The Future of Behavioral Health: Can Private Equity and Telehealth Improve Access?

Abstract

Treatment of mental illness in the United States is woefully inadequate. One-third of adults report having a mental health condition or substance use disorder, but less than half receive treatment for their condition.Access is the problem. The U.S. is short on mental health professionals: more psychiatrists are needed and psychologists and social workers are overextended. Proposed solutions are to (1) increase reimbursement rates for psychiatrists and other mental health practitioners, and (2) use a wider range of providers, including nurses and family support specialists-all good ideas. My focus however is on two other forces that are moving into the behavioral health area, offering both financing and technologies to extend the reach of mental health services-private equity and telemental health.First, private equity firms see high demand in this market. Behavioral health is desperately needed but is highly fragmented and lacking in innovation. Private equity is attracted to outpatient programs that target specific conditions that have evidence-based clinical models-programs aimed at addiction, eating disorders, and autism; these areas require less capital. Federal and state reimbursement is available, some regulations have been relaxed to allow remote prescribing of medicine; and innovative telehealth tools can be used. The problem is that private equity has a poor track record in both nursing home care and behavioral care for teens. The private equity model and its financial incentives are at odds with good care.Second, telemental health tools, already in use because of the need during the pandemic, appear attractive. These tools require less capital to treat a higher volume of patients and promise much improved access to mental health treatment for populations that could not get such care because of travel distance, costs, and time limitations. The problem is that the telemental health tools have yet to be subjected to evidence-based testing.My goal in this article is to test whether these two developments - private equity and telemental health -can improve access for patients at an acceptable level of quality. I conclude that both have substantial problems and I offer a range of regulatory approaches to control patient abuses and poor quality.