Psychiatric Practices
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 psychiatric practices in the US provide mental health care through private practices, group practices, or medical facilities (hospitals, HMOs). Firms generate the majority of revenue through visits and consultations. Other sources of revenue include non-surgical interventions. Psychiatric practices may specialize in a particular type of disorder (eating disorders, behavioral problems, substance abuse) or patient (elderly adults, children, adolescents).
Dependence on Referrals
Because psychiatric care is highly personal and involves sensitive information, many patients rely on referrals to obtain services.
Drug Treatment Prevails
The advent of prescription drugs to treat mental illness created a fundamental shift in how the medical community provides psychiatric care.
Industry size & Structure
The average psychiatric practice operates out of a single location, employs 7 workers, and generates about $842,000 annually.
- The psychiatric services industry consists of about 12,000 firms that employ about 79,000 workers and generate about $10.1 billion annually.
- The industry is extremely fragmented; the top 50 companies account for less than 15% of industry revenue.
- Most psychiatric practices are small, independent firms that operate locally. State licensing requirements create geographical restrictions.
- Large practices, such as Psychiatric Solutions, operate as part of hospitals or inpatient psychiatric care providers, such as Universal Health Services (UHS).
Industry Forecast
Psychiatric Practices Industry Growth
Recent Developments
Jul 16, 2024 - Labor Costs Increase
- Psychiatric practice industry employment and average wages for nonsupervisory employees increased slightly during the first five months of 2024, according to the US Bureau of Labor Statistics. Psychiatric practice sales are forecast to grow at a 5.6% compounded annual rate from 2024 to 2028, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
- US health spending increased 7.1% year over year in April and represented 17.7% of GDP, according to health care nonprofit organization Altarum. Personal health care spending increased 7.6%, year over year in April, with utilization growth continuing to outpace price growth. The overall Health Care Price Index (HCPI) increased 3.4% year over year in May. The HCPI increased 2.9% year over year in April. Economywide inflation held mostly steady, with year-over-year growth in the overall Consumer Price Index falling slightly to 3.3% and growth in the Producer Price Index slowing to 2.2%.
- Private equity firms are buying behavioral health and substance use disorder services nationwide, according to a study published in the journal JAMA Psychiatry. Researchers found that 642 mental health clinics and 1,152 clinics treating substance use disorders had undergone private equity acquisition between January 1, 2012, and July 31, 2023, constituting 6.2% of all mental health facilities and 7.1% of addiction treatment facilities nationwide. Private-equity-owned practices accounted for roughly a quarter of all facilities providing mental health treatment in Colorado, Texas, and North Carolina.
- Almost 70% of employees surveyed for Calm's 2024 Voice of the Workplace Report said that their mental health has stayed the same or worsened over the past year. About half of workers are concerned about rapidly developing technologies in the workplace. One-third believe that artificial intelligence (AI) tools are contributing negatively to employee well-being. The survey also revealed the top stressors for employees. Number one is the cost of living or inflation, and number two is financial instability.
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