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 10,700 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 5 workers, and generates about $649,000 annually.
- The psychiatric services industry consists of about 10,700 firms that employ about 57,600 workers and generate about $7 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
Nov 4, 2022 - Industry Hit Hard By Workforce Exits
- An estimated 333,942 healthcare providers dropped out of the workforce in 2021, according to Definitive Healthcare. The physician specialties hit hardest by workforce exits are internal medicine (-15,000 providers), family practice (-13,015), clinical psychology (-10,874), chiropractic (-10,662), psychiatry (-8,629), optometry (-8,292), anesthesiology (-7,459), pediatric medicine (-7,330) and emergency medicine (-5,530). Combined, these nine specialties saw the loss of 86,791 physicians in 2021, according to Definitive's analysis. There will be 13,000 fewer psychiatrists practicing in 2030, according to the Health Resources and Services Administration (HRSA). The shortage of psychiatrists is currently around 6,500 physicians. The story is similar for clinical psychologists, for whom the HRSA predicted a 14,000 psychologist shortage relative to need by 2030.
- The US Department of Health & Human Services (HHS) has renewed the Public Health Emergency (PHE) declaration for COVID 19 for another 90 days, beginning on October 13 (the date the PHE was previously scheduled to expire) and extending through January 11, 2023. The emergency measure linked to the PHE that may be of most interest to psychiatric practices is coverage of telehealth services. Medicare and Medicaid coverage of telehealth services was extended immediately. PHE renewals keep in place flexibilities under Section 1135 waivers, such as the expanded use of telehealth. They also extend public aid programs. HHS will provide states with 60 days notice prior to the termination of the PHE. Prior PHE renewals gave HHS the discretion to terminate the PHE at any time. Waiver of cost-sharing for medical and behavioral telehealth services by health insurers is likely to be extended again by insurers.
- The mental health system is increasingly reliant on psychiatric mental health nurse practitioners (PMHNPs) to meet the psychiatric needs of Medicare patients, according to researchers at the Harvard School of Public Health. The researchers found that PMHNPs account for 50% of all mental health prescriber visits in rural areas of states with no restrictions on prescribing medications by PMHNPs. There would have been a decline of nearly 30% in mental health specialist visits for Medicare patients without growth in the PMHNP workforce from 2011-2019. The drop was 12% during the period instead, according to the researchers.
- The Centers for Medicare & Medicaid Services (CMS) calendar year (CY) 2023 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule includes the continuation of access to mental health services via telehealth following the conclusion of the COVID-19 public health emergency. CMS also issued a final rule to update Medicare payment policies and rates for the Inpatient Psychiatric Facility Prospective Payment System (IPF PPS) for fiscal year (FY) 2023. Total estimated payments to IPFs are estimated to increase by 2.5% or $90 million in FY 2023 relative to IPF payments in FY 2022. CMS updated the IPF PPS payment rates by 3.8%, based on the final IPF market basket update of 4.1% less a 0.3 percentage point productivity adjustment. A permanent 5% cap policy was included to smooth the impact of year-to-year changes in IPF payments related to decreases in the IPF wage index.
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