Despite the rapid growth of outpatient behavioral health care, Acadia Healthcare (Nasdaq: ACHC) is reaffirming its commitment to the acute care setting. For the company, acute care remains not only a core service line but also one of the most significant areas for growth and investment.
Currently, acute care accounts for nearly half of Acadia’s U.S. revenue, making it the largest contributor to the company’s financial health. According to company executives, demand for acute services has been steadily increasing, and the opportunities to expand within this space continue to accelerate.
Acute Care as a Growth Driver
During the Credit Suisse 29th Annual Virtual Healthcare Conference, Acadia’s Chief Financial Officer David Duckworth emphasized that most of the company’s recent growth initiatives have been centered around acute care. Whether through new facility openings, joint ventures, or bed additions, the acute service line has consistently taken priority.
“Most of our new facilities and joint ventures have been in the acute service line,” Duckworth noted. “And even the recent bed additions to existing facilities have been more heavily weighted toward the acute service line. That’s a function of the demand and the opportunities that we see in our existing markets and in new markets.”
The strategy reflects the organization’s recognition of a growing national need for acute psychiatric and behavioral health services, especially as communities face rising rates of mental illness, substance use disorders, and crisis situations that require immediate intervention.
A Diverse National Footprint
Headquartered in Franklin, Tennessee, Acadia Healthcare operates a broad network of 582 facilities across 40 states, the United Kingdom, and Puerto Rico. Its locations span inpatient psychiatric hospitals, residential treatment centers, specialty facilities, and outpatient clinics.
This extensive footprint allows Acadia to meet a wide range of behavioral health needs, but it also highlights the outsized role that acute care plays within its service mix. Duckworth noted that acute care not only accounts for about 47% of U.S. revenue but also continues to deliver stronger volume and revenue growth compared to other lines of business.
“Volume growth has been more in the acute service line,” Duckworth explained. “Because of that, acute does tend to have a higher overall revenue growth.”
Consistent Revenue Growth
Acadia has set a consistent revenue growth target of 5% to 7% annually, and company executives believe the acute service line is a critical driver of that performance. The company has managed to achieve this growth rate even in the midst of the COVID-19 pandemic, which disrupted operations for many behavioral health providers.
By focusing on bed expansion, strategic partnerships, and new facility development, Acadia has positioned itself to not only maintain but also accelerate its financial momentum.
Record-Setting Patient Volumes
CEO Debbie Osteen reinforced the importance of acute care during Acadia’s Q3 2020 earnings call. She revealed that the company’s U.S. facilities had hit record-setting patient volumes in October, marking the highest census in the company’s history.
“We actually hit the highest census in the history of Acadia in October,” Osteen said, attributing the success to recent investments in U.S. bed expansion and facility development.
Osteen credited the company’s ability to add hundreds of new beds in 2020 as a major factor behind the growth. The expansion included both new facilities and joint ventures with health system partners, with the acute care line taking center stage in nearly all of those projects.
The Role of Joint Ventures and New Facilities
Joint ventures with hospitals and health systems have become a cornerstone of Acadia’s strategy. These partnerships allow the company to leverage its behavioral health expertise while collaborating with established providers in local markets.
By working with hospitals that may lack the resources to develop behavioral health facilities independently, Acadia can expand its reach while meeting critical community needs. Most of these partnerships, executives say, are focused on acute care facilities, which are often the most urgent priority for health system partners.
Additionally, de novo facility development has been a major driver of growth. By opening brand-new facilities in underserved markets, Acadia can directly address gaps in access to behavioral health care. Once again, acute care has been the dominant service line for these new ventures.
Meeting Strong Demand Trends
The increasing demand for behavioral health services, particularly in the acute setting, is driven by several factors. Rising rates of mental health conditions, heightened stress from the COVID-19 pandemic, and an increased national focus on behavioral health parity have all contributed to higher patient volumes.
Osteen pointed out that the diversity of Acadia’s service lines also helps strengthen the company’s ability to respond to these trends. While acute care has been the primary growth engine, outpatient and residential services still play an important role in creating a continuum of care.
“We believe — because of the strong demand trends and the fact that we have such diversity in the service lines — that this high census trend is going to continue into 2021,” Osteen said.
Looking Ahead to 2021
Executives at Acadia remain optimistic that the momentum seen in late 2020 will carry forward into 2021. The combination of strong demand, a broad service portfolio, and targeted growth strategies puts the company in a favorable position.
Duckworth emphasized that acute care will remain at the center of Acadia’s expansion strategy going forward. Given the proven ability of this service line to deliver both patient volume and revenue growth, the company plans to continue prioritizing new acute facilities, joint ventures, and bed expansions in the coming years.
At the same time, Osteen highlighted the importance of continuing to invest across the full spectrum of behavioral health services. While acute care may drive immediate growth, other service lines help sustain long-term patient relationships and ensure continuity of care.
Conclusion
Acadia Healthcare’s focus on acute care reflects both a clear demand in the marketplace and a strategic approach to growth. As the largest contributor to the company’s U.S. revenue, acute care is proving to be a reliable driver of both volume and financial performance.
With record-setting patient counts, a robust pipeline of joint ventures, and an ongoing commitment to expanding its national footprint, Acadia is positioning itself to meet the growing behavioral health needs of communities across the country.
Even as outpatient care becomes increasingly popular, Acadia’s acute care service line demonstrates that immediate, intensive treatment remains an essential part of the behavioral health landscape. As the company looks ahead to 2021 and beyond, acute care will continue to be a cornerstone of its strategy for growth and impact.
