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Article Author:

Paul D. Smith, Jr.

CPA, MSA

Specialty Snapshot: Mental Health Professionals

There are more than 100,000 mental health professionals across the U.S. with combined annual revenues of approximately $10 billion. Service revenues consist primarily of patient care services, and also include pharmaceutical sales and fees for lab tests. Within each specialty, mental health professionals are divided into two categories: psychiatrists with medical degrees authorized to prescribe medication and perform minor medical procedures, and psychologists and social workers with masters and doctorate degrees who primarily provide counseling and are restricted from prescribing medication. The industry is labor intensive: average annual revenue per worker is less than $100,000. 

Psychiatrists and other mental health professionals help patients manage a wide range of mental and behavioral conditions through individual and group therapy sessions, behavior modification training, medical procedures, and prescription pharmaceuticals. Mental health professionals also study social patterns and evaluate medical and pharmaceutical treatments through clinical trials. Working in multiple settings expands mental health professionals’ access to a variety of patients and referral sources. Private practices generally receive patients from self-referrals, hospitals, courts, jails, and community health agencies. 

In 1990, Congress established Mental Health Awareness Week (MHAW ), which is hosted annually by the National Alliance on Mental Illness (NAMI). Over the last two to three decades there has been an increased awareness of mental illnesses in part due to the efforts of individuals — most notably Rosalynn Carter, the wife of the former U.S. President Jimmy Carter. 

Items to keep in mind regarding the current mental healthcare industry: 

1. Mental health programs that rely on state government funding continue to be vulnerable due to reduced state tax revenues. States are challenged by large budget shortfalls and have continually looked to cut payments for Medicaid services — community mental health services certainly being included in this list. 
2. Malpractice insurance costs continue to rise, and it is estimated that malpractice liability costs account for as much as 2 percent of all healthcare expenditures. This might seem like a small percentage; however, when compared to the overall net margin of 3.9 percent, noted in the table below, it is quite significant.
3. Opportunities for mental health professionals for cross-industry collaboration with physicians and researchers in areas including neurology, osteopathy, biology, chemistry, pharmacology, sociology, economics, and political science appear to be on the rise. 
4. The federal government continues to fund research and training in various fields impacting psychological science. The Departments of Health and Human Services, Defense, Homeland Security, and Justice also offer grants covering a number of new psychological research areas. Post-traumatic stress disorder (PTSD) related to the U.S. soldiers is one such area of significant research and analysis.
5. Significant population growth in different regions around the U.S. presents new practice opportunities for mental health professionals. Texas, California, and Florida, states that already have the largest number of mental health practices, experienced large population increases between 2009 and 2010. 
6. The Patient Protection and Affordable Care Act of 2010 (PPACA) includes provisions that put mental health benefits on parity with those for other healthcare issues. The act also restored Medicare Part B reimbursements for psychologists that had been previously cut.¹

Benchmarking data