Behavioral health remains a hot topic in the private equity sector, as revealed in a recent survey report by Berkeley Research Group (BRG). The report, based on responses from 127 U.S.-based health care investment professionals at 88 private equity funds, highlights the continued interest and growing focus on behavioral health as an investment thesis.
According to the report, over 90% of executives surveyed view behavioral health as either a continuing focus or a “growing/likely” focus for the private equity sector in 2025. It is also ranked as the No. 2 investment priority for the coming year, indicating the significant attention it is receiving from investors.
Competition for quality assets in behavioral health and other high-demand sectors is expected to be fierce. Private equity investors are also keeping an eye on segments such as infusion pharmacy, in-home care, and outsourced pharmaceutical services. However, the sector is anticipated to be more challenging for platform companies to operate in, with respondents noting increased competition for assets and challenges in supporting valuation and growth.
Labor remains a top challenge in the industry, although concerns about it have slightly decreased compared to previous years. Other key concerns highlighted in the report include Federal Trade Commission activity and scrutiny on billing compliance.
Looking ahead, professionals predict a shift in the types of deals that health care private equity firms will make, with a focus on new platform investments. The report also identifies home-based solutions for seniors, specifically dementia care and aging-in-place services, as the most-cited investment thesis for 2025. This includes a diversified focus on various types of care, technology services, and accessing federal grant and opioid crisis settlement dollars.
Additionally, there is continued interest in behavioral health programming, with a focus on scaling businesses in Medicaid expansion states via telehealth and state grants. The report also indicates a more optimistic outlook for dealmaking in the coming year, with professionals expecting deal processes to be more efficient and accelerated.
Among the top investment priorities for respondents are staffing businesses serving home health companies, behavioral health, and infusion pharmacy services. Physician practice management (PPM) organizations, on the other hand, are viewed as cooling or not a focus for investment, with psychiatric services remaining the top specialty within the PPM investment segment.
Overall, the report paints a picture of a dynamic and competitive landscape in the private equity sector, with behavioral health continuing to be a focus of interest and investment in the years to come.
