Some economic dimensions of the mental health jigsaw in Australia

Purpose - The purpose of this paper is to demonstrate that, although there are some unique features associated with mental illness, such special features do not preclude economic analysis. Design/methodology/approach - As a mechanism for understanding how individual economic studies fit into the mental health sector, a conceptual framework of the components of mental health service provision is outlined. Emphasis is placed on, not simply institutional and market resources, but also on the services provided by relatives, self‐help groups, etc. Findings - Australian data on parts of the mental health sector are employed to illustrate that some (and different) economic analyses can be undertaken in mental health. First, time‐series data on public psychiatric hospitals are employed to demonstrate trends associated with deinstitutionalisation. Other data (for Queensland alone) indicate that there are state‐based differences in the provision of such services. Second, attention is then directed to the analysis of time‐series data on private fee‐for‐service psychiatric services. Various concepts and measures from industrial economics are applied to analyse the relative size of this service industry, the pricing behaviour of the profession, the service‐mix of “the psychiatry firms” operating in Australia. In addition, the analysis also sheds some light on the distributional implications of Australia's national (and uniform) system of health funding, Medicare. Originality/value - Apart from demonstrating that economic analyses can be undertaken in the difficult area of mental health, this paper indicates a number of puzzles (e.g. various regional variations within a unified profession and a uniform national funding scheme) that invite further investigation.