Matt Morgan and Boston-based private equity firm Summit Partners unveiled a long-in-the-works overhaul of what is now a national mental health platform focused on bridging the gap between outpatient and in-facility care.
Called Blended Health, the new entity uncouples outpatient mental health assets from Vertava Health, a company once focused on pivoting its legacy destination residential addiction treatment facility business into a mental health platform.
During its shift from addiction treatment to outpatient mental health, Vertava Health acquired the companies that would make up the core of Blended Health — Dallas-based Connections Wellness Group and Memphis, Tennessee-based Integrated Addiction Care Associates — in 2021.
Blended Health offers partial hospitalization programs (PHPs) and intensive outpatient programs, emphasizing group programming, to adult and children with mental health and co-occurring substance use disorder (SUD) issues.
“We are focused on connecting people to what matters in mental health by providing PHP and IOP services to adolescents and adults in a unique and profound way,” Matt Morgan, CEO of Blended Health, said in a statement.
On Wednesday, Blended Health revealed its branding and that it had plans to build even more on its new platform after establishing new governance for the company.
Summit Partners acquired Vertava Health, then known as Addiction Campuses, in 2018. Addiction Campuses was founded in 2014.
Morgan succeeded the founding CEO, Brent Clements, in 2019. Early on in his tenure, Morgan and the company’s board established the need to take the company in a new direction. He previously told Behavioral Health Business that the company was most interested in outpatient mental health and other “lighter assets” and “lighter services.”
This new direction included a divestiture of the Vertava Health residential treatment centers and investments in outpatient mental health.
Morgan told Behavioral Health Business in 2021 that the company would lean into outpatient care and would be “aggressive in the acquisition market.” At that time, Morgan said his company had plans to add 15 to 20 de novo outpatient mental health centers on top of its M&A game. However, it sold several of its newly opened facilities to Mindpath Health by the end of 2021.
At the end of 2022, Vertava Health sold three of its four facilities to Fort Lauderdale, Florida-based Regard Recovery. Near the end of 2023, Vertava Health sold the fourth facility, which was based in Southaven, Mississippi, to Bradford Health Services. Along with the facility, Bradford Health also acquired Vertava’s intellectual property and other legal assets — severing the last connection Summit, Morgan and the burgeoning outpatient mental health business had with the Vertava legacy.
All the while he was running the legacy Vertava Health assets and preparing them for sale, Morgan was tending to what would eventually grow into what Blended Health is today. This included the two acquisitions, establishing a totally new leadership team, developing a new governance structure and plotting sites of service.
Today, Blended Health operates 18 locations, employing over 400 people in Texas and Tennessee.
Connections Wellness Group founder and now-former CEO Awstin Gregg helped grow the company post-acquisition to include 12 locations in Texas and five more on the way, according to its website. He stepped down as CEO in October 2023 and is an advisor to the company.
The Blended Health clinics will be rebranded or maintain the Connections Wellness Group brand.
“Our vision is to create a healthy society empowered through positive mental health,” Morgan said in a statement. “The impact we have on their lives today will shape the health of our communities tomorrow.”
Key historical context
The destination residential treatment center model Vertava Health historically operated fell out of favor with investors as payers began to hack down on the reimbursement rates offered to providers using this model. Often, addiction treatment providers in this realm operated out of network with health plans, targeting rates that were higher than in-network rates.
Data from the M&A advisory from The Braff Group illustrates a flip in what investors were willing to buy: a shift from high-end and/or destination treatment to locally focused, more affordable facilities and business models that operated on an in-network basis.
Many addiction treatment providers couldn’t manage the transition. Delphi Behavioral Health Group’s bankruptcy saga illustrates this era, which spanned roughly from 2016 to 2022.
Addiction Campuses wasn’t excluded from those market-shifting trends, requiring the company to pivot. It was rebranded as Vertava Health in 2020.
Editor’s note: This story has been updated to reflect that Summit Partners and Matt Morgan started Blended Health as a new company not formally connected to Vertava Health. While Blended Health includes legacy Vertava Health assets, Blended Health is not a rebrand of Vertava Health.
Companies featured in this article:
Blended Health, Connections Wellness Group, Integrated Addiction Care Associates, Vertava Health
