Psychiatric and Substance Abuse Hospitals NAICS 622210

Jun 3, 2026 - California Activates Enhanced Staffing Standards

• Enhanced staffing requirements for psychiatric hospitals in California were enacted in early June. California is often referred to as a "policy incubator" because the state regularly passes groundbreaking legislation that serves as a model for other states and the federal government. The California Department of Public Health emergency regulations specify that the hospitals must assign one nurse for every six patients in adult psychiatric units and one nurse for every five adolescent patients. Hospitals found in violation of this standard can be fined $15,000 to $30,000 per day. Major healthcare worker unions and front-line caregivers have supported the reforms as an essential step to improving treatment in locked facilities where patients are often held against their will.
• Between 2023 and 2024, 126 hospitals across the US shut down their inpatient psychiatric units, according to data provided to Stateline by the American Hospital Association. Psychiatric and substance abuse hospitals compete with hospitals, residential facilities, comprehensive treatment centers, and emergency departments. "(Psychiatric units) are often in the red, and, for lack of a better word, kind of subsidized by the rest of the health system," said Sarah Steverman of the National Association for Behavioral Healthcare. The mental health field is also struggling with workforce shortages across states, especially in rural areas. More than 122 million Americans lived in designated mental health professional shortage areas as of December 2024.

• The One Big Beautiful Bill Act signed into law in 2025 includes Medicaid cuts that could exact a heavy toll on psychiatric units at hospitals across the country, according to Stateline. The law is projected to cut federal Medicaid spending by an estimated $886.8 billion over the next decade, largely because new work requirements will push people off the Medicaid rolls, according to the Congressional Budget Office (CBO). CBO estimates that the law could increase the number of people without health insurance by 7.5 million by 2034. Those cuts will have a significant effect on mental health care because Medicaid, jointly funded by the federal government and the states, covers more people with mental illness than any other public or private insurer. About 29% of the estimated 52 million nonelderly adults with mental illness, or about 15 million people, are covered by Medicaid, according to health research group KFF.
• Psychiatric and substance abuse hospitals increased prices 6.38%% year over year in March, according to the US Bureau of Labor Statistics (BLS). Psychiatric and substance abuse hospital industry employment decreased slightly and average wages for nonsupervisory employees increased slightly during the first two months of 2026, according to the BLS. Psychiatric and substance abuse hospital sales are forecast to grow at a 5.28% compounded annual rate from 2026 to 2030, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.