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Breaking from the Pack: Succeeding in Competitive Markets


“Build it and they will come.” This familiar mantra from the movie Field of Dreams (Robinson, 1989), has been the long-term modus operandi for behavioral health providers, whether an addiction treatment, acute psychiatric, outpatient, or medication-assisted treatment (MAT) facility.

Universal Health Services (UHS) and Acadia became two of the largest behavioral health providers in the world by following that model and simply meeting demand with supply. As long as organizations can find a way to get reimbursed appropriately (which is easier said than done), the model has been “rinse and repeat.” We saw the same models work in addiction treatment when the industry exploded after the Mental Health Parity and Addiction Equity Act (2008), the growth of private-equity-backed national MAT clinics in the last five years, and the recent expansion of massive outpatient therapy providers such as Lifestance and Thrive Works. Just a few days before the writing of this article, Stuart Archer, CEO of Oceans Healthcare, reiterated this strategy by discussing Ocean’s focus on underserved rural markets in Texas on the August 6, 2022 episode of Becker’s Healthcare Podcast (Becker’s Healthcare, 2022).

The challenge is that this strategy is coming to an end—it has already happened in addiction treatment. As the owner of a marketing company focused on behavioral health, I track a lot of trends. By our last count, New Jersey alone has over three thousand detox and residential beds serving the commercially insured (i.e., 36,000 per year), but there is only enough demand in the state for eight thousand commercially insured residential patients a year! Of course, New Jersey pulls from other surrounding states as well, but you can see the point. Most states are not as bad as New Jersey, but there are definitely more detox and residential addiction treatment beds across the country than there are patients.

This is partly because of a miscalculation in demand. Most pitch decks to investors in behavioral health cite the same statistics: only 11 percent of those struggling with a substance use disorder (SUD) seek care in a given year (SAMHSA, 2021). For anxiety, it is 37 percent (ADAA, 2022), and depression has some of the highest numbers at about 66 percent (NIMH, 2022). Executives and investors will look at this data and say that 89 percent of potential SUD patients, 63 percent of potential anxiety patients, and 34 percent of potential depression patients are not being served. There is still an ocean of opportunity out there!

What they are missing is that according to the same survey research reporting on how many do not seek care, respondents also state that they do not want to seek care. They recognize their diagnosis or that there are issues, but they choose to ignore them or try to solve those problems on their own. Research does show that many of them do successfully solve these problems themselves, therefore obviating the need for treatment.

The reality is that most behavioral health markets are oversaturated. Yes, there is still opportunity in rural areas, small cities, and less densely populated parts of the country, but patient volume is low in those areas as well. There is a reason most providers are not rushing in to fill those gaps. Most of the critical-access hospitals already in those areas have been operating at a loss for decades, propped up only by government support. With behavioral health utilization and reimbursement far under that of traditional medical services, it is unlikely that behavioral health providers can succeed where traditional hospitals have not.

So what does all this mean for behavioral health providers? It means that “Build it and they will come” is no longer a viable strategy. According to our data, Columbus, Ohio has four acute care psychiatric hospitals, all with one to two hundred beds each, and in the greater Phoenix area, there are over twenty hospital-type providers offering acute psychiatric or SUD treatment services.

For those already established facilities, competition has created more supply than demand in many urban markets. The same is starting to happen even in smaller cities as well. Yet new providers are continuing to pop up, get funding, and looking to expand. That is not even taking into account the massive growth in online-only telehealth options now also competing for patients. This sea change in the supply-demand curve for behavioral health patients means that providers need to stand out in order to attract patients and referrals. With so many options in the community, patients and referral partners need a reason to refer to a particular organization.

The default option is relationships. If the business development team can build good relationships, then providers assume they will get the referrals. While there is truth to that, it is limited in its approach. Business development representative turnover is high, and once the rep is gone, the relationship often fizzles with it. Referral partner turnover is high as well, especially in high-volume sources like hospitals. Your competitors are doing the same things.

To truly stand out and become the provider of choice for both potential patients in the community and among key referral partners, providers must have differentiated care. This could be the speediest intake process or the most respected clinical program in the market. Many differentiators work because, as every provider knows, consistent excellence in execution is easier said than done.

Providers that become known for the smoothest intake or the best clinical care earn a reputation in their market. Even if key referents at a hospital turn over, a strong reputation makes it likely that other members of the hospital staff prefer particular providers and educate new staff on them. A strong reputation also significantly increases the probability that new staff members already recognize the providers as great referral options without needing to be educated by business development representatives. Suddenly providers are no longer tethered to the tenuous one-on-one relationships between business development reps and referents; they now have a cumulative advantage over competitors, increasing the likelihood of referrals or patient decisions in their favor.

In saturated and highly competitive markets, it is not about building a better mousetrap in terms of patient acquisition or scrounging to find as-of-yet untapped markets. The defining features of success are differentiation and excellence in execution.


Nick Jaworski

Nick Jaworski is the CEO of Circle Social, Inc., a behavioral health marketing company. He has helped build startups across the globe, from Turkey to China to the United States. A passionate recovery advocate, Jaworski sits on the board of Above and Beyond Family Recovery Center and also advises the Behavioral Health Association of Providers. He has helped numerous companies start from humble beginnings and grow to multi-million-dollar a year organizations through strategic marketing and operations, driving results for many behavioral health clients.

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