Diversity across service lines and payer contracts is often beneficial to both behavioral health patients and businesses.

Varying marketing channels can offer both similar and distinct benefits, according to industry insiders.

“Just like you would diversify your payer mix to mitigate your risk portfolio, you need to diversify your marketing mix,” Glenn Hadley, senior director of growth solutions at Unlock Health, said at a recent Behavioral Health Business webinar. “Gone are the days where you can just throw a whole lot of money into one channel and call yourself a business. It does take diversification these days in order to grow.”

Nashville, Tennessee-based Unlock Health is a technology and services growth platform designed for health care organizations. The company acquired SPM Group in November 2023. 

Even marketing that drives revenue may not always be beneficial for a company’s long-term goals.

“Not all marketing is good marketing,” Daniel Gemp, managing director of strategic markets at Unlock Health, said. “Not all categories of marketing add multiples of value. A lot of them just add real-time cash flow. … It may generate wonderful cash flows and some near-term scalability, short-term throttle control on census levels, but it’s not actually an acquirable strategy compared to wholly owned marketing channels.”

While some cash flow streams may not drive exit value, they can still benefit behavioral health providers’ businesses, Steve Garbon, managing director of behavioral health and health care staffing at The Braff Group, said during the webinar. Providers can use revenue to diversify their businesses and build out other service lines, building growth potential.

The benefits of expanding to a more holistic continuum of care may differ depending on a provider’s exit timeline, however.

Providers with a longer runway to an exit may be better suited to take on the risk of creating a new service line, Ted Jordan, managing director at The Braff Group, said. More time before an exit also allows executives to focus on the exit itself.

Diversification outside of business lines can also benefit providers. Expanding marketing channels presents an avenue to increase revenue and valuations while minimizing risk.

Investing in multiple forms of search engine ads, for example, ensures that providers are not over-leveraged. It also creates sustainable revenue, Hadley said.

“The problem with [Google ads] is that it’s a direct money auction, and you’re essentially just going toe to toe with other operators,” Hadley said. “All it would take is for a new operator to come into the space and throw a larger budget out there, and you have directly impacted market share.”

Another method to generate sustainable revenue, Gemp said, is through strategic partnerships.

For example, substance use disorder (SUD) providers have partnered with divorce attorneys. Rates of drug abuse are higher among divorced people, creating opportunities for providers to access patients in need of care.

Additionally, partnering with other behavioral health providers can create referral pipelines.

Diversification of business lines and marketing channels is key to growing both revenue and value, akin to the benefits of diversifying payer partners, Jordan said.

“There’s going to be a difference between the evaluation of somebody who is 100% out-of-network and somebody who is 100% in-network,” Jordan said. “All else equal, that in-network revenue is going to be seen as more attractive, less risky, and therefore more valuable.”

While completely in-network providers are likely to have higher valuations, a balance between both in-network and out-of-network business can be advantageous, according to Jordan. Providers cannot be in-network with every payer, and a specific catchment area may lead to out-of-network patients.