Wage Inflation Slowing in Psychiatric and Substance Use Disorder Hospitals

Wages in psychiatric and substance abuse hospitals have dipped slightly, potentially signaling a slowing of wage inflation.

That’s according to recently released data from risk management market research firm Hedgeye.

Hourly wages for psychiatric and substance abuse hospital workers reached their lowest level year to date in September at $31.06 per hour. That mark is a drop from the industry’s high in April, when wages averaged $32.34 per hour.

Photo credit: Hedgeye

The same trend can also be seen in the assisted living and nursing home industry, according to analysts at Hedgeye. This dip in wages comes after nearly a decade of steady wage increases in the space.

Meanwhile, the aggregated weekly hours of all employees in psychiatric and substance use hospitals is up substantially year over year.

For the past year, behavioral health providers have struggled to keep up with the rising cost of wages, which have been driven up by the pandemic and subsequent staffing shortages. Macro-level economic factors such as inflation have also created labor headwinds.


Some providers, such as substance use disorder operator Landmark, developed worker-incentive programs to help with staffing shortages, only to then find those programs undermined by inflation.

“What I could not have anticipated is the 1970s coming back with crazy inflation,” Landmark CEO Matt Boyle told Behavioral Health Business in July. “So we’ve already found that some of the escalators that we rolled out in December are antiquated because the market, especially in nursing, has been increasing 20%, 25%, 30% a year in terms of the starting wages.”

Generally, the mental health workforce as a whole has a diverse set of wages.

In October, the U.S. Bureau of Labor Statistics released new data highlighting the wages of mental health workers. Psychiatrists make the highest mean wage at $250,000. Meanwhile, psychiatric aides made the lowest in the industry, with a mean wage of approximately $34,600.

In particular, Hedgeye sees the lessening wage inflation has a tailwind for companies like Acadia Healthcare’s (Nasdaq: ACHC), Universal Health Services Inc (NYSE: UHS) and LifeStance Health Group Inc. (Nasdaq: LFST).