Behavioral health companies have reason for optimism, according to an April 19 report from Moody's.
The fragmented nature of the behavioral health market presents consolidation opportunities, the report said. Some estimate the substance abuse disorder treatment sector alone at more than $45 billion across 3,800 facilities, including more than 1,000 that are private and for-profit.
The outlook is mixed in some ways, however, according to the Healthcare Quarterly: April 2023 report. Labor issues plague all facets of healthcare, but acute psychiatric care is "particularly exposed" to those pressures partially because of a higher nurse-to-patient ratio than that of the substance abuse business.
Wage inflation is easing, however, as are peak contract labor and the use of premium labor, the report said. Those offering the full continuum of behavioral care, especially larger and national providers, are well-positioned to mitigate labor pressures' negative effects.
Patients with substance abuse issues are likely to seek additional behavioral health treatment, so companies with a wide variety of offerings are more likely to keep patients in their business ecosystems. Because of that, "behavioral health companies will continue to expand aggressively through growth of existing facilities, partnerships, new facility openings, and acquisitions," the report said.