US HealthVest’s de novo strategy reflects a major opportunity for a psychiatric hospital

Investor and facility owner US HealthVest and OSF HealthCare System provider announced a joint venture agreement (JV) to build the largest inpatient psychiatric hospital in Illinois south of Chicago.

The deal between New York City-based US HealthVest and Peoria-based OSF HealthCare is an essential part of US HealthVest’s business strategy and the broader trend of health care providers and other companies involved in addressing the declining number of psychiatric beds in the United States.

The two organizations unveiled the joint venture Thursday, which will result in a 100-bed behavioral health facility built on land owned by OSF HealthCare along Illinois Route 91 in Peoria, Illinois. The facility will be located near other OSF facilities, according to a press release.

The facility to be built is expected to open in late 2024 or early 2025; The two organizations have begun the regulatory approval process. It will provide 24/7 access to comprehensive behavioral health services, including crisis services. It will also offer free evaluations, specialized programs, partial hospitalization programs, and extensive outpatient services.

“The ability to bring a large number of beds into central Illinois brings people closer to home and allows us to provide continuity of care within the community in which people reside and allows family members to be more involved in the care of their loved ones,” said Dr. Samuel Sears, director of behavioral health physician services, at OSF HealthCare. , in the statement, “Those we know are evidence-based and compassionate.”

The company has already built three facilities near Chicago.

This joint venture represents a larger strategy for US Health Vest. US HealthVest is an investment company focused on its heavy-duty strategy of building and owning new psychiatric hospitals. It does so through joint ventures with local Midorge hospital organizations, Dr. Richard Krish, CEO and president of US HealthVest, told BHB.

The local joint venture largely manages day-to-day operations under the management of the local hospital partner while US HealthVest provides a supervisory role focused on psychiatric care.

The company is also targeting states with Certificate of Need (CON) laws. These regulations require new entrants to the market or existing companies seeking to make significant investments (such as building a facility) to disclose and, in some cases, obtain approval from government regulators before doing so.

“While the CON process adds to development time, CONS provides strong competitive advantages including high barriers to entry,” Martina Sze, chief development officer at US HealthVest, said in an email. “OSF HealthCare requires JV CON and we have started this process in Illinois where we have a proven track record of getting approvals.”

Currently, US HealthVest Hospitals have about 1,300 beds, Krrish said. The company has built three hospitals in Illinois, two each in Georgia and Washington and one each in Indiana and Massachusetts.

US HealthVest also has a partnership with hospital organizations Sturdy Memorial Hospital Inc. and South Shore Health System Inc. and Signature Healthcare Corp. To build a psychiatric hospital in southeastern Massachusetts. Krish said this project is just getting started.

In March 2021, the American HealthVest and Hendrix Regional Health Opened a 70,000 square foot facility In Plainfield, Indiana – near Indianapolis. This is the first US HealthVest facility in Indiana.

The big picture with psychiatric hospitals

Psychiatric hospitals stop at critical juncture Many of the giant trends that make them prime sites for making deals and partnership.

On a broader level, the decreasing supply of psychiatric beds in and of itself leads to increased demand. Increase focus on behavioral health because of the epidemic It increases the acceleration of the need on the demand side.

During the pandemic, US HealthVest has seen a slight increase in development opportunities, mostly on the joint venture side of the business due to Covid-driven increases in demand for services, Sze said.

Krish said there are still deeper drivers behind the demand for new psychiatric hospitals.

Krish said many medical and surgical hospital operators have been closing psychiatric units to make way for other services, while many new facilities often do not go into psychiatric units.

Krish said this happened and is happening at a time when “the number of people who may consider treatment in an acute psychiatric hospital is increasing”.

He said the Affordable Care Act, passed and implemented during the Obama administration, increased access to private health insurance and increased support for states to expand access to government-backed insurance plans, especially Medicaid, at the state level. This has allowed more people to access affordable health care in the first place.

Furthermore, the stigma around seeking care has subsided somewhat in recent years, he said.

“The overall market dynamics are good in terms of patient volumes often exceeding bed availability,” Krish said. “I think there is recognition from governments at all levels that there is a need and that need needs to be supported with reasonable reimbursement.”

Historically, the decline in psychiatric beds is a distant extension of a decades-old trend of inpatient psychiatric care.

For more than 60 years, government hospitals, once well-accessed sources of long-term inpatient psychiatric services, have closed as part of a movement in health care policy called deinstitutionalization. The United States had more than 558,000 psychiatric beds in 1955. The number of patients supported by inpatient services fell from about 370,000 to 40,000 between 1970 and 2014, according to the American Psychiatric Association Report.

“It has been beneficial in some ways for our acute psychiatric hospitals,” Krish said. “In terms of the business side, the scale and so on, this is likely to be beneficial for the acute sector because we are seeing patients in crisis mode who would otherwise have been long-term patients in a government hospital.”

Looking to the future, Kresch said, the company’s near-term goal is to find and strike new deals while the long-term strategy will remain the same as ever for US HealthVest.

“It is more of the same thing – developing new hospitals and opportunistic takeovers of functioning hospitals if the conditions are right,” Krrish said.

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