Acadia (Nasdaq: ACHC) has firmly established itself as the country’s largest pure-play behavioral health provider, and its ambitious growth strategy ensures that it will maintain this title for years to come. With its relentless focus on behavioral health expansion, Acadia aims to add 300 to 400 additional beds annually, consistently exceeding its targets. At the end of 2022, the company operated 250 facilities across 39 states and Puerto Rico, with a total of approximately 11,000 beds. But Acadia isn’t resting on its laurels — CEO Christopher Hunter points to the substantial room for growth across the U.S., especially in underserved areas. According to Hunter, there are currently 100 metro statistical areas (MSAs) in the U.S. that are “under-bedded,” meaning they lack sufficient access to behavioral health services. With a keen focus on these markets, Acadia plans to continue expanding its reach and provide much-needed care to communities where services are most in demand.
Acadia’s ability to thrive in these underserved regions is rooted in its approach to behavioral health expansion. Hunter shared that the company takes a proprietary approach to identifying the most attractive MSAs, assessing everything from local demand to potential operational challenges. The goal is clear: to provide more behavioral health services where they are needed most. As Hunter explains, “It’s on us to look at these 100 under-bedded markets, to have our own proprietary view as to which are most attractive and to where we might have deficiency.” This proactive approach ensures that Acadia enters markets with a clear understanding of what’s at stake and how to meet the growing demand for services.
The Power of Strategic Partnerships and Joint Ventures
One of the key components of Acadia’s growth strategy is its joint venture (JV) partnerships, a model the company has leaned into heavily in recent years. Acadia has completed 20 JVs to date, representing 21 new facilities, in collaboration with notable healthcare organizations such as Tufts Medicine, Nebraska Methodist Health System, and SolutionHealth. These partnerships provide Acadia with the opportunity to expand quickly while leveraging the strengths of established healthcare providers in local markets. Hunter emphasized that the benefits of these JVs are twofold: not only do partners bring valuable payer relationships to the table, but their strong local brands also help attract employers and patients. In some cases, JV partners may even transfer existing beds to Acadia, further accelerating its behavioral health expansion.
The JV model has proven to be particularly effective because it allows Acadia to tap into existing healthcare networks while also adding its own expertise in behavioral health services. Hunter noted that, when considering a partnership, Acadia evaluates factors like the local healthcare environment, patient needs, and potential for collaboration. “If there is a market that we see as desirable, and there’s a logical health plan partner like there was in New Hampshire with the Solution Health JV we just announced, it makes more sense to partner,” Hunter explained. By combining forces with experienced partners, Acadia is able to expand more efficiently and gain access to new patients who may have previously lacked options for behavioral health treatment.
Beyond Joint Ventures: Mergers, Acquisitions, and De Novo Expansion
While JVs play a crucial role in Acadia’s expansion, the company is also pursuing other growth avenues through mergers and acquisitions (M&A) and de novo (new facility) developments. Acadia has consistently demonstrated its ability to grow through strategic acquisitions, with CEO Hunter noting that the company’s strong financial position makes it an attractive partner for providers looking to sell. Acadia’s acquisition of Utah-based Turning Point Centers, a 76-bed specialty provider of substance use disorder (SUD) and primary mental health treatment services, is an example of its proactive approach to expanding its service offerings. By acquiring Turning Point, Acadia added a fourth service line to its Utah operations, complementing its existing acute care facility, comprehensive treatment center (CTC), and residential treatment center (RTC). This acquisition not only strengthens Acadia’s position in Utah but also provides the company with additional resources to meet the rising demand for behavioral health services in the region.
Acadia’s focus on M&A isn’t limited to just acquiring existing providers; the company is also looking for opportunities to optimize and expand underperforming facilities. Hunter explained that when facilities reach a 70% occupancy rate, Acadia challenges them to look for expansion opportunities. This forward-thinking approach ensures that Acadia remains agile in a competitive market, constantly seeking ways to increase capacity and better serve its patients. The company’s deep understanding of the behavioral health landscape, including payer mix, wage rate inflation, and other factors, allows it to make informed decisions about where to expand and which facilities to target for acquisition.
A Holistic Approach to Growth
Acadia’s growth strategy is not just about adding beds or acquiring new facilities; it’s about creating a comprehensive network of care that can meet the diverse needs of patients. The company takes a holistic approach to its behavioral health expansion, carefully evaluating a wide range of factors before entering new markets. Heather Dixon, Acadia’s CFO, explained that the company has a strong understanding of the markets it enters, including the ability to acquire land, obtain necessary licenses, and staff hospitals with skilled professionals. Acadia’s commitment to maintaining high standards of care ensures that each new facility is equipped to deliver the best possible outcomes for patients.
This strategic focus on growth through a combination of joint ventures, mergers, acquisitions, and de novo facilities ensures that Acadia is well-positioned to remain the leader in behavioral health services. As the demand for mental health and substance use treatment continues to rise, Acadia’s ability to expand efficiently and effectively will be a key factor in its ongoing success. By partnering with healthcare providers, acquiring strategic assets, and expanding into new markets, Acadia is setting the stage for continued growth and ensuring that more people across the country have access to the critical care they need.
In conclusion, Acadia’s aggressive and multifaceted growth strategy makes it clear that the company is not just content with being the largest behavioral health provider in the country; it is determined to stay on top. With an unwavering commitment to behavioral health expansion, enhancing its service offerings, and strategically entering under-bedded markets, Acadia is poised to remain a dominant force in the behavioral health landscape for the foreseeable future.
