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Resource Misallocation in Australia’s Mental Health Sector under Medicare: Evidence from Time-series Data


  • We wish to thank Elizabeth Amean, Elyse Gryl and Carmel Meir for assistance in the preparation of this manuscript. Needless to say, the remaining errors and omissions are the responsibility of the authors.

Ruth F.G. Williams, Regional School of Business, La Trobe University, PO Box 199, Bendigo, VIC 3552, Australia. Email:


Evidence of poor correspondence between resources and “need” in mental health sectors is accumulating. This non-correspondence relates to the tendency for some people with mental disorders not to receive services and some people without mental disorders to use services subsidised under Medicare. Time-series Australian data are examined here and an appropriate approach is applied to measure the correspondence of Australian Bureau of Statistics (ABS) epidemiological surveys of mental disorders and the enumeration of consumers of mental health services under Medicare. The extent of this “structural imbalance” is determined to be extensive. This result reflects a sector beset with incomplete information. Diagnostic efficacy, and funding efficacious processes, is vital economically for the allocation of scarce mental health resources, not just clinically for efficacious therapy. Relevant policy is yet to be formulated.