For-Profit Ownership of Mental Health Centers Rises, Raising Concerns About Quality of Care

For-profit firms are accelerating their expansion into behavioral health treatment, raising questions about the impact this might have on the quality of care. In a new study published in JAMA Psychiatry, researchers found that private equity (PE) acquisitions of outpatient and residential mental health and substance use disorder (SUD) treatment facilities are increasing—in some states, significantly so.

The research team consisted of individuals in the medical and public health sectors in universities across the East and West Coasts of the United States. It was led by Jane Zhu of the Oregon Health and Science University. They describe their findings:

“In select states, PE penetration exceeds 25% of facilities, suggesting an important new form of behavioral health practice ownership with potentially high market shares and implications for health care prices, utilization, and quality. Given persistent workforce shortages and access gaps, it is yet unclear how PE’s short investment time frame (usually within 3-7 years) and distinct business model could intersect with a national behavioral health crisis.”

They discovered that private equity firms now own 6.2% of all outpatient and residential mental health facilities and 7.1% of SUD treatment centers nationwide. However, these percentages vary significantly by state, with some states like Colorado and Virginia experiencing particularly high levels of private equity penetration.

The study raises critical questions about how these firms’ profit-driven motives might intersect with the ongoing national behavioral health crisis, especially in light of persistent workforce shortages and access gaps. The findings underscore the need for a closer examination of the broader implications of this trend on the mental health care system, which is already grappling with the complexities of global capitalism and its impact on public health.