The Behavioral Health Industry Growth has been one of the most significant shifts in healthcare in recent years. While the industry is still relatively young, providers are continually figuring out the best ways to establish long-term, productive relationships with payers and investors. Although behavioral health services have made great strides, the sector continues to face a host of evolving expectations, shifting regulations, and a rapidly changing healthcare landscape. For many providers, the complexities they face may not neatly fit within an investor’s typical timeframe or strategy.
At the Behavioral Health Business INVEST event held in Dallas this October, Daniel Krasner, the Chief Marketing Officer of Summit BHC, shared his insights into these ongoing struggles. He stated, “There are headwinds in this business. We can’t tell you what they are going to be, but we’ve got to be able to weather the storm.” These words speak to the unpredictable and often tumultuous path ahead for behavioral health providers, who must continuously adapt to shifting health insurer expectations, Medicaid programs, and a maturing regulatory environment. These challenges are deep, complex, and in many cases, too long-term for investors to see a clear, immediate return on investment.
Summit BHC, a diversified behavioral health provider founded in 2013, has grown to operate 12 psychiatric hospitals and 26 substance use disorder (SUD) treatment centers across the United States. Despite this growth, Summit BHC, like many other providers, faces the ongoing challenge of integrating behavioral health more seamlessly into the broader healthcare system. As Krasner put it, “We are still in the early innings of figuring out how to best fit into the larger healthcare economy.” This statement reflects the Behavioral Health Industry Growth and the continued hurdles providers face as they navigate a complex, ever-changing market.
Still in the Early Stages: A Long Road Ahead
Roy Serpa, co-founder and chair of BasePoint Health Management, echoed these sentiments, noting that behavioral health is currently in its “second inning” of a nine-inning game. His experience spans over a decade, and his perspective is shaped by his time as president and CEO of Lakeview Health, a prominent addiction treatment and rehabilitation program. Serpa, along with his son Blake Serpa, co-founded BasePoint in 2019 to provide partial hospitalization (PHP) and intensive outpatient programs (IOP) for adolescents diagnosed with mental health disorders.
Despite the challenges, Serpa remains optimistic about the future of behavioral health. However, he is keenly aware of the industry’s growing pains, particularly when it comes to the healthcare economy. “We’re just at the beginning of figuring out how behavioral health fits within the broader healthcare system,” Serpa remarked. Both Roy and Blake Serpa recognize that their work at BasePoint is part of a much larger effort to define and refine the delivery of behavioral health services, especially within the context of an outpatient treatment model. This is a key component in the broader scope of Behavioral Health Industry Growth.
The Logistics of Coordinating Care: A Major Practical Challenge
Blake Serpa, CEO of BasePoint, shared an essential insight into the practical difficulties of delivering care within behavioral health services. While investors and payers may understand the broader themes of what it takes to run an outpatient program, many overlook the detailed logistics involved in coordinating care, especially when patients go home daily. “The logistics of a program where patients go home every day are incredibly challenging,” Blake Serpa said.
One of the key challenges that BasePoint faces is transportation for their patients. In many cases, patients need reliable transportation to and from treatment centers, and BasePoint has hired a dedicated team of drivers to address this need. The company provides transportation services for about 70% of its patients, often with meet-up sites instead of home pickups. While this service helps ensure patients’ access to treatment, it also highlights the logistical complexities that are often invisible to outside stakeholders.
These transportation challenges are just one example of the everyday difficulties providers face in delivering care. Coordinating multiple aspects of treatment, including transportation, appointment schedules, and individual care plans, requires extensive coordination and planning. While insurers and investors may focus on high-level outcomes, these logistical aspects are crucial to the effective delivery of care, and they cannot be overlooked. This practical challenge is part of the ongoing Behavioral Health Industry Growth as providers continue to refine their service models.
Building Stronger Communication with Payers: The Disconnect on Value-Based Care
At the core of many behavioral health providers’ struggles lies the challenge of aligning care with payer expectations, particularly when it comes to measuring outcomes. Summit BHC emphasizes a focus on patient progress, measuring outcomes, and striving for patient satisfaction. However, Krasner shared his frustration, noting that health insurers and Medicaid programs often seem uninterested in the outcomes providers are working so hard to achieve. “They haven’t been that interested, from what I’ve seen, about our outcomes or learning about what we’re doing to improve them,” Krasner said.
Similarly, BasePoint’s leadership has faced challenges in engaging payers around value-based care. “There’s been talk of value-based care with payers, but there’s no really deep conversations yet,” Roy Serpa noted. BasePoint’s model is entirely in-network, meaning that it works with private insurers but does not accept Medicaid, as Texas’s Medicaid program does not reimburse for PHP and IOP. This situation underscores the limitations that many behavioral health providers face in dealing with insurance companies, who may not fully understand or value the outcomes-focused, individualized care models that providers are working hard to establish.
For BasePoint, negotiating with private insurers has required significant discipline. One advantage the company has leveraged is a three-year-old federal law that requires insurers to publicly disclose the rates they negotiate with providers. “I felt like I was negotiating in a dark room prior to having this data,” Blake Serpa explained, highlighting the impact that transparency can have on leveling the playing field for providers. As the Behavioral Health Industry Growth continues, understanding and adapting to these evolving payer relationships remains essential.
The Road Ahead: Building the Right Partnerships and Growing the Model
Looking ahead, BasePoint is focused on developing its care model further before seeking private equity ownership. Blake Serpa emphasized that the company wants to ensure that its care model is fully established and effective before seeking external investment. The Serpas are committed to expanding their services across Texas and building a strong foundation for sustainable growth. This growth reflects the larger trend of Behavioral Health Industry Growth, where providers are prioritizing long-term sustainability over immediate financial gain.
Summit BHC, on the other hand, has already attracted significant investment. In 2021, Summit was acquired by Patient Square Capital for an estimated $1 billion. Despite the financial success, Krasner emphasized that it’s crucial to find investors who truly understand the complexities of behavioral health. “Do they fundamentally understand what we need to do?” Krasner asked, highlighting the importance of partnering with investors who are patient and willing to understand the long-term nature of behavioral health care. “You want somebody that’s patient,” he added, emphasizing that a good investor understands the intricacies of the business and the time it takes to achieve meaningful outcomes. As the Behavioral Health Industry Growth continues, finding the right investors will play a pivotal role in shaping the future of the sector.
Conclusion: A Bright Future Despite Growing Pains
As the Behavioral Health Industry Growth continues, providers must navigate an increasingly complex landscape. The early stages of the industry are defined by growing pains—struggles with aligning care with payer expectations, logistical challenges, and regulatory complexities. However, despite these difficulties, the future of behavioral health remains promising. With the right partnerships, a focus on patient outcomes, and a patient approach to investment, behavioral health providers can continue to build sustainable, effective care models that benefit patients and the broader healthcare system.
While the storm may be brewing, the Behavioral Health Industry Growth is steadily working to weather it and build a stronger, more resilient future. The continued evolution of this sector will be guided by thoughtful investments, strategic collaborations, and an unwavering commitment to improving care for those in need.
