Background & History

In the 1980s, a number of changes were occurring within the health care industry which directly impacted the mental health provider network. The emergence of new forces were determining where and how the health care dollar would be spent. The health care industry today is characterized by aggressive competition for that dollar.

  • General and private psychiatric hospitals, due to increasing competition and decreasing bed utilization, were looking beyond their traditional inpatient, general medical model for new markets and a new array of income-generating services. In addition, other providers not traditionally involved in the provision of psychiatric care were entering the market.

  • Insurance providers were being asked to consider mental health as a legitimate part of health coverage. The types of treatment being covered, and the duration and scope of treatment, were under constant review and revision.

  • Government, insurance companies, and private employers were pressuring the health care industry to curtail rising costs. As a result, the economic structure of the health care industry made fundamental changes from cost-based reimbursement for health care providers to competitive market pricing. Those purchasers expanded their influence over how, where, and at what price the aggregate consumer would receive services.

  • The public funding base for mental health was under increasing pressure, and a greater share of the responsibility being shifted to the private sector through contractual arrangements.

These changes created a number of potential problems for community mental health providers. Many mental health centers were experiencing an increase in competition either from private practitioners in their local community or from private organized care facilities. While some centers viewed this competition as healthy, or as meeting a need in the community, most were very concerned about the implications of these developments for their own operations.

Because of these and other factors, a group of executive directors of community mental health centers across the country met several times during 1984 to discuss solutions to the above described problems. They recognized that it was necessary for centers to re-evaluate their basic mission. The inevitable conclusion was that centers could not continue to view themselves as solely a part of the mental health care delivery system, but rather a part of a much broader health care system.

Despite general agreement with this conclusion, the dilemma most centers faced was in finding a way to compete effectively in the marketplace. Limited funding, lack of marketing expertise, an image as public or quasi-public agencies for the indigent, relatively small size, and a history of operation based on humanitarian rather than economic concerns, left most centers ill-equipped to deal effectively with these problems.

However, strategies for dealing with the competition were already beginning to form; some directors adopted aggressive counter-marketing strategies, and others took a "wait and see" attitude. Those centers who made up the original group forming MHCA realized that a "wait and see" attitude would accomplish nothing more than allowing others to determine for them their future scope of activities, responsibilities and funding. From that realization emerged the Mental Health Corporations of America, Inc.

In September 1984, nineteen chief executive officers of community mental health centers met in Orlando, Florida for the purpose of forming the Mental Health Corporations of America, Inc. (MHCA). They hired a consultant to help them organize and search for a chief executive officer for the corporation. From that original 19 members, MHCA has grown to a current membership of 146 members in 35 states.

The original purpose, organization and goals have remained much the same (see ARTICLE II, Bylaws).

In addition, MHCA is the parent corporation of Mental Healthcare America, Inc., a for-profit subsidiary that oversees special programs and projects.  MHCA is also a major shareholder in the Mental Health Risk Retention Group, Inc., a captive insurance company created to provide liability coverage for the behavioral healthcare industry.