The chaos that the coronavirus pandemic inflicted on the behavioral health care industry gave way to a new normal in 2021 based on the many lessons learned in the previous year.
And an apparent lesson learned by all is that the demand for behavioral health in the U.S. is immense. This apparently spurred on a red-hot dealmaking environment. Behavioral Health Business’ top 10 most-read stories include several merger and acquisition announcements and startup investment stories.
Both of those aspects of dealmaking were driven by private equity investors who were, as one expert put it, “really trying to make up for a lost year” in 2020.
Here’s a rundown of our top 10 most-read stories from 2021:
The Centers for Medicare and Medicaid Services (CMS) made waves when it finalized a rule that would change up how and what it would pay for in the realm of telehealth (See No. 4). Attorneys and behavioral health executives alike see the move as signaling major validation for telehealth and proof that the industry’s future is a hybrid of in-person and telehealth services.
Several pros in the behavioral health care dealmaking space said at the beginning of the year that private equity would drive never-before-seen investment in the behavioral health space. As our coverage shows, they were right. The year was defined by major deals all across the behavioral health spectrum.
No. 3: Cerebral Reaches $1.2B Valuation After Raising $127M in New Funding (June 10)
Another defining feature of the year was head-turning investments in startups that seek to tackle the intractably poor mental health of people that was only made much worse by the pandemic.
Cerebral’s model of medication management, counseling and other mental health services that are enabled by a mobile app represents a familiar thread across several startup investment stories — a new digitally focused company seeks to buoy the mental health of people by partnering with employers or with health plans.
No. 4: CMS Expands Telehealth for Behavioral Health in Final Rule (November 2)
CMS announced at the beginning of November that it would allow Medicare beneficiaries to originate telehealth visits for mental health services in their homes — with the home being loosely and inclusively defined — regardless of where they live. Also, Medicare will allow providers to use audio-only visits when a patient declines to conduct a video chat.
These changes come into effect on Jan. 1, 2022. CMS said in its announcement that the moves were meant to expand telehealth’s impact of increasing access to behavioral health care services.
No. 5: PE Firm Reportedly Looking to Sell Springstone for $1B (April 9)
News reports circulated that private equity giant Welsh, Carson, Anderson & Stowe (WCAS) would sell Louisville-based addiction treatment provider Springstone. WCAS invested in the company in 2010 and helped it grow to 18 inpatient behavioral health hospitals and other supporting offices. Medical Properties Trust (NYSE: MPW) announced in June that it would acquire the Springstone facilities and make an investment into the company in a deal with WCAS that totals $950 million.
No. 6: Headspace Health CEO Talks the Future, More Acquisitions, and IPO Possibility (October 26)
Following the merger of mental health startups Headspace and Ginger to create Headspace Health, CEO Russ Glass reflected on the future of the $3 billion company. He said that it’s vital to the company’s financial success and to its mission to accelerate its ability to reach people. As of the interview, Headspace Health reaches 100 million people across 190 countries. It also had deals with about 2,700 enterprise and health plan partners. The company is eying expanding into providing services for children, potentially getting into the addiction treatment space and growing its enterprise business.
No. 7: Apax Partners and Oak HC/FT Purchase Eating Recovery Center for $1.4 Billion (October 5)
The M&A fervor reached into the eating disorders treatment space with two funds teaming up to acquire Denver-based Eating Recovery Center from CCMP Capital for a reported $1.4 billion.
Burlingame, California-based Lyra Health is another digital technology company that seeks to help employers better connect their people to behavioral health care. Lyra’s platform helps members identify the particular services that are available and that they are best suited for through an algorithmic process known as intelligent matching technology, which pairs users with therapists, coaches or physicians specializing in mental health or addiction treatment care.
A company executive walked us through how it was focused on helping its clients — many that are large multinational corporations — implement telehealth, tackling access to care systematically and potentially going for an IPO to fuel further growth.
Increased talk about value-based care being enabled by better adoption of technology within the industry came as a sort of follow-up to the almost instantaneous adoption of telehealth in behavioral health care.
Managed care organization Beacon Health Options’ then newly hired president, Glenn MacFarlane, told us he “would like within the next three-plus years to have all [of Beacon’s] spend linked to some sort of value-based arrangement.” That commitment comes with the heft of Anthem Inc., Beacon’s owner, behind it.
Acadia Healthcare, the nation’s largest pure-play behavioral health care company in the U.S., got a lot of attention for saying that it would use its heft to be a consolidator within behavioral health. The organization’s outgoing CEO, Debbie Osteen, said Acadia’s expansion efforts will be aided by a market and society that is more friendly toward mental and behavioral health.
Acadia also made two key hires that Osteen said were necessary to manage the company’s coming expansion. While she didn’t get into specifics, Osteen said that the company would do deals on its own and would seek to be a go-to joint venture partner with other companies.