North Carolina Mental Health System


In 2001, North Carolina's General Assembly called for sweeping changes to the state's mental health care system.  The state privatized the provision of local and regional mental health services by requiring that local jurisdictions contract out delivery of services.  As a result, the quality of care that North Carolinians with mental illness receive has declined while allegations of fraud and waste have increased.  North Carolina is trying to pick up the pieces of its shattered system, but the many negative effects associated with the privatized system are still felt across the state today.  



In 2001, North Carolina's General Assembly passed the "Mental Health System Reform Act," which required local jurisdictions to separate the management of mental health services from the delivery of those services.  Previously, local entities such as counties and regional agencies delivered mental health services by directly employing the care providers.  The 2001 law required the governmental local management entities (LMEs) to contract with private providers to serve area residents who needed mental health services.  The local counties and regions no longer directly controlled the provision of services, but instead were responsible for managing provider contracts.     

Seven years later, mental health reform was still important political topic in the 2008 race for North Carolina governor.  Candidates from both parties criticized the lack of standards and cost overruns in the privatized system.  North Carolina is currently revisiting its mental health system and considering better ways to provide higher quality care for its residents with mental health issues.        


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Key Issues
Key Issues: 

Shortly after the new system was put in place, numerous problems occurred.   Many highly trained mental health care workers left the field as private providers took control of service delivery, decimating the professional public-sector workforce.  Furthermore, the fragmented system created through privatization had a tremendous negative impact on the quality of services provided to clients.  Many times, important mental health services were no longer even available to clients.  Private providers engaged in "cherry-picking," offering only the most profitable services, such as "community support" services.  These services include basic assistance and mentoring, and such tasks as running errands for a client or helping with a child's homework.  They could be performed by low-paid, unlicensed personnel.  Many providers focus on these highly profitable community support services and left seriously ill clients without the more costly care they needed. 

Reports of cost overruns estimate that the state wasted at least $400 million in community support services offered by private providers that were unnecessary for the client or not even performed.  As a result of the in treatment offered by the private providers, the number of North Carolinians with mental illness who ended up in emergency rooms or jails significantly increased.           



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Today, North Carolina is trying to pick up the pieces of its shattered system, and reform the "reform."  Several advocacy groups, including NAMI North Carolina (, have offered recommendations to improve the system and restore the mental health safety net.  NC NAMI has coordinated roundtable meetings, bringing together various stakeholders across the state to discuss ways to improve North Carolina's mental healthcare system.  The notes from one 2007 meeting are available at