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 11,300 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 11,300 firms that employ about 70,100 workers and generate about $9 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 15, 2023 - Moderate Sales Increase Expected
- Psychiatric practice sales are forecast to grow at a 5.73% compounded annual rate from 2022 to 2027, faster than the growth of the overall economy. Industry labor costs increased during the first eight months of 2023 as employment levels increased moderately while average wages for nonsupervisory employees were unchanged.
- Medicare will allow marriage and family therapists and mental health counselors to provide services beginning in January 2024. This group of more than 400,000 professionals makes up more than 40% of the licensed US mental health workforce and is especially critical in rural areas, according to The Washington Post. Medicare has covered only mental health services provided by psychiatrists, psychologists, licensed clinical social workers, and psychiatric nurses. Medicare is also adding up to 19 hours a week of intensive outpatient care as a benefit, improving navigation and peer-support services for those with severe mental illness, and expanding mobile crisis services that can treat people in their homes or on the streets.
- More than 150 million people live in federally designated mental health professional shortage areas, according to the Health Resources & Services Administration. The country will be short between 14,280 and 31,109 psychiatrists within a few years, and psychologists, social workers, and others will be overextended as well. More than half of US counties lack a single psychiatrist, according to research conducted at the University of Michigan's School of Public Health Behavioral Health Workforce Research Center. Several factors fuel the shortage, according to experts. “The U.S. population has grown, there’s a lot of mental health need especially with the pandemic, and we don’t have enough residency slots to train people,” says Anna Ratzliff, MD, PhD, psychiatry residency program director at the University of Washington. There’s also a retirement drain since more than 60% of psychiatrists are 55 or older.
- 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.
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