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Talking about Mental and Behavioral Health

SCALE Consulting
Blog Post
Janice Pryce
Chief Advisor of Behavioral Health Provider Platforms

Behavioral Health - the Problem is Larger Than Most People Realize

Mental Health has made some really great progress. And when you talk about societal well, there’s a lot of levels and layers to this. When I think about when I started out in the field in the 1980s, there’s clearly been improvements in addressing the stigma with helping individuals both acknowledge and receive help. Early on it was Betty Ford coming forward and there’s been other individuals who have stood up and shone a light.  Let’s be real, if we look at it from an epidemiological standpoint, one in four adults have a diagnosable mental health problem on any given day – that’s our brothers, sisters, friends, cousins, workmates.

The prevalence is huge, but no one really thinks it’s going to happen to them or anyone they know. So working with this stigma, trying to normalize that behavioral health is something that’s there, and there are increasingly effective treatment options, and it’s okay to talk about. I mean, this is at a broad level. It’s still really important. 

Advances in Mental Health Legislation are Making a Difference in Behavioral Health as well

More recently, we’ve had some mental health party legislation, which coming back to the reimbursement side, ensures that a health plan will have behavioral health benefits that are on par with standard medical benefits.  And so that, as well as some components of the Affordable Care Act have really helped support individuals who want to use insurance to be able to access mental health services. 

When you look at the research on, less than half of the individuals with mental health issues actually receive formal help. So why is that? One answer is that large numbers don’t know where to go to get help. Some of that is again the stigma because we’re afraid to ask. And then there’s a group who feels that somehow they couldn’t afford it and don’t understand the financial structure.

There are still those barriers out there, but we clearly have made some improvements. And there’s some good, I think, tailwinds with the mental health parity legislation and the Affordable Care Act. One of the things the Affordable Care Act did, which again, you’d have to think like a behavioral health person to think of the implications, it said that young adults can be on their parents’ insurance until age 26. Well, what we know about major mental illness is that it’ll often present in the early 20s. There’s probably indications with many of those individuals in their late teens, and so it would just present itself at a time that a young adult is transitioning to their own insurance or opting out of insurance all together. If it’s on the young adult to get purchase insurance, they might mislabel themselves as healthy, opt out of insurance and then go through major episodes without any professional help. So, I’ve seen in my work in Eating Disorder, a lot of the patients I work with are young women, in their 20s, now able to continue treatment at age 23, 24, because they’re able to be covered under their parents’ insurance. And that was a change the Affordable Care Act provided that has really been a positive in advancing mental health treatment forward.

"Behavioral Health is in a really good place in the industry with some evidence-based models, more integration, some improvements with the payers . . . there is enormous opportunity on the investor side, given all of those really positive tailwinds that we are presently experiencing."
Janice Pryce
Chief Advisor of Behavioral Health Provider Platforms

Investment Potential for the Behavioral Health Sector

There is huge demand for Behavioral Health.  So if there is this huge demand, what’s the best way to be in the service area or to be in the business? Most of the organization is on a disorder basis. So with probably the largest grouping of services being in the addictions arena, given the huge demand there. We then have service arenas for example eating disorder programs. There’s now some growing kind of management of outpatient, some of those public sector funded. Historically it’s pretty much all been insurance funded. So now there’s some growth in looking at programs that would be both traditional insurance and Medicaid or Medicare funded.

Investors focused on a behavioral health need to be sure that they’re ultimately picking and supporting a business that has a clear definition, a niche that supports their mission. There’s a lot of addiction programs and the ones that do well normally have a clearly identified approach to how they’re doing what they’re doing. So that it can be made tangible and communicated to the markets that they work in. There is much demand, but you can’t offer something that’s vanilla and expect to be treated well by the broader market place. It’s got to be really well defined. There’s a social part to this, and obviously we could have a whole social determinants discussion as well. It’s probably a little different than other areas of medicine in that many of the referral sources to these programs are, there’s a clear B2B component, but they’re psychologists and therapists, and other treatment programs, not necessarily all through MDs and health systems.

So the program needs to be defined and there needs to be an understanding on how to build a network in order to have a good strong referral base. Continuous care is good. Historically and it’s probably still the case, a lot of the really high margins have been in programs that are bedded, whether they’re inpatient or residential. But there have been improved margins now looking at the outpatient ambulatory sector as well, particularly what we call intensive outpatient programs and partial hospitalization programs, otherwise known as ILPs and PHPs, in the field. So the entire continuum is now very important.

This article was adapted from the SCALE Interview Series. Be sure to read the full interview with Janice.

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Janice Pryce is SCALE’s Chief Advisor of Behavioral Health Provider Platforms.  She was clinically trained as a psychiatric social worker at the University of Chicago.  She received her MBA from Northwestern while working at the Hospital Corporation of America as Senior VP for Business Development.  She joined the company’s Psychiatric Division following its acquisition of a med-surg company that had 19 psychiatric hospitals.  She was part of the team that built and bought that entity to a 53-hospital platform.

From there she launched Pyrce Healthcare, her own consulting practice, where she has brought her expertise and insights to dozens of both non-profit health systems and for-profit clients including private equity-backed and publicly traded organizations.