The Growing Demand for Behavioral Health Services
The demand for behavioral health services has never been higher. Rising rates of anxiety, depression, substance use disorders, and autism diagnoses have created an urgent need for accessible, high-quality care. This has made private equity behavioral health investments increasingly attractive.
In the first three quarters of 2022, private equity accounted for more than 60% of behavioral health transactions, according to The Braff Group. Even amid global economic uncertainty, PwC reported that behavioral health deals in the first 11 months of 2022 were valued at 3.3 billion dollars. These numbers underscore the confidence investors have in the sector’s growth potential.
As Dexter Braff, president of The Braff Group, said at Behavioral Health Business’ INVEST event: “All you people that think you want to be investing in behavioral health, you’re in the right space. But you’re going to have to pay up to get into it.”
This surge of capital is reshaping nearly every sector of behavioral health, from substance use disorder treatment to autism services, eating disorder care, inpatient psychiatric hospitals, and digital mental health platforms. Yet, despite the flurry of acquisitions, no single private equity group dominates the field. That’s partly by design: investors diversify across geographies, populations, and care models to avoid portfolio conflicts and maximize growth opportunities.
Why Behavioral Health Appeals to Private Equity
Behavioral health has become a prime target for investors for several reasons:
- High Demand, Low Supply – Mental health and addiction treatment services are severely undersupplied, creating strong opportunities for growth.
- Fragmented Industry – Thousands of independent operators make the field ideal for consolidation.
- Recession Resilience – Behavioral health needs persist, even during economic downturns.
- Diverse Sub-Sectors – Opportunities range from autism and IDD care to inpatient hospitals, outpatient clinics, and digital therapy apps.
- Clear Exit Strategies – Larger health systems and payers often acquire scaled behavioral health platforms, providing attractive exits for investors.
These factors explain why private equity behavioral health investments continue to accelerate, reshaping the industry at a rapid pace.
KKR: A Ground-Up Approach
Global firm KKR has emerged as a leader in private equity behavioral health. The firm has invested in existing providers and launched new companies from scratch:
- BlueSprig (2018) – ABA therapy for children with autism.
- Brightline (2022) – A virtual behavioral health platform for children and teens; KKR led its 105 million dollar Series C.
- Therapy Brands (2021) – Practice management and EHR software acquired for 1.2 billion dollars.
- Geode Health (2021) – A mental health service provider blending in-person and virtual outpatient care.
By investing in both direct care and digital tools, KKR is positioned to influence how private equity behavioral health integrates technology into care delivery.
Lee Equity: A Behavioral Health Veteran
Lee Equity has been active in the space for over a decade, focusing on SUD treatment and psychiatric care:
- Eating Recovery Center (2012) – An eating disorder provider sold in 2017.
- Summit BHC (2017) – Psychiatric and SUD provider, sold in 2021.
- Bradford Health (2022) – Southeastern U.S. SUD treatment provider with 40 centers.
Lee Equity’s reinvestment strategy demonstrates the long-term potential of private equity behavioral health deals, particularly in addiction treatment.
Webster Equity Partners: Scaling Across Addiction and Mental Health
Webster Equity Partners has steadily built one of the largest behavioral health portfolios.
- Discovery Behavioral Health (2011) – 145+ SUD treatment centers.
- BayMark Health Services (2015) – 400+ opioid treatment facilities.
- Oceans Healthcare – Texas-based mental health provider with inpatient and outpatient programs.
Webster’s expansion into the IDD sector highlights the evolving opportunities within private equity behavioral health, blending behavioral and physical health supports for better outcomes.
Thurston Group: Rapid Platform Growth
The Thurston Group has taken a platform approach with ARC Health, offering outpatient, inpatient, and virtual mental health services. In 2022 alone, ARC acquired six practices, including Lotus Consulting and The Ross Center.
This aggressive acquisition strategy demonstrates how private equity behavioral health can accelerate consolidation in outpatient mental health care.
Shore Capital: Autism and SUD Focus
Shore Capital has strategically focused on autism and pediatric behavioral health while expanding into SUD treatment:
- The Stepping Stones Group (2014) – Autism care provider.
- Behavioral Innovations (2017) – ABA, speech, and occupational therapy for children.
- BrightView (2017) – Treating 20,000+ patients across 97 sites.
- Column Health (2020) – Acquired by BrightView, expanding its New England presence.
Autism therapy and SUD treatment are considered recession-resistant, making Shore’s investments prime examples of private equity behavioral health targeting stable, high-demand areas.
Health Enterprise Partners (HEP): Lower Middle-Market Focus
HEP has been active in behavioral health since 2007, with investments spanning mental health, autism, and SUD treatment:
- Behavioral Health Centers of America (2007) – Inpatient and outpatient psychiatric care, later sold.
- CenterPointe Behavioral Health Systems (2015) – Psychiatric hospitals and outpatient programs, sold to Acadia Healthcare.
- Aware Recovery (2021) – Home-based SUD treatment provider.
- Proven Behavior Solutions (2022) – Autism care provider offering ABA, speech, and occupational therapy.
HEP’s diverse portfolio demonstrates how private equity behavioral health can expand across multiple service lines while targeting underserved populations.
Revelstoke: Expanding into Eating Disorders
Denver-based Revelstoke has recently broadened its scope:
- Crossroads Treatment Centers (2014, recapitalized 2022) – 115 SUD clinics in 10 states.
- Monte Nido & Affiliates (2022) – One of the largest eating disorder treatment providers in the U.S., with 45 facilities.
Revelstoke’s investment shows how private equity behavioral health can impact emerging care areas like eating disorder treatment, where patient demand is growing rapidly.
The Broader Landscape
These firms are part of a larger ecosystem of private equity investors in behavioral health, including Northwood Healthcare Partners, Thomas H. Lee Partners, Linden Capital, and TPG Capital. Together, they are reshaping the industry, driving consolidation, and expanding access to care.
While some observers raise concerns about potential profit-driven motives, the infusion of capital is also enabling innovation, digital expansion, and new care delivery models.
Conclusion: Watching the Future of Behavioral Health
The surge of private equity behavioral health investment is transforming the sector. It is enabling providers to expand, integrate technology, and scale services in ways that were not possible before. At the same time, it is vital for policymakers, patients, and providers to monitor the impact on care quality, access, and affordability.
As PwC notes: “A reset in valuations, the availability of capital and the increased competitiveness from corporates should provide openings for dealmakers in the year ahead.”
Private equity’s influence is now a defining factor in behavioral health, shaping everything from autism therapy and SUD treatment to digital mental health and psychiatric care. The coming years will reveal just how this investment wave changes the way care is delivered in the U.S.
