Competition Among Mental Health Organizations: Environmental Drivers and Strategic Responses

While mental health system reforms have sought to leverage competition in the private sector to improve service quality and costs, competition among mental health organizations is poorly understood. To inform future studies about the impact of policy and system reforms on mental health organizations and service delivery, this qualitative study explores (1) resources for which organizations compete most intensively, (2) drivers of competition, and (3) leaders’ strategic organizational responses. Semi-structured phone interviews were conducted with 15 organizational leaders (CEO’s, executive directors) representing about 22% of organizations in the regional mental health market. Interviews covered leaders’ perceptions about competition, and their strategic responses. Porter’s seminal framework on competition was used to interpret codes and themes. Intensive competition for personnel was driven by workforce shortages, new for-profit organizations, and alternative employment opportunities. In response, organizations have attended to wages/benefits, recruitment, and retention. However, strong community need, expanded insurance coverage, and a history of local strategic responses that created service niches appeared to have minimized competition for financial resources in the region. Competition for funding and clients was expected to intensify under systems reform, and in anticipation, organizations were expanding services. Leaders also feared for the viability of smaller organizations in highly competitive environments. Consistent with theory on competition, mental health organizations compete and respond in ways that might improve services. However, the goals of privatization may have been unrealized because of minimal competition for funding and clients, and intense competition may undermine quality.