What Private Equity Gets Wrong About Mental Health Rollups

Mental health problems are prevalent in the general population. Depression, anxiety disorders, and several other mental conditions are making it difficult for many people to live their lives normally. The increase in awareness of how disabling mental health disorders can be has led many private equities to invest in acquisitions and consolidations in mental health rollups. The problem is, these privately owned entities often get a couple of things wrong. They ignore certain factors, underestimate critical values, and often overestimate the market. This article explores common things that private equity gets wrong about mental health rollups.

Table of Contents

Focusing on Profit Over Care

A private equity company tends to have a large focus on profit when it decides to acquire or merge with existing businesses. Even at a startup point, these companies usually have profit in mind with any type of venture they take on. Unfortunately, by prioritizing profit, it often results in a lack of proper care for patients who have real mental health problems.

There are many examples that showcase how private equity and venture capital are causing problems within the mental health system. In one in-depth post on Reddit, a therapist shares their experience. After building up a mental health program that was highly successful, they were suddenly told that the company would shut down. This comes after really hard work by the therapist and their colleagues.

At one point, they were told: “We are in a phase that needs to generate revenue.”

This provides a clear view of how private equity gets the idea of mental health rollups wrong. They think about this as a short-term investment and opportunity to profit, instead of focusing on creating a long-term program that can be sustainable and offer mental health patients real care services.

Poor Understanding of Mental Health Concerns

Another thing private equity gets wrong is the complexity that lies in understanding mental health concerns. The owners of the private equity might not have a thorough understanding of mental health disorders, yet they wish to enter this market due to the potential to profit from it.

Conditions like anxiety and depression can take a heavy toll on a person’s life. They not only cause psychological symptoms but can manifest physically as well. When investors do not truly understand what mental disorders are, how they affect people, and what is needed to care for these patients, they cannot make smart choices with their acquisitions and mergers.

A failure to understand mental health concerns can lead to a number of problems. This includes antitrust issues. It happens when patients start to see how the company acquired as part of the private equity focuses on profit over their care. This antitrust not only affects patients but can even extend to the staff members employed by management. When therapists begin to see a change in how things are run and notice that management has no interest in the care of patients, but rather wants to see more money flowing in, it can create distrust among them as well.

This antitrust can cause serious damage to the reputation of the company acquired by the private equity. This damage can reflect back on the private equity as well, which can have serious consequences for the investors involved in the long run.

Failure to Recognize the Complex Treatment System

Treating depression and other mental health disorders is about more than just offering therapy or prescribing medication. These are complex conditions that require expertise among staff members and a highly individualized approach. Not every person is affected in the exact same way.

This ties in with the previous factor we looked at. If the investors in charge do not completely understand mental health concerns, they also lack the knowledge about just how complex treatments can be. They might expect staff members to provide basic care services and become reluctant to offer more comprehensive systems that could add to the expenses of the company.

When this happens, it negatively affects the quality of care that can be offered to patients. This results in longer treatment times, while also reducing customer satisfaction at the same time.

Overestimating the Market

Private equity also often overestimates the market for mental health rollups. They see an opportunity due to increased awareness of mental health problems. However, the market is already oversaturated and highly competitive. This means entering the mental health industry is harder than many think when they are investors who want to profit.

There are a couple of factors that are usually overestimated in this regard. While there is a significant number of people with mental health disorders, only some of them are actively seeking treatment. Awareness campaigns are bridging the gap and helping people better understand how they can access efficient treatments, but there still remains a lot who are refusing treatment.

This means the actual potential in how many people can be targeted through campaigns is much smaller compared to looking at statistics about mental health disorders.

Lack of Knowledge About Operational Challenges

The mental health industry also has certain operational challenges that many businesses face. When private equity overlooks these, it can cause serious obstacles in the long run. One particularly important factor to consider is the difficulty in scaling this type of business. It’s not just about scaling, but also the process of integrating companies they acquire in the mental health market.

Conclusion

As private equity corporations move to mental health rollups, they are overlooking a number of important factors. By focusing attention on profit over patient care and service level, these investments can have a serious impact on the mental health system, and potentially alter the quality of care provided to those in need. Evidence already shows that private equity is causing problems for both staff and patients, and this can only be resolved by recognizing the things it gets wrong.

References

https://www.reddit.com/r/therapists/comments/143v1yg/venture_capitol_funded_mental_health_companies/https://tradeoffs.org/2024/05/16/private-equity-health-care/https://journalofethics.ama-assn.org/article/health-inequity-profiteering-private-equity-firms/2025-05https://pestakeholder.org/news/debunking-the-private-equity-industrys-messaging-about-its-healthcare-investments/