Investors are signaling that behavioral health could see the most significant influx of capital of any medical specialty in the coming years. According to KPMG’s 2023 Healthcare and Life Sciences Investment Outlook, 20% of survey respondents named behavioral health as the medical specialty most likely to attract investment, with another 19% identifying it as the second most likely. This growing focus highlights the continued momentum of behavioral health market growth, which has become one of the most closely watched areas in healthcare investing.
Cardiology and orthopedics followed as the next two specialties expected to experience strong investor interest. However, the consistent demand for mental health and substance use services, combined with workforce shortages and increasing reimbursement opportunities, positions behavioral health market growth as one of the most promising areas for both private equity and strategic investors.
Value-Based Care Driving Change
KPMG’s report also points to value-based care as a key driver of evolving healthcare business models. Investors anticipate that the shift toward value-based care will continue to reshape multiple specialties, including behavioral health, cardiology, and oncology. For behavioral health providers, this transition means new opportunities to align outcomes with reimbursement models, ultimately fueling behavioral health market growth through improved accountability and patient results.
Across both government and commercial payers, there is a noticeable trend toward incentivizing quality over volume. Behavioral health organizations that can demonstrate measurable improvements in outcomes will be well-positioned to attract investment. This alignment between value-based care and behavioral health market growth represents a major step forward in integrating behavioral health more fully into the broader healthcare system.
Ongoing Workforce and Reimbursement Challenges
Despite optimism about behavioral health market growth, the sector faces ongoing headwinds. Investors project continued difficulties in staff recruitment and retention, particularly among clinical professionals. Medicare reimbursement rates also remain a challenge, impacting smaller practices and potentially influencing which organizations attract investment.
Still, many physician groups are adapting by maximizing the scope of their teams—encouraging staff to work at the top of their licenses and providing additional training for non-clinical workers. These operational shifts may help sustain behavioral health market growth, even amid workforce shortages.
Outpatient Expansion and Consolidation
The report suggests that physician practices will continue to appeal to investors as care shifts toward outpatient settings. Behavioral health providers, in particular, stand to benefit from this trend, as outpatient and community-based care models align closely with evolving patient needs and payer priorities.
As value-based care accelerates, scale will play a crucial role in managing administrative demands and negotiating payer contracts. Behavioral health market growth will likely drive increased consolidation, especially in fragmented specialties and smaller provider groups. Investors are expected to pursue mergers and acquisitions to create larger, more efficient behavioral health networks capable of delivering measurable outcomes at scale.
Digital Health and Virtual Care Opportunities
Even after a volatile year for digital health, investors still see opportunity in behavioral health technology. KPMG’s report highlights that virtual care continues to be “vitally important” for patients and providers, with many organizations now operating hybrid models that blend in-person and telehealth services. Behavioral health market growth in this area remains strong, particularly as payers continue to reimburse for virtual visits.
The growing acceptance of telehealth is especially important for behavioral health services in rural and underserved regions, where access to care is often limited. Virtual platforms are expanding the reach of behavioral health professionals, helping meet demand and sustain behavioral health market growth across diverse populations.
Looking Ahead
While behavioral health tech investments were down by 56% year over year, according to Rock Health, investor sentiment remains optimistic. The long-term fundamentals—rising demand, ongoing workforce innovations, and integration with value-based care—suggest that behavioral health market growth will continue to outpace many other medical specialties.
In the next 12 to 24 months, behavioral health providers who can demonstrate operational efficiency, measurable outcomes, and adaptability in digital care will likely attract significant investor attention. The momentum in behavioral health growth signals not just financial opportunity, but a broader transformation of how mental health and addiction care are delivered, funded, and valued in the U.S. healthcare system.
