As Dealmaking Cools, Eating Disorder Treatment Providers Reassess
Eating disorder treatment providers say they face a slew of challenges, including how to attract patients and best differentiate themselves from their competitors.
At a Behavioral Health Business INVEST panel in Dallas earlier in October, Abhilash Patel, CEO and co-founder of Within Health, and Thomas Britton, CEO of Accanto Health, spoke bluntly about an industry that has experienced turmoil following years of growth. They were joined by Haywood Miller, who advises on mergers and acquisitions as managing director of BRG.
“There will be contractions before there is consolidation and expansion,” said Patel, whose five-year-old company provides telehealth for people with eating disorders.
Like other behavioral health industries, investment and deal-making among eating disorder providers crested in 2021, but it has cooled of late, Miller said.
Additionally, there have been high-profile retrenchments, including private equity-backed Odyssey Behavioral Health and Discovery Behavioral Health announcing the closure of residential treatment facilities late last year. Earlier this year, Optum subsidiary Refresh Mental Health shuttered its eating disorder treatment service line.
“A lot of the deal spikes were because of consolidation,” Britton said. “They weren’t because it was such an amazing product.”
Britton, who joined Accanto in January after serving as CEO for the substance use disorder (SUD) provider American Addiction Centers, said that eating disorder treatment providers deal with a relatively small patient pool that may be reluctant to seek help.
About 30 million to 60 million people in the U.S. would benefit from substance use disorder treatment at a given time, Britton said. That’s compared to a 3 million to 8 million patient population for eating disorders.
Even so, about 9% of the U.S. population, or 28.8 million Americans, will have an eating disorder in their lifetime, according to statistics from the National Eating Disorder Association.
Of that patient population, some might see a stigma around getting help, Patel said.
“I live in Los Angeles,” Patel said. “I can’t throw a rock without hitting somebody where you’re like, man, this person has disordered eating.”
To Patel, “the stigma around eating disorders and the shame with being able to talk about it” reminds him of where SUD treatment was over a decade ago. Investments in SUD clinics began only after a wider swath of people felt comfortable seeking help, Patel said.
Miller went farther back with his own historic perspective. In the 1980s, his wife, Caroline Miller, wrote a bestselling book, “My Name is Caroline,” about seeking help for her bulimia.
Miller brought up The New York Times’ review of Caroline Miller’s book, “which kind of made fun of her and made fun of eating disorders,” adding “how far we’ve come is remarkable.”
“The de-stigmatization of eating disorders is a very bullish sign for the demand for eating disorder services,” Miller said.
Workforce challenges
The general patient population and persistent stigmas around pursuing treatment options aren’t the only factors that make operating in the eating disorder space challenging.
Another thorny issue is finding the right personnel.
“It is much harder to recruit staff, primarily clinicians,” Britton said, comparing eating disorder clinics to other areas of behavioral health. “You add a layer within eating disorder treatment that requires a level of medical specialty care that is different from anything I’ve ever done before.”
Patel said that it is especially difficult to recruit clinicians as “there’s a layer of medical insight and sensitivity in this category” that remains different from other behavioral health fields.
If Britton and Patel stood apart on any matter, it was the effectiveness of exclusively focusing on telehealth.
Britton noted that at Accanto, about 20% of his patients “are people that would die if they were not in a hospital.”
Residential programs face challenges of their own, Britton said. Those challenges have resulted in reducing beds or closing beds in some cases. But there is an “equal risk to only being virtual,” Britton continued.
Patel countered that unlike brick-and-mortar spaces, which existed for years with little need to innovate, virtual clinics like Within Health can stand out by offering “a higher level of acuity but fully remotely.”
“If someone’s the best at something, there will be room for that particular operator,” Patel said.
Patel and Britton did agree there are opportunities for partnerships between physical and virtual providers.
“Operators have to work together to find people the care they need,” Patel said. “It is incumbent on us to work collegially.”
In addition to provider partnerships, the panel cited expanded treatment options as an industry trend.
The future could bring more widespread use of wearable devices that track food consumption, Patel said. Also, some patients might take GLP-1s to control binge eating, or even psychedelics to alter one’s attitude toward food.
“There’s all sorts of room for an open mind and figuring out what is actually going to work,” Patel said.
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