Why Behavioral Health Revenue Cycle Management, Services, and Software are Poised for Outsized Growth

In the latest Healthcare & Life Sciences Insider from BGL’s Healthcare Outsourcing & Information Technology investment banking group, the case is made as to why companies in the behavioral health revenue cycle management industry may be poised for outsized success in the coming years. But, before laying out our reasons why we believe in future industry growth, we dive deeper into the history of how we got to where we are today. 

Regulatory Changes Have Previously Impacted Revenue Cycle Management in the Behavioral Health Space

Behavioral health has become one of the healthcare industry’s hottest high-growth areas. For much of the 20th century, behavioral healthcare services had been delivered primarily through state-funded inpatient institutions. 

Regulatory changes over the last 20-30 years have increased access and reimbursement for a much wider array of outpatient and community-based behavioral health services across all demographics. This legislation (all covered in greater detail in the full Insider) includes:

• The Mental Health Parity Act (MHPA) in 1996
• The Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008
• Affordable Care Act (ACA) of 2010
• Senate Bill 946 in 2012

However, just as it seemed the behavioral health paradigm had improved for good, many commercial and governmental payors started deploying revenue cycle obstacles utilized elsewhere in the healthcare industry to mitigate their medical spend, leaving this fast-growing, nascent segment of the healthcare industry to experience several well-publicized financial struggles, and raising the specter of how important top-notch revenue cycle capabilities will be in the future of behavioral health.

The Need for Behavioral Health Revenue Cycle Management Solutions and M&A Opportunities

We are now seeing a huge market emerge for behavioral health RCM solutions as several behavioral health focused RCM companies experience dramatic growth with many fascinating innovations. But, this market is fragmented; there are few players providing comprehensive solutions to behavioral market participants and it seems like the best brand-named RCM services and software companies are still targeting the traditional acute care industry. 

We foresee 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 amongst some of the larger and more established behavioral health RCM platforms.

BGL’s Healthcare Outsourcing & Information Technology practice is uniquely qualified to assist RCM businesses in exploring their liquidity, investment, and sale options. As one of the country’s largest and most active healthcare investment banking platforms, our industry experience goes beyond traditional transaction advisory to subject matter specialization in the RCM field. BGL’s Managing Director Jonathan Bluth spent the first half of his career as a revenue cycle consultant, advising some of the nation’s leading payors and providers on process improvement and vendor selection mandates on topics such as patient access redesign, self-pay management, charge description master optimization, and cash collections acceleration. 

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