Health care industry outlook

A recent Substance Abuse and Mental Health Services Administration (SAMHSA) study shows that 23% of adults experience mental illness each year. In response, the Department of Health and Human Services has introduced a ruling, effective in 2025, ensuring mental health and substance use services are as accessible as medical benefits. This includes eliminating prior authorizations, treatment limitations, and out-of-network costs for group health plans. The ruling is part of a broader effort by the Biden administration to address the mental health crisis, with increased funding for SAMHSA. The rising use of the 988 Suicide & Crisis Lifeline underscores the growing need for these services.

Easing monetary policy is driving increased dealmaking activity in the health care industry, with a focus on acquisitions, divestitures, joint ventures, and investments. The Federal Reserve’s rate cuts in September and November have made deals more affordable, encouraging both health care organizations and investors, like private equity, to pursue more transactions. While official data has not yet reflected this surge, discussions with financial and strategic buyers reveal a significant rise in interest since the rate cuts. Strategic buyers, such as hospitals and health systems, are expected to evaluate deals at a higher rate than usual due to the changing rate environment.