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
Sep 25, 2024 - Biden Administration Requires Private Insurers To Pay For Mental Health Care
- Private health insurers will be required to cover mental health care and addiction services the same as any other condition under a final rule released by the Biden administration. Most provisions in the rule will apply to group health plans and health insurance issuers for plan years starting January 1, 2025, or after. The Association for Behavioral Health and Wellness, the Blue Cross Blue Shield Association, and the ERISA Industry Committee, a major employer group, said the rule would have “unintended consequences” that could raise costs and jeopardize access to mental health care. Addressing the shortage of mental health providers is a top priority, the groups said, but “the final rule will complicate compliance so much that it will be impossible to operationalize, resulting in worse patient outcomes.”
- 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.
- Psychiatric practice industry employment and average wages for nonsupervisory employees increased slightly during the first seven 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.
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