Private Equity Penetration in Behavioral Health in the United States, 2010-2022

Private equity (PE) investments in health care have rapidly increased over the last decade, leading to debates over whether PE’s short-term financial incentives deter long-term investments in physician practices for high-quality care. Behavioral health is potentially susceptible to this trend, due in part to fragmentation of independent providers, changing reimbursement for behavioral health care, and sustained demand for services since the COVID-19 pandemic. Previous research has shown that PE firms use a "platform and add-on" growth strategy to gradually increase market share in regional markets. Thus, we hypothesize some markets may be more affected than others. Yet there is limited evidence on the growth or geographic landscape of PE in behavioral health. In this study, we provide new data on PE acquisitions of behavioral health providers, including mental health and substance use disorder (SUD) treatment facilities, from 2010 to 2022, a topic of wide interest to clinicians, researchers, and policymakers.