“Private equity has been after health care products and services for the better part of two decades. The firms have been extremely good at finding choke points where they can dominate a niche and engage in monopoly/oligopoly pricing.” (Yves Smith, Naked Capitalism, 1/6/21)

Most behavioral health clinicians haven’t woken up to the financial engineering threats to their profession and livelihoods. Growing income inequality means more money is piling up in the hands of wealthy people who, having no more material needs to satisfy, are investing in schemes to turn their extra money into more extra money. They invest through Private Equity (PE) firms (such as Bain Capital, Providence Capital, KKR) which pool money to buy or create businesses so they can loot them or rollup small businesses to create extractive monopolies.

PE financial engineering is now feeding at the trough of US healthcare, the most overpriced health system on the planet, transforming its focus from providing services people want and need to separating people from their money via sophisticated financial engineering and costly and unnecessary “management” services.

PE firms are successful looters because they have a short-term focus of 4-7 years. They load their businesses up with debt and pay themselves exorbitant fees, aggressively advertise hard-to-believe benefits and cut compensation to providers to the bone. They collect enough in fees that they usually come out ahead even if the business goes bankrupt, which many of them do, leaving the providers and public to deal with the damage.

Now, PE is attempting to take over two behavioral health market niches:

  1. Mental Health Therapy Market
  2. Behavioral EHR Market

The Therapy Market & the Big Lie

Lyra Health is a PE company that offers mental health services through employers with a network of providers. Only a few years old and now worth over two billion dollars, Lyra has grown via a big marketing budget and ads that lie with impunity.

Lyra’s big pitch is that it provides “the best mental healthcare for your workforce,” and plastered all over their website is the claim that:

”83% of (our) members improve or recover. Providers within traditional networks only help 24%.”

This is a textbook example of medical quackery: a false claim about the efficacy of treatment for financial gain. Lyra is claiming that its therapists are 3 times more effective than clinicians generally.

All studies show with remarkable consistency that psychotherapy - whether delivered in traditional or non-traditional networks - is effective with a majority of patients and that the benefits of therapy persist over time. In fact, the largest survey of the effectiveness of psychotherapy ever conducted, the Consumer Reports Survey of 1995, concluded the majority of patients are helped “very substantially” by psychotherapy.

Therapists who work for Lyra and similar companies are in an ethical bind. To wit: is the therapist ethically bound to tell a new patient that the Lyra claims about efficacy are false? How do they explain the expected benefits of therapy to a patient who has read the Lyra ads?

The Behavioral EHR Market & The Roll Up

PE also has behavioral EHRs in its crosshairs. Using a company called Therapy Brands, they have been buying up small behavioral electronic health record companies (EHRs). By rolling up all the competitors, PE is attempting to gain monopoly pricing power in order to price-gouge clinicians.


The battle for mental healthcare is between independent practitioners, the professionals, and the financial engineers, the quacks.

The quacks are gaining market share. Their game is not to improve healthcare but to wring money out of a bloated system and already strapped clinicians. In order to do this, they are creating a therapy factory. Over time therapists in the factory will lose their status as independent professionals. Already some companies require therapists read from scripts or follow rigid treatment protocols. Should the quacks take over, therapists will be turned into poorly paid gig workers.

The financialization of mental health is a sorry development that will hurt patients and therapists. It will make the rich richer.

It must be resisted.

Author: Geoff V. Gray, PhD

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