This article is sponsored by NextGen Healthcare. In this Voices interview, Behavioral Health Business sits down with Javier Favela, Vice President of Solutions, Behavioral Health & FQHC/CHC, NextGen Healthcare, to talk about how integrated care can bolster revenue integrity and financial stability. He maps out the key financial challenges facing the behavioral health industry today and the steps providers can take to overcome them. He also explains how behavioral health organizations can optimize their investments to drive innovation and growth while controlling costs.

Behavioral Health Business: What life and career experiences do you most draw from, in your role today?

Javier Favela: I’ve spent my entire career in the behavioral health and nonprofit health care space. For about 15 years, I worked for a large community mental health organization that eventually shifted to a whole-person approach to care. As the Chief Financial and Operating Officer, I led the organization’s finances and business operations. I also served on many boards for peer support-run organizations, including as Chair for the March of Dimes and on the board of directors for Children Provider Networks.

I channel that experience through the technology lens, offering a unique perspective in my role today. Working with behavioral health organizations and FQHCs, I understand what it’s like to manage tight budgets, and I fully comprehend the importance of technology. As these organizations shift towards integrated care, I’ve been involved in developing business plans and strategies to ensure they are financially operational and clinically sustainable in the long term. My work at NextGen is deeply informed by my career experience in this field.

What are the key financial challenges facing the behavioral health industry today, and how can providers overcome them?

At the forefront of challenges, according to our surveys of executives nationwide, is the workforce issue. Although it’s improving slightly post-COVID, high turnover and high no-show rates remain problematic. The hiring quality of long-term staff is a significant pain point, creating financial challenges around productivity and production. When I was CFO, every staff turnover in our behavioral health programs cost between $10,000 to $15,000 due to hiring, training and production ramp-up, negatively impacting the bottom line.

This issue is exacerbated by double-digit staff turnover rates, sometimes exceeding 20%, which is financially draining. The shift to managed care and Medicaid in the nonprofit space has tightened payer rates, further challenging provider organizations. Post-COVID, many organizations used emergency funds for short-term pay increases to retain employees, but without long-term rate increases or diversification into prospective payment models, this remains a major financial challenge.

Competing with for-profit entities who have larger budgets and capital infusion has intensified the competition. Additionally, in the FQHC space, organizations are now competing against major players like Walgreens and CVS. Mergers and acquisitions in the commercial behavioral health sector have led to a lack of interoperability and challenges with disparate technology systems, resulting in poor revenue cycle management and millions left on the table. Despite these issues, workforce challenges still dominate executives’ concerns.

How has the current economic climate impacted providers’ revenue streams, and what strategies can they implement to mitigate the negative effects?

Organizations are left with the residual effects of short-term funding and how they used those funds, which ultimately create long-term issues. In the nonprofit space, we’re seeing a significant shift toward more sustainable revenue models. Innovators in the space are transitioning to become certified community behavioral health clinics (CCBHCs) with a long-term vision of holding dual licensure as both CCBHCs and federally qualified health centers (FQHCs).

This shift allows organizations to move into prospective payment models, helping them cover costs and provide quality services that wouldn’t be covered under a traditional fee-for-service model. On the physical health side, FQHCs are expanding into behavioral health services and aiming for dual certification as CCBHCs and FQHCs, which enables more flexibility in the services they offer. We’re seeing a lot of activity in the nonprofit space with mergers and acquisitions; 2023 and 2024 have been particularly significant years in this regard.

Innovators in the space are adopting a “go big or go home” mentality. Previously, organizations often had to outsource services not provided in-house through costly single-case agreements. Now, large enterprise organizations are acquiring specialty providers to bring those services in-house and reduce costs. Large, innovative organizations are merging to create economies of scale, consolidating technology into a single system across the continuum of care, and engaging with clinically integrated networks or accountable care organizations. By using data effectively, these organizations aim to improve care, reduce costs, and gain negotiation power to secure contracts, all while avoiding legal challenges of collusion. The major activity is occurring among large, enterprise-sized organizations willing to take risks.

How can behavioral health organizations balance the need for cost control with the imperative to invest in innovative programs and services to stay competitive?

Executives are focused on improving clinical workflows to enhance efficiency. The goal is to make providers more efficient, reduce overall provider and clinician burnout, and decrease case manager burnout. Two major areas of focus are improving turnover rates and keeping providers, clinicians, case managers and social workers satisfied, while also reducing no-show rates.

They are diversifying revenue, with nonprofits entering the commercial payer space and for-profits expanding into Medicaid. Another strategy involves adopting more sustainable financial models by becoming certified community behavioral health clinics or federally qualified health centers. These models shift organizations into prospective payment systems.

Additionally, focusing on technology and implementing a single system to improve business intelligence and data management is crucial. In the FQHC space, diversification is happening, with participation in clinical trials providing an additional revenue stream, and life sciences playing a key role where data is very important.

How is NextGen adapting its service delivery models to ensure financial viability while driving quality of care for providers and their patients?

Going back to the five key pillars we focus on in FQHC and behavioral health, improving clinical workflow and the provider experience is key. For us, this means enhancing our product specifically for these markets, with FQHC being our largest, and behavioral health our fastest-growing sector. About a third of all federally qualified health centers in the country use NextGen, and we are committed to improving the UI/UX for providers.

The voice of the customer drives our efforts to enhance clinical efficiencies and workflows. This includes integrating ambient and augmented technology, such as AI, to reduce clinician burnout. Our ambient assist technology allows providers in both physical and behavioral sessions to use AI to complete over 95% of clinical documentation without manually handling it. This not only improves provider experience but also boosts efficiency, enabling them to see more patients.

Patient engagement is another key area, especially post-COVID. Virtual visits and integrated patient engagement are essential for managing high-risk, high-cost members in value-based contracts. We are focusing on enhancing patient engagement, population health, care management, and data alignment to support financial sustainability as organizations transition to value-based care and alternative payment models.

Robust data analytics, benchmarking and cloud-based enterprise data are also vital for business intelligence and regulatory reporting needs. We are providing a comprehensive solution for business intelligence, covering the fundamental financial, clinical and operational aspects for providers. Lastly, having the best technology is not enough without the right tech-enabled wraparound services. We emphasize data orchestration, life sciences, clinical research, and optimization to ensure organizations have the support needed to move from point A to point B and achieve success.

What steps can providers take to diversify their revenue sources and reduce dependency on traditional funding?

I’m surprised by how many mid-sized organizations have not taken advantage of funding to become integrated care providers. Many are still late to adopting the whole-person approach to care, which payers are increasingly seeking in value-based or alternative payment models.

Looking at long-term financial models, becoming a certified community behavioral health clinic and an FQHC is critical. We’ve seen a bit of a lull in the mid-segment of the market, though innovators have seized these funding opportunities. For nonprofit organizations, there is significant potential to expand into commercial payers. Many nonprofits rely primarily on Medicaid, with less than 5% of their funding coming from commercial payers. Diversifying into this space can be lucrative, especially as commercial payers are incentivizing home-based and virtual services, which are needed in underserved and rural areas.

Additionally, for-profit organizations should consider expanding into the Medicaid space to create competition. Integrated care organizations are shifting toward sub-capitated models, negotiating per-member, per-month models, or performance-based contracts with incentives for meeting quality metrics. Economies of scale also play a role — the larger you are, the greater the opportunity to reduce overall administrative costs. This aligns with the “go big or go home” mentality that is driving change in the industry.

Finish this sentence: “In the behavioral health space, 2024 will be defined by…”

… technology and data innovation with artificial and augmented intelligence at the forefront.

I think it has been accelerated in 2024. When we think about the business model around financial, clinical, and operational sustainability becoming more efficient, and tackling the challenges from previous years, technology, data, and artificial intelligence will be instrumental.

Editor’s note: This interview has been edited for length and clarity.

NextGen Healthcare is the industry’s only platform to integrate comprehensive behavioral health, primary care, oral health, addiction treatment, and human services in one software solution. To learn more visit nextgen.com.

The Voices Series is a sponsored content program featuring leading executives discussing trends, topics and more shaping their industry in a question-and-answer format. For more information on Voices, please contact [email protected].