Sukumar Narayanan draws deeply from his extensive career in consulting and professional services to lead DecisivEdge, a firm focused on helping businesses solve complex challenges through a collaborative and expert-driven approach. His philosophy centers on blending company-wide frameworks and methodologies with individual expertise and fostering a strong team culture. In his words, the most successful professional services firms effectively combine these three elements—experience, expertise, and teamwork—to consistently tackle difficult issues. This philosophy underpins DecisivEdge’s approach to serving its clients in healthcare, including the rapidly evolving behavioral health sector, where behavioral health mergers and operational excellence are critical, as well as financial services.
Key Drivers of Growth in Behavioral Health
Narayanan identifies several fundamental factors driving growth in behavioral health today. The first is the societal shift toward greater openness and acceptance of mental and behavioral health challenges. Over the past decade, stigma has diminished significantly, partly because public figures and celebrities have shared their personal struggles with addictions, eating disorders, and other behavioral health issues. This visibility has helped normalize conversations around mental health and encouraged more people to seek help.
The second driver is the availability of more accessible and targeted treatments. Advances in telehealth, digital therapeutics, and personalized care approaches have made it easier for individuals to get the right care at the right time, no matter their location. This has expanded the reach of behavioral health services dramatically.
The third factor is the change in employer attitudes. More companies are recognizing behavioral health as a critical component of overall employee wellness. Employers are reshaping their policies, offering more comprehensive mental health benefits, and partnering with providers to ensure their workforce has access to behavioral health care. Narayanan notes that although behavioral health challenges have long existed, they were often hidden or overlooked. According to recent statistics, the number of people with unmet mental health needs has risen sharply—from 21 million in 2010 to 31 million in 2022—highlighting both the growing demand and the gap in care.
The M&A Boom in Behavioral Health
The surge in demand for behavioral health services, combined with a decade of historically low interest rates, has created a perfect environment for mergers and acquisitions. Companies are turning to M&A to accelerate growth, expand geographic reach, and enhance their service offerings. Organic growth alone is challenging due to shortages of trained clinicians and operational complexities, so acquisitions become a strategic way to make quantum leaps in scale and capability.
Private equity firms have eagerly entered this space, attracted by the strong growth potential and fragmentation of the market. Many see an opportunity to build large, multi-specialty behavioral health platforms through roll-ups—quickly consolidating smaller providers into nationally recognized entities. This consolidation trend is reshaping the behavioral health landscape and underscores the critical importance of behavioral health mergers and operational excellence for sustainable success.
Challenges That Cause Mergers to Fail
Having advised on over 10 mergers himself, Narayanan points to several reasons why many mergers do not achieve their promised benefits. The primary issue is underestimating the cost, complexity, and time required for successful post-merger integration. Integration isn’t just about financials—it involves aligning clinical service portfolios, treatment protocols, referral networks, technology systems, and administrative operations.
A key challenge is the human element. Mergers disrupt people’s jobs and careers, which often leads to fear, uncertainty, and resistance. Narayanan explains that while companies plan for rational behavior, employees’ responses can be quite different when their livelihoods feel threatened. Some may withhold information, resist collaboration, or disengage, all of which can derail or delay integration efforts. This people-side challenge often contributes more to merger failures than any financial or operational factor.
In fact, Narayanan says more than half of mergers across industries do not deliver on their initial promises—whether that’s achieving projected synergies, cost savings, or growth targets. To overcome these pitfalls, behavioral health providers must prioritize behavioral health mergers and operational excellence as a strategic focus.
Best Practices for Behavioral Health Providers in Mergers
To improve the odds of merger success, Narayanan offers several strategic recommendations. First, behavioral health providers should adopt a realistic and conservative mindset when planning integration. Instead of assuming a best-case scenario, leaders need to prepare for setbacks such as key personnel departures, unexpected cultural clashes, or slower-than-expected system integrations. A chief medical officer leaving, for example, can create a major operational vacuum.
Second, providers must avoid heavy-handed “we acquired you, now fall in line” approaches. Narayanan has repeatedly seen this attitude backfire by alienating the best people in the acquired organization. Respectful, transparent, and empathetic communication goes a long way in retaining talent and building trust.
Finally, recognizing that mergers inherently create winners and losers is important. Many cost savings come from rationalizing staff roles and facilities. Treating employees fairly during these transitions and valuing their contributions—even if redundancies are necessary—helps smooth integration and prevent morale problems.
Focusing on behavioral health mergers and operational excellence throughout these steps creates a framework where growth can be achieved without losing critical talent or operational stability.
The Critical Role of Technology Integration
Technology is another vital component in post-merger success. Narayanan explains that many platform companies and private equity-backed firms invest heavily in building robust, scalable technology infrastructures designed specifically for behavioral health. These platforms enable rapid onboarding of acquired companies by standardizing data, policies, and systems into one cohesive environment.
When a larger entity acquires smaller providers in a roll-up strategy, this technology-driven approach can speed integration and create seamless operations. However, in mergers of equals, integration decisions often become complex negotiations—everything from which systems to keep to who leads each department is subject to bargaining. This can slow down integration efforts and create friction.
Regardless of the approach, the end goal is consistent: customer and partner interactions must be frictionless, regardless of the original companies’ disparate systems or cultures. Embracing behavioral health mergers and operational excellence through thoughtful technology strategies supports smoother transitions and long-term success.
Preparing Behavioral Health Providers for What’s Next
Looking ahead, Narayanan emphasizes that operational excellence must be the top priority for behavioral health providers preparing for 2023 and beyond. Three major challenges will shape the landscape:
- Economic uncertainty: There is potential for an economic downturn, which could tighten budgets and increase financial pressure on providers.
- Public policy changes: Legislative shifts after the midterm elections may affect reimbursement, regulations, or funding.
- Workforce shortages: The scarcity of trained personnel continues to push wage costs higher and complicate staffing.
To thrive amid these pressures, behavioral health providers should focus on optimizing operations, managing census effectively, and controlling costs where possible. Streamlined processes and efficient resource management will be essential to sustaining growth and delivering quality care.
In sum, the top strategy for behavioral health providers in the coming years is to pursue behavioral health mergers and operational excellence. This dual focus will help organizations navigate the complexities of growth, integration, and market dynamics while positioning them for long-term success.
Sukumar Narayanan’s insights offer a valuable roadmap for behavioral health businesses navigating rapid growth, increasing consolidation, and operational challenges. By balancing realistic planning, cultural sensitivity, and technology-enabled integration, providers can enhance their chances of successful mergers and position themselves to meet the surging demand for behavioral health services in the years ahead.
