Psych Hospitals: Private Equity’s New Frontier

But first: Rates of some mental and neurodevelopmental disorders are nearly 50% higher, on average, among people who are not right-handed, according to a study covered by PsyPost. The tendency to prefer one hand over the other has long been linked to differences between the brain’s right and left hemispheres – as have disorders such as autism and schizophrenia (but not depression).

MindSite News honored with new awards

We’re delighted to announce our winners in the Spring 2025 Digital Health Awards:

• Gold: TikTok Posts on the Rare Illness Known as Dissociative Identity Disorder Have Exploded Among Teens. What’s Behind the Fixation? by Astrid Landon. 
• Gold: “Forgotten Children” by Michele Cohen Maril. Parental death has been rising in the U.S. due to COVID-19, the overdose epidemic and gun violence. This four-part series dug in. 
• Silver: Inside America’s Mental Health Agency: Mass Firings and Work Stoppages Sap Morale, Impede Mission, by Art Levine and Rob Waters.

See all our awards here, including a 2025 Peter Lisagor Award for Best Reporting on Crime and Justice: A West Side Story: How to Traumatize a Neighborhood, by Josh McGhee, Emeline Posner and Matt Kiefer.

Editor’s note: Investigative journalism is expensive, and reader donations are critical to our ability to pursue deep reporting on mental health and addiction that you won’t find anywhere else. Our work is more important than ever – and so is our need to raise money. Please support our work.

Anorexia: it’s not just a disease of the young. Who knew?

Sally Odenheimer, 73, a retired teacher from Colorado, has been struggling with anorexia nervosa for decades. “It’s an addiction I can’t get rid of,” she told the New York Times. Baby Boomers like Odenheimer may remember when anorexia nervosa first entered the public consciousness. Two influential books came out in the late 1970s. One of them, Steven Levenkron’s “The Best Little Girl in the World,” reached even more as a 1981 TV movie starring Jennifer Jason Leigh. Two years later, the death of singer Karen Carpenter showed how dangerous excessive dieting could be.

Eating disorders mostly affect teenage girls and young women – and anorexia is the deadliest mental health disorder other than substance use, as Melanie Haiken reported in our recent series, Deadly Denials. Yet research shows that a growing number of older women are seeking treatment for bulimia, binge eating and anorexia. 

Many of those embarrassed and apologetic older patients are reluctant to seek treatment, thinking younger people should be a higher priority. Little was known about the disorders when they were young, and long-term consequences, including osteoporosis, arthritis, dental problems and heart disease, are now becoming clear. Even if they do seek treatment, it often is geared towards younger women. And most inpatient facilities, especially those run by venture capital firms, don’t accept Medicare. While doctors have tools like blockbuster drugs Ozempic and Wegovy to offer those needing to lose weight, there’s nothing on offer to help those who need to gain weight and shake the feeling that any food is too much.

Even with treatment, anorexia never goes completely away. The concept of recovery is particularly challenging for elders, whose illness has been part of their life for decades. Karen Moult, 64, an artist in Tulsa, Okla., considers herself in recovery after a 40-year fight with anorexia. In 2023, she went into treatment for the first time – with three roommates in their 20s. “We helped each other,” she said.

Private equity ownership of psychiatric hospitals rises sharply

Private equity firms have poured money into healthcare in recent years, with an estimated $151 billion in global buyouts in 2021, the highest in more than two decades, and $89 billion the following year. Psychiatric hospitals are an increasingly attractive target, and, as of April, according to the Private Equity Stakeholder Project, they account for nearly a quarter of all PE-involved hospitals in the U.S. 

A new study published last month in JAMA Psychiatry estimated that 14% of the nation’s 617 freestanding, inpatient psychiatric hospitals were PE-owned in 2021, with the numbers varying widely from state to state. Two-thirds of PE-owned psych hospitals were in southern states. New Mexico has only four psych hospitals, and three of them were owned by private equity firms. In Louisiana 38% (16 of its 42) of psych hospitals and in Texas 31% (19 of 61) are PE-owned. Yet 29 states plus Washington, D.C., had none.

Other findings:

• PE facilities were significantly more likely than psychiatric hospitals with different types of ownership to serve geriatric patients and less likely to serve child or adolescent patients. They also were far less likely to accept patients from the overloaded criminal justice system.
• Staff-to-patient ratios were significantly worse, on average, for registered nurses and medical social workers at private equity-owned hospitals, after adjusting for populations served and services offered.
• But PE psychiatric hospitals performed better on some standard quality measures: 7- and 30-day follow-up visits, and 30-day readmissions. They were much better for use of restraints (a measure, the authors cautioned, that is self-reported and prone to gaming.)
• Occupancy rates were higher at PE-owned hospitals. 

Earlier research has found that PE ownership in health care often leads to staffing declines and that registered nurses in PE-owned nursing homes are often replaced by licensed practical nurses who have less training and receive lower pay. Occupancy rates rise, as private equity improves efficiency in pursuit of higher profit. Quality measures yield mixed results: Some show improvement – perhaps because administrators know they are publicly posted and that good scores are a form of marketing.

But psychiatrists and their professional organizations have long worried – and insider reports have sometimes confirmed – that conditions often deteriorate simply because of how private equity typically works: Wealthy individuals and institutional investors borrow money to buy practices or facilities, cut costs to make them more profitable, then sell their holdings after three to five years for substantial returns.

Economic and other conditions over the last couple of years have been less than ideal  for private equity, and how they’ll change going forward is challenging to predict. “Given continued policy efforts aimed at expanding inpatient care and forced treatment and current efforts to defund accountability mechanisms,” it’s possible that investors will find the environment increasingly favorable, study lead author Morgan C. Shields speculated in an email to MindSite News.

On the other hand, said Shields, who studies the quality and accountability of behavioral health care from her post at Washington University in St. Louis, “the landscape is dynamic given threats to Medicaid and Medicare.” If those cuts come to fruition, one effect could be increased institutionalization “in state facilities but maybe not in private facilities,” she added, thus providing little benefit to private equity.

In other news…

Illicit fentanyl is increasingly being cut with local anesthetics, according to a commentary in JAMA Psychiatry. These legitimate, commonly prescribed medications have been mixed into cocaine and heroin for years, much as veterinary sedatives like xylazine and medetomidine get mixed into opioids. But, in “a new and alarming phenomenon,” the authors write, local (human) anesthetics are now popping up around the country as adulterants in street fentanyl. 

While not deadly, drugs like lidocaine, procaine, benzocaine, tetracaine, and bupivacaine are each linked to different degrees of toxicity. Fentanyl overdoses involving “caines” look different, too. Besides tell-tale slowed breathing, signs may include anxiety, agitation or fear, numbness or tingling in extremities, racing heartbeat, hallucinations, gray or blue skin, rapid loss of consciousness, and seizures – as well as a limited response to naloxone.

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The presence of inflammation should be used to categorize diagnoses of major depression, according to a commentary in JAMA Psychiatry. Studies have found low-grade inflammation in about 25% of patients with depression. That subgroup tends to exhibit a distinct set of symptoms. They also respond less to conventional antidepressants, but do seem to get an antidepressant effect from taking anti-inflammatory drugs, which have no effect on most depressed patients. 

Psychiatric disorders are normally diagnosed through symptoms rather than bloodwork. But in this case, the authors write, lab tests could actually help guide more effective and personalized treatment. In light of that, they suggest adding inflammation to the next edition of psychiatry’s diagnostic manual, the DSM-6, as a potential physiological mechanism for some cases of depression.

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The nation’s main mental health agency is being ground down. Since President Donald Trump’s second inauguration, the agency has lost a third of its staff, $1 billion of its operating budget, and its mission, which – in Health Secretary Robert F. Kennedy Jr’s vision – will be picked up by a new entity.

The Substance Abuse and Mental Health Services Administration (SAMHSA) was created more than three decades ago, in a bipartisan effort to address mental illness and addiction. Since then, much of its work has been in distributing grants to states and local communities. Funds sent to states have helped make naloxone accessible, reversing many overdoses that might have been fatal. The agency’s grants “are the backbone of behavioral health in this country,” psychologist Rachel Winograd, director of the addiction science lab at the University of Missouri-St. Louis, told NPR. “If those grants were to go away, we’d be screwed.” 

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A lawsuit blames an insurer’s “ghost network” for the death of an Arizona man who was unable to access mental health treatment, ProPublica reports. Ravi Coutinho’s 2023 death came after 21 fruitless calls with his insurer, but was ruled an accident, likely due to complications from excessive drinking. The 36-year-old entrepreneur tried for months to find an in-network provider listed by his Obamacare plan, the most popular one around Phoenix, where he lived. He’d chosen the plan – offered by a subsidiary of health insurance giant Centene – because it seemed to offer plenty of local mental health and addiction care. The lawsuit, filed by his mother, alleges that that plan’s directory was “inaccurate and misleading.”

Coutinho had been seeking help to reduce his consumption of alcohol, which he’d been using to self-medicate for diagnosed anxiety and depression. ProPublica showed that he was stuck in what’s known as a “ghost network” – providers were listed as accepting his insurance, but he could not actually access the care he needed under it.