Thinking of Selling Your Behavioral Health Center? Consider These Variables First…

The behavioral healthcare market continues to be one ripe for consolidation and growth as investors increasingly realize the opportunities in a market dominated by niche health programs.

“The last time I looked, no single provider had more than 1 percent of the market in behavioral health,” Dr. Bill Bithoney, chief physician executive and managing director of The BDO Center for Healthcare Excellence & Innovation, says in Behavioral Healthcare Executive. “That means the opportunities for roll-ups and potential for efficiency gains are incredible.”  

The catalyst to this shift was of course the Mental Health Parity and Addiction Equity Act (MHPAEA) combined with the Medicare Improvements for Patients and Providers Act (MIPPA) and the Affordable Care Act (ACA). These forces boosted financing for behavioral healthcare, but since large providers deliver just a fraction of mental healthcare, there is considerable opportunity to drive clinical and administrative standardization.

And while some smaller providers may be reluctant to be gobbled up by larger organizations, being acquired often affords them greater financial stability and efficiency–allowing them to better treat a growing number of patients.  

Before dotting the i's and crossing the t’s on any deal, though, treatment centers should ensure their expectations for their organization post-acquisition align with that of the acquirer. They can start by asking themselves whether the due diligence process for the deal is a two-way street. If either side is reluctant to share financials, both sides should forget about the deal, Bithoney explains.

As income is more and more tied to patient outcome measures, he adds, past performance is no guarantee of future income.

“One of the things we are doing is looking at quality metrics, and the techniques and methods whereby quality data is being reported, looking at their rigor and veracity,” Bithoney said.

What other variables should behavioral health centers consider before selling? You can view additional insights in the full Behavioral Health Magazine article here.

Healthcare organizations with compliance questions specific to their organization or facility are invited to reach out to BDO.