The challenges of operating psychiatric hospitals in today’s healthcare landscape were put on full display as MiraCare Group filed for bankruptcy after its psychiatric hospital closure in Tinley Park, Illinois. Despite the growing demand for mental health services, financial viability remains a pressing issue, leading to disinvestment in many cases.
MiraCare Group, based in Palos Heights, Illinois, attributes the psychiatric hospital closure to delayed insurance reimbursements. Documents filed in federal bankruptcy court state that over $1 million in outstanding receivables from insurance carriers forced the facility to shut down. As a result, the company now faces multiple lawsuits from vendors and is in default on a line of credit related to the project.
The hospital, which served adolescents, received state approval in December 2022, with founder Christopher Higgins highlighting its importance in filling the gap for inpatient psychiatric care for youth. However, the exact timing of the psychiatric hospital closure remains unclear, and legal representatives for MiraCare have not responded to requests for comment.
While the psychiatric hospital closure has occurred, MiraCare Group continues to operate three outpatient mental health centers offering psychiatry, psychoneurotherapy, individual and group therapy, and testing services. These clinics employ about 40 staff members, including both clinical and non-clinical personnel. Despite the company’s ongoing outpatient services, the failure of the hospital project has left a significant gap in adolescent psychiatric care in the south suburban Chicagoland area.
The Widening Crisis in Psychiatric Care
MiraCare’s struggles are not an isolated case but rather a reflection of a larger crisis in psychiatric hospital closures nationwide. The need for inpatient psychiatric care continues to rise, yet the financial viability of these facilities remains in question. According to the Treatment Advocacy Center, the U.S. has only 18 psychiatric beds per 100,000 residents—well below the recommended minimum of 30 per 100,000. This shortage has only worsened in recent years, with 19 states reporting fewer psychiatric beds than they had in 2016.
A separate study utilizing predictive modeling found that the ideal number of psychiatric beds falls between 28.1 and 41.7 per 100,000 people. However, access to beds is inconsistent across the country, with 3% of states having far fewer beds than needed, while 28% actually have a surplus. The disparity highlights the ongoing challenge of ensuring equitable mental health care access.
Financial Pressures and Payer Delays
Low reimbursement rates exacerbate the challenges faced by psychiatric hospitals. The American Hospital Association estimates that inpatient behavioral health services are reimbursed at an average of 34.3% less than the actual cost of care. This financial gap places enormous strain on facilities, making it difficult to maintain operations even in areas with high demand for services.
Further compounding the issue is the growing trend of “payer ghosting,” where insurers delay or fail to address claims altogether. Hospitals and providers increasingly report difficulties in receiving timely reimbursements, which creates cash flow issues and threatens the sustainability of mental health facilities. In MiraCare’s case, the psychiatric hospital closure directly resulted from more than $1 million in unpaid insurance claims, demonstrating the devastating impact of delayed payments.
The Future of Psychiatric Hospital Operations
Some health systems have found ways to sustain psychiatric hospitals through joint ventures, such as those led by Acadia Healthcare and US HealthVest. These models allow hospitals to share startup costs and management responsibilities, reducing financial risk. However, joint ventures are not a one-size-fits-all solution, and many smaller providers struggle to secure the necessary partnerships and funding to keep operations afloat.
The psychiatric hospital closure of MiraCare raises important questions about the future of inpatient psychiatric care in the U.S. While demand for services continues to grow, financial and operational challenges make it increasingly difficult to sustain these facilities. Without policy changes addressing reimbursement rates, timely insurance payments, and alternative funding strategies, more psychiatric hospital closures may be at risk, further limiting access to critical mental health care.
As the demand for mental health care continues to rise, the failure of MiraCare’s hospital serves as yet another example of the systemic financial hurdles that threaten the viability of psychiatric care in the U.S. Addressing these issues requires a concerted effort from policymakers, insurers, and healthcare providers to ensure that mental health services remain accessible to those who need them most.
