Webinar by attorney Purvi Maniar of Epstein Becker Green - April 5, 2016. Part of the Behavioral Health Crash Course Webinar Series. This webinar will provide: * A discussion of the main drivers of growth in investment in behavioral health, including the focus on population health management and mental health parity laws * The outlook for providers of behavioral health services, including an overview of areas of legal focus and potential competition http://www.ebglaw.com/events/investme... These materials have been provided for informational purposes only and are not intended and should not be construed to constitute legal advice. The content of these materials is copyrighted to Epstein Becker & Green, P.C. ATTORNEY ADVERTISING.

1. © 2016 Epstein Becker & Green, P.C. | All Rights Reserved. ebglaw.com
Investments in Behavioral Health:
Drivers and Outlook
April 5, 2016

2. © 2016 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com 2
This presentation has been provided for informational purposes only
and is not intended and should not be construed to constitute legal
advice. Please consult your attorneys in connection with any fact-
specific situation under federal, state, and/or local laws that may
impose additional obligations on you and your company.
Cisco WebEx can be used to record webinars/briefings. By
participating in this webinar/briefing, you agree that your
communications may be monitored or recorded at any time during
the webinar/briefing.
Attorney Advertising

3. © 2016 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com
Purvi Maniar
Member of the Firm
• Healthcare and Life Sciences and Corporate Services Practices
• Provides transactional legal guidance and strategic advice in
the healthcare and technology industries
• Represents private equity investors as well as providers in
transactions in the behavioral healthcare space
314-395-2775
3
pmaniar@ebglaw.com

4. © 2016 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com
Prevalence of Behavioral Health Issues
The United States has the highest prevalence of mental disorders in the world
 27% of the U.S. population will experience some sort of mental disorder within a given year
 47% of the population are at risk in their lifetimes
Standardization of depression screening by primary care physicians
 Adolescents – ages 12-18
 Adults, including pregnant and post-partum women
High comorbidity between medical and mental conditions
 75% of high-users of hospital inpatient services had behavioral health diagnoses, versus 32% of
patients who were not high-users
4

5. © 2016 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com
Increased Awareness; Improvements in Care
Increased awareness and decreased social stigma
 Public health education and better diagnostic tools have created greater awareness and
understanding of behavioral health disorders
 Understanding and acceptance of substance abuse as a disease has helped decrease social
stigma associated with seeking help
Continued clinical advancements
 Advancements in therapy and medication management have yielded new and better
procedures for treatment of mental disorders and substance abuse disorders
 Another driver is the need for clinics to develop youth, elderly and gender-specific programs
5

6. © 2016 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com
Increase in Reimbursement Coverage
Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA)
 Equalizes annual or lifetime dollar limits (Mental Health Parity Act of 1996)
 Equalizes cost sharing, treatment limitations and out of network coverage
Patient Protection and Affordable Care Act of 2010 (PPACA)
Expands MHPAEA requirements from large group plans to:
 Most individual and small group plans
 Plans offered on health insurance exchanges
2016 Medicaid Change
 Will provide coverage for stand-alone psychiatric hospitals
6

7. © 2016 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com
Alternative Payment Models; Triple Aim
Alternative payment models can advance effective behavioral healthcare
 ACOs, bundled payments and other value based payment models
 Payments for chronic care management and care coordination activities
Providing effective care for behavioral health disorders can advance “Triple Aim”:
 Improvement of the patient’s care experience
 Improvement of the health of patient populations
 Decreasing the per capita costs of healthcare
7

8. © 2016 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com
Growth in Investment
Recent years have seen record growth in behavioral health mergers and acquisitions
 2014 health care M&A activity increased by 18% but behavioral health increased by 24%
 Rise in behavioral health deals from 21 in 2010 to a record number of 43 in 2015
Major Players
 Acadia Healthcare Company – 585 facilities; 6 recent multi-facility acquisitions
 Universal Health Systems – over 225 facilities; 4 recent multi-facility acquisitions
 Pyramid Healthcare Inc. – over 60 facilities; 4 recent multi-facility acquisitions
Continued Fragmentation
In 2015, most of the 14,000+ substance abuse providers were still owned by operators who owned
only one or two facilities, with larger operators owning less than a dozen facilities
8

9. © 2016 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com
Outlook
Demand will continue to outpace supply
 Due to high prevalence, development of new therapies, increases in reimbursement coverage,
value based payment models and focus of healthcare reform on enhancing the health of
populations while avoiding unnecessary costs
Behavioral healthcare specialty providers will face competition from hospital systems
 Cost of adding beds to an existing system is generally lower than the cost of acquiring them
 9% of general hospitals with behavioral health projects under construction; 11% with projects
on the books
Focus on compliance with legal and regulatory requirements will grow
 Increased legal requirements due to third party reimbursement
 Larger, multi-state operators will invite increased scrutiny
9

10. © 2016 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com
Legal and Regulatory Compliance
Licensure
 Requirements vary by state depending on types of facilities and programs offered
 Separate from state requirements applicable to licensure of professionals
Corporate Practice of Medicine
 Many states restrict non-physician ownership and control of facilities employing physicians and
other professionals
 Requirements and acceptable means of compliance vary significantly by state
Privacy
 States have varying and stringent standards applicable to mental health records which are not
preempted by HIPAA
 New proposed federal regulations would increase requirements regarding confidentiality of
patient records related to substance use disorders
10

11. © 2016 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com
Legal and Regulatory Compliance
Fraud and Abuse
 Federal and state anti-kickback and self-referral restrictions become applicable and important as
providers consolidate and start to seek third party reimbursement
 Current regulations can pose challenges to clinical and financial integration of behavioral and
physical healthcare services
Certificate of Need
 Construction, expansion and change of ownership of facilities can require lengthy state review
and approval process based on assessment of public need
11

12. © 2016 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com
Questions?
Purvi B. Maniar
Member of the Firm
pmaniar@ebglaw.com
212-351-3757
12

13. © 2016 Epstein Becker & Green, P.C. | All Rights Reserved. ebglaw.com
Thank you