Canberra Hospital doesn't have enough psychiatric beds to meet demand, meaning mental health patients are spending too long in inappropriate parts of the hospital, internal documents say.
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The hospital says it is also hamstrung by the fact Calvary Public Hospital's emergency department is not an approved facility under the Mental Health Act.
As a result, all mental health patients on emergency orders must be taken to Canberra Hospital.
Advocates say the territory's "mental health crisis" is one of the key causes of Canberra's poor emergency department wait times, calling for greater transparency.
Mental Health Minister Shane Rattenbury is currently considering whether Calvary Public Hospital's role in mental health should be expanded to ease the pressure on Canberra Hospital.
The internal documents obtained by The Canberra Times said there was a high risk of patients who had serious mental health illnesses waiting long periods within the emergency department and other general wards before being transferred to an appropriate mental health care location.
It said the problem was caused by a number of factors including the insufficient number of psychiatric beds in the hospital, an inability to recruit enough mental health trained staff and the increasing number of more complex mental health patients.
An ACT Health spokeswoman said planning was underway on a number of strategies to improve system-wide access to mental health services.
"Investing in mental health services has been a high priority in recent years, with the government's focus on least restrictive environments for treatment and care and investing in early intervention, health promotion and prevention rather than just focussing on increasing bed numbers," she said.
The spokeswoman acknowledged there was still a growing need for inpatient care, pointing to funding in this year's budget.
Australian Medical Association ACT president Antonio Di Dio called for greater transparency around "bed block" data, with mental health and geriatric wards key problem areas.
Bed block is when patients have been admitted and need a hospital bed but are delayed from leaving the emergency department.
He said the government should provide regular data around the time from when a patient is admitted to the time they get a bed on a ward.
"The mental health crisis is not only a terrible crisis for mental health patients, but also buggering up the waiting times for all emergency department patients," he said.
Dr Di Dio said the discharge process was often inefficient, with people sometimes taking up a bed for 10 to 12 hours, despite being given the all-clear to go home, simply because they were waiting for a prescription.
He said other hospitals had lounges where patients could wait for their discharge to be finalised.