UnitedHealth Group health services division Optum has acquired burgeoning outpatient mental health provider Refresh Mental Health.
As first reported by Axios Pro’s Sarah Pringle, New York City-based private equity firm Kelso & Co. sold the Jacksonville Beach, Florida-based Refresh Mental Health to Optum.
While the sale price isn’t included, Axios reports that Kelso & Co. acquired Refresh Mental Health in a deal that valued the company at about $700 million in December 2020 when it had an estimated $40 million of EBITDA.
Kelso purchased its stake from Lindsay Goldberg, a private equity firm that frequently works with families and that helped found Refresh back in 2017. Lindsay Goldberg worked with Steve Gold, Refresh’s CEO, and his father Mark Gold, Lindsay Goldberg affiliate partner, to build the company, according to previous Behavioral Health Business reporting.
At that time, Refresh operated more than 200 locations across 28 states. Today, the company lists 300 locations in 37 states.
“Optum and Refresh Mental Health are excited to expand effective behavioral care to patients through a more coordinated health system,” an Optum spokesman said in an email to BHB. “Together, we will be able to drive deeper integration between medical and behavioral health care and advance personalized care to patients through value-based care.”
For Optum’s part, the organization has previously focused on addressing the need for better coordination of care and more efficient access to behavioral health providers of the right level of care.
Katherine Hobbs Knutson, senior vice president of UnitedHealth Group and CEO of Optum Behavioral Care, said at a conference that her organization would like to see better integration of physical and behavioral health in terms of health plan benefits and in the provision of health care.
How the Refresh-Optum deal changes the outpatient mental health landscape
The deal adjusts the national outpatient mental health segment by making Optum a major player in the market by owning one of the largest providers in the space.
Highly fragmented and in-demand, Refresh and Lifestance Health Group Inc. (Nasdaq: LFST) are regarded as the two largest providers that have reached a prominent national scale.
Founded in 2017, Lifestance has over 500 centers across 32 states and went public in June 2021. The company saw its clinician base increase 55% during 2021 to 4,790, adding 415 net in the fourth quarter and 1,693 for the full year.
Outpatient mental health has largely been driven by fee-for-service payments. The investment into the behavioral health industry by Optum — whose parent company, UnitedHealth Group, is the largest insurer in the U.S. — could accelerate the shift in the industry towards value-based arrangements.
Also, Optum’s focus on integrating behavioral health more into physical health appears comparable to Lifestance’s efforts.
Michael Lester, CEO and founder of Lifestance, said on the company’s recent annual earnings conference call for 2021 that the company has 10 integrated care partnership programs including some with Medicare Advantage plans and a dialysis provider.
“This is not just a goal,” Lester said of integrated care on the call. “We are innovating in this space today and are at the forefront of integrated care in the mental health industry.”
Lifestance expects that it will take several years before the health care industry is capable of totally embracing integrated care, Lester said.
Editors Note: a previous version of this article incorrectly said Refresh Mental Health was acquired at a roughly $700M valuation in December 2022 — it has been updated to December 2020.
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