As the share of U.S. adults receiving mental health care treatment steadily grows, for-profit companies are playing an increasingly important role.
More than 40% of inpatient mental health beds were operated by for-profit entities as of 2021, according to unpublished data from Morgan Shields, an assistant professor at Washington University in St. Louis who studies quality in behavioral health care. That’s up from about 13% in 2010. (The number of mental health beds held relatively constant during that time.)
Experts tie this growth to provisions of the Affordable Care Act, which made mental health care an essential health benefit that all insurance plans are required to cover.
Before the law, millions of Americans lacked meaningful mental health care coverage by their insurers — if they had any coverage at all. That changed with the law’s passage in 2010. Three years later, the Obama administration went further, issuing rules that require plans to pay more for mental health care, and to pay for it as long as patients need it. (Some plans had previously imposed hard caps on the number of days they would cover.)
Wider access to and increased reimbursement of mental health services piqued the interest of for-profit corporations, said Eileen O’Grady, who until recently served as program director at the Private Equity Stakeholder Project, a nonprofit organization that researches the industry.
“Investors in for-profit entities see that as an opportunity to make money,” she said, “in a space that had not historically been seen as super profitable.”
Shields and other researchers have repeatedly flagged concerns about lower quality of care at mental health facilities owned by for-profit corporations, in part due to efforts to cut staff and reduce costs. Companies have defended the quality of care they provide.
ProPublica reported Monday that over 90 psychiatric hospitals across the country have violated the Emergency Medical Treatment and Labor Act in the past 15 years. The vast majority of them — around 80% — are owned by for-profit corporations.
Yet only a handful have faced any consequences from either the U.S. Centers for Medicare and Medicaid Services or the inspector general of the Department of Health and Human Services, both of which are responsible for regulating the law. In the rare cases when hospitals have faced fines, the penalties have been trivial compared to the earnings of each for-profit hospital chain, the investigation found.
According to ProPublica’s analysis of CMS data, about half of all the hospitals cited were owned by just two corporations — Universal Health Services and Acadia Healthcare — which together operate hundreds of inpatient and outpatient behavioral health facilities, in addition to psychiatric hospitals. (UHS made nearly $16 billion in revenue last year, and Acadia collected more than $3 billion.)
From 2010 through the second quarter of this year, 34 of UHS’ psychiatric hospitals had been cited with EMTALA violations. Two, Brentwood Behavioral Healthcare of Mississippi and Three Rivers Behavioral Health in South Carolina, settled with the HHS inspector general for a total of $375,000.
In its May 9 enforcement action against Brentwood, the inspector general of HHS found that, in June 2021, the hospital’s interim CEO directed staff to refuse to accept seven patients from other facilities under the pretense that the facility “did not have the capacity” to treat them. “In each instance, however, Brentwood had the capacity,” an inspector general press release accompanying the enforcement action said, “but refused the transfer because the individual needing treatment was uninsured.”
UHS spokesperson Jane Crawford said the company has 134 facilities that are subject to EMTALA. “While there have been isolated citations associated with technical EMTALA compliance over the 15-year time period in question at some of our facilities, over 75% of UHS Behavioral Health (BH) facilities did not have any EMTALA citations during this time period,” Crawford said. “As such, the narrative or belief that UHS’ facilities as a whole do not comply with EMTALA or attempts to circumvent its requirements is inaccurate and incorrect.”
In a separate statement, she said the company’s psychiatric hospitals “do not select patients based upon insurance status or ability to pay. All UHS facilities are committed to complying with their EMTALA obligations as applicable and provide the requisite care and treatment to all patients who present to the facility regardless of ability to pay.”
As for what happened at Brentwood, Crawford said that the hospital “inadvertently violated rules and regulations” due to “poor internal communication and process failure in a one-month period of time.” Brentwood “promptly revised its practices to address any such future concerns and has not had any EMTALA related issues since that time,” she added.
On the events at Three Rivers, Crawford said that of the 11 patients that CMS said it denied to accept for transfer, citations related to 10 of them were ultimately “rescinded as it was determined that EMTALA did not apply to those patients.” She added that “at no time did Three Rivers fail to respond or accept a fax request based upon any prospective patient’s insurance status or ability to pay.” CMS did not respond to requests to clarify whether the citations were rescinded, but they remain on its website.
Inspectors have cited 12 Acadia hospitals for EMTALA violations since 2010. However, only one — Park Royal Hospital in Florida — has been fined by the inspector general; in 2019, the agency fined the hospital just over $52,000.
“Our goal is always to provide the best quality care to anyone seeking treatment at one of our facilities, and we take our compliance obligations very seriously,” Acadia spokesperson Tim Blair said in an email. He did not respond to subsequent questions about quality of care at Park Royal.
Dr. Jane Zhu, an associate professor of medicine at Oregon Health and Science University, said decisions made by for-profit psychiatric hospitals may be driven by financial interests. Denying care to patients without insurance or with lower-paying forms of insurance can help increase profits, Zhu said.
Those same financial incentives may drive for-profit hospitals to turn away more complicated patients — such as those who are aggressive or violent while in the throes of a mental health crisis, Zhu added. In these situations, hospitals can save on staffing and other costs if they admit healthier patients and avoid patients with the most severe psychiatric needs — a tactic she called “cream-skimming.”
Both CMS and the HHS inspector general declined to comment on why psychiatric hospitals owned by for-profit corporations have so infrequently faced consequences for EMTALA violations.
Federal law caps the amount that the HHS inspector general can fine for EMTALA violations, an agency spokesperson said. In 2024, that amount was about $66,000 per violation for hospitals with fewer than 100 beds, and $133,000 per violation for hospitals with more than 100 beds. (The figure increases annually for inflation.)
Since 2010, in four of the five cases in which the agency settled with psychiatric hospitals for EMTALA violations, the amounts were well below the maximum allowable. The inspector general’s office declined to comment why.
Former staffers from both CMS and the inspector general’s office said that the lack of consequences for EMTALA violations may be emboldening hospitals to turn away patients that could hurt their bottom line.
“There are a lot of CEOs who will take that risk — they say, ‘Yeah, we know we dumped that patient,’ or, ‘They’re not going to fine us anyhow,’” said a former CMS official focused on EMTALA who spoke on the condition of anonymity because of ongoing work in the industry.
And even in the cases when facilities do face fines, the sums have been minimal compared to chains’ bottom lines.
“Hospitals may see those small-dollar figures as just the cost of doing business,” said a former senior official in the HHS inspector general’s office who spoke on the condition of anonymity for fear of affecting future job opportunities. “They weren’t seen as a particular deterrent.”
U.S. Rep. Frank Pallone Jr., D-N.J., ranking member of the House Energy and Commerce Committee, said ProPublica’s findings are cause for concern.
“In the face of a large mental health crisis, we should be doing more, not less, to ensure people have access to the care and treatment they need,” he said in a statement.
“Medicate Him and Ship Him Out”
Perimeter Healthcare is one such company whose growth came years after passage of the ACA. In September 2016, Perimeter — backed by $8 billion private equity firm Ridgemont Equity Partners — acquired another company and, with it, five residential treatment facilities and three psychiatric hospitals.
By May 2019, Perimeter acquired its six and seventh hospitals. The hospitals’ former parent company, SAS Healthcare, was indicted months earlier for violating the Texas mental health code. It later pleaded guilty to one count and paid a $200,000 fine; the county dropped the other charges.
The hospitals in Dallas and Arlington aimed to “serve as the gold standard for inpatient psychiatric care,” Rod Laughlin, Perimeter’s founder, said in a press release announcing the acquisition.
But within years of Perimeter taking over, the Dallas hospital again was in the spotlight.
In August 2023, CMS found that Perimeter Behavioral Hospital of Dallas violated EMTALA in four ways when staff refused to examine a patient who had tried to kill himself. (“If that is the patient I am thinking of, he can’t be here,” a hospital staff member told a police officer at the time, according to CMS records. “All we can do is medicate him and ship him out.”) Under the law, hospitals are required to screen and stabilize all emergency patients before discharging them.
And less than a year later, at the same hospital, staff pushed for another patient to be transferred elsewhere after he started flipping chairs.
That led to a standoff between staff and police as the patient slammed against the walls, trying to escape.
“Legally we can’t touch him because he is not our patient,” a hospital staff member told an officer during the exchange, according to CMS records.
With that, the officer called another officer, who asked hospital staff if there was “a particular reason” they were refusing to admit the patient.
“This individual here is beyond our ability to treat” due to his “extreme aggression,” a staff member responded. “We can’t manage him.”
“Under EMTALA since he is on your grounds EMTALA says you guys are responsible — so we are having a disagreement here,” the second officer responded. “I guess,” the officer added, “my next call is to CMS.”
“It is not even necessary to call CMS,” the hospital staff member said, “but feel free to do that.”
Eventually, CMS was called. And some two weeks after the incident, the agency found that the hospital had violated EMTALA in three ways, including failing to provide even the most basic care through a medical examination of the patient — beyond just eyeballing him.
When hospitals breach the law, they are required to send plans to CMS detailing how they will avoid violating EMTALA in the future. Plans of correction filed by Perimeter Behavioral Hospital of Dallas said the hospital would revise some of its materials, including training slides, a test, a self-attestation form used in staff training and a medical screening form for patients. Officials also said they would monitor compliance with the law by reviewing patient logs daily. But the hospital also noted multiple instances in which officials believed “no changes were needed” to its policies.
Beyond responding to CMS with these plans, the hospital did not face consequences from the agency, or from the HHS inspector general for either set of findings. The agencies have not responded to questions about the lack of follow-up in the Perimeter Dallas cases.
Perimeter Healthcare and Ridgemont Equity Partners did not respond to requests for comment.
Lately, lawmakers and regulators have expressed particular alarm about health facilities owned by private-equity companies — like Ridgemont Equity Partners — which typically take control of a business for a relatively short time, restructure it, and resell it at a profit.
Data on for-profit health facilities, in general, shows worse results for both hospitals and nursing homes after they are acquired by private equity firms. A January report by HHS, before the end of the Biden administration, attributed quality differences in part to private-equity firms’ tendency to “dramatically reduce the operational costs” of health care facilities.
Recent research demonstrates that private equity is playing an increasing role in psychiatric hospitals, and that has some federal officials worried. In January, the Senate Budget Committee released a bipartisan congressional staff report investigating private equity’s growing presence in health care.
Officials from the Healthcare Private Equity Association, the trade group that represents medical facilities owned by over 100 investment firms, did not respond to requests for comment.
“Instead of helping families, billionaire corporations are denying sick patients legally protected emergency care to turn healthy profits,” Sen. Jeff Merkley, D-Ore., ranking member of the Senate Budget Committee, said in a statement to ProPublica.
“This unchecked corporate greed is leading to worse outcomes for patients,” Merkley added, “particularly those who struggle with mental health crises.”
This reporting was supported by the McGraw Center for Business Journalism at CUNY’s Newmark Graduate School of Journalism, the Fund for Investigative Journalism and the National Institute for Health Care Management Foundation.
Great Job by Eli Cahan for ProPublica & the Team @ ProPublica Source link for sharing this story.
