In the ever-evolving landscape of behavioral healthcare, one investment trend is gaining undeniable traction: in-network behavioral health investment. While private-pay models have long been favored for their high reimbursement rates and seemingly robust profit margins, more and more investors are gravitating toward the stability, scalability, and long-term viability of in-network providers.
This pivot represents more than just a reaction to market volatility—it’s a strategic move shaped by a deeper understanding of the modern behavioral health ecosystem.
The Case for In-Network Behavioral Health Investment
Traditionally, out-of-network providers have attracted investors due to their ability to charge premium rates, resulting in strong short-term EBITDA. However, that model is increasingly viewed as unsustainable in a value-based care environment. With rising pressure to improve access and affordability, in-network behavioral health investment is now seen as a smarter long-term play.
According to Behavioral Health Business, investors are seeing faster growth, quicker revenue cycles, and stronger returns from in-network models. These providers benefit from more consistent reimbursement and a broader patient base, both of which are critical in a competitive marketplace.
Shore Capital’s Strategic Focus on In-Network Growth
One prime example of this trend is Chicago-based Shore Capital Partners, a private equity firm managing around $6 billion in assets. Shore has made it clear: every behavioral health deal they’ve done—six in total—has followed an in-network model. Their portfolio includes ABA therapy provider Behavioral Innovations and SUD provider Brightview, both of which rely on in-network strategies.
“Reimbursement models have always been very, very important to us,” Shore founding partner John Hennegan said. “We have not ever done a deal that is primarily out-of-network.”
This unwavering focus has made Shore a standout in the field of in-network behavioral health investment, illustrating that while the road may be slower to start, it yields more sustainable and scalable results.
Private Pay: Profitable but Precarious
There’s no denying the appeal of private pay. Providers outside the insurance system often report impressive revenues and attractive margins. As Craig Sager of Provident Healthcare Partners notes, “There’s a lot of out-of-network providers that have chunky EBITDA or a really nice top line.”
But that strength can be misleading. Odyssey Behavioral Healthcare CFO Scott Sarnacke points out that the private-pay model carries hidden risks—particularly in uncertain economic climates. “There’s always that conversation of, ‘If we get into a recession, what does that do to your private pay business?’”
In contrast, in-network behavioral health investment offers a stabilizing force. Payers may not directly refer patients to providers, but in-network credentialing often signals higher quality and trustworthiness—two traits investors value deeply.
A “Flight to Quality” in Behavioral Health Investing
The shift toward in-network models isn’t just about money—it’s about quality. In a tightening M&A market, investors are focusing on high-performing providers that demonstrate strong clinical outcomes, payer relationships, and operational discipline.
Being in-network typically requires passing rigorous credentialing and utilization reviews—benchmarks that help investors identify reliable, scalable businesses. As John Hennegan explained, “Typically, being in-network means that you’ve passed some sort of credentialing process… that is a mark of quality.”
That growing preference has put in-network behavioral health investment front and center for PE firms looking to create durable platforms capable of expanding across states and payer types.
Challenges of Going In-Network
Despite the clear advantages, transitioning to in-network care isn’t without its challenges. Odyssey Behavioral Healthcare began as a private pay organization and only gradually shifted to an in-network model—primarily when payers requested partnerships.
That approach underscores a key truth about in-network behavioral health investment: success depends not just on reimbursement models but on strategic alignment between provider capabilities and payer needs.
Even once a payer expresses interest, the process can take time. Timelines that once spanned 60 to 90 days now stretch to 120–180 days post-COVID. As Odyssey’s VP of Finance Rush Brady noted, “That’s if you can find somebody to engage with who is responsive… and that’s definitely not a guarantee.”
Still, the payoff is worth the wait. Strong payer relationships can deliver consistent revenue, lower patient costs, and improved access to care.
Patient Impact and Equity Considerations
Beyond the bottom line, in-network behavioral health investment plays a critical role in expanding access. When providers stay out-of-network, much of the cost burden shifts to the patient—often making care unaffordable for low-income individuals or those from marginalized communities.
According to KFF, six in ten uninsured adults forgo needed care due to cost. Among Black and Hispanic adults, over 60% report serious affordability challenges, compared to 39% of white adults. Building in-network infrastructure helps reduce these barriers and aligns providers with broader equity goals.
As Craig Sager notes, “When you’re out-of-network, the rates are at a premium… but a lot of that is getting passed off to the patient. Unfortunately, that’s not where we need things to go in health care and behavioral health.”
The Long-Term Payoff
Even if an out-of-network provider appears profitable, that success may not last if the business is later converted to in-network. Shore’s Hennegan explained, “If in-network gets paid $50 for a service and they’re billing out-of-network at $100… [on a pro forma basis] the earnings stream is going to be materially smaller.”
That’s why investors increasingly model revenue under in-network assumptions from the start. It’s not just prudent—it’s essential to building a future-ready behavioral health platform.
Sarnacke summarized it well: “The rates are going to drop, but the flip side is the volume is going to go up.” In other words, the math still works—especially when the long game is considered.
Final Thoughts: Where Investment Is Headed
The future of behavioral health investment lies in quality, scalability, and payer alignment. And increasingly, that means embracing the complexity and long-term benefits of in-network care.
From predictable revenue to patient access, from reputational value to operational efficiency, in-network behavioral health investment has become the model of choice for savvy investors who want to build something that lasts.
While private-pay may still offer short-term spikes in revenue, it’s the in-network providers—those doing the hard work of building strong payer relationships—who are poised to lead the next wave of innovation and growth in behavioral health care.
