May 23, 2024

Is the Behavioral Health Industry Recession-Proof? Recession Impacts on Behavior Health, How Facilities May Be Affected & How To Prepare

Is the Behavioral Health Industry Recession-Proof? Recession Impacts on Behavior Health, How Facilities May Be Affected & How To Prepare

When a recession looms, behavioral health facilities are prepared for: 

  • The inevitable increase in mental health cases
  • The lack of insurance among the newly unemployed; and 
  • The possibility of less charitable funding

What can the behavioral health industry do to protect both its services and its clients during a recession?

The key is preparation. 

In this post, we explore the various steps the behavioral health industry can take to ensure quality services and care during a recession.

Table of Contents

Will a Recession Impact Behavioral Health? 

Historically, countries in recession experience deteriorating living conditions and high unemployment rates. This results in a decline in the population's health.

Multiple studies concluded that economic recessions and their mediators, such as …

  • Unemployment
  • Unmanageable debt
  • Income decline
  • Lack of insurance

… significantly impact mental well-being. Substance abuse, mental disorders, and suicidal behaviors increase during times of recession and financial uncertainty.

As a result, many behavioral health facilities will see an increase in people seeking help for mental health issues, such as depression and anxiety.

Research Links Recessions With Increased Mental Health Issues

Unfortunately, this decline in mental health affects the most vulnerable groups of people. The health of populations is heavily shaped by:

  • Labor markets
  • Socioeconomic context
  • Public policies; and
  • Demographic characteristics of the country

Pre-existing mental health issues may get worse, and new mental health issues may arise, for people undergoing economic hardship or crisis.

From 2007 to 2009, the Great Recession in the United States was linked with higher rates of mental health disorders and outcomes than previous recessions in other countries. 

With widening income gaps, inequality may be to blame for the increase in mental health decline during economic downturns.


As you might guess, studies show that an economic crisis or recession is linked to a higher risk of depression and depressive disorders.

People who suffered even a single housing, job-related, or financial hardship were at greater risk of showing symptoms of depression.

These hardships are no different from what people are experiencing in the U.S. today.


The threat of a recession has triggered anxiety in people across the nation. Baylor College of Medicine expert, Dr. Asim Shah, spoke on the issue, finding, “There has been a 50% increase in anxiety over the last couple of years, and finances are a major contribution to that.”

During the 2007 to 2009 Great Recession, U.S. mental health professionals reported an increase in traffic at mental health clinics, therapists’ offices, emergency rooms, and on mental health hotlines.

Doctors reported seeing more cases of panic disorders and stress-related physical problems, such as chest and abdominal pains.

Substance Abuse

In one survey, 58.3% of people reported an increase in drug use during the recession and only 25.6% reported decreased drug use. 

For many, the reason for the increase was attributed to the amount of free time available. While for others, stress at work, or seeking comfort due to the loss of social status, income, or family.

Those who reported a decrease in drug use said the economic difficulty was the main reason.

However, for those that reported a decrease in drug use, smoking increased by 46.3% and alcohol intake increased by 39.4%.

What Does a Recession Potentially Mean for Behavioral Health Facilities?

Behavioral healthcare is better positioned than many industries to survive a recession, however, facilities must prepare.

Certain factors may affect mental health practices, such as:

  • Rising business costs may put more financial strain on the behavioral health industry.
  • Growing demand for mental health services due to the increase in symptoms of anxiety, depression, and substance abuse.
  • Job loss during a recession could lead to changes in healthcare coverage from private to public options. This could lead to a lower reimbursement rate for mental health providers.
  • Lack of parity for mental health coverage could cause some clients to decline healthcare due to the inability to pay upfront.
  • Clients declining mental health services due to high costs could result in an increase of otherwise treatable mental health issues becoming more serious, which could put more strain on resources and drive up the cost of services. 

Are Behavior Health Facilities ‘Recession-Proof?’

Healthcare, in general, is considered “recession-proof” due to ongoing demand for services, even during economic hardship.

Behavioral health facilities, in particular, face an ongoing shortage of providers. This means that the service should remain in high demand.

However, we can’t look at history alone. While the behavioral health industry weathered the Great Recession fairly well, certain changes have taken place since then that could affect the industry's overall health. 

For example:

  • Out-of-pocket costs were lower
  • The Affordable Care Act did not exist yet
  • Medicaid had not begun
  • Fewer people were on Medicare and Medicare Advantage

Usually, moving uninsured clients to Medicaid benefits healthcare providers. However, with an ongoing rise in unemployment, fewer people have access to commercial insurance and must shift to Medicaid. 

Changing commercial insurance to Medicaid may put financial pressure on behavioral health facilities.

How Can a Recession Affect Government Funding for Behavioral Health?

Governments tend to avoid cuts to healthcare funding during a recession due to the increased demand for services, especially in behavioral health.

Healthcare economist, Steve Morgan, notes, “A downturn in the economy means there is going to be an increase in medical needs. The stress and anxiety of economic change will cause people to not be well, both mentally and physically.

Perhaps this notion prompted the Biden administration to award nearly $300 million for new and existing Certified Behavioural Health Clinics and another $15 million in new grants in the Bipartisan Safer Communities Act.

Governments may not cut funding during recessions, but they’re not likely to spend money on expanding healthcare infrastructure. “When the economy is in the tank, the government doesn’t have much money to throw around for these new services, which aren’t as sexy as new buildings or a new bridge or highway”, says Morgan.

3 Things Behavioral Health Facilities Should Prepare for Before and During a Recession

#1: Shifts in Health Coverage

Fewer clients with private insurance may result in less coverage for certain services. The rising cost of private health care has resulted in deductibles and premiums for private coverage growing faster than inflation and wages.

Private insurance annual spending per capita grew annually by 3.8% between 2010 to 2018, while Medicare per capita spending grew by an average annual rate of only 1.7%.

This means behavioral health facilities must brace for lower reimbursements for services rendered.

#2: Increased Demand for Treatment

With the inevitable increase in demand for mental health treatment, behavioral health facilities must prepare in advance.

Facilities may consider reviewing payment and reimbursement options to make it easier for struggling clients to make payments.

Preparing for growth by increasing marketing to attract more clients, or partnering with other facilities to handle an increased client load may help ease the burden.

Efficiency is key to handling increased demand. Technology, such as electronic medical records (EMR) software can help streamline your practices and provide data-driven outcomes analysis.

Ritten provides behavioral health facilities with EMR software that goes beyond billing and compliance, delivering important client insights during times of economic stress. 

Our software allows behavioral health facilities to chart and analyze individual client trends and calculate client risk levels. This is especially important during a recession when mental health crises and suicidal thoughts are at an all-time high.

#3: Clients Seeking Help Elsewhere

Behavioral health providers may see more people asking about sliding scale fees or free medications. Many clients will opt to forgo traditional treatment in favor of less expensive alternatives, such as:

  • Fitness classes
  • Yoga and meditation
  • 12-Step programs
  • Support groups

While others will turn to the internet for help. Multiple websites have been launched in the last decade offering counseling via online platforms. 

This can cause financial strain for private behavioral health clinics that are not supported by government funding and may have seen a reduction in charitable funding.

What Can Behavioral Health Facilities Do To Prepare for a Recession?

Understand Client Demand

As clients continue to look for less-expensive services, behavioral health practitioners may have to find ways to make their services more accessible to meet the demand.

This could mean more flexibility in how clients are charged and how fees are collected. Or, providers need to get creative with the type of services they provide, such as offering group sessions or workshops as an alternative to more expensive private sessions.

Upgrade Data Analysis Software

An increase in demand for treatment also means an increase in demand for outcomes analysis reporting. 

Software that can analyze high volumes of data based on data from notes and assessments can help providers better manage their practice.

Provide Results-Driven Data

Many government grants are contingent on proof of treatment effectiveness and many clients want to know what they’re paying for works.

EMR software that provides data-driven analysis of patient outcomes can help providers endure a recession. 

When providers have proof of what’s working, they’re better positioned to stay hyper-focused on obtaining those results. This saves time and money and ultimately results in better patient care.

Ritten: Leverage Data & Track Client Outcomes to Better Meet the Needs of Your Community During a Recession

Ritten is the only data-driven EMR software designed specifically for behavioral healthcare providers. Many EMRs are built for the sole purpose of billing and compliance, which leaves providers lacking the valuable information needed to streamline workflow.

With Ritten, behavioral health practitioners can unlock valuable, personalized data that will drive better patient outcomes. When the demand is high, this data saves time, money, and lives.

For more information, or to book a free demo, contact us today. 

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