Mental Health & Substance Abuse Services Industry Overview

Excerpt from Mental Health & Substance Abuse Services Report

Companies in this industry provide outpatient and residential care and treatment for individuals with mental health and substance abuse illnesses. Major companies include CRC Health and The Betty Ford Center in the US, the Centre for Addiction and Mental Health in Canada, and the Crossroads Centre in Antigua (founded by Eric Clapton).

Competitive Landscape

Demand for mental health and substance abuse services is driven by availability of new drugs and treatments and funding policies of health care insurance programs. The profitability of individual facilities depends on controlling costs and attracting physician referrals. Large companies have advantages in group purchasing and in marketing to physicians and managed health care companies. Small facilities compete effectively by providing superior patient service, integrating treatment with follow-up procedures, and specializing by treatment or demographic group. The industry is highly fragmented: the top 50 companies account for only about 20 percent of industry revenue.

Products, Operations & Technology

Revenue for mental health and substance abuse facilities comes primarily from patient care. Other sources of revenue include the management of health care programs for corporations and hospitals. Not-for-profit organizations such as Betty Ford and Hazelden also receive private contributions. Outpatient facilities account for about 60 percent of industry revenue; residential facilities account for about 40 percent.