The finding, published in the journal JAMA Psychiatry, appears to reflect a growing trend across medicine as private equity firms acquire medical practices with an eye on maximising profits. The new study, by researchers from Oregon Health & Science University, the University of Pennsylvania and Yale University, is notable, given that this has previously been considered to be an area of medicine offering scant profit margins.

“At this point, there is no stone left unturned by private equity investors,” said lead author Jane Zhu, MD, associate professor of medicine (general internal medicine and geriatrics) in the OHSU School of Medicine.

The interest among private equity investors likely reflects improved insurance coverage and reimbursement rates for behavioural health services nationwide in recent years, along with growing demand, Zhu explained. Traditionally, many private practices have been relatively small, with only one or two practitioners. Acquiring multiple practices may enable private equity firms to gain operational and administrative efficiencies with increased market power to negotiate commercial insurer reimbursement rates.

“It all comes down to what kind of care they’re providing,” Zhu said. “If these firms are expanding to increase access for people who otherwise wouldn’t be able to receive behavioural health treatment, that could be positive.”

Researchers used financial databases to identify behavioural health practices acquired by private equity investors between 1 January 2012 and 31 July 2023. They found 642 mental health clinics and 1152 clinics treating substance use disorders that had undergone private equity acquisition over that period, as of last year, constituting 6.2 per cent of all mental health facilities and 7.1 per cent of addiction treatment facilities nationwide. In Colorado, Texas and North Carolina, the proportion of private equity-owned practices accounted for roughly a quarter of all facilities providing mental health treatment.

“Private equity ownership of outpatient behavioural health clinics is very, very high in some states,” Zhu noted. “Given those high rates of penetration, it points to behavioural health as an area that needs attention from policymakers.”

In some cases, the researchers found clinics that had expanded since acquisition.

The study did not look at the impact on cost, quality or access for patients, but prior research in 2022 and last year has found price increases with mixed effects on quality following private equity acquisition of healthcare facilities. The typical investment period for private equity investors is three to seven years.

“Given persistent workforce shortages and access gaps, it’s yet unclear how private equity’s short investment timeframe and distinct business model could intersect with a national behavioural health crisis,” the study states.

The research was supported by the Agency for Healthcare Research and Quality, and the National Institute on Drug Abuse of the National Institutes of Health.