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Private equity moves into care in Northwest: Investment firms buying mental health, substance use clinics

Columbian - 5/22/2024

May 21—A national study published by the journal JAMA Psychiatry earlier this month found private equity firms now account for as much as a quarter of practices providing mental health services in some states. In Washington, about 3 percent of mental health clinics and 8 percent of substance use clinics are owned by private equity firms.

The study, authored by researchers from Oregon Health & Science University, the University of Pennsylvania and Yale University, highlights a growing trend as private equity firms acquire small, physician-owned practices in efforts to potentially maximize profits, the authors said.

"It's actually a very rapid investment cycle. They're in and out and usually they sell to another private equity company," said Jane Zhu, lead author and associate professor of medicine at OHSU. "And so, on the surface then, there is obviously tension between how quickly and how much profit you're trying to make and the incentives to make longer-term investments in the community, in the practice and in the workforce."

One behavioral health facility in Clark County was among this growing trend.

LifeStance Health Group, an outpatient mental health company backed by private equity firm TPG, recently acquired Western Psychological & Counseling Services, which has three offices in Vancouver. In June 2021, LifeStance went public, resulting in a market capitalization of $6.73 billion, according to Reuters.

The growing interest from private equity investors could be a result of improved insurance coverage for behavioral health services and a growing demand for access to mental health services as a whole, Zhu said.

"There's actually a lot of system factors that are driving investment interest. There is persistently high demand for behavioral health services," Zhu said. "Insurance companies, more and more, are covering more services for behavioral health. All of those things are contributing to the interest and make behavioral health very profitable, or potentially profitable."

The authors used financial data to identify private equity acquisitions of mental health facilities in the U.S. between Jan. 1, 2012, and July 31, 2023.

Altogether, the study found 642 mental health clinics and 1,152 clinics treating substance use disorders had undergone private equity acquisitions during that period, accounting for 6.2 percent of all mental health facilities and 7.1 percent of addiction treatment facilities nationwide.

The study did not assess the impact private equity acquisitions have on cost or quality of care. But a 2022 study published by JAMA Health Forum found after a number of physician-owned medical practices were acquired by private equity, those clinics saw more patients and billed more for visits.

"Given persistent workforce shortages and access gaps, it is yet unclear how (private equity's) short investment time frame and distinct business model could intersect with a national behavioral health crisis," the study said.

Other practices acquired

Private equity acquisitions are not limited to behavioral health facilities. Researchers from OHSU previously examined 578 physician practices specializing in dermatology, gastroenterology and ophthalmology that were acquired by private equity firms across the nation between 2016 and 2020.

In early April, rumors swirled around the community that Vancouver Clinic, a physician-owned health care provider, was preparing to sell. Vancouver Clinic CEO Mark Mantei quickly dispelled those rumors.

"The information is incorrect. There is no sale underway. Vancouver Clinic is committed to the physician-driven model of health care that benefits our patients and ensures access to high quality clinical care," Mantei said in an April email to The Columbian. "As we implement our strategic plan for continued growth and expansion, we are always considering how best to tap into resources that support bringing our unique model to more patients in more places."

Still, Zhu believes policymakers should be aware of the potential negative consequences of this trend.

"It's really to be able to actively monitor and have a little bit more transparency as to who owns what because health care is such a critical service to all Americans," she said. "There needs to be some more transparency in terms of these ownership transfers that happen. I also think policymakers should be taking a closer look as to the reasons why private equity has been very profitable in health care."

This story was made possible by Community Funded Journalism, a project from The Columbian and the Local Media Foundation. Top donors include the Ed and Dollie Lynch Fund, Patricia, David and Jacob Nierenberg, Connie and Lee Kearney, Steve and Jan Oliva, The Cowlitz Tribal Foundation and the Mason E. Nolan Charitable Fund. The Columbian controls all content. For more information, visit


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