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Forward-Thinking Health Providers Want to Fix Minds, Not Just Bodies

Behavioral health has always been the “stepchild” of the healthcare industry, but that’s slowly changing, according to experts who spoke at Connect Healthcare’s panel titled Crisis Management: Surging Demand for Behavioral Health.

Younger health providers, along with those who are forward-thinking, are realizing it’s important to fix minds and bodies. Likewise, state and federal legislators have opened their eyes and started to focus on mental health. Behavioral Health Association of Providers’ Andrew Martin pointed out that legislators introduced 86 behavioral health bills during the most recent session, compared to just 14 bills for the prior session.

With mental health in the spotlight, reimbursements are slowly increasing, which is creating more opportunities for healthcare real estate companies, panelists said.

“From an investment standpoint, there’s an extreme need that has not been met because we’ve been underbuilding for more than 15 years,” said architect Anthony Pings. “We desperately need these facilities. And it’s a really wonderful time because we’re so bad, we’re about to get better.”

Panelists explored the way mental health patients enter the healthcare system—most of them are admitted through emergency rooms because of physical conditions, and then evaluated for mental health conditions after physical ailments are ruled out.

Watch Hill Capital’s David Lebowitz noted that more and more health systems, both for-profit and not-for-profit, are looking for ways to treat mental health patients without clogging up their ERs or dedicating any hospital space. The solution is partnering with psychiatric hospitals and third-party providers.

“That’s definitely a trend,” he said. “It’s symbiotic.”

Lebowitz’s company has developed several freestanding psych hospitals with its joint venture partner, Signature Healthcare Inc. The JV owns and operates roughly 700 beds.

“The psych hospital space has received a lot of investment interest from private equity and REITs,” Lebowitz noted, pointing to Signature’s $400 million sale-leaseback deal with Sabra Health Care REIT for six behavioral health hospitals. “Investors are chasing yield, and it’s higher in this space than in others.”

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