Los Angeles Department of Mental Health Full Service Partnership (FSP) Program

Third Sector and the Los Angeles County Department of Mental Health launched the largest system of outcomes-focused mental health service provider contracts in the nation, transforming approximately $300 million in provider contracts to deliver better client outcomes for 15,000 of LA County’s most vulnerable residents.

The Project

LA City Skyline

Los Angeles County is the epicenter of the nation’s mental health and homelessness crises. An estimated 66,000 residents of LA County are experiencing homelessness, and nearly a quarter of LA’s jail population has an open mental health case. The Los Angeles County Department of Mental Health (LACDMH) is the largest county-operated mental health agency in the country, charged with serving more than 250,000 of LA County’s most vulnerable residents every year and boasting an annual budget approaching $3 billion. Yet, like many mental health departments around the nation, LACDMH’s existing model for provider contracts made it financially unsustainable for providers to provide the kind of wraparound supportive care that research shows is the most effective way to help those with the most challenging mental health needs.

To better serve LA County’s most vulnerable residents, LACDMH Director Dr. Jonathan Sherin engaged Third Sector in 2017 with funding from Ballmer Group to help realign LACDMH’s largest and most intensive outpatient supportive services program: the Full Service Partnership (FSP) program, which serves 15,000 clients with serious mental illness who are currently or at risk of experiencing homelessness, have a history of justice involvement and/or are high utilizers of emergency services. Over the next three years, Third Sector and LACDMH worked collaboratively with providers and clinical experts to develop outcomes targets, data reporting, and incentive structures for a new service model that would more effectively improve life trajectories of LA County’s FSP clients.

As a result of this work, in July 2021, Third Sector and LACDMH launched the largest system of outcomes-focused mental health service provider contracts in the nation, covering 196 clinics whose combined contracts are valued at approximately $300 million. This redesign of LACDMH’s FSP program is designed to support a “whatever it takes” approach to help individuals on their path to recovery and wellness. The new outcomes-focused contracts set specific client outcome goals for providers and rewards providers who successfully enroll, retain, and achieve the highest priority life outcomes (e.g., obtaining and maintaining stable housing, reducing recidivism, and reducing psychiatric emergency department visits) for clients with the highest needs. Providers will submit their first dataset by October 2021, after which LACDMH will gather data on the new outcomes and enrollment metrics and give providers new actionable reports to show them their progress in the first quarter. The first incentives will be distributed in early 2022, based on progress in the first six months of the new contracts. To support continuous improvement, UCLA’s DMH Public Mental Health Partnership will host quarterly Learning Collaboratives with providers and LACDMH to discuss progress and lessons learned.

Igniting a Larger Movement Towards Outcomes-Focused Government

LACDMH’s contract transformation reflects a major milestone toward leveraging data and funding to help social programs better serve local communities. Following LA County’s lead, a number of counties across California are now embarking on an FSP innovation project that builds on the data, insights, and tools developed through Third Sector’s partnership with the Ballmer Group and LACDMH. For details on this project, visit our Multi-County FSP Innovation Project page

“Full Service Partnerships represent a $1 billion investment in public funds each year, and have tremendous potential to reduce hospitalizations, homelessness, incarceration and prolonged suffering by Californians with severe mental health needs. The diligent and creative efforts by the participating counties, with technical support from Third Sector, is a demonstration of how collaborative efforts can drive transformational change in the delivery of mental health services.”

—Toby Ewing, Executive Director of the Mental Health Service Oversight and Accountability Commission

For more information about Third Sector’s work with LACDMH, the Multi-County FSP Innovation Project, or mental health efforts in general, please contact Tyler Lewis (communications@thirdsectorcap.org).


  • October 2021: Press Release (10/21/2021)-Los Angeles County Department of Mental Health Leading Effort for New Outcomes-Focused Mental Health Contracts Serving More Than 15,000 Residents with Serious Mental Illness
  • July 2021: Learnings from the Field: Best Practices for Transitioning from Full Service Partnership Programs to Lower Levels of Care
    Third Sector interviewed mental health experts, advocates, and researchers across the country to identify consumer readiness indicators and the most promising practices for stepping consumers down to less intensive outpatient mental health programs. This memorandum synthesizes recommendations from national experts and identifies opportunities for California counties and mental health services providers across the country alike to continuously improve service delivery and consumer outcomes.
  • July 2021: Leading with Outcomes (in collaboration with SAMHSA Mental Health Technology Transfer Center (MHTTC) Region 9
    and the Center for Applied Research Solutions TA Center) 
    In this 90-minute webinar recording, representatives from the LA County Department of Mental Health (LACDMH), the San Bernardino Department of Behavioral Health (SBC DBH), the California Mental Health Oversight and Accountability Commission (MHSOAC), and Third Sector share insights, tips, and lessons learned from California’s journey to build more outcomes-focused outpatient mental health services