Acadia Healthcare Diversifies With More Step-Down Options

While Acadia Healthcare (Nasdaq: ACHC) is best known for its inpatient behavioral health facilities, the company is looking to diversify with more step-down services.

Specifically, the organization is boosting its intensive outpatient programs (IOPs) and partial hospitalization programs (PHPs). These services are often used as a step-down from traditional inpatient care and a step-up from outpatient services. In 2023, the company added 13 new IOP and PHP programs.

However, Acadia’s CEO, Christopher Hunter, noted that there is a lot of white space for expansion in this area and patient needs.


“The majority of our acute and specialty patients can clinically benefit from these programs as they offer a step-down level of care after discharge from a high acuity stay, but also enable patients to step up again in acuity as their needs change,” Hunter said in the company’s fourth-quarter earnings call. “This not only improves clinical outcomes but also enhances the overall patient experience.”

Hunter said this could be a significant opportunity for Acadia’s patients to access these services in the future because “only a portion of our clinically eligible patients stepped down to PHP IOP care post discharge today.”

Overall, Acadia ended with a total revenue of $742.8 million in Q4, a 10% increase over 2022’s Q4. The company’s same facility revenue grew 10.3% compared with the fourth quarter of 2022. Acadia reported an annual revenue growth of 12% and an adjusted EBITA growth of 13%.


Investors have been largely positive on Acadia’s Q4 performance and future.

“ACHC produced solid results in 4Q23 and continues to execute on its long-term strategic expansion plan, driving same-facility revenue growth of +10% and core adjusted EBITDA growth of +12% from 4Q22, excluding items,” a research brief from investment banking firm Stephens said.

This growth was aided in part by the decrease in wage inflation. The company announced that wage inflation peaked at 8% in the fourth quarter of 2022. That dropped to 5% in the fourth quarter of 2023; Hunter noted that was an improvement of 300 basis points.

In addition to the external workforce factors, Acadia has also implemented new clinical training programs and new technologies to help retain its workforce. This has, in turn, supported patient growth by 5%, according to Hunter.

Those technology investments include an electronic health record (EHR). Hunter attributes the EHR to improved employee satisfaction, workflow efficiencies and improved retention. Implementing an EHR also helps the provider move towards measurement-based care for the future.

“These investments in our core infrastructure, combined with the EMR and patient care technology, provide access to better data to measure outcomes and provide a framework for value-based care,” Hunter said. “The ability to measure and demonstrate these outcomes is important for collaborating with payers.”

Technology isn’t the only place where Acadia is focusing on growing. In Q4 of 2023, the company’s comprehensive treatment center (CTC) business line, which primarily treats patients with opioid use disorder (OUD), grew its revenue by just under 20%.

The company opened a total of six CTCs in 2023 and plans to open an additional 14 centers in 2024. Hunter said this focus comes as the opioid epidemic continues to sweep across the country.

“The opioid epidemic continues to intensify with approximately 9 million Americans misusing opioids in the past year and new, more potent drugs continuing to emerge,” Hunter said. “In fact, some experts believe that we have now entered the fourth wave of the opioid epidemic as drug users have now evolved from prescription drugs in the first wave to heroin and then to fentanyl and the second and third waves, and now to poly-substances that include fentanyl mixed with substances such as cocaine, and methamphetamine.”

Companies featured in this article: