rmisngers – I didn’t say there was only one reason. I pointed out the main one.
    Also, my statement isn’t a strawman, but I liked the way you strawmanned my non-strawman.

    Comment by Gregor W — June 2, 2015 @ 2:06 pm

  23. The flaw, as usual, is the assumption that everyone thinks like economists and that people become mental health workers for the enormous profits, rather than motives of, say, compassion or humanity.

    Instead of muttering about how economists should be strung up from Thorndon lamp-posts pour encourager les autres it’s high time that we took the compassionate approach and recognised their condition as a bona fide disability. With their newfound vulnerability they’ll be the perfect high-priority test group to flush out flaws in the brave new mental health services regime.

    Comment by Joe W — June 2, 2015 @ 3:40 pm

  24. It’s not well managed because funding has been cut over many years for dedicated mental health services for ideological reasons, to be replaced by notions of ‘care in the community’, aka shifting the costs.

    I wasn’t aware that mental health services are not well managed. That’s not my experience. Some particular service units might not be I suppose but certainly not all.

    The govt’s proposal is for a service not currently provided.

    The shift to community based care has on the whole worked well and isn’t responsible for what ever short comings there are currently in mental health services.

    There’s changes I would make that no political party are proposing at the moment so in
    Not uncritical but this particular proposal could be of benefit.

    But I don’t have an ideological preference either way. If it works it works.

    Comment by NeilM — June 2, 2015 @ 3:49 pm

  25. @NeilM – I’m glad your experience of mental health services has been positive. But my statement wasn’t dealing with particular instances or services.

    It was a comment on the sector as a whole which has been historically relatively underfunded and been treated with a scattergun approach in terms of public health outcomes, though admittedly, this has become somewhat simplified in recent years with the advent of the HPA.

    My further point being that, while these services may not currently be provided, it doesn’t necessarily follow that if the MoH has worked out that they should be provided, that this is the best way to do it.
    But if this approach works then terrific, back slaps all round.

    However, I would have thought that a modicum of risk analysis would have suggested that taking on one of the most complex areas of public health in a pilot programme to demonstrate the awesomeness of market dogma might have raised some alarm bells. Unless of course, this is incredibly low risk / high reward area in terms of outcomes gained in which case the question should be asked, why go for a profit incentive model for services if the quality measurement is straightforward and the benefits obvious?

    Comment by Gregor W — June 2, 2015 @ 4:24 pm

  26. “A fine example of the risks inherent in outsourcing mental health care to private providers…”

    Nope. The people in the Whare Paia were patients of Carrington Hospital

    Comment by Tinakori — June 2, 2015 @ 4:25 pm

  27. It’s interesting that public choice theory is never applied to cops, prison guards (and private prison operators), soldiers or spooks.

    I guess the right aren’t keen to have their protection forces depleted.

    Comment by richdrich — June 2, 2015 @ 4:43 pm

  28. @richdrich – It’s almost as if sectors that have an actual record of (and the power to exercise) self-interested and corrupt behaviour are being excluded from this theory for some inexplicable reason.

    Comment by Gregor W — June 2, 2015 @ 4:52 pm

  29. @Gregor W

    Mental health services aren’t perfect but the dysfunction that I have seen isn’t the result of underfunding but rather of poor management.

    One of the best resourced units I’ve seen was also the most dysfunctional primarily because of the Clinical Director.

    Comment by NeilM — June 2, 2015 @ 5:23 pm

  30. The devil will be in the detail, no doubt: duration of contracts and the cost of options for incoming governments to re-jig or break them; public control of the definitions of goals and parameters for determining success; the costs of purchasing such services and the areas from which that funding is re-directed etc etc. The UK’s NHS outcomes from Public Private Partnerships seem not to have been crash hot, from what my sketchy reading tells me, and it appears it may be be an ongoing slow-mo road crash with the government on the hook for a considerable amount of dosh.

    The state of NZ’s mental health services in the past is actually a massive red-herring, reflecting as it does the state of psychiatric knowledge and the institutional biases of the times. As a student I worked vacations as a nurse aid at Porirua Hospital and agree that things were pretty ugly, just as they were ugly in the primary school I attended where class size hovered between 63 and 65 from Standards 3 through 5, something I was oblivious to until in middle age I reread my school reports. My shared experiences hardly suppy evidence of an urgent need for charter schools.

    Comment by paritutu — June 2, 2015 @ 5:59 pm

  31. Success in this model depends far too much on the terms of the contract and the monitoring arrangements. If we could be confident in this government’s ability to negotiate any deal in favour of the public rather than businesses, I might feel better about it.

    I guess they’re starting with people who need mental health services because if it all goes tits-up, traditionally the rest of us have not cared much about their welfare. Disabled people, next up.

    Comment by Sacha — June 2, 2015 @ 6:42 pm

  32. It could be done really well, it really could. There is however a nagging feeling that it will not be implemented with care and intelligence.

    Create a generation of mental health advisors who have actually lived with some form of mental illness, listen to their ideas. Exploring the concept of Consumer driven services would be more valuable in terms of improving health outcomes and the flow on effect of higher employment participation for mental health consumers.

    The system has been in the hands of medical clinicians and now it will probably end up in the hands of accountants. How about listening to THOSE people they are all making money from instead were any consumer advocates present when treasury first threw that idea around?

    Comment by naomi — June 2, 2015 @ 6:56 pm

  33. A couple of final points.

    Resource capture already happens, it’s a middle class sport. Cutting the private sector out of service provision doesn’t stop that.

    Off hand I can think of a number of instances in health where the private sector provides a service – For A Profit – and no body complains.

    Comment by NeilM — June 2, 2015 @ 7:57 pm

  34. I might not mind if the contracts, measures and outcomes were transparent as we could examine them independently.

    My issue with a lot of contracting out is that too much is kept behind the curtain and funder and provider have a joint interest in declaring victory amid the wreckage of abject failure…..and the people most effected – the end users / consumers of the service – have no voice in it and choice….

    This funder / provider split garbage has been peddled for over 30 years…..and the result has generally been degraded services and the people being failed have no one to complain as the both the funders and the providers are deaf to bad news

    Comment by Steve W — June 2, 2015 @ 8:03 pm

  35. This funder / provider split garbage has been peddled for over 30 years….

    But would things be better otherwise?

    Govt only services are not one homogenous body, they’re made up of different professions and service groups with often different management that are often in conflict.

    There’s always s degree of sleft interest involved and even when it’s not explicitly self intersect these groups will understandable see things differently.

    Everyone might be for “public service” but people have families, careers, think about money and status. Those are not sins confined to the private sector.

    Comment by NeilM — June 2, 2015 @ 8:30 pm

  36. Best not complain too much, might get labeled as paranoid, then get privatised.

    Comment by Neil Miller — June 2, 2015 @ 8:37 pm

  37. Why stop at mental health?
    Just fund the dhbs the same way.
    I can just see profits and the physical health of the nation rising hand in hand because of the magical might of “the market”. Hah!.

    That is what an ex treasury theoretical plonker and an ex wall street trader would have us believe as they drive us to becoming an annex to the usa. The ewst already spends his vacations in ihis home iin Hawaii, displaying absolute distaste or staying in nz for holidays, despite being mimister of tourism.

    Key is a US puppet and the nats would not object to bcoming part of the USA. Why the interest in a new flag?

    Comment by peterlepaysan — June 2, 2015 @ 8:47 pm

  38. The people in the Whare Paia were patients of Carrington Hospital

    The people “treating” them weren’t.

    Comment by Psycho Milt — June 2, 2015 @ 8:51 pm

  39. “The people “treating” them weren’t.”

    You are absolutely right, they were employees of the hospital

    Comment by Tinakori — June 2, 2015 @ 9:15 pm

  40. I’m not sure someone who refers to himself as ‘Psycho’ should be allowed to discuss this topic. It’s like a conflict of interests.

    Comment by Lee Clark — June 2, 2015 @ 11:24 pm

  41. “there’s always s degree of self interest involved”

    That’s the ideological theory being discussed, yes. Somehow public servants are biased, yet the private sector isn’t.

    Comment by Sacha — June 3, 2015 @ 3:44 am

  42. Tinakori, the hospital contracted out its management to a sub-standard group who caused harm. I doubt the afflicted were splitting hairs about the contractual arrangements.

    Comment by Sacha — June 3, 2015 @ 3:47 am

  43. I doubt the afflicted were splitting hairs about the contractual arrangements.

    Once upon a time there was a group of long-term Oakley inmates who’d managed to score what appeared to be genuine nurses’ neckties. When the opportunity presented they’d attempt to throw their weight around by flaunting these tokens of authority. Who knows, perhaps they’ve leveraged their advantage to become consultants. while posting authoritative comments around the blogosphere.

    Comment by Joe W — June 3, 2015 @ 5:20 am

  44. “Somehow public servants are biased, yet the private sector isn’t.”

    Eh? Biased towards turning a profit from time-to-time in order to remain in business, you mean?

    Comment by Clunking Fist — June 3, 2015 @ 7:57 am

  45. Public choice sort of ok in theory doesn’t work in practice because of the corruption of the power of the State.

    “but what they’re more likely to do is hire lobbyists and lawyers, find a way to game the system”

    That cant happen in a free market and only works when dealing with the State.

    Comment by Simon — June 3, 2015 @ 8:21 am

  46. @Simon
    It doesn’t happen because one side is a government, it happens because one side gets to set the rules.

    And the rules don’t need to be laws – they could be contracts or they may not even be explicit but just commonly held beliefs.

    Comment by mjpledger — June 3, 2015 @ 8:35 am

  47. And the rules don’t need to be laws – they could be contracts or they may not even be explicit but just commonly held beliefs.

    Exactly.
    It’s also bullshit to suggest that gaming can’t happen in an hypothetical free market because information asymmetry and agency problems don’t magically go away.

    Comment by Gregor W — June 3, 2015 @ 9:47 am

  48. “When the opportunity presented they’d attempt to throw their weight around by flaunting these tokens of authority”

    In the old style psychiatric hospital the symbol of authority was not a tie but the large black key that nurses carried.

    Comment by Tinakori — June 3, 2015 @ 10:32 am

  49. This kind of privatisation is just the thin end of the wedge and marks a dark day in public health care.

    Mark my words, soon we will have doctors going out and setting up their own businesses and making money off sick people, and using that money to buy expensive cars and houses in nice areas, and go to conferences at fashionable overseas locations. Surgeons may even build their own hospitals and drive even better cars. The channeling of public money to private health providers must stop now before it’s too late.

    Comment by insider — June 3, 2015 @ 2:08 pm

  50. As has been pointed out elsewhere, all the targets will be met, all the moneys will be paid, none of this will be for doing what they are actually meant to be doing, instead it will be done by gaming the system.

    Comment by Michael — June 3, 2015 @ 2:12 pm

  51. Many people on the left don’t like this social bond idea because it was thought up by Members of the National Party. They are the ones that were the first to back the idea when it was loosely bandied about by Labour Members five years ago.

    Comment by Daniel Lang — June 3, 2015 @ 2:31 pm

  52. it was thought up by Members of the National Party

    By “thought up” you mean “Googled”. It’s yet another example of aping the American attempts to address problems that are vastly worse than ours, without asking why they are in the first place (answer: deep-rooted indifference to public services and funding thereof).

    Who were these lefties who were first to back the idea?

    Comment by sammy 3.0 — June 3, 2015 @ 3:40 pm

  53. The two major components of this seem to be (a) defining what is wanted, and (b) getting private funding. The magic is that the private funders will ensure that what is wanted (being clearly defined) will be achieved with a profit.

    What I do not understand is why you cannot just have “(a) defining what is wanted”, then instruct and resource the public sector to do it. Should be cheaper as the block of profit disappears.

    This private funding of public works can easily cost more than public funding — just look at the interest payments for Transmission Gully — over $500 million wasted extra cost.

    Comment by Andrew R — June 3, 2015 @ 4:39 pm

  54. What I do not understand is why you cannot just have “(a) defining what is wanted”, then instruct and resource the public sector to do it

    This is the root of the magical thinking at play, in that proponents of the alternate systems assume that there are no levers that can possibly adjust performance, other than those that stem from a profit / market centric approach.

    Which of course is bollocks as it all comes down to contract design and ensuring that you have the right incentives or proxies to get the desired result, not just throwing out the baby with the bathwater if you are ideologically predisposed to have a view that the public sector ‘isn’t working’.

    Comment by Gregor W — June 3, 2015 @ 5:20 pm

  55. I work in the public sector and don’t have the opinion the public sector isn’t working. Unlike yourself Gregor with your dire views on mental health provision.

    I’ve seen health provision done well and and done badly by both the public and private sector. It’s people and oversight that make the difference.

    I’m for having the govt involved in business and am not against business being involved in proving a public good. If banks want to invest in mental health I’m not going to oppose that without good reason. And in these days of sustainable/ethical investment what better field to invest in.

    Money is already an incentive in the health system. There are pay grades for health professionals for good reason. It’s not s matter of altruism vs capitalism – it’s always a bit of a mix.

    As for “experimenting” well WFF was a bit of an experiment, as was Tomorrow’s Schools, KiwiBank and KiwiSaver were experiments and there’s this thing called clinical trials. How do things improve if not by making changes – changes that might be a bit of a risk.

    I rate the chances of this initiative being hugely successful as slim but I don’t object to it.

    Comment by NeilM — June 3, 2015 @ 6:14 pm

  56. “I rate the chances of this initiative being hugely successful as slim but I don’t object to it.”

    so maybe we have some evidence based research then trial it on people who are able to pick up the pieces if/when it goes wrong?
    note: pay grades is a bit of a red herring isnt it? – health workers arent graded on results but a wide range of factors involving experience and training?

    I get your drift here neil and at surface level theres not much to disagree with – but that only if we ignore vaild assumptions regarding intent and ideology.
    I dont actually think the idea is being put forward to fix or deliver better outcomes for the people involved – exhibit a) the fact that not one govt MP has actually talked about these people and how the idea will improve things for them – instead they keep talking about financial risk to the govt.

    Comment by framu — June 4, 2015 @ 8:07 am

  57. @NeilM

    I work in the public sector and don’t have the opinion the public sector isn’t working. Unlike yourself Gregor with your dire views on mental health provision.
    I’ve seen health provision done well and and done badly by both the public and private sector. It’s people and oversight that make the difference.

    I work in the State sector and always have and don’t have the opinion that the Public sector isn’t working either.
    Assuming you’re nor being deliberately disingenuous, having an opinion on one area of public sector influence – and within that, an opinion of specific issues of effectiveness as noted (funding provision and unclear objectives / supplicated effort) – does not mean that my criticism extends to the entire sector.

    And of course people and oversight “make the difference”, to the extent that without them it’s impossible to deliver or measure effective results. This is not a particularly pertinent point to make as it applies to any institution, public or private.

    Re your point around “experimentation”, most of your examples aren’t really that experimental. Transfers like WFF are tried and tested. Kiwibank and KiwiSaver type initiatives are relatively normal worldwide. Clinical trials have well established methodology and procedure.

    In one sense, I agree with you that we should not be afraid to experiment but in the end, it’s all about risk. As a number of us have pointed out, mental health is a sensitive area where screw-ups will have very material results to people’s wellbeing.
    It would seem sensible to me that if you wanted to trial an alternate funding and incentive approach, you would pick something that is working fairly well (or at least consistently) and has easily measureable outcomes, and then run a comparative pilot against it. That’s what you would do in the business world.

    Comment by Gregor W — June 4, 2015 @ 10:35 am

  58. @framu I don’t think you can look objectively at the comments on this post and claim there are “valid assumptions regarding intent and ideology”. There are ideological assumptions about intent and ideology.

    Comment by rsmsingers — June 4, 2015 @ 3:36 pm

  59. Both the public sector and the private sector have issues (and we need to be careful that private sector doesn’t always mean “for profit”). The public sector is susceptible to provider capture, to one size fits all, and to delivering services that have little concern for the people receiving those services. The private sector is susceptible to lowest common denominator delivery, to gaming their delivery to claim success (well, so are the public sector), and in some cases to excess profits being syphoned off with no justification.

    But, the private sector (including the NGO sector) can also be a great driver of innovation, an opportunity for people with motivation and aptitude to take a risk and try to change the current state of the art.

    I see a number of people on this thread criticising purely because it’s private, and presumably because private is bad. That’s not a useful critique, and certainly if we agree that there are pros and cons to public and private, then surely there are times when things are better delivered in the public system, and times when they’re better delivered in the private system. Allowing a bit of both seems pretty middle of the road (and adjusting from time to time how much of which). Outright banning one (aka saying “never private provision in mental health”) seems to me a pretty extreme position.

    I’d also note that there are a shedload of NGOs in the mental health sector already (Lifeline anyone?) and some of them do very good work, others less good. Somehow pretending that this is new and dastardly doesn’t make sense. It’s about a different way to structure the contract, sure, but on the surface the intention seems sound – lifting the contract up to a more outcomes focused thing and paying a bonus when you achieve it, better still allowing “ethical investors” to take some risk in it.

    This isn’t about some believe in magic, it’s about how the world actually works. Markets aren’t magic, they’re what happens when you buy something from someone – you agree a price and a service. They’re one of the most basic forms of interaction people have – trading one thing for another. They’re not in any way mystical

    Comment by PaulL — June 4, 2015 @ 6:23 pm

  60. “the private sector (including the NGO sector) ”

    Nice try at redefining the community sector to be the same as businesses.

    Motivations are important. Bill English has said on many occasions he wants to shrink the size of the state to 20% of the economy and that the only reason his govt is interested in social services is because they cost the govt lots. I agree with framu that nobody has talked about this being better for people relying on mental health services,

    Comment by Sacha — June 4, 2015 @ 9:14 pm

  61. @sacha: well, who do we think will be the organisations taking on these initiatives? I’d expect the likes of Lifeline to be pretty high on the list, and they’re very clearly an NGO/charity. So putting about the impression that this will be some sort of faceless corporate multinational I think is misrepresenting the likely situation. Of course, it shouldn’t really matter if the argument is one of delivery quality and outcomes – whether it’s Lifeline or some faceless multinational we’d only be talking about the outcome. But since this seems an argument against faceless multinationals making evil profits, I thought it was worth tempering a little.

    Comment by PaulL — June 4, 2015 @ 11:00 pm

  62. Lifeline is a worthy cause, but would they and other NGOs have the financial resources to do the heavy lifting? The Sallies have already told the Govt that they can’t afford to take on social housing.

    Whatever happens, I’d hate to see people like James Eagan Holmes as an end result, when mental cases get turned away due to under-resourcing or being deemed ‘unprofitable’…

    AP: Gunman says he tried calling crisis line before shootings

    Comment by Kumara Republic — June 5, 2015 @ 12:00 am

  63. @PaulL – if you read the pilot docs, it makes it pretty clear that the proposals are being put forward for initiatives that are cost intensive (presumably a proxy for complexity?) and therefore, an opportunity to create an efficiency dividend for investors.
    I suspect this limits the exposure to smaller NGOs.

    Comment by Gregor W — June 5, 2015 @ 10:28 am

  64. Yes and no. I would imagine that the smaller NGOs would be coming up with innovative plans for service delivery, then looking to some sort of ethical investment fund or other benefactor to fund their ideas. So yes, somewhere in there an investor would appear, but I would expect the NGOs to make the bulk of the running. But you never know.

    Comment by PaulL — June 5, 2015 @ 10:36 am

  65. If “innovative” = “profitable”, then no doubt some tremendously ethical investor will take a look.

    Comment by Gregor W — June 5, 2015 @ 10:42 am

  66. @Gregor W: I think the innovation of social bonds is to turn outcomes into profits. The govt will pay for results, and if someone has an innovative idea to achieve those results, and can convince an investor to back them, then they have a hope of getting the govt payment. It’s kind of like the old Ansari X prizes – $10M for the first private company to get a payload to 100km. Some people had the ideas of how to do it, some investors believed those ideas and backed them, the profit ultimately came for those whose ideas actually worked and therefore secured the prize for achievement.

    Comment by PaulL — June 5, 2015 @ 5:53 pm

  67. @PaulL so what kind of results will people be looking for ….re: the social bonds for companies finding work for mental health clients…is it client satisfaction with the job, employer satisfaction with the employee, length of time in the job, overall quality of life improvement for the client, less reliance on the public health system as measured over time or simply ‘getting a job’ …regardless of fit, duration etc? so open to gaming the system in so many ways, not hard to prove ‘results’…in the short term…also what if the innovative idea doesn’t work…or causes more harm? I disagree that innovation can’t happen in the public system…The only difference is there is more transparency and less urgency to move on to more lucrative clients in the public system or vested interest in ‘proving’ your innovation works.

    Comment by woodpecker — June 6, 2015 @ 9:56 am


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