Whether you’re a behavioral health provider, an administrator, a support staff professional, a shareholder, or play more than one role in the space, you’re grateful for the opportunity to help others every day.
You also know that now, more than ever, is an exciting and challenging time to be in the business of behavioral health.
Without losing sight of what really matters — improving outcomes for those who need behavioral health care — it’s as good a time as any to take stock of key trends on the business side.
These trends are set to shape the industry through 2021, into 2022, and — in some cases, at least — well beyond.
1. Venture Capital Firms Will Continue to See Opportunity in Behavioral Health
Venture capital firms have long been interested in the behavioral health space, and it’s clear that they’re targeting high-return opportunities in areas where investment has lagged to date. Dallas-based behavioral healthcare system Oceans Healthcare has raised at least $17 million from venture capital sources since 2013, for example, according to its Crunchbase profile, helping fuel a rapid expansion into underserved communities across the mid-South and Gulf Coast regions of the United States. Look for this trend to accelerate as we come out of the COVID-19 pandemic and the behavioral health impacts of the ordeal become clearer.
2. Behavioral Health Providers Will Double Down on Investments in Telemedicine
For years, telemedicine adoption lagged even in segments where it clearly added value, like behavioral health.
That all changed when COVID hit and outpatient healthcare delivery all but ground to a halt. Early in the pandemic, the U.S. Department of Health and Human Services relaxed long-standing restrictions on telemedicine-enabled healthcare delivery to make it easier for patients and providers to connect remotely. Among other changes, HHS allowed providers to offer telemedicine care across state lines and bill for those services as if they’d be provided in person.
The telemedicine genie is now out of the bottle. For investors in the segment, the past two years have been the liveliest to date, with at least a half-dozen IPOs recorded or expected through 2021.
3. App-Based Wellness Solutions Will Continue to Attract Investor Attention
Relatedly, we’re likely to see app-based wellness solutions draw investor attention at every stage of the development cycle. From billion-dollar IPOs like Talkspace’s pending SPAC deal to a surge in early-stage investment led by angel investors and venture capital firms, the “smart money” increasingly sees the value in app-based behavioral health services. For their part, providers are set to step up investments in complementary or competitive technologies to keep pace with this change.
4. Late-Stage Deals May Remain Attractive to Private Equity and Venture Capital Investors
Despite growing interest in early-stage, technology-driven behavioral health solutions, much of the sector’s investment activity continues to focus on later-stage startups and established enterprises. With awareness of behavioral health needs growing faster than access and supply, and with established health systems eager to bring service to under, or unserved, geographies, this is sure to continue for the foreseeable future.
5. Clinical Consolidation Will Continue and May Accelerate
At the same time, the knock-on effects of the widespread adoption of telemedicine and the financial and logistical strain of the pandemic may fuel an increase in clinical consolidation. Larger, better-capitalized health systems that weathered the pandemic are in prime position to integrate smaller systems and independent practices that didn’t. Likewise, larger players can bring the necessary scale to telemedicine services, a vital capability moving forward.
6. Behavioral Health Providers Will Increase Investment in Patient Management and Patient Engagement Tools
Finally, the pandemic has brought a renewed focus on the patient experience, and investment has already followed. Though costly, electronic health record systems and patient access portals are increasingly non-optional for healthcare providers. Systems that fail to invest in these capabilities may soon find themselves on the outside looking in.
The Behavioral Health Space Is Changing
The business of behavioral health is in flux, like so much else in these challenging times.
For investors in behavioral health organizations, the organizations themselves, and the people who make them stronger, the changes shaping the industry present clear challenges and also clear opportunities.
How one feels about those challenges and opportunities depends on where one sits. But it’s undeniable that the six changes we’ve explored here — from surging investment in telemedicine solutions for behavioral health providers to ongoing clinical consolidation across the field — will reverberate through 2021 and beyond.
New trends will emerge in the near future as well. Whether we’ll understand them as continuations of today’s or as entirely new remains to be seen.
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