Low reimbursement threatens behavioral health providers’ bottom line

Low reimbursement threatens behavioral health providers’ bottom line

Staffing is no longer the top issue facing behavioral health operators. Providers now predict that reimbursement and payments will be the industry’s biggest challenges in 2024.

That’s according to a new Behavioral Health Business Survey, which included responses from 404 professionals identified as working for organizations that provide treatment for behavioral health, mental health and substance use disorders.

Staffing shortages have plagued the behavioral health industry since the COVID-19 pandemic. While these issues remain a major pain point, 42% of providers said it was the biggest challenge this year and 43% said reimbursement was the most important.

By comparison, last year, 53% said staffing was the biggest challenge and 34% said reimbursement was a top concern.

Many operators noted that staffing and reimbursement challenges are interrelated.

“The biggest problem facing [substance use disorder] “This has resulted in lower or flat reimbursement rates, which means most centers are unable to retain staff,” Lighthouse founder and CEO Trey Laird previously told BHB. “This means a constant turnover of SUD providers.” , the quality of care suffers. There are talented therapists or clinicians across the country who are leaving medical facilities and opening private practices as quickly as possible.”

The Lighthouse is a Connecticut-based SUD provider. It provides concierge services, sober living, case management and recovery coaching in the tri-state area.

Inside the reimbursement landscape

More than half of behavioral health professionals say payer rate cuts and minimal rate increases will be the areas of greatest financial stress in 2024. Meanwhile, 27% of respondents said staffing was the most significant financial pressure.

Carriers had previously expected payers to require providers to provide results and accountability next year.

“Today, most payers are generally under tremendous pressure on the cost of care, particularly in mental health. They are worried about the economy and employment,” Transformations Care Network CEO Brian Wheelan previously told BHB. “Healthcare inflation is very high, especially in emergencies. They are looking for funding and need to control bad practices across their new, wide-ranging networks.”

Transformations Care Network offers a wide range of outpatient mental health services, from adult and child psychiatry to ketamine therapy and group therapy.

While value-based care is one of the most anticipated reimbursement trends in the behavioral health industry, many providers have been slow to move away from the fee-for-service model. More than 37% of respondents said their organization does not use any form of value-based care.

Meanwhile, only 7% of behavioral health professionals say value-based care contracts account for more than 50% of their revenue.

“The key is whether you can build a business with a sustainable reimbursement model because we’re still in a fee-for-service world,” Jon Gordon, general partner at HC9 Ventures, previously told BHB. “Behavioral health Still too fragile to move to value-based care at scale. But then again, physical health isn’t actually value-based either. So let’s not beat ourselves up too much.”

HC9 Ventures is an investment company focusing on seed and Series A investments. Its portfolio includes behavioral health companies Forge Health and PsychHub.

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