Top Three Strategic Issues in Behavioral Healthcare

Behavioral health is a highly fragmented market. With an increased demand for providers as well as the recent supply shortage, this sector requires innovative partnerships and strategic thinking.

Here are the top three strategic issues in behavioral healthcare to consider currently. 

1. Provider Availability
   
   Most health systems and provider groups struggle to recruit and retain enough psychiatrists to meet community needs. In many cases, a lack of provider resources limits the growth of existing services or prevents clients from offering a behavioral health program at all. Residency programs or other less formal relationships with medical schools have proven to be effective recruitment tools. 
   
   
2. Fee-For-Service Economics
   
   From a contribution margin and net income perspective, behavioral health services are well below average for many health systems. This is largely due to some combination of the following:
   
   
   1. 1. Payer mix: For example, disproportionate share of Medicare, uninsured, etc.
      2. Reimbursement rates.
      3. State policy and community resources: Health systems are often required to use upwards of 25% of their capacity to board behavioral health patients due to a lack of community post-acute options. Patients no longer meet the criteria for inpatient reimbursement.
         
         
   Organizations assuming higher levels of financial risk generally favor the economics of behavioral health due to the service line’s impact on the total cost of care. This phenomenon has resulted in increased interest and investment in behavioral health for many clients. VMG Health’s advisory clients have recently identified behavioral health as one of the most important service lines moving forward. 
    
3. Care Model
   
   The care model needed to provide behavioral health continues to be an area of interest for many organizations. Clients are increasing investment in pre-inpatient and post-admission services and community resources to improve program performance.