Private Equity Firms Acquiring Behavioral Health Practices: A Growing Trend in Medicine

Private equity firms are making a significant impact on the behavioral health services sector, with a new study revealing that as much as a quarter of practices providing these services in some states are now owned by private equity investors. This trend, outlined in a study published in JAMA Psychiatry, highlights a growing interest among private equity firms in acquiring medical practices to maximize profits.

Lead author Dr. Jane Zhu from Oregon Health & Science University noted that private equity investors are increasingly targeting behavioral health practices due to improved insurance coverage and reimbursement rates, as well as a rise in demand for these services. The acquisition of multiple practices allows these firms to gain operational efficiencies and negotiate better reimbursement rates with commercial insurers.

While the expansion of private equity-owned practices may increase access to behavioral health treatment for some individuals, the study did not assess the impact on cost, quality, or access for patients. Previous research has shown mixed effects on quality following private equity acquisition of healthcare facilities, with price increases being a common outcome.

The study identified a significant number of mental health and addiction treatment clinics that had been acquired by private equity investors between 2012 and 2023, with some states seeing a high proportion of private equity-owned facilities. The researchers emphasized the need for policymakers to pay attention to the high rates of private equity ownership in the behavioral health sector.

As the behavioral health crisis continues to pose challenges in terms of workforce shortages and access gaps, the short investment timeframe and distinct business model of private equity investors raise concerns about how these factors may intersect with the national healthcare landscape. Further research is needed to understand the full implications of private equity ownership in the behavioral health sector.

Overall, the study sheds light on the increasing influence of private equity firms in the behavioral health services sector and underscores the need for continued monitoring and evaluation of their impact on patient care and access to services.