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Behavioral healthcare's new horizon

May 1, 2007
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There's some evidence of a brightening future for the field

Behavioral healthcare has had an image problem. For too long the U.S. public has viewed behavioral health (and those of us who provide it) as a distant cousin, twice removed, of general healthcare. The good news is that we're collectively gaining ground. Newspapers are writing more stories about mental illness, TV shows and movies feature more realistic portrayals of characters with mental health disorders, and celebrities bring substance abuse and emotional problems into the public eye on a routine basis.

Yes, the image of behavioral health in our society is on the rise. Having an aging population of baby boomers, who are much more comfortable seeking help from therapists than their parents were, will increase the need for quality care exponentially in upcoming years.

To meet the baby boomers' and other groups' needs, some investors are eyeing growth opportunities in the field, and public-sector providers are finding creative ways to serve patients. The prospect of national parity legislation finally becoming law is giving all stakeholders hope for increased access to services. It adds up to a changing climate for behavioral healthcare providers that is signaling a “new horizon” for the field.

Investors' Interest

The growing realization that the American public has awakened to the importance and need for good mental healthcare is a key motivator for investors who see the potential in the for-profit sector. In the last year we have witnessed an unprecedented number of mergers and acquisitions, driven by investors' interest in the market. PsychSolutions, Horizon Health, HCA, and Universal are some of the names that figure into this trend.

Virginia Capital Partners (VCP) in Richmond, Virginia, is looking for growth in a field that tends to focus myopically on its helping roots, rather than on its return on investment (ROI). Matt Austin, vice-president of VCP, puts it like this: “VCP is a private equity firm that seeks diverse business opportunities for investment. We see opportunities in behavioral health. One in five Americans has an emotional problem of some significance, and 5% of our population has a serious mental illness.”

Austin and his partners envision creating a cutting-edge treatment center. “Right now, we're looking at a specific market segment that, in certain geographic areas, is underserved, namely adolescent behavioral health,” he says. “VCP wants to create a leading adolescent treatment facility that provides quality residential treatment renowned among its peers. After we establish a successful model, we want to replicate it in other geographic areas.”

As a venture capital firm, VCP looks at different industries all of the time, evaluating what can be profitable. “We are constantly analyzing opportunities for our investors,” explains Austin. “We like the facilities-based aspect of adolescent treatment. Rehabilitation takes time and is intensive clinical work, so there is a longer length of stay and, potentially, a more steady revenue stream.”

Austin believes three factors will be critical to their success. “We have to have an outstanding clinical team, we have to provide a top-notch continuum of care, and we must have an inviting facility located in an area where other behavioral healthcare services are limited,” he says. As with previous ventures, the principals of VCP are excited about building an enterprise from the ground up. “The macrotrends and drivers are strong on the demand side,” Austin notes. “On the supply side, there are not enough top-tier facilities in certain geographic areas to serve existing and future behavioral healthcare needs.”

Paul Keck, MD, president and CEO of the new Craig and Frances Lindner Center of HOPE (Helping Other People Excel) believes in the strength of his model, as well. Opening in July 2008, with $30 million dedicated by the Lindner family (principals of American Financial Group), this state-of-the-science comprehensive treatment center for adults, adolescents, and geriatric patients will be in Mason, Ohio, just north of Cincinnati, on a private setting of 35 acres.

“I believe it's generally recognized that the mental health system, outside of the public-sector system, is broken,” says Dr. Keck. “There is no system anymore. The Lindners approached me with this recognition—that there is no private system of care for mental illness in our geographical area. There is a huge unmet need.”

Together, Dr. Keck and the Lindners shaped the vision for the Center of HOPE to fulfill that need. Dr. Keck says they are borrowing heavily from the Institute of Medicine's 2005 recommendations for treatment of mental and substance use disorders.

“Our number-one goal is that patients and families come first,” he explains. “For example, families of patients will be able to stay overnight, if appropriate. We will have a unique ‘curriculum of education’ about the illnesses that patients have, so they can become knowledgeable about their condition and the best treatments available for that condition. We will have a comprehensive system of care: inpatient, outpatient, mental illness, dual diagnosis, and addictions. Medical records will be electronic, so that patients and clinical staff can focus on treatment and getting well, rather than finding documents.”

Another feature that will set the Lindner Center of HOPE apart from other programs is on-site medical care. There will be four physical healthcare components available at the facility: family medicine, pediatrics, MRI, and laboratory services.

When asked whether the Lindner Center will be a one-of-a-kind behavioral healthcare facility, Dr. Keck replied, “We're doing a lot of innovative things, but as soon as I say we're unique, I'll read about someone else doing something similar.”