ARC Health and Thurston Group are redefining growth in the outpatient mental health space by putting partnership and collaboration at the center of their strategy. Through a combination of selective acquisitions, clinician-focused ownership programs, strategic investments, and partnering with mental health providers, the company has grown from a single practice in Cleveland, Ohio, to 16 practices across 25 locations by the end of 2022. This expansion demonstrates how a platform-based approach to outpatient mental health can create scale, improve access to care, and support the clinicians who deliver it.
In August 2021, Chicago-based healthcare private equity firm Thurston Group launched ARC Health through an investment in Advanced Recovery Concepts. This move established the company’s foundational blueprint: consolidate fragmented outpatient mental health practices, maintain clinical quality, and expand access to care across multiple states. Within a year, ARC Health completed six acquisitions, including its latest deal with Lotus Counseling in Ann Arbor, Michigan, marking the company’s expansion into its twelfth state. Today, ARC Health also serves patients in the District of Columbia.
The Power of Partnering with Mental Health Providers
A central tenet of ARC Health’s strategy is its model of partnering with mental health providers. Unlike traditional acquisitions where clinical leaders may lose autonomy, ARC Health allows doctors and therapists to maintain control over their practices while providing the resources and infrastructure needed to scale. Dan Davis, managing director at Thurston Group, emphasized the distinction: “We didn’t see the strategy that Thurston usually has in our deals, which is a partnership model, with having the doctors keep the clinical autonomy of the practice to continue to grow.”
This approach addresses several key market challenges. The U.S. is facing a worsening shortage of mental health providers, a problem exacerbated by the COVID-19 pandemic. Outpatient mental health remains fragmented, with small practices struggling to scale and compete. At the same time, the consolidation of physician practices has removed growth opportunities for many clinicians. By partnering with mental health providers rather than acquiring them outright, ARC Health creates a platform that encourages growth while protecting the independence of high-quality providers.
Selectivity and Clinician Alignment
ARC Health is highly selective when choosing which practices to partner with. The company prioritizes finding top-tier clinicians who are committed to long-term growth rather than those seeking a quick cash-out. Vincenzo Morra, CEO of ARC Health, explained that many acquisitions fail when the leading clinician leaves after the sale. To prevent this, ARC Health focuses on providers who intend to continue developing their practice, ensuring continuity of care and sustained growth.
The company also avoids working through investment banks, preferring to dig deeply into the performance, reputation, and culture of potential partners. “I know if the clinical quality is high, usually profitability is going to follow that,” Davis said. By partnering with mental health providers selectively, ARC Health ensures both clinical excellence and business success.
Aligning Incentives Through Ownership
One unique aspect of ARC Health’s model is its approach to equity and ownership. Practice owners who sell to ARC Health can reinvest 20% to 40% of the enterprise value of their sale into Class A shares of ARC Health. This aligns the financial incentives of clinicians with the overall success of the platform.
The company also encourages frontline clinicians—including advanced practice nurses and therapists—to buy equity through a program called the “Pathway to Ownership.” This initiative provides financing options for providers to become shareholders in the company, fostering retention and engagement while giving clinicians a real stake in the organization. According to Morra, the program has two major aims: attract top talent and retain existing staff while creating a sense of partnership across the entire network of practices. Programs like this are a key part of partnering with mental health providers in a way that goes beyond traditional acquisition models.
Building Multi-Specialty Clinical Practices
Another distinguishing feature of ARC Health’s strategy is its focus on building multi-specialty outpatient practices. Rather than duplicating services, the company acquires practices that excel in specific subspecialties and then shares those best practices across its network. This approach allows ARC Health to expand services efficiently while maintaining high standards of clinical care.
“For example, we have a couples counseling program that we run in Minnesota, but that’s what they do,” Morra explained. “Looking forward, if a couple is not getting along, that may transcend to the kids. So how about we start a pediatric program as well within the practice? Those are the things we are going to create and not reinvent the wheel because we have it already throughout the country.” Clinical oversight is strengthened through leadership appointments like Sandeep Vaishnavi, who will join ARC Health as chief medical officer in May 2024. Initiatives like these demonstrate how ARC Health’s model of partnering with mental health providers can enhance care across multiple specialties.
Strategic Growth and Continued Investment
ARC Health’s growth trajectory shows no signs of slowing. The company expects to roughly double in size by the end of 2023, expanding its workforce from 350 healthcare providers and 40 administrative staff to between 600 and 650 providers. The network will also grow by 14 new practices, adding 20 to 25 new locations.
Acquisitions are a key part of this strategy. In early 2023, ARC Health announced deals for the Colorado Center for Clinical Excellence in Denver and the Lilac Center in Kansas City. Following acquisitions, the company uses a light-touch approach to practice management, introducing technology to track outcomes, streamline operations, and consolidate administrative functions such as payroll and HR.
ARC Health is also investing in technology to support outcome-based care and value-based arrangements with payers. Partnerships with firms like Boston-based Mirah and Aurora-based Mental Health Technologies aim to develop platforms that capture clinical and operational data, enabling the company to negotiate innovative payment models. By continuing to focus on partnering with mental health providers, ARC Health ensures that technology investments enhance clinical care without undermining autonomy or quality.
Preparing for the Future
ARC Health’s long-term vision extends beyond acquisitions and operational efficiency. The company is actively building a platform capable of supporting alternative payment models and direct negotiations with large organizations, including global professional services firms like Deloitte. By centering strategy on clinician engagement, multi-specialty care, and partnering with mental health providers, ARC Health is creating a scalable outpatient mental health model that addresses fragmentation, provider shortages, and variation in care quality nationwide.
With its unique combination of partnership-first strategy, selective growth, and investment in technology and clinical excellence, ARC Health is setting a new standard for outpatient mental health care. As the company continues to expand, patients, providers, and the broader mental health ecosystem stand to benefit from greater access to high-quality care delivered by committed, supported clinicians.
