The Evolving Private Psychiatric Inpatient Market
- 627 Downloads
The private psychiatric hospital market has exhibited great volatility over time. From 1976 to 1992, the number of hospitals more than doubled, while in the decade following, the number of facilities dropped by half. Recently, however, the industry has begun to grow again. The evolution of this market reflects the response of a private industry with access to capital markets to changes in both the supply of substitutes and the demand for services. Most recently, the limited supply of facilities and expanded demand for psychiatric services have spurred renewed growth. The two leading firms today, Universal Health Services, Inc., which rode the market crest and downturn since the 1980s, and Psychiatric Solutions, Inc., a newer entrant, have employed different strategies to take advantage of these opportunities. The rapid responsiveness of the private psychiatric hospital market, as exemplified by these two firms, presents significant potential for shaping future mental health policy.
KeywordsPsychiatric Hospital Occupancy Rate Market Leader Behavioral Health Care Prospective Payment System
- 2.Fine J, Super KE. Repeal of some States’ CON laws spurs psych hospital construction. Modern Healthcare. 1986;16(21):74–76.Google Scholar
- 3.Salinsky E, Loftis C. Shrinking inpatient psychiatric capacity: cause for celebration or concern? National Health Policy Forum Issue Brief No. 827. August 1, 2007.Google Scholar
- 7.Frank RG, Glied SA. Better but not well: mental health policy in the United States since 1950. Baltimore: Johns Hopkins University Press; 2006.Google Scholar
- 8.Levenson A. Growth of investor-owned psychiatric hospitals. American Journal of Psychiatry. 1982;39(7):902–907.Google Scholar
- 9.Gellar J. The last half-century of psychiatric services as reflected in psychiatric services. Psychiatric Services. 2000;51(1):41–67.Google Scholar
- 12.Manderscheid RW, Berry J (eds). Mental Health, United States, 2004. U.S. Department of Health and Human Services.Google Scholar
- 14.Scotto E. Specialty healthcare services. Needham & Company Industry Report 2003.Google Scholar
- 15.Kerr P. Charter medical and Texas settle a case. New York Times. January 1, 1993.Google Scholar
- 16.Nodell B. National medical enterprises persuades wall street. Los Angeles Business Journal. November 22, 1993.Google Scholar
- 17.Freudenheim M. Hospital Corp. Drops Psychiatric Unit Sale. New York Times. December 21, 1989.Google Scholar
- 18.Hospital Corporation of America, 2007, Form 10-K, retrieved June 5, 2008, from Edgar Online database, http://www.sec.gov/edgar.shtml.
- 19.Magellan Health Services, Inc., 2007, Form 10-K, retrieved June 5, 2008, from Edgar Online database, http://www.sec.gov/edgar.shtml.
- 20.Community Psychiatric Centers (CPC) Company History, retrieved on June 5, 2008, from Thomson ONE Banker database, http://banker.thomsonib.com.
- 21.Annual Survey: Behavioral Healthcare Delivery Today. National Association of Psychiatric Health Systems.Google Scholar
- 22.Costa P. The U.S. hospital industry. ABN AMRO Industry Report. 2001.Google Scholar
- 23.Covall M. Medicare prospective payment comes to psychiatric hospitals: the long-awaited Medicare. Behavioral Health Management. January 1, 2005.Google Scholar
- 24.Lehrich D. Behavioral health care: ‘Three Pillars’ stand strong. Deutsche Bank Industry Report. June 26, 2006.Google Scholar
- 25.Lehrich D. Behavioral health care: solid fundamentals remain in place. Deutsche Bank Industry Report. September 5, 2007.Google Scholar
- 26.Morgan F. Industry update: inpatient psychiatric facility prospective payment system. Jefferies Industry Report. November 25, 2003.Google Scholar
- 28.Hough J. The SmartMoney.com EV/EBITDA screen. SmartMoney Magazine. April 16, 2003.Google Scholar
- 29.Ferris K, Pecherot Petitt B. Valuation: avoiding the winner’s curse. Upper Saddle River: Financial Times Prentice Hall Books; 2002.Google Scholar
- 30.Universal Health Services, Inc. (UHS), 2007, Form 10-K, retrieved June 5, 2008, from Edgar Online database, http://www.sec.gov/edgar.shtml.
- 31.Fong T. San Diego-based psychiatric services company to merge with Tennessee firm. Knight Ridder/Tribune Business News. May 7, 2002.Google Scholar
- 32.Psychiatric Solutions, Inc. (PSYS), 2007, Form 10-K, retrieved June 5, 2008, from Edgar Online database, http://www.sec.gov/edgar.shtml.
- 33.Universal Health Services, Inc. (UHS), 2008, Q1 2008 Earnings Call, 25 April, retrieved June 6, 2008, from Thomson ONE Banker database, http://banker.thomsonib.com.
- 34.Kershaw S. The Murky politics of mind–body. New York Times. March 30, 2008.Google Scholar
- 35.Jeffrey S. Mental health parity bill passes house, but differs from senate bill. Medscape Medical News. March 7, 2008.Google Scholar
- 36.Universal Health Services, Inc. (UHS), 2008, Q4 2007 Earnings Call, 29 Feb, retrieved June 6, 2008, from Thomson ONE Banker database, http://banker.thomsonib.com.
- 37.President’s New Freedom Commission on Mental Health. Achieving the promise: transforming mental health care in America. Final Report. DHHS Pub. No. SMA-03-3832. Rockville, MD: 2003; 79–85.Google Scholar
- 38.U.S. Department of Health and Human Services. Mental health: a report of the surgeon general—executive summary. Rockville: U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, Center for Mental Health Services, National Institutes of Health, National Institute of Mental Health; 1999; 171, 258, 287–288.Google Scholar