New Behavioral Health Business Model | Behavioral Healthcare Executive Skip to content Skip to navigation

The emerging business model for behavioral healthcare

August 15, 2016
by Ron Manderscheid, PhD, Executive Director, NACBHDD and NARMH
| Reprints

We continue to transition away from the very familiar and comfortable of the past half-century toward the less-known and more-unsettling service environment of today. The Affordable Care Act (ACA) is bringing into focus changes we have been seeking for decades—broadened insurance coverage, better behavioral health benefits, effective integrated care and improved linkages with social services. Yet, these welcome changes also are being accompanied by new organizational arrangements that are beginning to alter the business landscape of behavioral healthcare.

Not unexpectedly, the integration of service delivery also is accompanied frequently by parallel integration of previously long-standing service organizations. Simultaneously, Medicaid and Medicare are shifting away from encounter-based  payments well suited to separate organizational service providers toward value purchasing—a new system based on prepaid case and capitation rates that favors large, single, integrated service organizations, whether public or private.

Philosophically, the new ACA service delivery model promotes whole person care centered in the person rather than in the service provider. Over time, this will lead to more self-directed care through improved personal health literacy and health activation.

Taken all together, these large scale changes are quite anxiety provoking to many in the behavioral health field. The following principles reflect some important considerations as we begin to adapt our behavioral healthcare business model to these new realities.

Differentiate public responsibility for the health of a particular population from the delivery of services that fulfills that responsibility.  Public entities such as cities, counties and states cannot abrogate the inherent responsibility they hold for the health and well-being of their respective populations. This responsibility can be fulfilled by engaging in oversight--assessment, licensure, and evaluation functions—and by service delivery. However, actual care delivery can be delegated by the public entity to not-for-profit or private entities. Over time, we can expect more public entities to engage only in oversight functions and fewer to provide care directly.

Recognize that essential social supports will be a necessary part of oversight and service delivery functions. Such supports include housing, work and social networks. Public behavioral health entities in cities, counties and states should explore these functions as an essential adjunct to the core responsibility for the health and well-being of their populations. As with other service functions, they can be delivered directly or delegated by the public entity.

Be open to new contractual arrangements.   When behavioral health and primary care organizations become linked or new, integrated, accountable care organizations are created, we will need to evolve joint accountability contracts. Such contracts will specify the required activities of each participating entity and the joint outcomes for which each participant is responsible. Such contracts have the potential to permit seamless integrated service delivery while preserving the identities of participating organizations.



Ron Manderscheid

Exec. Dir., NACBHDD and NARMH

Ron Manderscheid


Ron Manderscheid, Ph.D., serves as the Executive Director of the National Association of County...

The opinions expressed by Behavioral Healthcare Executive bloggers and those providing comments are theirs alone and are not meant to reflect the opinions of the publication.