Funding arrangements are creating perverse incentives for health practitioners to spend less time with patients in need of mental health services.

Per-patient Medicare gap payments encouraged managers to push general practitioners towards shorter sessions, Ramsay Clinic Thirroul consultant psychiatrist Karen Williams told a NSW parliamentary inquiry.

"It should never cost the clinician to actually give a s***," Dr Williams said on Thursday.

She agreed the current funding system provided perverse economic incentives and required rethinking.

The NSW parliamentary inquiry is examining the equity and accessibility of outpatient community mental health care in the state.

Community clinicians were being forced to spend their time to "tick boxes and get through paperwork", Dr Williams said.

People being referred to care were being crossed off the list if they already had a psychologist or had received care in the past, she added.

"It's so much funding going into just rejecting people," Dr Williams said.

People going through the system who repeatedly experienced treatment that did not work left them feeling broken and unable to be fixed, she said.

"There's frustration from clinicians who say we can't offer you anything more, service providers are impatient and overworked, and that makes these patients feel even more worthless than they already feel," Dr Williams said.

Repeatedly seeing the same faces also left carers disillusioned, contributing to recruitment and retention issues in the workforce, she said.

"You go into medicine because you want to see people get better, that's not happening in the mental health system the way it stands and so it's not inspiring new people to do it at all," Dr Williams said.

Health workers need better training in complex trauma and the associated mental health impacts, Full Stop Australia director of clinical and client services Tara Hunter said.

"For anyone going into an allied health profession that's going to be working on the front line ... it doesn't matter where you work, this is going to be an issue," she said.

Domestic and family violence, which contributed to trauma and mental health challenges for children, also needed to be considered when trying to treat minors.

Recent data suggested children as young as six required mental health services as a result of domestic or family violence, but they were not able to access them until the age of 12, Ms Hunter said.

There were also challenging criteria for accessing care.

"There's a requirement often to work with family members so there's a lack of privacy and safety for young people, particularly if they're having issues within their family setting," Ms Hunter said.

The hearing continues on Thursday and is expected to hear from several other witnesses, including representatives from the NSW Council of Social Service and the state's chief psychiatrist Murray Wright.

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