PDF Behavioral Health Industry Overview
BEHAVIORAL HEALTH INDUSTRY OVERVIEW
September 2014
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BEHAVIORAL HEALTH MARKET OVERVIEW
The US Mental Health and Substance Abuse Services industry includes over 17,000 facilities with combined annual revenue of approximately $50 billion.
Including ancillary services, broader industry revenues represent over $300 billion combined. Mental health and substance abuse market has grown at a 2.1% CAGR from 2008 to 2014E and is
expected to grow at a 2.8% CAGR from 2014E to 2018P.
Demand for mental health services has reached an all-time high and continues to grow, while the
supply of hospital beds dedicated to mental health patients has steadily declined.
? 13.6% decrease in number of public psychiatric beds from 2000 to 2011
? Supply / demand disconnect has resulted in shorter stays, growth in outpatient / community-based services, and an increased prevalence of mental illness among prison and homeless populations
US mental health industry remains highly fragmented, continues to incorporate ACA changes, and
is expected to remain dynamic.
LARGE AND GROWING INDUSTRY ACCOMPANIED BY...
($ in billions)
...GROWING MENTAL HEALTH BUDGETS TO MEET DEMAND
Increasing or level budgets in 44 states.
2014E ? 2018P
$60 $40
$43.0 10.2
$44.0 10.5
$45.3 11.0
$44.6 10.9
$45.7 10.9
$46.9 11.1
$48.7 11.6
$50.5 12.0
$52.0 12.5
$53.2 12.8
$54.3 13.2
CAGR 3.4%
2.6%
13.3 13.7 14.0 14.4 14.8 15.2 15.8 16.3 16.8 17.2 17.5
$20
19.5 19.8 20.3 19.4 20.0 20.5 21.4 22.2 22.7 23.2 23.6
2.5%
$0 2008 2009 2010 2011 2012 2013 2014E 2015P 2016P 2017P 2018P
Mental Health & Substance Abuse Counseling / Residential Care Mental Health & Substance Abuse Clinics Psychiatric Hospitals
Source: 2012 Behavioral Health, United States Report from SAMHSA. Wall Street research, Treatment Advocacy Center, National Alliance on
Mental Illness, IBIS World Mental Health and Substance Abuse Clinics in the US March 2014, IBIS World Mental Health and Substance Abuse
Centers in the US February 2014, IBIS World Psychiatric Hospitals in the US December 2013, the Pew Center, and Congressional testimony.
1
MENTAL HEALTH AND NEUROLOGICAL DISORDERS CREATE LEADING DISEASE BURDEN ON US ADULTS
Major studies have indicated that Mental / Behavioral disorders have a profound impact on both length and quality of patient life.
LEADING CATEGORIES OF US DALY CONTRIBUTORS
Neuropsychiatric Disorders
Mental and Neurological Behavioral Disorders Disorders
13.6%
5.1% 18.7%
Cardiovascular and Circulatory Diseases
16.8%
Neoplasms
15.1%
Musculoskeletal Disorders
11.8%
Diabetes, Urogenital, Blood, and Endocrine
Diseases
Chronic Respiratory Diseases
8.0% 6.5%
Other Noncommunicable Diseases
5.1%
0%
5%
10%
15%
20%
Percent of Total U.S. DALYs
MENTAL / BEHAVIORAL DALY CONTRIBUTORS
Major Depressive Disorder
3.37%
Drug Use Disorders
2.61%
Anxiety Disorders
2.28%
Alcohol Use Disorders
1.40%
Schizophrenia
1.02%
Bipolar Disorder
0.71%
Dysthymia
Autism and Asperger's Syndrome
Eating Disorders
0.67% 0.46% 0.32%
ADHD and Conduct Disorder 0.25%
Other Mental and Behavioral Disorders
Idiopathic Intellectual Disability
0.12% 0.06%
0% 1% 2% 3% 4% Percent of Total U.S. DALYs
DALY metric provides a holistic
measure of total disease burden
Higher DALY scores may allude to
commercial opportunity based upon:
? Reduction of YLL, which may yield a
corresponding rise in YLD
? Niche opportunities for underserved
chronic conditions
? Extensive co-morbidities may provide
opportunities to create a best-in-class population health treatment platform
Americans with a Serious Mental
Illness (SMI) experience a significantly shorter life-span than the general American population
Disability-Adjusted Life-Year (DALY) is a metric that combines the burden of mortality and morbidity (non-fatal health problems) into a single number. The DALY metric is used to provide a single number to capture all of the health costs caused by a disease (or averted by an
aid program) and is calculated as the sum of Years Life Lost (YLL) due to disease and Years Lived with Disability (YLD).
Source: The World Health Organization (WHO), SAMHSA, 2010. US Burden of Disease Collaborators, JAMA, 2013, and
Congressional Testimony. 2
SUBSTANTIAL UNMET NEED FOR MENTAL HEALTH SERVICES RESULTING FROM GROWING DEMAND AND CONTRACTING SUPPLY
Utilization of prescription therapies has grown to help serve the unmet need for mental health services, while outpatient and inpatient services has remained flat.
INCREASING MENTAL HEALTH SERVICE USE DRIVEN BY...
13.0% 10.5%
13.2% 10.9%
12.8% 10.5%
13.0% 10.7%
12.9% 10.9%
13.3% 11.2%
13.5% 11.4%
13.4% 11.3%
13.8% 11.7%
13.6% 11.5%
14.5% 12.4%
7.4% 7.1% 7.1% 6.8% 6.7% 7.0% 6.8% 6.4% 6.6% 6.7% 6.6%
...PREVALENCE OF ADULT MENTAL ILLNESS AND ACA
18.6%
19.6%
21.2%
15.8%
14.9%
22.0%
Percent with any Mental Illness (AMI) in the Past Year
Percent Using Mental Health Services in the Past Year
0.7% 0.8% 0.9% 1.0% 0.7% 1.0% 0.9% 0.8% 0.8% 0.8% 0.8%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Any Type of Care
Outpatient
Prescription Medication
Inpatient
REDUCED SUPPLY DESPITE GROWING DEMAND RESULTS IN...
For the Years Ended December 31, 2000 to 2011
84
800
82
780
80
760
78
740
76
(13.6%) 720
74
700
72
70
680
68
660
66
640
64
620
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Beds (k)
Admissions (k)
18 or Older 18 to 25 26 to 49 50 or Older Male
Female
Age Group
Gender
...SUBSTANTIAL UNMET NEED & COMMERCIAL OPPORTUNITY ACROSS THE ADULT POPULATION
41.0%
62.9%
45.9%
Over 1/3 of SMI Patients & Over 1/2 of MMI Patients
DO NOT Receive Treatment
29.0%
Treatment in Diagnosed Population
8.5%
Any Mental Illness (AMI)
Serious Mental Moderate Illness (SMI) Mental Illness
Low (Mild) Mental Illness
No Mental Illness
Source: SAMHSA, Center for Behavioral Health Statistics and Quality. 3
GROWING POPULATION OF INDIVIDUALS ELIGIBLE FOR CARE
Healthcare reform aims to reduce the fiscal and psychological barriers to mental healthcare services.
REASONS FOR NOT RECEIVING MENTAL HEALTH CARE...
Could Not Afford Cost
Could Handle the Problem without Treatment
Did Not Know Where to Go for Services
28.2% 22.8%
45.7%
Did Not Have Time
14.3%
Did Not Feel Need for Treatment
10.2%
Concerned About Confidentiality
Might Cause Neighbors / Community to Have Negative Opinion
Fear of Being Committed / Having to Take Medicine
Did Not Want Others to Find Out
9.6% 9.5% 9.5% 8.2%
Might Have Negative Impact on Job
8.1%
Health Insurance Did Not Cover Enough Treatment
7.9%
Treatment Would Not Help
7.3%
Health Insuance Did Not Cover Any Treatment
0.0%
5.5% 10.0% 20.0% 30.0% 40.0% 50.0%
...ARE DIMINISHING THROUGH RECENT REFORMS
Recent changes from healthcare reform and
reimbursement policies may promote expanded utilization
? ACA seeks to reduce the negative stigma of mental
health and substance use disorder (SUD) treatments and services by:
? Including mental health and SUD benefits as
"Essential Health Benefits"
? Applying federal parity protections to mental health
and SUD benefits
? Providing more Americans with access to quality
healthcare, mental health and SUD services
? Integrated Care models shift focus on inpatient treatment
to a PCP lead team for treatment management
? Integrated care models may provide a path to greater
"at risk" posture for both payors and providers
HHS ESTIMATES 62 MILLION WILL GAIN COVERAGE
(millions)
Federal Parity Protections 30
Individual Markets 7
Small Group Markets 23
ACA Implementation
32
May be mitigated by ACA
Source: SAMHSA, Center for Behavioral Health Statistics and Quality. 4
SUBSTANTIAL UNMET NEED FOR MENTAL HEALTH / SUBSTANCE ABUSE
Substance abuse and mental health co-morbidity is untreated in over 50+% of population.
MAJORITY OF POPULATION REMAINS UNTREATED...
60MM 50MM
SUD, No Mental Illness 12.3MM
SUD
Treatment
SUD + Mental
Only 4%
Treatment
8%
40MM
SUD and Mental Illness 8.4MM
Mental Treatment
Only 34%
No Treatment
54%
30MM
20MM 10MM
Mental Illness, No
SUD 35.3MM
...PRESENTING A CLEAR UNMET PATIENT NEED
Adults diagnosed with both Substance Use Disorder
(SUD) and Any Mental Illness (AMI) remain largely underserved.
? Payment / reimbursement barriers may exist to achieving
appropriate care
- Certain states prohibit same-day billing for certain
combinations of behavioral health services
- While Medicare often covers the services of licensed
mental health practioners, many substance use treatment professionals are not licensed - which creates a funding gap
Only 8% of properly diagnosed patients receiving
treatment, receive appropriate care
PREVALENCE OF SUBSTANCE ABUSE AMONG MENTALLY ILL
39.9% 34.5%
29.4% 22.6%
18.0%
8.6%
MM SUD and Mentally Ill Patients
Source: SAMHSA, Center for Behavioral Health Statistics and Quality.
18 - 25
26 - 49 SMI AMI
50+ 5
EVOLVING MENTAL HEALTH REIMBURSEMENT PARADIGM
Even as Medicare expands, private payors will be increasingly pressured to maintain coverage.
PRE-ACA
Fee-for-service dominates the
entire healthcare industry including mental / behavioral health
State mental institutions have
historically borne a heavy burden for those with a "Serious Mental Illness", however, recent history has seen significant closure of state institutions
Employers could elect to offer
less coverage to employees on mental health than on traditional physical health
CURRENT MENTAL HEALTH FINANCING
Other Private 3%
Out of Pocket
12%
Private Insurance
27%
Private 42%
Other Federal
5% Medicare
8%
Other State and Local
18%
Medicaid 27%
Federal 13%
State 45%
ACA REFORM IMPLEMENTATION
State sponsored institutions
have seen a reduction of funding and facilities
Medicare expansion and
Mental Health Parity laws could expand potential patient population by up to 62 million
ACA parity regulations promote
mental health as part of an "Essential Health Benefits"
Integrated care platforms (i.e.,
Medicare health homes) are piloting bundled payment programs
2009
Source: National Alliance on Mental Illness. State Legislation Report, 2013. 6
POTENTIAL IMPACT OF CONTINUING HEALTHCARE REFORM
Higher levels of integration of medical and physical expected to promote higher quality
outcomes based care.
Current
Goal
Gradual Movement to Integrated Healthcare
Coordinated
Co-Located
Integrated
Clinical Delivery
Level 1: Minimal Coordination
Level 2: Basic Collaboration at a
Distance
Level 3: Basic Collaboration
On-Site
Level 4: Close Collaboration On-Site with Some
System Collaboration
Level 5: Close Collaboration
Approaching an Integrated Practice
Individual screening / assessment
Separate treatment plan Evidence Based Practice
("EBP") unique to each specialty
Individual screening / assessment
Separate treatment plan Separate responsibility for
care / EBP
May agree to specific screening for in-house referrals
Some shared info between service plans
Shared knowledge of EBPs
Agree on specific screening Collaborative treatment
plans for some patients Some EBPs and training
shared, but focused on specific population
Consistent common screenings
Collaborative treatment plans for shared patients
EBPs shared across system with some joint monitoring
Physical / Behavioral health are separate issues
Patient must navigate separate practices
Health needs treated separately; records are shared
Patients may be referred; care access still impaired
Health needs treated separately at same site
Proximity allows referrals to be more successful
Health needs treated separately at same site
Internal patient referrals allow for better follow-up
Health needs treated by team for shared patients
Patient treated by a team, as needed
No coordination or management
Up to providers to integrate
Some practice leadership in info sharing
Some provider buy-in to collaboration
Org leaders supportive, but co-location viewed as `project' or `program'
Provider buy-in to effective referrals
Leadership supports
Leadership supports closer
integration through problem integration, practice areas
solving system barriers
remain fundamentally the
Greater buy-in although not same
consistent
Nearly all providers buy-in
Level 6: Full Collaboration a Transformed / Merged Integrated Practice
Standard population based medical and BH screenings
Single patient treatment plan EBPs are team selected
All health needs treated by a team
Patient experiences a seamless response to all healthcare needs
Leadership supports integration as primary practice model
Integrated care embraced by all providers
Organization Experience
Patient
Practice /
Business Model
Separate funding No sharing of resources Separate billing
Separate funding May share resources for
single projects Separate billing
Separate funding May share facility expenses Separate billing
Separate funding; may share Blended funding; various
grants
forms of expense sharing
May share some OpEx
Combined billing or
Separate billing
otherwise agreed upon
Integrated funding Shared resources Billing maximized for
integrated model
Timely and autonomous decisions on care
Existing model
Maintains current operating structure
Some info sharing helpful to patients & providers
Co-location leaders to more Removal of some system
direct interaction
barriers
Referrals are more successful Patients viewed as shared
responsibility
Services may overlap Some aspects of care may
take a long time to be diagnosed
Info sharing may not be
Proximity may not lead to
broad enough to affect care greater collaboration
Referrals may fail due to
Limited flexibility with no
barriers
change to traditional roles
System issues may limit collaboration
Conflicting agendas may create tension
More responsive patient care All / almost all system barriers Increasing provider flexibility resolved
Patient needs addressed as they occur
Practice changes may create lack of fit for some providers
Time is needed to smooth integration
Sustainability issues may stress the practice
Outcome expectations not clearly established
Weaknesses Strengths
Source: SAMHSA. 7
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