Acadia Healthcare Eyes PHP, IOP Growth

Outpatient behavioral health could be a new growth avenue for behavioral health giant Acadia Healthcare (Nasdaq: ACHC). 

The operator, which has a substantial footprint in inpatient mental health care and comprehensive treatment centers (CTCs) for addiction treatment, is now turning its attention to partial hospitalization programs (PHPs) and intensive outpatient programs (IOPs).

Both PHPs and IOPs offer an intermediate level of care that is less acute than an inpatient setting but more comprehensive than traditional outpatient care.


“We’re really excited about outpatient and partial hospitalization overall,” Acadia CEO Christopher Hunter said during the Bank of America Securities Healthcare Conference yesterday. “It is a small financial contributor to the business today, but I think it’s just one that we have significant upside over time.”

More outpatient offerings could help improve patient outcomes and provide a broader continuum of care.

“Clinically, [IOPs and PHPs] can be very advantageous for a patient where the majority of our patients are either in an acute or in a specialty facility. There’s benefit from stepping them down into a PHP or IOP program, as they prepare to transition back into the community, and PHPs IOPs overall have a strong track record of very solid clinical outcomes post-discharge.”


While the majority of Acadia’s acute and specialty facilities have some form of PHP or IOP, there isn’t consistency across the business lines, Hunter said. But aligning these services could be a financial opportunity for the provider and entice payers.

“It’s also a less intensive form of care than inpatient care, and so the reimbursement and the cost to deliver that care are reflected,” Hunter said. “Then finally, just from a return on capital perspective, which we spend a significant amount of time focusing on. We see PHP IOP as an attractive opportunity because the capital requirements for that growth lever are significantly lower as well. So it’s something that we’re just going to continue to focus on and where we see continued upside in the days ahead.”

Acadia isn’t the only provider eyeing the IOP and PHP space. Investors and providers have been keen to grow this business segment over the last few years.

Outpatient deals were one of the only segments of behavioral health on the rise in 2023. Seventeen deals were completed in the outpatient partial hospitalization program (PHP), intensive outpatient program (IOP) and counseling sectors, according to M&A advisory firm The Braff Group data.

GV, formerly Google Ventures, has also invested heavily in the space. In January, GV and Triple Ventures invested in IOP/PHP provider Guidelight. Guidelight offers hybrid intermediate care to patients aged 12 and older.

Intermediate care is often cheaper for providers, patients and payers, making it a potential opportunity for the space.

“If someone can be treated in an IOP setting versus an inpatient setting, on a per diem basis, it’s a fraction of the cost,” Terry Hyman, managing partner of Northwood Healthcare Partners, previously told BHB. “And if you can avoid that inpatient stay or a single ED visit, it is a highly economical alternative.”

Companies featured in this article: