At many of the conferences VisiQuaters have been attending over the past few weeks, one of the most prominent and consistent themes that has emerged is a renewed need for volume and access to mental health services both inpatient and outpatient. Health system missions demand it but the data doesn’t translate into dollars, as they search for services to overcome pandemic financial disaster. Mental health margins for health systems have been and continue to be notoriously low.

Spending on mental health services has been on the increase. In 1986, it was an estimated $31.8B and in 2020 that number had risen to $238.4B. However, when taken in the overall context of health care spending, that $238.4B dollars represents only 5% of total spend-which is pretty staggering considering the state of the world.

Access

There are about 11,582 mental health facilities across the US, which is more than twice the number of inpatient hospitals. And yet, access to care is at an all-time low. There are a lot of reasons for that. Just last month, a study was released indicating that 1 in 5 american adults are suffering from some form of anxiety, depression or other mental illness. However, 42% of those don’t seek care because of cost and that number isn’t reflective of those patients that simply lack access to a provider at all. Overwhelmingly, mental health sites are in urban areas and rural areas that lack basic health services are tremendously disadvantaged when it comes to mental health. There is quite simply no one to talk to.

As spend in outpatient care continues to increase over inpatient care, health care administrators are also struggling with declining reimbursement and 2-3% outpatient margins making mental health services a less attractive part of their portfolio. Only 56% of psychiatrists accept commercial insurance and that is twice the percentage that take Medicare. As an example, Medicare has a 190 day lifetime limit on inpatient psychiatric care, which is in no way sufficient for someone struggling with lifetime mental illness.

Private Equity

There is some thought that private equity is a potential answer to expansion of mental health services that are ripe for consolidation creating 20-30% margins. Historically, private equity has looked to buy for profit hospitals and high performing clinics. But for clinicians concerned with outcomes and quality of care, the private equity reality has left some scratching their heads. When there are mandated patient volumes and care pathways designed to be cost lean that may not always reflect the best care for the patient. In some cases, fed up physicians are buying back their practices to regain clinical control of the care they deliver. Those anecdotes don’t bode well for this being an answer for mental health services.

Mental health conditions are recognized as the most under-diagnosed and under-treated medical conditions and yet they have devastating impact on the families that live in the communities the health systems serve. Perhaps collaboratively we can find balance in the balance sheet to put some wealth into mental health?

Interested in learning more? The team at VisiQuate is focusing on how we can help hospitals optimize their revenue cycle management. Visit our Revenue Cycle Playbook for step-by-step plays to help you stay on top of the ever-changing landscape of healthcare revenue cycle, or contact us to schedule a demo.

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