New entities are emerging in behavioral health—a testament to its growth potential.
One such entrant is LifeStance Health, backed by Summit Partners and Silversmith Capital Partners. The organization doesn’t own any treatment centers just yet, but according to CEO Michael Lester, there are two or three deals primed for the first quarter of 2016.
“We would hope to acquire up to 300 beds in 2016,” Lester tells Behavioral Healthcare. “Our goal is to organically grow to 1,000 beds after that.”
The model will be a high-end, clinically focused program with a full continuum of care from detox to aftercare, ideally contained in campus settings with multiple buildings. LifeStance expects to invest $250 million in acquisitions and de novo sites nationwide to provide services for addiction, substance use and eating disorders.
According to Lester, a long-term goal would be to transition the organization to a risk model, which would change the reimbursement from in-network/out-of-network rates to global payments. For example, a third-party payer might contract for a per-person, per-program flat rate, and the treatment centers would deliver a flexible package of care, according to clinical need, along the continuum. Often in such models, quality targets are included to ensure providers don’t skimp on care.
In addiction treatment, the key quality indicator would be recidivism.
A former pharmacist, Lester also launched Accelecare Wound Centers, which grew from eight small acquisitions to 150 centers over five years. He sold the company in March. LifeStance will have a similar model, he says.
“These are ‘gold rush’ days in the behavioral healthcare space, and as is typical with a gold rush, it comes with good things and bad things,” he says. “But there is a lot of money being put to work.”
He predicts a healthy appetite for acquisitions for the next three or four years. After that, once the platforms are established, the growth will be organic.