In short: Behavioral health private equity is moving from paying for growth to paying for systems that survive it. McDermott Will & Schulte’s six priorities for healthcare private equity heading into 2027 all test one thing in a behavioral health platform: whether billing, credentialing, documentation and reporting work the same way at every site.
Private equity has stopped paying for growth. It is paying for whether a platform’s systems can survive the growth.
That was the undercurrent at HPE NYC, McDermott Will & Schulte’s healthcare private equity conference, on October 15, and the firm put it in writing in Beyond growth: New priorities for healthcare private equity: six priorities for sponsors and operators heading into 2027. The piece is written for the whole healthcare market. Behavioral health is where its argument bites hardest: thin margins, scarce clinicians, and payers that reimburse medical office visits 22% more on average than behavioral ones, according to RTI International.
Below, each priority in one line, what it means if you run a behavioral health platform, and where ClinicMind fits.
The six private equity priorities at a glance
| Priority | What a sponsor tests in a behavioral health platform | What to have ready |
|---|---|---|
| 1. Underwrite the value-creation plan before signing | Whether the next acquisition joins as configuration, not a project | One set of payer rules, one documentation standard and one roll-up from go-live |
| 2. Look for sector durability | Payer concentration and dependence on a few clinicians | Collections, denials, A/R and productivity by entity, site, provider and payer |
| 3. Make AI prove its value | Measured change in documentation time, capacity and note quality | A before-and-after, and where audio and notes are stored |
| 4. Rethink partnerships and capital strategies | Whether every counterparty sees the same numbers | One definition of each metric, exportable on request |
| 5. Bring reimbursement diligence forward | Payer mix, credentialing, authorizations and denials | Net collection rate, first-pass resolution, denial rate, days to first billable visit, unworked denials |
| 6. Prepare for the exit from the beginning | The operating metrics a buyer reads first | Failure-zone and survival-zone thresholds, reported the same way at every site |
1. Underwrite the value-creation plan before signing
McDermott’s point: acquiring more businesses doesn’t create value if management capacity, technology, or compliance infrastructure can’t absorb them. The plan should be diligenced as hard as the asset.
For behavioral health operators: the integration that goes sideways is almost never clinical. It is a billing system that can’t take a new tax ID, a credentialing backlog nobody tracked, or a chart migration that stalls a quarter of revenue at one site. A platform with four EHRs, three billing vendors, and authorizations in a spreadsheet has a value-creation plan that depends on reconciliation, and reconciliation doesn’t scale.
The test a sponsor will apply: can the next acquisition be brought onto the operating model as configuration, not a project? Same payer rules, same documentation standard, same roll-up, from go-live.
Where ClinicMind fits: every acquired practice joins as its own entity, keeps its data, fee schedules, and reporting, and inherits on day one every payer rule, claim edit, denial pattern, and appeal the group has already learned. Billing can run first, across the EHRs you inherit, with the EHR standardized later on your schedule. Credentialing can start at deal close, before the location is live. The platform for growing practice networks is multi-tenant and single-platform: separate where a buyer needs it separate, shared where it pays.
2. Look for sector durability
McDermott’s point: durability of demand, reimbursement, and cash flow matters as much as growth. Strong fundamentals can hide reimbursement and concentration risk that only shows up after close.
For behavioral health operators: demand is not your problem. Access is: 46% of psychologists reported no openings for new patients in the American Psychological Association’s 2025 Practitioner Pulse Survey, and annual turnover in the behavioral health workforce averages about 30%. Durability in this sector is the ability to keep clinicians productive and credentialed, and to collect what you bill from payers that pay behavioral visits less than medical ones. A platform whose revenue depends on three payers and two dozen clinicians who could leave is not durable, however fast it grew.
The diligence questions to expect: payer concentration by revenue, clinician tenure and productivity, authorization-driven churn between sessions, and whether collections hold up when a key clinician or contract changes.
Where ClinicMind fits: durability is something a sponsor underwrites, not something a vendor claims. What the platform built for mental health groups does is make the inputs visible before anyone else asks for them: collections, denials, A/R, and productivity by entity, site, provider, and payer, reported the same way at every location. Payer concentration and clinician dependence stop being surprises in diligence because they’re on the dashboard every month.
3. Make AI prove its value in behavioral health
McDermott’s point: adoption alone is not value. Sponsors should demand evidence of measurable gains, weigh them against implementation cost and disruption risk, and look at data rights and governance.
For behavioral health operators: this is the line every vendor with an AI scribe should read twice. In behavioral health, documentation is the clinician’s second shift and the main driver of burnout. An AI scribe that saves time but doesn’t move sessions delivered, note quality, or clean claims is a feature, not a value-creation lever. A sponsor will ask for the before-and-after, and will ask where the audio and the notes live.
Published research sets a realistic bar. A multisite study in JAMA in April 2026 found that documentation time fell by about 10%, or 16 minutes a day, after clinicians adopted AI scribes. A University of Chicago Medicine study in JAMA Network Open found that time spent composing notes fell by more than 15%. Gains of that size are worth having, and they are why a sponsor wants your own measured numbers rather than a vendor’s.
Three questions to be able to answer:
- What did documentation time do, measured, not surveyed?
- Did clinician capacity or audit-flagged notes change as a result?
- Does the AI run inside the system of record, or is it a third-party tool with its own data agreement?
Where ClinicMind fits: AI Scribe runs inside the EHR, not as a plug-in, so the note is created in the chart, structured to the same template every time, and the transcription stays inside the platform. The note is reviewed and finalized by the clinician before the patient leaves, which is what makes the time savings show up downstream as sessions and claims rather than as a faster path to the same backlog.
4. Rethink strategic partnerships and capital strategies
McDermott’s point: strategic-PE partnerships, health-system joint ventures, carve-outs, earn-outs, structured equity, and continuation vehicles are all gaining ground as ways to bridge valuation gaps and create liquidity when a conventional sale is hard.
For behavioral health operators: every one of these structures puts your operating data in front of a counterparty earlier and longer than a clean sale would. A health system considering a JV wants to see your payer mix and authorization performance. An earn-out means the buyer’s view of your collections is the number that pays you. A continuation vehicle means a new set of LPs diligence the same business again. The operator who can produce the same numbers, the same way, for every counterparty is the one with options.
Where ClinicMind fits: the structure is the sponsor’s call; the data has to be ready for whichever one they choose. On the platform, a group’s full financial and clinical record exports as a certified platform capability, not a services request, and reporting rolls up for a board and drills down to a claim for a site lead. One definition of every metric, for every counterparty, however many times the business gets diligenced.
5. Bring reimbursement diligence forward: in behavioral health, it is the thesis
McDermott’s point: bring reimbursement and regulatory analysis forward, translate it into valuation and deal terms, and test how planned expansion changes the risk profile. Don’t run it as a confirmatory checklist at the end.
For behavioral health operators: in this sector, reimbursement diligence is the business. Payer mix, credentialing cycle time, authorization management, parity appeals, and denial patterns decide whether a platform’s revenue is real. Multi-state telehealth adds license tracking and the interstate compacts (PSYPACT and the Counseling and Social Work compacts) to the list. A buyer who finds a credentialing backlog in diligence doesn’t discount the deal. They reprice the working capital and extend the timeline.
The numbers a sponsor will ask for first: net collection rate, first-pass resolution rate, denial rate, days to a new clinician’s first billable visit, and the share of denials that were never worked.
Where ClinicMind fits: on the revenue cycle, ClinicMind’s full billing service runs at a 97% net collection rate, 98% first-pass resolution, and a denial rate under 2%, with the billing team working inside the same record the clinician documents in, so authorization is checked when the session is scheduled and session caps are tracked in the chart. On credentialing, CredEdge brings a new clinician to billable in an average of 31 days against a 92-day industry average, with 99.4% of renewals on time and enrollment starting at deal close for acquired locations.
6. Prepare for the exit from the beginning
McDermott’s point: build what the next buyer prizes from day one: durable earnings, operational discipline, scalable infrastructure, manageable risk. Fix what will surface in buyer diligence before it does.
For behavioral health operators: the metrics a buyer reads first are operational, and they are the same whether you hold, refinance, or sell. The table below is the threshold set ClinicMind publishes for practice networks. A platform in the survival-zone column is one a buyer can underwrite without a working-capital argument.
| Metric | Failure zone | Survival zone | Why a buyer cares |
|---|---|---|---|
| Visit notes flagged as poor | >30% | <5% | Documentation that won’t survive an audit is a deal-killer, not a discount |
| A/R past 120 days | >17% | <10% | Sets the working-capital peg; aged A/R is priced into the deal |
| Denied claims abandoned | >10% | <5% | Billing problems surface first in diligence |
| Patient visit average | 6–12 | 30–50 | Recurring revenue drives the multiple |
| No-show rate | >15% | 5–8% | No-shows are unrecoverable capacity |
Thresholds as published by ClinicMind; our guide to independent practice benchmarks explains the failure and survival zones.
Where ClinicMind fits: every one of these is reported the same way at every location on the platform, rolled up for the board and drilled down to the claim. That consistency is the proof point. A buyer who gets five different definitions of days in A/R from five sites assumes the worst one.
The question to ask this quarter
If you run a behavioral health platform, or want to be one by 2028, the question isn’t how fast you can grow. It’s whether your systems would survive a buyer’s diligence tomorrow. Many wouldn’t. That is fixable, but not in the six weeks before a process launches.
The four priorities above that touch infrastructure (1, 3, 5, and 6) share one fix: one record, one billing engine, one credentialing roster, and one set of numbers at every site. Everything else a sponsor underwrites sits on top of that.
Frequently asked questions
What are healthcare private equity’s priorities heading into 2027?
McDermott Will & Schulte names six: underwrite the value-creation plan before signing, look for sector durability, make AI prove its value, rethink strategic partnerships and capital strategies, bring reimbursement and regulatory diligence forward, and prepare for the exit from the beginning.
What does behavioral health private equity diligence check first?
Reimbursement and operations. Expect questions on payer mix and concentration, credentialing cycle time, authorization management, denial patterns, net collection rate, first-pass resolution rate, days to a new clinician’s first billable visit, and the share of denials that were never worked.
Which operating metrics set the value of a behavioral health practice network?
ClinicMind’s survival-zone thresholds are visit notes flagged as poor under 5%, A/R past 120 days under 10%, denied claims abandoned under 5%, a patient visit average of 30–50 visits, and a no-show rate of 5–8%. The failure zone starts above 30% for flagged notes, 17% for aged A/R, 10% for abandoned denials and 15% for no-shows, or at a patient visit average of 6–12.
How should a behavioral health operator prove an AI scribe’s value to investors?
Measure documentation time before and after instead of surveying clinicians, show whether sessions delivered, note quality or clean claims changed, and document where audio, transcripts and notes are stored and under which data agreement. Peer-reviewed studies report modest gains, such as about 10% less documentation time in a multisite JAMA study, so measured results carry more weight than claims.
How quickly can a newly acquired location’s clinicians start billing?
With CredEdge, a new clinician reaches billable status in an average of 31 days, against a 92-day industry average, and enrollment for an acquired location can start at deal close, before the location goes live.
Sources
- McDermott Will & Schulte, Beyond growth: New priorities for healthcare private equity
- McDermott Will & Schulte, HPE NYC 2026, October 15, 2026
- American Psychological Association, 2025 Practitioner Pulse Survey
- Hallett et al., Factors Influencing Turnover and Attrition in the Public Behavioral Health System Workforce, Psychiatric Services, 2023
- RTI International, Behavioral Health Parity: Pervasive Disparities in Access to In-Network Care Continue, April 2024
- Changes in Clinician Time Expenditure and Visit Quantity With Adoption of Artificial Intelligence-Powered Scribes, JAMA, April 2026
- Use of an AI Scribe and Electronic Health Record Efficiency, JAMA Network Open, October 2025
About the author: Edisa Shirley, PhD, LMHC, is ClinicMind’s Chief Growth Strategy Officer and a licensed mental health counselor.