UNDERSTAFFED, UNLICENSED, AND UNTRAINED: BEHAVIORAL HEALTH UNDER PRIVATE EQUITY

The report examines the growth of private equity (PE) in the behavioral health sector, specifically focusing on autism, eating disorders, and addiction treatment. It argues that PE's demand for outsized returns in an underfunded sector creates risks such as inadequate staffing, reliance on unlicensed personnel, and the potential for patient abuse. The document provides detailed case studies of Sequel Youth and Family Services and Community Intervention Services to illustrate these risks, including allegations of fraud, neglect, and systemic abuse across multiple US states.

• Private equity investment in behavioral health has grown rapidly, with PE buyers increasing their share of acquisitions from 48% in 2017 to 69% in 2018.
• Several factors make the behavioral health industry attractive to private equity, including high fragmentation (nearly 18,700 companies with no one holding more than 5% market share), expanded insurance coverage via the Affordable Care Act and Mental Health Parity Act of 2008, and increased funding for opioid treatment through the 2018 SUPPORT for Patients and Communities Act.
• The pursuit of high returns over short timeframes creates systemic risks in behavioral health, including reduced staffing ratios, overreliance on unlicensed staff to cut costs, and pressure on physicians to provide unnecessary services.
• Sequel Youth and Family Services, owned by Altamont Capital Partners, has been linked to severe patient harm and neglect across multiple states, including the death of a teenager in Michigan and reports of 'unsafe, squalid living conditions' in Alabama.
• Sequel Youth and Family Services faced license threats and closures in Utah and Ohio due to inadequate staffing, violence, and failure to respond to COVID-19 outbreaks.
• Community Intervention Services, owned by H.I.G. Capital, was involved in a whistleblower lawsuit alleging it fraudulently billed Medicaid (MassHealth) for services provided by unlicensed and unsupervised staff.
• The report highlights a pattern of understaffing in H.I.G. Capital's other healthcare investments, such as Wellpath, which has faced numerous lawsuits and investigations regarding negligence and untimely care.

APA

OGrady, E. (2020). UNDERSTAFFED, UNLICENSED, AND UNTRAINED: BEHAVIORAL HEALTH UNDER PRIVATE EQUITY. Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2020/09/PESP-behavioral-health-9-2020.pdf

Chicago

OGrady, Eileen. UNDERSTAFFED, UNLICENSED, AND UNTRAINED: BEHAVIORAL HEALTH UNDER PRIVATE EQUITY. Private Equity Stakeholder Project, 2020. https://pestakeholder.org/wp-content/uploads/2020/09/PESP-behavioral-health-9-2020.pdf.

Wikipedia

{{cite report |last1=OGrady |first1=Eileen |title=UNDERSTAFFED, UNLICENSED, AND UNTRAINED: BEHAVIORAL HEALTH UNDER PRIVATE EQUITY |publisher=Private Equity Stakeholder Project |date=September 2020 |url=https://pestakeholder.org/wp-content/uploads/2020/09/PESP-behavioral-health-9-2020.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ogrady2020understaffed, author = {OGrady, Eileen}, title = {{UNDERSTAFFED, UNLICENSED, AND UNTRAINED: BEHAVIORAL HEALTH UNDER PRIVATE EQUITY}}, institution = {Private Equity Stakeholder Project}, year = {2020}, month = sep, url = {https://pestakeholder.org/wp-content/uploads/2020/09/PESP-behavioral-health-9-2020.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }