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US behavioral healthcare industry, lacking the expected growth

  • Brief about the behavioral healthcare industry
  • Major causes for increasing requirements in the industry
  • Reasons for a sluggish growth despite an increase in behavioral illnesses
  • Current trends in the industry

 

Stress is an inevitable emotion for humans. While it is good up to a certain extent until it motivates an individual to achieve his or her goals, but beyond that it can do more harm and lead to mental illnesses. A relentless increase in the stress levels and drug addiction (beyond the control of an individual’s capacity), especially among the younger generation, has given rise to the behavioral healthcare industry, which provides mental healthcare services to patients.

The United States, which is the world’s largest economy, is also presently struggling with the rapid increase in the mental illnesses among its population, this has led to the development of behavioral healthcare industry as a distinct segment in the healthcare sector of the nation. The focus over behavioral healthcare in the US was initiated in 1996 with the enactment of the Mental Health Parity Act (‘MHPA’), which brought mental healthcare parallel to the traditional physical care. This allowed the behavioral healthcare industry to occupy a key area in the healthcare industry.

According to the Mental Health America (MHA), currently, 1 out of 5 adults in the US is suffering from one or the other forms of mental illnesses. Further, as per a survey conducted by the American Psychological Association (APA) in August 2017, the leading factors for mental illnesses include loss of financial wealth, failed relationships and stressful working environment, but money and work topped the list for more than a decade. The 2008 financial recession saw a surge in the US unemployment rates, which was 4.6% in 2007, but reached 5.8% in 2008 (at the beginning of the recession) and peaked at 9.6% in 2010. This led to an increase in depression and mental illness cases. Thereafter, though the economy picked up (post-2010), the decline in the unemployment rate has been very gradual and has still not reached the pre-recession levels. Furthermore, drug addiction has been another menace leading to severe mental health issues, specifically among the young people.

Despite a continuous increase in the mental illness cases, the US mental healthcare industry’s growth rate remains very slow due to lack of resources, a high cost of treatment and the social stigma attached with mental disorders.

Lack of resources: the number of people looking for treatment is growing at a faster pace than the availability of mental healthcare professionals to provide treatment to them, this is leading to a higher treatment cost. The Staff Care (the US’ leading locum tenens staffing firm) last reported in 2015 that the national average was 8.9 psychiatrists per 100,000 people, against the 91.1 primary healthcare providers per 100,000 people, which was also not evenly distributed across the country. Consequently, over 1.7 million youths with major depressive illnesses were unable to receive the treatment, while 56% of adults suffering from mental illnesses are still struggling to receive the treatment. Additionally, 59% of psychiatrists were aged 55 or above, which indicates towards a forthcoming shortage of mental healthcare professionals as they are nearing retirement.

High cost: according to the survey by Kaiser Family Foundation, many individuals refrain from seeking professional help due to the involvement of a high cost. In addition, financial difficulty has been identified as one of the major causes of mental illnesses and hence, it is not surprising that the cost associated with professional help prevents people from seeking assistance. Out of pocket cost exceeding $200 were more frequent for visits to mental health professional (15-16% of total visits) compared to specialty or primary care visits (6-9% of total visits). Further, most of the health insurance plans in the United States do not cover basic mental healthcare services such as consulting a psychologist, psychiatrist or a counsellor. 

Social stigma: another reason for not availing mental healthcare is the stigma attached with the treatment, that prevents people from seeking the professional help. Though this stigma has now reduced in the urban areas, but is still prevalent in the rural regions of the US.

The mental healthcare industry in the US is highly fragmented with most of the professionals into private practices ([Over 81% of the market share], [Source: 2016 National Mental Health Services Survey]). There are a number of small and medium-sized enterprises that hire psychologists and psychiatrists for mental health services. Addedly, most of these enterprises operate only in a narrow spectrum of mental health services, hence, these do not cover all or major areas of mental healthcare. There are very few national level companies including the United Healthcare Services (UHS) and the Acadia Healthcare, that have earned the reputation of a one-stop destination for professional counselling related to almost all types of behavioral illnesses. Thus, due to the above reasons, the United States mental healthcare services industry grew at a lower CAGR of 2.4% over the last 7 years from USD 46.9 billion (2010) to USD 55.3 billion (2017).

However, lack of professional resources and a shortage of government spending on the mental healthcare has led to calls for consolidation within the industry and integration of behavioral healthcare industry with the primary care. Mergers and acquisitions are taking place in the industry and are showing a rapid growth over the last five years. Over 302 behavioral health transactions have taken place from 2012 up to 2017.

The consolidation within the industry and integration with primary care has led to a defragmentation, which can improve both the quality and accessibility of services on the back of economies of scale. Further, many start-ups have entered into the world of telepsychiatry, providing remote access to mental health, counselling through video conferencing and were well funded by venture capitalists. This is expected to help people in the rural areas, who currently do not have access to professionals and will reduce emergency department’s wait time, while delivering a cost-effective care.

Although, the recent changes in the United States mental healthcare industry dynamics are expected to increase the reach and affordability of health services to a large population, preventive socio-economic measures are required to improve the mental health of the people.

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