Payer partnerships are essential to successfully scaling a behavioral health organization.

However, the landscape of those partnerships is quickly changing as payers deal with an uptick in behavioral health utilization and value-based care contracting grows in popularity. Additionally, payers are increasingly looking for a continuum of services.

Historically, payers used a carve-out model for behavioral health services, which meant they lost a lot of intelligence and resources in the sector, according to Jenny Welling-Palmer, chief strategy officer of Thriveworks. But that model has quickly been changing, putting new pressures on payers. This, combined with the move towards value-based care, has complicated relationships between payers and providers.

“Payers are navigating quite a confusing landscape that’s very busy with lots of provider groups,” Welling-Palmer said at the Behavioral Health Business INVEST event. “They’re all measuring quality in 500 different ways. So it’s actually quite hard, in a way, to be on the payer side and ask, ‘Who do I go to as my providers? What’s my current perspective on the trends for in-person versus virtual therapy? How’s that going to land over time?’ So I think having a very close dialog and relationship with payers is really key.”

Lynchburg, Virginia-based Thriveworks operates 340 offices and has a staff of over 2,200 clinicians in 49 states and D.C. Founded in 2008, Thriveworks provides online and in-person mental health care to adults, teens and children.

Many health plans are looking to scale their behavioral health efforts through M&A. For example, UnitedHealth’s health service division purchased Refresh Mental Health in 2022.

“I think what’s interesting about those investors within a health plan is they’ve got good relationships with their behavioral health teams, and they’re saying, ‘we’ve just been really focused on access, access, access over the past few years,” Welling-Palmer said. “We’ve now have plans who are… saying, ‘Our total medical expenses are out of control. Behavioral health can no longer be this sacred cow to help us think about the investment and how we’re kind of like going for those high-quality providers where we know we should be really focused on.'”

Still, relationships between traditional providers and payers will always be a cornerstone for both parties. Payer relationships play a significant role in what company operators are interested in acquiring.

“So we always say at PAXs, for it to be a region or a state that we operate in, we have to do psychiatry, psychology, work comp, and have a federal payer and commercial payer,” Anthony DeSena, CEO and Co-Founder of PAX Health, said. “From there, we acquire, or try to acquire, a group that has the commercial contracts already and work around it that way. So that’s sort of our guardrails about going too fast and sort of our playbook on how we get to these new markets.”

PAX Health was formed with the acquisition of Behavioral Medicine Associates, Workers Comp Psych Net, and Reservoir Health. HCAP Partners back the organization with co-investment by Hamilton Lane.