Inpatient psychiatric facilities and other behavioral health centers in the United States could soon have new opportunities for financing if a newly requested congressional study and proposed legislation come to fruition. For decades, regulatory and financial barriers have limited the development of inpatient mental health facilities, contributing to a national shortage of psychiatric beds and uneven access to care. Now, a bipartisan group of lawmakers is exploring whether federal mortgage insurance programs, historically available to acute care hospitals, could be extended to inpatient psychiatric facilities to help bridge this gap.
GAO Study Requested by Lawmakers
On September 6, Representatives Tom Emmer (R-Minn.), Patrick McHenry (R-N.C.), and Ritchie Torres (D-N.Y.) sent a letter to the U.S. Government Accountability Office (GAO), requesting a comprehensive study of the potential impact of such a change. The GAO, a congressional research agency, has been asked to examine historical trends and assess potential outcomes of amending Section 242 of the National Housing Act, administered by the U.S. Department of Housing and Urban Development (HUD). The lawmakers have requested that the GAO deliver its findings by December 31, 2022, providing Congress with data-driven insights to inform potential legislation that could expand financing for inpatient psychiatric facilities.
Section 242 and the Office of Hospital Facilities
Section 242 of the National Housing Act was amended in 1968 to create the Federal Housing Administration’s Office of Hospital Facilities (OHF). This office was designed to support capital financing for hospitals in need and encourage lending for critical hospital projects. Over the past five decades, the OHF has insured nearly 500 loans totaling over $22 billion, spanning 43 states and Puerto Rico. However, the program explicitly excludes facilities where 50% or more of patient days are devoted to behavioral health, leaving inpatient psychiatric facilities without access to the same financial support as acute care hospitals.
Proposed Legislation to Remove Barriers
Two of the lawmakers backing the GAO study, Emmer and Torres, are pushing to remove this exclusion. In June 2022, they introduced the Securing Facilities for Mental Health Services Act, which has not yet been assigned to a committee. The legislation is intended to eliminate regulatory obstacles that have historically limited the construction and expansion of inpatient psychiatric facilities. In a news release, Emmer emphasized the urgency of this issue: “Our current housing policies are outdated and have created a chronic shortage of psychiatric beds that too often abandons patients to the streets or traps them in a cycle of incarceration. We already have the tools to bring care to patients in need. The time has come to remove arbitrary barriers to care.”
Support from Behavioral Health Advocates
The legislation and GAO study have received early support from behavioral health advocacy groups. Shawn Coughlin, president of the National Association for Behavioral Healthcare, highlighted the importance of increasing inpatient capacity in the wake of the COVID-19 pandemic, which has intensified demand for mental health services across all age groups. According to Coughlin, the need for more inpatient psychiatric facilities is clear, and removing barriers to capital financing could allow private operators to invest in new facilities and expand existing ones to meet growing demand.
Uneven Access to Care
Access to inpatient psychiatric facilities across the U.S. is uneven. Currently, there are about 39 psychiatric beds per 100,000 residents, but estimates for the average state’s need range from 28.1 to 41.7 beds per 100,000. Research published in the International Journal of Environmental Research and Public Health indicates that 16 of the nation’s 50 states have fewer psychiatric beds than needed, 14 states exceed estimated requirements, and 20 states fall within the expected range. These disparities underscore the critical need for policy interventions and investments to ensure access to care for all communities.
Historical Context and Current Shortages
The shortage of psychiatric beds is rooted in decades of deinstitutionalization, a movement that sought to shift mental health care away from institutional settings into outpatient or community-based treatment. While well-intentioned, this shift drastically reduced the number of inpatient psychiatric facilities available, leaving gaps in care for individuals with severe mental health conditions. Today, this shortage has reached a crisis point in many regions, with some communities facing what experts describe as a “profound need” for inpatient psychiatric facilities.
Private Sector Response
Private operators are beginning to respond to this unmet demand. Some investors and health care providers are considering building new facilities in areas with the highest shortages, signaling a potential shift in the landscape of behavioral health care. However, without access to federal mortgage insurance and other capital support, many of these projects face significant financial hurdles. The proposed amendments to Section 242 could provide the necessary financial infrastructure to make these expansions feasible for inpatient psychiatric facilities.
Potential Impacts of Policy Change
If the GAO study confirms that extending Section 242 assistance to behavioral health facilities is viable, Congress could take steps to reduce longstanding barriers to financing, ultimately enabling more construction of inpatient psychiatric facilities and improved access to care. In the context of a nation grappling with rising mental health needs, particularly exacerbated by the COVID-19 pandemic, such policy changes could be pivotal in addressing systemic gaps in care, improving patient outcomes, and supporting the development of a robust, nationwide behavioral health infrastructure.
Conclusion
The path forward remains uncertain, but the combination of congressional attention, legislative proposals, and private sector interest suggests a potential turning point for inpatient psychiatric facilities in the U.S. Should these initiatives succeed, patients, providers, and communities alike may benefit from greater access to care, stronger support systems, and a more equitable approach to behavioral health treatment across the country.
