Private Equity Firms are Investing in Mental Health? New Research Shows the Rise of these Investments
Jun 27, 2024
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Wharton Healthcare Management Professor, Marissa King, discusses new research on private equity investments in mental health facilities. They explore the impact, benefits, drawbacks of consolidation, geographical concentration, and the effects on healthcare outcomes.
Private equity firms are investing in outpatient behavioral health clinics, driven by rising demand for mental health services.
Geographic concentration of private equity acquisitions in mental health facilities is influenced by Medicaid policies and insurance coverage.
Deep dives
Private Equity Investing in Mental Health Facilities
Private equity firms are increasingly investing in mental health and substance use disorder treatment facilities, with around six to seven percent of these facilities now owned by private equity. The rising demand for mental health services and treatment for opioid use disorder has led to this trend. Consolidation of facilities by private equity companies is occurring, potentially improving operational efficiency but also raising concerns about pricing and quality of care.
Geographical Concentration of Private Equity Involvement
The involvement of private equity in mental health facilities is geographically concentrated in certain regions, influenced by factors like Medicaid reimbursement policies and varying levels of insurance coverage for mental health services. The impact of private equity acquisitions on costs and outcomes is still being investigated. There is also a focus on addressing labor shortages in these facilities through different operating models and potential expansion of services.
Marissa King, Wharton Healthcare Management Professor, joins the show to discuss her new research on the increased private equity ownership of outpatient behavioral health clinics.