Psychiatric and Substance Abuse Hospitals NAICS 622210

Apr 6, 2026 - Some General Hospitals Are Closing Psychiatric Units

• 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.

• Six states have taken measures to offset the cost of Affordable Care Act (ACA) plans after a lapse in federal funding left millions of Americans facing higher premiums, according to Healthinsurance.org. Insurance coverage is a key determinant in accessing mental health services, according to health policy research firm KFF. California, Colorado, Connecticut, Maryland, Massachusetts, and New Mexico have increased their state-funded ACA subsidies for 2026 in response to the expiration of federal tax credits at the end of 2025. The states "modified or enhanced their programs directly to address the reduction in federal premium subsidies," said Louise Norris, a health policy analyst for Healthinsurance. Nonprofit health group KFF reports that several states, especially those operating what are known as State-Based Marketplaces, have been preparing for the lapse of ACA tax credits for months. New Mexico, for example, will fully offset the loss of the federal tax credits for all residents, including recent immigrants. Ten states offer ACA subsidies but only six have increased them since federal subsidies lapsed.
• Psychiatric and substance abuse hospitals increased prices 5.33%% year over year in September, 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 11 months of 2025, according to the BLS. Psychiatric and substance abuse hospital sales are forecast to grow at a 6.94% compounded annual rate from 2025 to 2029, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.