Mental Health & Substance Abuse

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 12,000 mental health and substance abuse centers in the US provide treatment and care for patients with mental health disorders and substance abuse illnesses, also known as behavioral disorders. About 48% of outpatient service centers and 62% of residential treatment centers are non-profit organizations.

Dependence on Third Party Payers

Mental health and substance abuse centers rely primarily on insurance companies, managed care organizations, and government programs as their main sources of revenue.

Coverage Improving Via Parity Laws

Growing recognition of the cost of mental illness and lack of patient access to care has resulted in federal legislation to improve mental health and substance abuse coverage.

Industry size & Structure

A typical mental health or substance abuse center employs 37-55 workers and generates $3-4 million in annual revenue.

    • The mental health and substance abuse service industry consists of about 12,000 companies that operate 20,000 facilities, employ about 513,000 workers, and generate $50 billion annually.
    • About 48% of outpatient service centers and 62% of residential treatment centers are non-profit organizations.
    • Large organizations include CRC Health Group and the Hazelden Betty Ford Foundation.
                                  Industry Forecast
                                  Mental Health & Substance Abuse Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Jan 8, 2024 - Prices Increase Slightly
                                  • Mental health and substance abuse hospitals increased prices slightly during 2023 as demand continued to exceed treatment capacity. Industry employment and wages for nonsupervisory employees increased moderately during the first 11 months of 2023 due to staffing shortages and high demand for service.
                                  • Over 16% people aged 12 and older had a substance use disorder in 2022, according to the 2023 National Survey on Drug Use and Health conducted by the US Department of Health and Human Services. The survey also found that nearly 25% of adults had a mental illness, including about 8% who experienced both mental illness and substance use disorder. About 20% of adolescents ages 12 to 17 had had a major depressive episode in the past year.
                                  • Many people with anxiety rely on cannabis to treat their symptoms but little independent scientific evidence shows that cannabis is an effective treatment for anxiety problems, according to The Wall Street Journal. Some studies have found that it can worsen symptoms. A 2022 survey conducted by the Harris Poll on behalf of cannabis company Curaleaf found that nearly two-thirds of respondents said that they would prefer to use cannabis rather than pharmaceuticals to treat a medical issue. Among the 54% of respondents who said they had ever used cannabis, 41% of them said they consumed cannabis to reduce anxiety.
                                  • Scientists at the National Institutes of Health have identified genes commonly inherited across addiction disorders, regardless of the substance being used. The scientists’ research method involves searching entire genomes for regions of genetic variation, called single-nucleotide polymorphisms (SNPs), that associate with the same disease, disorder, condition, or behavior among multiple people. The research team discovered various molecular patterns underlying addiction, including 19 independent SNPs significantly associated with general addiction risk and 47 SNPs for specific substance disorders among the European ancestry sample. The strongest gene signals consistent across the various disorders mapped to areas in the genome known to control regulation of dopamine signaling, suggesting that genetic variation in dopamine signaling regulation, rather than in dopamine signaling itself, is central to addiction risk.
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