Mental Health and Substance Abuse Clinics in the US Industry Market Research Report Now Available from IBISWorld

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There is mounting appreciation of the economic, personal and societal benefits of treating people who suffer from mental illness or substance abuse. Combined with a shift of treatment from inpatient to outpatient settings, this factor has fostered growth for the Mental Health and Substance Abuse Clinics industry. Rising appreciation for mental health and substance abuse treatments will aid demand in the next five years. The improving economic environment will also play into industry growth, with higher disposable incomes and private health insurance coverage supporting revenue growth. Medicare will also increase coverage for mental health; however, a shortage of skilled labor and mounting pressure to decrease costs will lead to further consolidation. For these reasons, industry research firm IBISWorld has added a report on the Mental Health & Substance Abuse Clinics industry to its growing industry report collection.

IBISWorld Market Research

IBISWorld Market Research

Healthcare reform will expand coverage for mental health services and boost demand

There is mounting appreciation of the economic, personal and societal benefits of treating people who suffer from mental illness or substance abuse. Combined with a shift of treatment from inpatient to outpatient settings, this factor has fostered growth for the Mental Health and Substance Abuse Clinics industry. Over the five years to 2012, revenue is expected to grow at an average annual rate of 2.3% to $14.6 billion. While the majority of revenue is garnered through government sources, a significant portion of revenue depends on private insurance and out-of-pocket payments, according to IBISWorld industry analyst Caitlin Moldvay. Consequently, revenue dipped during the recession. With rising employment favorably affecting private insurance rates, industry revenue is expected to rebound. Under Medicare, coverage for outpatient mental health services has risen. As a result, clients' co-payments have decreased, boosting demand. Similarly, employer-sponsored health plans were recently required to cover mental health comparably with other healthcare services. By contrast, Medicaid, a state healthcare system, has been strained because of state budgetary issues.

Despite mounting costs, operating profitability has managed to improve as the percentage of for-profit operators has increased. “For-profit operators earn significantly higher margins than nonprofit organizations, so their growing activity in the industry is causing overall margins to increase,” Moldvay says. Over the five years to 2012, the number of industry operators is expected to grow at an average annual rate of 1.9% to 4,836 companies. The Mental Health and Substance Abuse Clinics industry is highly fragmented, and establishments tend to be small. Concentration varies among for-profit, public and nonprofit firms. For-profit firms tend to be larger, and this segment of the industry is more highly concentrated. The reverse holds true for nonprofit organizations. Over the past five years, the Mental Health and Substance Abuse Clinics industry has undergone a period of consolidation. For example, CRC Health Corporation, one of the largest companies in the industry, acquired 10 outpatient treatment clinics during the period, significantly augmenting its market share concentration. Within the industry, consolidation has been driven by opportunities to leverage new technologies, to exploit new regulatory initiatives, and to introduce economies of scale and scope into an industry that is currently highly fragmented.

Through 2017, the improving economic environment will likely enhance industry revenue growth. In 2013, revenue is projected to increase, marking a continued recovery that includes higher personal disposable income and private health insurance coverage. The healthcare reform of 2010 will expand coverage of industry services, bolstering demand. In addition, Medicare is expected to increase coverage for mental health. For more information, visit IBISWorld’s Mental Health and Substance Abuse Clinics report in the US industry page.

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IBISWorld industry Report Key Topics

This industry includes establishments with medical staff who primarily provide outpatient services related to the diagnosis and treatment of mental health disorders and alcohol and other substance abuse. The industry excludes facilities or hospitals that treat inpatients. Furthermore, the industry does not include establishments that primarily use medical treatment to care for mental health patients.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
IBISWorld
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