Spending, Care Access, and Quality following Private Equity and Other For-Profit Acquisitions of Mental Health and Substance Use Treatment Facilities in the US

Abstract

Background: Private equity (PE) and other for-profit firms have fueled a growing wave of healthcare consolidation through acquisitions. Behavioral healthcare has been a target, as serial acquisitions of its smaller, independent providers can generate market power while avoiding antitrust scrutiny. Understanding implications for vulnerable populations such as Medicare beneficiaries is particularly important, as over 20% of Medicare beneficiaries are affected by a mental illness or substance use disorder (SUD). Objective: To determine whether for-profit acquisitions of behavioral healthcare facilities were associated with changes in Medicare beneficiaries’ care access and outcomes. Design: Cohort study using Medicare fee-for-service claims (2014-2021) and difference-in-differences models comparing acquired and non-acquired facilities before and after acquisition, overall and by acquirer type (private equity, other for-profit). Setting: Specialty behavioral health treatment facilities with Medicare patients. Participants: 34 PE acquired and 59 other for-profit acquired facilities matched to 829 never-acquired comparator facilities, serving ~2.5 million beneficiaries between 2014 and 2021. We required acquired facilities to be observed at least one-year pre-and-post acquisition, non-acquired to be in counties with at least one acquisition, and beneficiaries to be at least 18 years old with calendar-year continuous enrollment. Main Outcomes and Measures: Beneficiary volume; total and per-beneficiary spending; and quality measures such as follow-up after an acute care event, care continuity, and medication adherence. Results: There were no significant associations between PE acquisition and measures of spending, utilization, or quality. Acquisition by other for-profit firms was associated with significant increases in annual beneficiary spending 53.3% (95% CI: 44.7%, 61.9%), volume 31.5% (95% CI: 21.1%, 42.0%), and spending per beneficiary 16.1% (95% CI: 2.3%, 30.0%) compared to matched never-acquired facilities pre-post-acquisition. Conclusions and Relevance: PE acquisition was associated with small, insignificant increases in beneficiary spending and volume while other for-profit acquisitions were associated with large, significant increases, highlighting differences that may help policymakers anticipate whether an acquisition is likely to increase Medicare volume and service intensity.

Benjamin D. Thornburg, PhD

Postdoctoral Fellow in Health Economics

I am a health economist and fellow of the Center for Health Systems Effectiveness at Oregon Health & Science University. I use quasi-experimental methods, claims data, surveys, and other administrative information to study market structure, provider labor, and policy in behavioral and maternal healthcare.