In a recent conversation with Behavioral Health Business, Discovery Behavioral Health’s CEO, John Peloquin, offered valuable insights into the company’s behavioral health growth strategies, the increasing importance of value-based care, and the challenges facing the behavioral health industry today. As the company continues to expand its reach and services, Peloquin’s leadership is guiding Discovery Behavioral Health through a period of significant transformation in the healthcare landscape.
Prioritizing Growth: De Novo First Strategy
When asked about Discovery Behavioral Health’s approach to growth, Peloquin was clear about the company’s preference for developing new programs organically rather than relying heavily on mergers and acquisitions (M&A). “We are a De Novo-first organization,” he explained. While he remains open to purchasing companies that complement their services, the company’s primary focus is on building programs from the ground up. This strategy allows them to expand in a systematic and targeted way, ensuring that each new program aligns with their broader mission.
Discovery Behavioral Health operates across four primary service lines: eating disorder treatment, substance use disorder (SUD) care, mental health services, and psychiatric services. Peloquin described how the company’s approach to growth is rooted in offering a comprehensive range of services in each new market. “When I go into a market, I try to bring all service offerings and levels of care,” he said. This commitment to offering a full spectrum of care is part of the company’s larger vision of providing holistic support to individuals across different stages of treatment.
Discovery Behavioral Health typically enters a new market through organic growth, establishing its presence in communities by building programs that meet local needs. However, there are occasions when the company acquires existing facilities or programs to complement and enhance its offerings. Peloquin’s goal is to ensure that the company’s services are tailored to the specific needs of each community they serve, while maintaining a consistent standard of care across all locations. This strategy is integral to the company’s behavioral health growth strategies.
Becoming a One-Stop-Shop for Behavioral Health?
Given the increasing prevalence of comorbidity between mental health and substance use disorders, many organizations are expanding their service offerings to address both conditions. Some addiction treatment centers are pivoting into mental health services, and vice versa. When asked whether Discovery Behavioral Health aims to become a one-stop-shop for all behavioral health needs, Peloquin provided a thoughtful response.
“Yes and no,” he said. While he recognizes the natural intersection of mental health and addiction treatment, his goal is not to create a catch-all facility. Instead, Peloquin emphasized that Discovery Behavioral Health aims to be a part of the fabric of the communities they serve. “I want to be part of the community and meet the needs of that community in a different way,” he explained. Sometimes, this is accomplished through a single facility, but other times it may require multiple facilities working in tandem to offer a broader range of services.
Peloquin stressed that his company’s focus is on understanding the specific needs of each community they serve, ensuring that they have the right services and resources in place to meet those needs. By keeping a pulse on the local demand for services, Discovery Behavioral Health is able to adapt and refine its offerings, providing the most effective care for each unique community. These efforts are key to the company’s overall behavioral health growth strategies.
Expanding Acuity Levels for Comprehensive Care
One of the key factors that set Discovery Behavioral Health apart is its commitment to offering a full continuum of care across varying levels of acuity. Peloquin discussed how this approach has evolved over the years to ensure that patients receive the appropriate level of care, no matter where they are in their recovery journey.
For example, Discovery Behavioral Health provides everything from inpatient detox services to outpatient care. In the case of eating disorders, they offer a wide range of services, including inpatient tube feeding to outpatient care as patients progress. Peloquin explained that when patients enter treatment, they undergo a clinical evaluation to determine the appropriate level of care for their needs. This allows the company to place patients in the setting that best supports their recovery, ensuring the best possible outcomes.
This system of care is critical in helping patients succeed, as it ensures they are treated at the right level of intensity throughout their treatment. Peloquin described how this approach to acuity has evolved over the years, allowing the company to provide a flexible, patient-centered care model that meets the needs of individuals at different stages of their recovery process. This model is an essential part of their behavioral health growth strategies.
Payer Trends and the Future of Behavioral Health
As the behavioral health landscape continues to shift, several key trends are emerging that will shape the future of the industry. According to Peloquin, one of the most notable changes is the increasing demand for behavioral health services. The opioid epidemic, coupled with the effects of the COVID-19 pandemic, has led to a significant rise in the need for addiction treatment, mental health care, and related services.
Peloquin sees this as an exciting time for the behavioral health sector, as the industry is finally beginning to gain the recognition it deserves. For years, addiction treatment, in particular, was marginalized within the healthcare system. However, the opioid crisis and the pandemic have highlighted the need for accessible, high-quality behavioral health services. As a result, more payers and healthcare providers are recognizing the importance of behavioral health, which is creating new opportunities for companies like Discovery Behavioral Health.
At the heart of Discovery Behavioral Health’s strategy is a commitment to improving clinical outcomes. Peloquin described the company’s goal of aligning behavioral health with physical health, which he refers to as “One Healthcare Lane.” This approach aims to bridge the gap between physical and mental health services, ensuring that patients receive comprehensive, coordinated care that addresses both their mental and physical health needs.
Peloquin also touched on the growing emphasis on clinical outcomes within the payer landscape. “Payers want to pay for the lowest cost and the highest output,” he explained. As a result, payers are becoming more selective about which providers they work with, prioritizing those with proven clinical efficacy. Discovery Behavioral Health has built a measurement-based clinical care system that helps demonstrate its clinical outcomes and engage payers in a meaningful way. The company’s partnership with Harvard University allows them to validate their clinical outcomes while also exploring predictive elements of treatment to continually refine and improve their care models. These innovations play a central role in the company’s behavioral health growth strategies.
The Journey to Value-Based Care
As payers move away from traditional fee-for-service models, the industry is shifting towards value-based care (VBC), where providers are reimbursed based on the quality of care they deliver, rather than the volume of services provided. Peloquin is optimistic about this shift, but notes that most payers are not yet ready for value-based relationships. This is largely due to a lack of understanding of behavioral health and its unique challenges.
However, there are some payers leading the charge in adopting innovative reimbursement models that align clinical performance with financial outcomes. Peloquin sees this as a promising development, as it encourages providers to focus on improving clinical outcomes and reducing costs. As the industry continues to evolve, he believes that more payers will come to recognize the value of evidence-based care and begin to adopt value-based reimbursement models. This shift will likely be a cornerstone of future behavioral health growth strategies.
Labor Shortages: A Growing Concern
While there is much to be optimistic about, Peloquin also highlighted some of the significant challenges the behavioral health industry faces. The most pressing issue, according to Peloquin, is the ongoing labor shortage. This shortage is driven by burnout, an aging workforce, and a lack of qualified professionals to replace those approaching retirement age. The shortage of mental health professionals is especially acute in rural areas, where access to care is already limited.
Peloquin pointed out that while telehealth has helped improve access to behavioral health services, it does not address the underlying issue of an insufficient labor pool. To address this challenge, the industry will need to find new ways to recruit and retain qualified professionals, particularly in underserved areas. This workforce challenge is something that all behavioral health growth strategies will need to consider moving forward.
A Bright Future for Discovery Behavioral Health
Despite the challenges, Peloquin is optimistic about the future of Discovery Behavioral Health and the broader behavioral health sector. With a strong focus on growth, clinical outcomes, and aligning with evolving payer trends, the company is well-positioned to thrive in an increasingly complex healthcare environment. As the demand for behavioral health services continues to rise, Discovery Behavioral Health remains committed to meeting the needs of the communities they serve and providing the highest standards of care for individuals on their recovery journey.
This interview offers a glimpse into the innovative behavioral health growth strategies driving Discovery Behavioral Health’s growth and success, while also shedding light on the challenges that the industry must address in order to continue moving forward. With a focus on evidence-based care, value-based reimbursement, and a commitment to meeting the diverse needs of patients, Discovery Behavioral Health is paving the way for a brighter future in behavioral health.
