In the dynamic and competitive world of behavioral health, providers must continually adapt to stay ahead. As the landscape evolves, both businesses and patients benefit from behavioral health business diversification—whether in service lines, payer contracts, or marketing approaches. Industry experts increasingly highlight the value of these diversified strategies, emphasizing their potential to maximize growth, ensure business stability, and support long-term success.
The Importance of Diversification in Payer Mix and Marketing Channels
As Glenn Hadley, Senior Director of Growth Solutions at Unlock Health, explained in a recent Behavioral Health Business webinar, diversification in marketing is just as essential as in payer contracts. He pointed out, “Just like you would diversify your payer mix to mitigate your risk portfolio, you need to diversify your marketing mix. Gone are the days where you can just throw a whole lot of money into one channel and call yourself a business.” This highlights a crucial shift in the behavioral health sector. Gone are the days of relying heavily on a single source of revenue or marketing strategy to drive business success.
The behavioral health industry is increasingly characterized by its use of digital marketing platforms and other advertising channels to attract new patients. Providers may turn to search engine ads, social media campaigns, content marketing, or pay-per-click strategies to raise awareness. However, Hadley’s words underscore a growing understanding that these marketing avenues must be strategically diversified in order to thrive. Over-relying on one channel not only exposes a business to potential risks (such as increased competition or market saturation), but it also limits growth potential. For behavioral health providers, behavioral health business diversification is becoming a critical component in staying competitive in a rapidly changing environment.
In an industry as competitive as behavioral health, businesses need to stay nimble and invest in a variety of marketing strategies to stay relevant. A diversified approach offers a way to remain competitive while mitigating the risk of being too heavily dependent on a single marketing channel or service offering.
Short-Term Revenue vs. Long-Term Business Strategy
Another key insight that emerged during the webinar was the concept that not all marketing is good marketing—especially when it comes to long-term business sustainability. Daniel Gemp, Managing Director of Strategic Markets at Unlock Health, shared his perspective on the potential pitfalls of some marketing strategies. “Not all marketing is good marketing. Not all categories of marketing add multiples of value. A lot of them just add real-time cash flow,” Gemp said.
While some marketing tactics may generate immediate revenue and create short-term scalability, they might not necessarily align with the broader, long-term business goals. Gemp went on to clarify that certain marketing approaches can only fuel near-term cash flow and census control, which are critical to keep operations running but might not contribute significantly to business acquisition or long-term success. “It may generate wonderful cash flows and some near-term scalability, but it’s not actually an acquirable strategy compared to wholly owned marketing channels,” he added.
For behavioral health providers, behavioral health business diversification also entails thinking beyond short-term revenue generation. It’s about setting the stage for future growth, ensuring that marketing strategies contribute to the company’s long-term value rather than just providing a temporary boost to the bottom line. When looking at the future trajectory of their businesses, providers need to evaluate marketing efforts not just by the cash they bring in today, but by their potential to build sustainable growth, attract future clients, and increase company valuation over time.
Strategic Partnerships: Expanding Reach and Risk Mitigation
Diversification also extends beyond marketing to include strategic partnerships. By forging alliances with other organizations, behavioral health providers can create new revenue streams, tap into previously underserved markets, and generate referral pipelines that significantly enhance long-term business prospects.
One compelling example is seen in substance use disorder (SUD) providers partnering with divorce attorneys. Data reveals that divorce is a significant risk factor for substance abuse, offering providers an opportunity to help individuals who may be struggling in the aftermath of relationship breakdowns. These partnerships allow providers to tap into a highly relevant, high-risk demographic, increasing their chances of successfully reaching patients in need.
Gemp also noted that partnerships between behavioral health providers themselves—whether in similar or complementary service areas—can open up new avenues for patient referrals and business growth. These collaborations not only increase revenue but also build resilience against the volatility of patient demand, helping providers create a more stable and diversified business model.
By leveraging these strategic partnerships, providers can access wider audiences, increase patient acquisition, and bolster the value of their businesses, all while minimizing the risks associated with being overly reliant on one service line or marketing strategy. Behavioral health business diversification through strategic partnerships offers a proven method to expand reach and ensure long-term business growth.
Expanding Service Lines: Long-Term Business Growth and Value Creation
For providers with a longer timeline to an exit, expanding service lines is another powerful strategy for diversifying their business models and increasing overall value. Ted Jordan, Managing Director at The Braff Group, highlighted that providers who are further from an exit can afford to take on the risks of creating new service offerings. “Providers with a longer runway to an exit may be better suited to take on the risk of creating a new service line,” he said, adding that the additional time before an exit allows executives to focus on building out the business to achieve greater scalability.
This diversification can take many forms. Some providers may look to expand into new behavioral health services such as outpatient mental health care, residential treatment for substance use disorders, or telehealth services. Other providers might explore complementary business lines, such as offering wellness programs, psychiatric services, or even non-clinical offerings that support patient recovery.
The benefits of expanding service lines are clear. Providers can increase their patient base, enhance their revenue streams, and become less reliant on one particular market segment. However, Jordan also noted that this strategy is best suited for providers with a longer-term outlook. For those looking to exit sooner, creating new service lines may not be a risk they want to take. Behavioral health business diversification through new service offerings enables providers to tap into fresh markets and remain resilient in the face of changing healthcare demands.
Balancing In-Network and Out-of-Network Business Models
One key aspect of diversification that behavioral health providers need to consider is balancing in-network and out-of-network business models. Ted Jordan explained that there are distinct differences between the valuation of businesses that are 100% out-of-network versus those that are fully in-network. “All else equal, that in-network revenue is going to be seen as more attractive, less risky, and therefore more valuable,” Jordan said.
However, he cautioned against relying solely on in-network contracts. Providers cannot always be in-network with every payer, and certain areas or patient populations may necessitate out-of-network care. In these cases, providers can leverage a balanced mix of in-network and out-of-network business models to maximize profitability while reducing dependence on a single payer source. By balancing both revenue streams, providers can achieve a more sustainable, diversified business model that offers flexibility and the ability to navigate changes in the market. This approach to behavioral health business diversification helps providers manage risks while optimizing their revenue potential.
Marketing Diversification: A Sustainable Strategy for Growth
Marketing is also a critical aspect of this diversification strategy. Providers must be wary of over-relying on any one form of advertising. For instance, digital advertising platforms such as Google Ads can be highly effective but are also extremely competitive, especially in the behavioral health space. Hadley explained, “The problem with Google ads is that it’s a direct money auction, and you’re essentially just going toe to toe with other operators. All it would take is for a new operator to come into the space and throw a larger budget out there, and you have directly impacted market share.”
To protect against this volatility, providers should invest in multiple forms of advertising, such as diversifying across search engine ads, social media marketing, referral networks, and organic content strategies. This diversified marketing mix allows providers to avoid becoming too dependent on one platform and ensures they have a broad, sustainable reach. In essence, behavioral health business diversification through a well-rounded marketing strategy creates more reliable, long-term revenue streams.
Conclusion: Diversification as a Key to Long-Term Success
For behavioral health providers, behavioral health business diversification is essential in today’s competitive market. By expanding service lines, diversifying marketing strategies, forming strategic partnerships, and balancing in-network and out-of-network contracts, businesses can increase revenue, minimize risk, and enhance long-term value. These diversified strategies allow businesses to remain competitive, adaptable, and resilient, setting the stage for future growth and success.
As the behavioral health industry continues to evolve, embracing a diversified approach is no longer optional—it is a key factor in achieving lasting business sustainability and positioning for growth in an increasingly complex landscape. By prioritizing behavioral health business diversification in both business operations and marketing, behavioral health providers can create thriving, scalable businesses that are well-equipped to meet the needs of patients and withstand the challenges of an ever-changing market.
