BGL Healthcare & Life Sciences Insider — The Growing Importance of Behavioral Health Revenue Cycle Management

Behavioral health focused revenue cycle management services and software companies are poised for outsized growth, according to a new industry report released by the Healthcare Outsourcing & Information Technology investment banking team from Brown Gibbons Lang & Company (BGL).

As many acute care and traditional hospital-based services have been struggling with declining margins and disintermediation from lower cost venues of care, behavioral health has stood out as an area of optimism and growth and has received tremendous venture and private equity growth capital.  But, as demand rises for behavioral health companies, many are struggling with payor denials and working capital pressures, leading to growing interest in innovative and impactful revenue cycle services and software solutions.

Inside the report, BGL features insights gathered through a series of exclusive interviews with behavioral health executives who discuss how the industry’s revenue cycle needs have transformed. BGL also examines the most important regulatory developments that have shaped the industry, some of the recent consolidation activity that illustrates the increased attention on the sector, and then profiles more than 50 behavioral revenue cycle services and software companies who are helping to transform this sector.

Key highlights include:

• • Policy changes aimed at improving access to behavioral health services have strengthened demand across the industry
  • Many providers have experienced recent financial challenges, as surging practice valuation required substantial leverage and payors responded to increased behavioral health volume with more stringent denials
  • Revenue cycle vendors specializing in autism spectrum therapy, substance use disorder, and broader psychiatric services are innovating around proprietary technology and improvements in workforce efficiency
  • Initial wave of M&A activity in the behavioral revenue cycle sector is described

BGL’s Healthcare Outsourcing & Information Technology investment banking team foresees quality RCM vendors playing an increasingly instrumental role in stabilizing the profitability of behavioral health businesses. We also expect an influx in growth capital invested into early-stage high-potential RCM vendors, with large diverse RCM consolidators, who have historically focused on growth across the traditional acute care industry, to begin evaluating acquisition opportunities among behavioral health RCM services and software platforms.