Multi-state behavioral healthcare strategies

Global Publication May 2018

Global law firm Norton Rose Fulbright and leading financial advisor Duff & Phelps have issued a white paper, Multi-state behavioral strategies: Value creation and challenges, that explores value creation through the expansion of behavioral healthcare organizations across multiple states and the challenges that the industry faces today.

The behavioral healthcare industry is growing rapidly, there is increasing availability of governmental and commercial reimbursement and providers are in high demand. An imbalance between patient demand and patient access to care has spurred accelerated investment, consolidation and growth in the industry. These trends create new opportunities, and challenges, when state lines are crossed. This article addresses the implications of a multi-state expansion strategy from a variety of viewpoints. It will discuss the value creation, regulatory and compliance challenges and other operating considerations of a multi-state behavioral healthcare practice.

Benefits of a multi-state practice

Healthcare practices operating in multiple states can benefit in a variety of ways, including: a lower financial risk resulting from a more diversified payor base, increased value by leveraging economies of scale and expanded access to services through the use of telehealth.

Regulatory considerations

When behavioral healthcare practices utilize a multi-state strategy there are regulatory concerns to be considered, including variations in the corporate practice of medicine doctrine, professional licensure requirements, state and federal privacy laws, facility and program licensure, and governmental and commercial reimbursement rates.

Growth and scale

Investing in and operating practices in multiple states requires careful consideration of the challenges to effectively growing and scaling into a larger operation. A contiguous state approach versus a noncontiguous state approach is one such factor. While a contiguous state approach offers increased development opportunities for integrated care, it also can inhibit the opportunity to reach the largest potential customer base.

2017 activity

The past year showed a continuing trend of vigorous acquisition activity in the behavioral health sector. This year is expected to see continued growth in deal volume in the area of behavioral health that could extend for years to come.

Read the full article, Multi-state behavioral strategies: Value creation and challenges.

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