27 Mar 2017

4 Reasons to Joint Venture Your Behavioral Health Unit

Written by William Teague, CFA and Matt Crook
Becker’s Hospital Review


The behavioral health industry is undergoing a wave of consolidation with the emergence of multi-location chains and growth of for-profit operators.

A major reason behind this growth has been regulatory changes including the 2016 revision of the Medicaid Institutions for Mental Diseases (“IMD”) Exclusion, the Mental Health Parity and Addiction Equity Act of 2008, and the Affordable Care Act of 2010. These legislative changes have expanded insurance coverage for mental health services, lifted restrictions on freestanding facilities, expanded the demand for behavioral healthcare in general and increased reimbursement. This along with a limited supply in the number of psychiatric beds nationwide has driven higher levels of private investment in the industry spurring consolidation trends.

Although not as common as outright acquisitions, joint venture transactions between non-profit health systems and for-profit operators have started to become more prevalent. The two largest for-profit behavioral health companies are Universal Health Services, Inc. (“UHS”) and Acadia Healthcare Company, Inc. (“Acadia”). Recent examples of joint venture transactions with these operators include Acadia’s 2016 announcements of separate partnerships with Ochsner Health and Greenville Health System to build inpatient psychiatric hospitals. In addition, UHS announced joint ventures with Lancaster General Health and Providence Health Care to build inpatient psychiatric hospitals.

Click here to continue to the full article and see the 4 reasons to joint venture your behavioral health unit.

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