24% of Health Care CFOs Plan to Divest Their Behavioral Health Operations

Amid the pandemic, the health care industry at large seems to finally recognize the importance of behavioral health care. But not everyone is sold on providing those services. 

In fact, nearly a quarter of health care CFOs say their organizations plan to get out of the behavioral health game, according to a recent report from the BDO Center for Healthcare Excellence & Innovation.

BDO is a professional services firm that provides accounting, tax, consulting and business advisory services to hundreds of clients nationwide. Its Center for Healthcare Excellence & Innovation helps health care organizations optimize their clinical, financial and digital strategies, operations and processes. 


The organization recently polled 100 CFOs from hospitals, health systems, physician offices, home health agencies and other entities for its 2021 BDO Healthcare CFO Outlook Survey. Annual revenues for those organizations range from $250 million to $3 billion.

The survey was conducted in September 2020 by Rabin Research Company, an independent market research firm, and it includes a couple interesting behavioral findings. Among the most notable: 24% of respondents said they plan to divest from behavioral health.

“One might say, ‘How can people be cutting back at a time when there’s such a demand for behavioral health … and reimbursement is so much better than it used to be?’” Jim Watson, a principal at BDO’s Healthcare Advisory practice, told Behavioral Health Business.


But Watson said he found the trend unsurprising due to a couple key factors, such as funding and resources.

Sometimes, the decision is financial. It comes down to payer mix and whether providers can sustain a margin in behavioral health.

Increasingly, though, community needs are driving providers to divest from behavioral health, according to Watson. In part, that’s a testament to the growing number of providers entering the space or expanding their services to meet high behavioral demand.

As such, Watson said CFOs in certain communities with adequate behavioral resources feel comfortable cutting behavioral health services that aren’t particularly profitable.

“Now, it’s more, ‘Okay, we’re not hemorrhaging on behavioral health. We may not be printing money, but we’re not hemorrhaging,’” Watson said. “‘If we decide to close [behavioral], what’s the impact on the community?’”

The final factor prompting some CFOs to divest from behavioral is resource allocation, he said.

“We’re seeing this in some of the safety net communities where there’s consolidation of services, as some of these hospitals look to not be full-service, general acute care hospitals anymore,” Watson said. “They’re starting to consolidate some of the service lines. We see that in some of the bigger cities.” 

Despite the divestiture trend, the 2021 BDO Healthcare CFO Outlook Survey also contains positive news: 50% of respondents said they plan to invest in behavioral health services. And overall, the industry is in an upswing, largely thanks to the growing recognition among providers that health care has to be holistic.

“Behavioral health is an increasingly important piece of population health management, even if [an organization is] not making money on it,” Watson said. “In that view, it becomes more of a cost center than a revenue generator, because … I need to be able to provide that full continuum, including behavioral health.”