This week’s “Daily Journal” guest columnist is Joseph Coletti, Fiscal and Health Care Policy Analyst for the John Locke Foundation.

At the state mental hospital in Butner, three workers beat a physically restrained patient in September. The hospital now faces having federal funds cut off at the end of the month.

At the state mental hospital in Morganton, administrators did not report four deaths since the federal government cut off funding for the hospital after another patient died.

At the state mental hospital in Goldsboro, administrators faced the potential of losing federal funding in September, but were able to address problems and keep the money flowing.

At the state mental hospital in Raleigh, administrators have until March 4 to fix problems linked to how they transfer patients or they, too, will lose federal funds.

North Carolina began reforming its mental health system six years ago in response to similar concerns (PDF) about patient treatment and safety at state mental hospitals. Mental health advocates have become increasingly disenchanted with the new system of care that supposedly privatized treatment but mostly just shifted the burden of payment from the state and counties to Medicaid, thereby blurring the lines of accountability.

Mismanagement at state-run hospitals, however, remains a danger to patients and reminds us why most advocates still support the idea of community-based care. Neither the state nor Medicaid, however, pays appropriately for mental health care. This should not be surprising. Medicaid subsidizes providers instead of patients and pays for procedures instead of care. Fiscal conservatives often suggest saving money by freezing reimbursement rates, but this simply acts as a tax on providers who then face the dilemma of not treating Medicaid patients or passing along even more costs to their private patients.

State policymakers exacerbated the Medicaid problem by failing to provide enough funding early on to help create a better community-based network of mental health care providers. Without the community network, patients end up cycling through emergency rooms and state hospitals. Many of the most seriously ill patients end up in jail for public nuisance crimes, though sometimes for violent crimes as well.

Nationally, roughly16 percent of jail and prison inmates suffer from mental illness. North Carolina has as many as 20,000 people in jail awaiting trial at any time, which means that about 3,200 of them are likely to have a mental illness. If counties and the state could move a fraction of these people to community care systems where they actually received treatment, the systemwide potential for savings would be significant. The human potential of successfully changing the system is even greater.

Memphis, Tenn., has two programs that can help achieve these goals. One is called crisis intervention teams (CIT) and involves training police how to respond to situations and to use de-escalation techniques. Wake and Durham counties have implemented CIT programs, and the state chapter of the National Alliance on Mental Illness (NAMI NC) recently co-hosted a statewide seminar on the program. The public defenders’ office in Memphis also has created the Jericho Project to divert mentally ill individuals from jail into treatment.

The success of such programs rests on the availability of community-based care for the mentally ill. Here, the state can do more to incorporate primary care physicians and allied health professionals such as nurse practitioners (PDF) in the continuum of care. This would address some of the stigma associated with mental illness, which is as much a physical problem as heart disease is. It could also address the access issue for patients in the 17 counties with no psychiatrists and the other 65 counties with less than one psychiatrist per 10,000 residents. There is no logical reason properly trained nurse practitioners cannot provide referrals to specialists or refill prescriptions, although scope-of-practice restrictions might be a statutory stumbling block.

Gov. Mike Easley has said mental health reform will be one of the three top priorities for his final year in office, and it should be. Reform is made difficult because the system is a function of multiple layers of government. The state needs a strong community-based system and safer hospitals. This means pushing the funding decisions down to the lowest level – patients, families, and local advocates who understand the personal needs of the patient – and away from Medicaid. Bringing other medical professionals into the mental health system will also help with cost, quality, and access. A strong community-based system that takes advantage of all the medical skills available will also mean more effective treatment of those diverted from jails.

Lower costs and better outcomes are the goals for all involved. Loosening state control is an essential step in the process.