Closing the Gap Between Perceived and Actual Demand in Behavioral Health

A large gap persists between people who perceive they need behavioral health services and those who actually seek out and receive appropriate care. There have been significant investments recently in innovation designed to close this gap and reach a greater percentage of the “perceived need” population.

Between the Lines

  • According to KFF’s 2020 Mental Health and Substance Use and State Fact Sheets, 37.7% of adults in the U.S. reported symptoms of anxiety and/or depressive disorder, a drastic increase from the reported 11.0% in 2019.
  • Many of those who perceive a need for mental health services do not use them. This suggests that perceived need is a necessary, but not sufficient, factor in accounting for behavioral health services utilization.
  • Untreated behavioral health conditions may have serious effects on peoples’ lives and on health care spending. Co-occurring regulative conditions and chronic medical conditions are associated with significantly more acute and expensive episodes.
  • The investment community is responding to this problem by investing in innovation that can facilitate an increase in the percentage of the “perceived need” group that translates into actual demand by receiving appropriate care.

By the Numbers

According to McKinsey & Company there has been a wave of investment in innovation in the behavioral health industry, with private equity and venture capital companies having invested more than $4.3 billion in behavioral health through June 2020.

Mckinsey Inc. Chart

Source: McKinsey & Company

  • Those technologies seeking to “close the gap” between perceived and actual demand include Digital Platforms to Provide Care, Digital Therapeutics, and Innovations in Care Delivery.
  • Together, these three categories make up 63.2% of the financial investment and 65.1% of the number of companies focused on reaching those with a perceived behavioral health need.
  • These technologies, if effective, will lower the barriers to behavioral health and help close the gap between perceived and actual demand.

Behavioral Health Valuation Implications

  • For those Behavioral Health providers that effectively integrate one or more of these innovations into their service lines, providers of inpatient and outpatient behavioral health services will likely experience an increase in business as access to their behavioral health improves.
  • Supply, or competition, will increase as new entrants enter the market to meet increased actual demand.
  • Supply constraints, such as available staff, psychiatrists, and techs will be exaggerated. Funding will continue to be a challenge.
  • Although there will be mitigating headwinds of increased competition, staffing constraints, and funding challenges, there is evidence to suggest that innovation and investment into technologies improving behavioral health access, assuming rapid adoption, will increase the value of existing behavioral health providers.

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© 2021

This is one in a series of related health care valuation posts: