2025 Market Outlook: Psychiatry, Medication Management, Ketamine, Spravato & TMS Services
Executive Summary
U.S. Behavioral Health Market Growth (2023–2034). The U.S. behavioral health market is projected to grow from about $92 billion in 2024 to $151.6 billion by 2034, reflecting ~5% CAGR. Rising demand for mental health services and new treatment modalities are key drivers.
The behavioral health sector in the U.S. is experiencing robust growth, driven by increased awareness of mental health needs, expanded treatment options, and supportive policy changes. This 2025 market outlook report provides a comprehensive analysis of five key specialty areas – Psychiatry, Medication Management, Ketamine Therapy, Spravato (esketamine) Treatment, and Transcranial Magnetic Stimulation (TMS) – with a primary focus on the U.S. market (and global context where relevant). Business owners operating clinics or practices in these areas are navigating surging patient demand and a dynamic payer/regulatory landscape, all while considering strategic options like growth partnerships or potential sales.
Market trends across these specialties show strong patient need but also rising competition and evolving reimbursement models. For owners contemplating a sale, partnership, or expansion, understanding these trends is crucial. Each section of this report delivers data-driven insights on market size, growth trajectory, patient utilization, payer changes, regulatory updates, and competitive dynamics in 2025. We also outline strategic pathways for owners – from recapitalization to full exit – and how the right partnership can provide capital and scale to maximize value. Finally, we discuss how Covenant Health Advisors helps business owners navigate the sale or partnership process, leveraging industry expertise to achieve optimal valuations in this growing market.
Psychiatry Services Market
Market Size & Growth: Psychiatry remains the backbone of behavioral health services. In the U.S., demand for psychiatric care has accelerated in recent years, driven by high prevalence of mental illness and reduced stigma. The U.S. psychiatry clinic market was valued at $25.9 billion in 2023 and is projected to reach $39.5 billion by 2033, growing at ~4.3% CAGR. This steady growth reflects ongoing need for depression, anxiety, and trauma-related disorder treatments. Broader U.S. behavioral health spending is similarly on the rise, expected to top $96.9 billion in 2025, up from $92.2B in 2024. Global context: The psychiatrist workforce shortage is a worldwide issue; in the U.S. alone, experts predict a shortfall of 14,000–31,000 psychiatrists within a few years​, underscoring strong demand far outpacing supply.
Patient Demand & Utilization: Approximately 1 in 5 Americans (51.5 million people) experienced mental illness in 2019​, and the COVID-19 pandemic sharply increased anxiety and depression rates. Even in 2022, about 33% of U.S. adults reported symptoms of anxiety or depression, nearly triple pre-pandemic levels. This has translated into more individuals seeking psychiatric help. Utilization of mental health treatment is rising: the CDC noted that 21.6% of adults received mental health treatment in 2021, up from 19.2% in 2019. A striking 24% of Americans are now taking prescription mental health medication (antidepressants, anxiolytics, etc.), indicating widespread psychiatric medication management needs. However, access to psychiatrists remains challenging in many regions – more than 150 million Americans live in federally designated mental health professional shortage areas. In response, innovative care models are emerging: primary care partnerships, telepsychiatry services, and collaborative care models help extend psychiatric expertise to more patients.
Payer & Reimbursement Changes: Favorable policy changes have improved reimbursement for psychiatric services, especially via telehealth. Telepsychiatry became a lifeline during the pandemic and is now mainstream. Medicare has extended coverage for telepsychiatry visits in a patient’s home at parity with in-person rates through 2024​, and many private payers have followed suit. In fact, telehealth for mental health has essentially been decoupled from geographic restrictions, allowing psychiatrists to treat patients statewide or even in multiple states (if licensed) without requiring initial in-person visits – though the DEA has temporarily extended flexibility for prescribing controlled substances via telemedicine through end of 2024(important for ADHD and anxiety medications). Reimbursement rates overall saw modest positive adjustments; psychiatry secured slight increases in the 2024 Medicare Physician Fee Schedule to offset other physician fee cuts. On the commercial side, parity laws and demand have pressured insurers to expand mental health coverage, yet challenges remain: some private plans reimburse psychiatrists 10–15% less than Medicare for the same services, which has led some psychiatrists to limit participation in lower-paying plans. Value-based care is also tiptoeing into psychiatry – payers are exploring outcomes-based contracts and integrated care payments (e.g., collaborative care codes) to incentivize effective management of behavioral conditions.
Regulatory Factors: The regulatory environment is cautiously supportive. Besides telehealth extensions, states are addressing scope of practice and licensure portability to alleviate the provider shortage. Many states now allow nurse practitioners or physician assistants to prescribe psychiatric medications with collaborative agreements, bolstering medication management capacity. The FDA is also advancing new psychiatric treatments (as seen with esketamine and neuromodulation therapies discussed later). However, regulations like the Ryan Haight Act (governing online prescribing of controlled substances) are in flux – a permanent framework is expected soon to balance access with safety in tele-prescribing. Overall, 2025 finds regulators recognizing the mental health crisis and showing willingness to extend emergency flexibilities or enact new laws to improve access.
Competitive Landscape: The psychiatry services market is fragmented but experiencing consolidation. Traditional solo practices are being supplemented or acquired by larger behavioral health groups and private equity-backed platforms. For example, large outpatient mental health companies (e.g., LifeStance Health, Mindpath Health) have expanded nationwide, offering psychiatry alongside therapy at scale. Competition also comes from digital health startups that offer telepsychiatry and medication delivery (such as online ADHD clinics), though some faced setbacks due to regulatory scrutiny. Hospitals and health systems are beefing up outpatient psychiatry programs, and community health centers continue to be key providers (especially for Medicaid populations). Overall, investor interest is high: after a slight dip in late 2023, behavioral health M&A activity is expected to rebound in 2024​. Psychiatry practices with strong referral networks or niche expertise (e.g. youth psychiatry, addiction psychiatry) are attractive targets. Owners should anticipate that scale and specialization will become increasingly important competitive advantages. Those who leverage technology (telehealth, electronic prescribing, measurement-based care tools) and offer multi-disciplinary services will be well-positioned in the marketplace. beckersbehavioralhealth.com
Medication Management Services
Scope & Demand: Medication management refers to the ongoing prescription and monitoring of psychiatric medications – a core component of psychiatric care that is often delivered by psychiatrists, psychiatric nurse practitioners, or physician assistants. Demand for medication management is surging in tandem with rising mental health diagnoses. As noted, 1 in 4 Americans now use a mental health prescription, and the pandemic spurred millions of new treatment starts for antidepressants, anxiolytics, mood stabilizers, and ADHD medications. In 2024, numerous telehealth-based companies sought to meet this demand (for example, services targeting ADHD and anxiety) resulting in rapid growth in prescription volume. However, this growth has also raised concerns about safety and appropriate prescribing, leading to greater oversight. Still, patient need for skilled medication management is at an all-time high, particularly for complex cases requiring fine-tuning of drug regimens.
Workforce Trends: With the psychiatrist shortage, psychiatric nurse practitioners (NPs) and physician associates (PAs) have increasingly filled the gap in medication management. These non-MD clinicians now make up a significant portion of prescribing providers in behavioral health clinics and telehealth platforms. Many practices are adopting a team-based approach: psychiatrists focus on initial evaluations or complex patients, while NPs/PAs handle routine follow-ups and refills under supervision. This model allows clinics to expand capacity and is often cost-efficient. Business owners should be aware of state-specific scope-of-practice laws (some states allow independent NP practice, others require supervision) which can impact staffing strategies.
Payer & Reimbursement: Generally, medication management visits (whether in-person or via telemedicine) are reimbursed similarly to other evaluation & management (E/M) visits. Payer policies have evolved to support medication management in convenient settings. Telemedicine for med management is widely covered now – for instance, Medicare and private insurers reimburse virtual med checks, often with no patient cost-sharing for mental health due to parity. One notable payer trend is an emphasis on integrated medication management: programs like the Collaborative Care Model (CoCM) reimburse primary care providers for working with psychiatric consultants to manage meds for common conditions (depression, anxiety) in primary care, indicating payers’ willingness to fund psychiatric expertise in non-traditional ways. On the flip side, payers are also introducing more prior authorizations for expensive psychiatric drugs (e.g., certain long-acting injectables or newer medications), and stringent monitoring of controlled substance prescriptions. Overall, in 2025, reimbursement for medication management is stable and generally favorable, with telehealth permanence ensuring flexibility in service delivery.
Regulatory Considerations: A key regulatory factor for medication management has been telehealth prescribing rules. Controlled substance prescribing via telemedicine (for stimulants, benzodiazepines, etc.) has been under an emergency waiver – the DEA’s extension through December 2024​ allows clinicians to initiate and continue controlled meds for patients they haven’t seen in person, as long as certain criteria are met. Business owners should watch for final DEA rules in 2025 that may require at least one in-person exam for long-term controlled prescriptions. Additionally, state medical
boards and legislatures are keeping an eye on companies that prescribe at high volumes – compliance and quality assurance in med management is critical to avoid regulatory issues. Electronic prescribing mandates in many states now require use of e-prescribing systems for controlled substances, which has largely been implemented and contributes to safer management (reducing fraud/abuse).
Competitive Landscape: Medication management services often overlap with general psychiatry practices, but there are some distinct competitive dynamics. A number of telepsychiatry startups grew rapidly by advertising quick medication access (for ADHD, depression, etc.). Some well-known names in 2021–2023 included Cerebral and Done Health for ADHD, and Doctor on Demand or Amwell’s behavioral health offerings. While growth was robust, some companies faced setbacks — for example, Cerebral scaled back controlled substance prescribing amid scrutiny. In 2025, the competitive field is stabilizing: many patients are returning to traditional providers or hybrid models for ongoing med management. Large group practices and hospital outpatient clinics compete by offering comprehensive care (therapy plus med management), which can be appealing versus stand-alone pill management services. Retail clinics (like CVS MinuteClinic or Walmart Health) are also eyeing behavioral health; some have begun offering mental health medication visits via embedded clinicians. For a business owner, this means that while demand is high, it’s important to differentiate on quality, access (e.g., quick appointments), and integration with therapy or other services. Practices that can demonstrate superior outcomes (like medication adherence and symptom improvement via measurement-based care) may also stand out to payers and partners.
Ketamine Therapy Market
U.S. Ketamine Clinics Market by Treatment (2020–2030). Depression (dark purple) remains the largest segment of ketamine treatments. The U.S. ketamine clinic market was $3.4B in 2023 and is projected to grow at 10.6% CAGR through 2030, indicating rapid expansion.
Market Size & Growth: Ketamine therapy – the use of ketamine (an anesthetic agent) for treating depression, PTSD, and other mental health conditions – has emerged as a fast-growing niche in behavioral health. In the U.S., the ketamine clinics market was estimated at $3.41 billion in 2023 and is expected to reach roughly $6.9 billion by 2030, reflecting an annual growth rate of about 10–11%. This high growth is fueled by ketamine’s unique value proposition: it can alleviate severe depression symptoms within hours or days, compared to the weeks required for traditional antidepressants. As awareness of this rapid relief has spread, patient demand for ketamine (typically given via IV infusion or intramuscular injection in specialized clinics) has surged, especially among those with treatment-resistant depression (TRD) who have not found success with standard therapies. Globally, ketamine use in mental health is expanding as well – several countries in Europe, as well as Canada and Australia, have burgeoning ketamine clinic networks. (On the other hand, some regions have tighter regulations on ketamine use, which can constrain global market growth relative to the U.S.)
Patient Demographics & Utilization: The typical ketamine patient is an adult with severe depression (often suicidal or TRD) or PTSD, although clinics also treat anxiety disorders and chronic pain off-label. In recent years, tens of thousands of patients in the U.S. have received ketamine therapy – a University of Michigan study in early 2024 (the Bio-K study) reported over half of patients experienced significant depression relief after ketamine treatment. These promising outcomes drive word-of-mouth referrals and media attention, further boosting demand. However, ketamine treatment is resource-intensive: it must be administered under medical supervision due to potential side effects (e.g., dissociation, changes in blood pressure), and treatment courses often involve 6–8 infusions over a few weeks. Thus, utilization is somewhat constrained by cost and logistics, but nonetheless the patient pool is growing. Many psychiatric practices have begun adding ketamine services or partnering with infusion centers to offer this option to their patients.
Payer & Reimbursement Climate: One major consideration is that most ketamine treatments for mental health are not covered by insurance, since ketamine for depression is an off-label use of an FDA-approved anesthetic. Patients typically pay out-of-pocket, with costs ranging from ~$400 to $800 per infusion session. This has limited access primarily to those who can afford it or are desperate for relief. There are signs of change on the horizon: as clinical evidence mounts, some insurers have started to pilot coverage for ketamine in certain cases, and a few regional payers reimburse a portion under “case-by-case†medical necessity reviews. Still, for 2025 planning, owners should assume ketamine services are largely cash-pay. In contrast, Spravato (esketamine), discussed next, is covered by Medicare and many insurers as it’s FDA-approved for depression – some clinics use a hybrid model, offering Spravato for insured patients and IV ketamine for others. From a business perspective, the lack of third-party reimbursement means ketamine clinics must market directly to consumers and maintain pricing strategies that balance profitability with patient accessibility. It also means ketamine practices can sidestep insurance administration burdens, but they need to justify the cost through superior patient experience and outcomes.
Regulatory Factors: Ketamine is a Schedule III controlled substance in the U.S., but physicians are permitted to use it off-label for depression and other conditions. Regulation primarily comes through required medical oversight and state-level clinic rules. Each treatment must occur in a clinical setting with monitoring; patients cannot take ketamine home. Some states have considered additional regulations for ketamine clinics (such as requiring special licensing or adherence to stricter protocols) due to concerns about safety and potential misuse. Thus far, no uniform national regulations beyond existing medical practice standards have been enacted, but owners should keep abreast of their state’s medical board guidelines. On the federal side, the DEA monitors ketamine distribution as with any controlled substance, but ketamine’s track record in supervised settings has been good. In 2025, a tangential but important development is the broader psychedelic therapy movement – compounds like psilocybin and MDMA are in late-stage trials for mental health conditions. If these receive FDA approval (MDMA for PTSD could be approved as soon as 2024/2025), it may increase acceptance of non-traditional treatments and possibly bring new competitors or opportunities (e.g., clinics could expand beyond ketamine). For ketamine-focused businesses, staying compliant, publishing outcome data, and participating in industry associations can help navigate any future regulatory shifts.
Competitive Landscape: The ketamine clinic arena in the U.S. has grown from a handful of early adopters to hundreds of providers today. Competition ranges from small psychiatric offices that
dedicate a room for infusions, to specialized chains of ketamine infusion centers. Notable multi-state providers have emerged (often backed by investors), and some have pursued roll-up strategies to create national brands. For instance, companies like Delic Holdings acquired ketamine clinic networks to scale up services nationwide. At the same time, many independent clinics are physician-owned and operate in single cities or regions, differentiating themselves through personalized care or adjunct therapies (meditation, psychotherapy integration, etc.). Given the rapid market growth, private equity and venture capital interest is strong – investors see a chance to consolidate this fragmented market and capitalize on the high-growth trend. Business owners in the ketamine space should be prepared for competition on both outcomes and patient experience. Building a strong referral network (with psychiatrists and therapists), maintaining excellent safety records, and potentially expanding offerings (to include Spravato, or future psychedelic therapies) can provide a competitive edge. Moreover, as the space matures, larger healthcare entities (hospitals or psychiatric groups) might acquire successful ketamine clinics to integrate this service line, offering owners a potential exit opportunity if their clinic demonstrates strong performance.
Spravato (Esketamine) Treatment
Overview & Adoption: Spravato® (esketamine) is a nasal spray form of ketamine’s molecule, FDA-approved in 2019 for treatment-resistant depression and acute suicidal depression (in conjunction with an oral antidepressant). It’s the first novel antidepressant mechanism approved in decades, and its uptake has been steadily increasing. By 2024, Spravato’s manufacturer (Johnson & Johnson) reported the drug is on track to exceed $1 billion in annual sales, growing ~56% year-over-year. In the first nine months of 2024 alone, Spravato generated $780 million in revenue, underscoring accelerating adoption. This momentum has positioned Spravato as a key component of many psychiatric clinics’ offerings for patients with hard-to-treat depression. Unlike IV ketamine, Spravato is given as a nasal spray in a clinic setting under supervision for about two hours (due to required monitoring for side effects). As of 2025, Spravato is available at hundreds of certified treatment centers across the U.S., including specialty clinics and some hospitals. Global context: Spravato has been approved in 77 countries and over 100,000 patients worldwide have been treated with it​, reflecting broad acceptance of esketamine as a depression therapy.
Clinical & Patient Demand: Spravato appeals to patients with severe depression who have failed multiple antidepressants. It can deliver improvements in depressive symptoms within 24 hours for some patients. Initially, usage was modest due to strict requirements and the need to take an oral antidepressant concurrently. However, a major recent development is the FDA’s approval (Jan 2025) of Spravato as a standalone monotherapy for depression. This means patients who cannot tolerate or don’t wish to take another antidepressant can use Spravato alone. This regulatory change is expected to widen the eligible patient pool and make it easier for prescribers to justify Spravato for those in need. Patient demand is also driven by success stories – many who had lost hope with traditional meds have experienced remission with esketamine, making it a sought-after option. Still, treatment involves a significant time commitment (twice-weekly visits for 4 weeks, then weekly or biweekly), so it tends to attract patients who are very committed to improving their condition. For clinics, adding Spravato can be a way to attract new patients and offer cutting-edge care, but it requires meeting REMS program requirements (Risk Evaluation and Mitigation Strategy) including provider training and a controlled administration setting.
Payer Coverage & Reimbursement: A key advantage of Spravato over IV ketamine is insurance coverage. Spravato is covered by Medicare and most commercial insurers as a medical benefit (sometimes as a pharmacy benefit as well). Patients usually pay a standard specialist co-pay, and the drug cost (which is high, roughly $600+ per dose list price) is borne by insurance subject to prior authorization. Medicare covers Spravato for its approved indications, making it accessible to older adults as well. Many insurers require documentation of prior antidepressant failures (consistent with FDA’s TRD definition) and may impose re-authorization after a certain number of treatments to ensure the patient is responding. Johnson & Johnson has also offered copay assistance programs (Spravato withMe) to limit patient out-of-pocket costs. For clinics, reimbursement generally includes the drug cost plus a facility fee for monitoring. In 2024, CMS created a specific billing code for esketamine administration, which helps standardize payments. Overall, reimbursement has improved such that Spravato is now financially viable for most providers to offer, whereas in 2019–2020 many were unsure due to reimbursement uncertainty. The need for two hours of monitoring does add staffing cost, but efficient scheduling and group monitoring setups (multiple patients observed in one facility room) can optimize operations. The bottom line: payer acceptance of Spravato has grown, removing a significant barrier to adoption and making it an important revenue stream in medication management practices.
Regulatory & Safety: Spravato remains under a strict REMS program due to risks of sedation, dissociation, and potential for abuse. Patients must be monitored at the care site until recovered and are not allowed to take the drug home. In 2025, aside from the monotherapy approval, the regulatory framework is stable. The FDA and Janssen (J&J’s subsidiary) continue to monitor long-term outcomes and safety through required post-market studies. So far, no unexpected safety concerns have emerged beyond known side effects. However, providers must stay vigilant in screening patients (to avoid Spravato in those with certain conditions like aneurysm or a history of psychosis where it’s contraindicated). Another consideration is competition and innovation: While Spravato is currently the only approved psychedelic-like antidepressant, other companies are developing rivals (including oral esketamine formulations and other NMDA receptor modulators). It’s possible by the late 2020s new alternatives will come, but for now Spravato enjoys a unique position.
Competitive Landscape: As a branded treatment, Spravato’s “competitors†are more the alternative treatment modalities for TRD – namely IV/IM ketamine, neuromodulation (TMS or ECT), and emerging drugs. Many psychiatric clinics offer both Spravato and TMS, tailoring to patient preference and clinical suitability. Competition in providing Spravato largely comes down to geography: patients must visit a certified center, so the key is to be the preferred Spravato provider in your catchment area. As of 2025, there is a growing network of Spravato providers, including large behavioral health groups that have multiple Spravato locations, some standalone infusion clinics that added Spravato, and academic medical centers. Marketing, physician referrals, and being on insurer directories as a Spravato site can help drive patients to a particular clinic. Business owners should note that offering Spravato can differentiate their practice and draw a subset of patients who might not have come for general psychiatry alone. With J&J heavily investing in provider and patient education, awareness is rising. In terms of financial performance, Spravato can be a solid contributor but not a windfall: it’s typically a moderate-margin service (due to the cost of clinician time during monitoring). Yet, the indirect benefits – improved patient outcomes and the prestige of offering a cutting-edge treatment – can enhance a clinic’s overall profile and growth.
Transcranial Magnetic Stimulation (TMS) Services
Market Size & Growth: Transcranial Magnetic Stimulation (TMS) is a non-invasive neuromodulation therapy for depression and other brain disorders, and it has matured into a mainstream treatment over the past decade. The global TMS device market was about $1.3 billion in 2023 and is projected to reach $3.0 billion by 2033 (CAGR ~9.3%)​. North America represents roughly one-third of that market and had around $380 million in TMS device sales in 2023​. Service revenues from TMS (the fees clinics earn for performing treatments) are also growing steadily as installed capacity increases. In the U.S., a conservative estimate valued the TMS therapy market around $425 million in 2023 (in terms of treatment sessions), with double-digit growth expected through 2025 as more patients seek out this therapy. TMS is primarily known for treating major depression that hasn’t responded to medication (FDA-cleared since 2008), but it has gained additional clearances (e.g., for OCD in 2018, smoking cessation in 2020 for certain devices). Each new indication can expand the addressable market. Furthermore, as awareness among referring providers (psychiatrists and primary care) grows, TMS is being offered earlier in the course of illness for some patients, not just as a last resort.
Patient Demand & Utilization: TMS offers an appealing option for patients who either did not improve on antidepressants or could not tolerate the side effects. It involves a series of outpatient sessions (typically 30 sessions over 6–7 weeks, though newer accelerated protocols are shorter). Patient demand for TMS is rising thanks to increased awareness of its efficacy (approximately 50-60% response rates in TRD and ~30% remission rates in some studies) and the fact that it is medication-free. As stigma around “brain stimulation†lessens (TMS is far gentler than electroconvulsive therapy, with no anesthesia or memory effects), more patients are willing to try it. By 2025, it’s estimated that tens of thousands of Americans per year receive TMS for depression. Companies like Neuronetics (maker of NeuroStar TMS systems) and BrainsWay (Deep TMS systems) have treated on the order of 100,000+ patients cumulatively with their devices in the U.S. to date. Still, relative to the potential pool (the millions with TRD), utilization has room to grow – which is why the market outlook is strong. We are also seeing expansion beyond depression: providers are using TMS off-label for PTSD, anxiety, and even cognitive disorders (research is ongoing), although insurance typically doesn’t pay for those yet. The convenience factor is improving too, with newer protocols like intermittent theta-burst stimulation (which can shorten session length from ~20 minutes to 3 minutes for depression treatment) being adopted, thus reducing the burden on patients and clinic capacity.
Payer Coverage & Reimbursement: The reimbursement landscape for TMS is highly favorable in the U.S. At this point, Medicare and all major private insurers cover TMS for treatment-resistant depression (generally defined as failure of 4 medication trials or similar criteria). Authorization is required, but approval rates are high when evidence of TRD is present. Insurers have specific TMS policies; for example, many now also cover TMS for OCD when an FDA-cleared protocol (like BrainsWay’s OCD helmet) is used, typically after failure of standard OCD treatments. The payment for a full course of TMS can be $6,000–$12,000 depending on insurer contracts (covering all sessions). For providers, margins are solid once the TMS device investment is paid down, since ongoing costs are mainly technician time and machine maintenance. Importantly, as of 2022–2023, Medicare increased the reimbursement for TMS sessions modestly, recognizing the therapy’s value, and maintained coverage for TMS performed in freestanding clinics. Another trend: more regional insurance plans are aligning criteria with national benchmarks, making it simpler to navigate coverage. Some employers are even actively promoting TMS in cases of long-term disability due to depression, given its effectiveness. With the treatment modality firmly established, payers are no longer debating whether to cover but rather focusing on ensuring appropriate use. Clinics need to diligently document patient history and progress to comply with insurance requirements. Looking forward, the next frontier in reimbursement could be coverage for other indications as evidence grows (e.g., PTSD or bipolar depression, if supported by clinical trials).
Regulatory Factors: TMS is regulated as a medical device procedure. The FDA continues to clear new devices and new protocols – for example, additional devices gain clearance for depression occasionally, and new coil designs or targeting techniques are being introduced. In late 2024, there was industry anticipation for FDA clearance of accelerated TMS protocols (which involve multiple sessions per day over a week); if approved, that could revolutionize treatment delivery, though as of early 2025 standard once-daily protocols remain the norm. On the state level, some states require specific certification or adherence to guidelines for office-based TMS, but generally regulation is light as long as a licensed physician prescribes, and a qualified technician administers under supervision. One regulatory aspect for owners: device maintenance and calibration – devices must be maintained per FDA and manufacturer standards to ensure safety and efficacy. Also, because TMS involves magnetic fields, clinics must follow safety protocols (e.g., screening patients for metal implants). The overall regulatory outlook for TMS is positive: it’s increasingly seen as a safe, established treatment. There are ongoing research and government grants supporting expansion of TMS into new areas (like treating veterans with PTSD), which can only bolster its legitimacy.
Competitive Landscape: The TMS provider landscape in the U.S. has undergone notable consolidation and corporate activity. A prime example is Greenbrook TMS, once the largest TMS clinic network (with 130 locations in 2023), which faced financial difficulties and was acquired by Neuronetics (a device manufacturer) in late 2024. After acquisition, Greenbrook’s clinic count adjusted (118 active centers as of end 2024), but this move signals a tighter integration between device makers and service providers. Beyond Greenbrook, there are other regional chains (e.g., Success TMS, Mindful Health Solutions on the West Coast, etc.) and many individual psychiatry practices that offer TMS. Competition can vary by locality: in major metropolitan areas, several providers may offer TMS, whereas in smaller cities a single clinic might be the only option. Differentiators include the type of device (some clinics market “deep TMS†versus standard TMS, though efficacy is comparable), the level of personalization (e.g., MRI-guided targeting offered by a few centers), and the overall patient experience. From a business standpoint, TMS has attracted private equity investment as part of larger behavioral health deals – investors like the recurring revenue model of TMS once referral streams are established. However, operating a pure-play TMS clinic chain has proven challenging unless there’s sufficient volume and payer mix, as evidenced by Greenbrook’s struggles. Many successful models are integrated: offering TMS alongside medication management and therapy, creating multiple touchpoints with patients. For owners, adding TMS to a psychiatry practice can be a growth driver, but one must invest in marketing to educate patients and referrers about its availability. On a global scale, the U.S. leads in TMS adoption thanks to insurance coverage; other countries are following, which could mean international expansion opportunities for established U.S. players down the line.
Strategic Options for Owners: Recapitalization, Partnership, or Exit
Business owners in psychiatry and related specialty services have several strategic options when considering growth or liquidity events. The right path depends on personal goals (e.g., expansion versus retirement), the business’s performance, and market conditions. Key strategic options include:
- Recapitalization (Partial Sale): This involves selling a minority or majority stake in the business to an investor (such as a private equity firm) to inject growth capital while the owner continues to operate and retain some ownership. A “recap†allows owners to take some chips off the table (get liquidity) and partner with a larger entity for expansion. For example, an owner of a multi-location psychiatry group could sell 60% to a PE firm, securing funds to open new clinics or invest in marketing, while still holding 40% equity that could be worth even more later. Recapitalizations are common for businesses that have strong fundamentals and growth potential but need capital or expertise to scale up. They can be structured in various ways (equity sale, debt refinancing, etc.), and often the incoming partner will help professionalize operations (for instance, upgrading IT systems or adding management depth). Pros: Owner retains upside in future growth, gets immediate liquidity, and gains a partner’s resources. Cons: Must share control/decision-making and align with the investor’s growth timeline (typically a 3–7-year horizon before the next sale).
- Strategic Partnership or Merger: In a partnership scenario, the business might merge with a strategic partner – for example, joining a larger provider group or aligning with a hospital system, or even merging with a complementary practice (like a psychiatry group merging with a therapy group to offer integrated care). This can sometimes be akin to a sale (if the owner takes equity in the larger entity or cashes out part of their ownership). The goal is often to leverage synergies: a larger partner can provide infrastructure, referrals, or broader service lines, fueling growth that the standalone business couldn’t achieve alone. Partnerships can also take the form of management services organizations (MSOs) where the owner retains ownership but cedes management to a professional firm in exchange for growth support. When considering a partnership, owners should evaluate cultural fit, vision alignment, and how their role might change post-transaction. Pros: Can rapidly accelerate growth, expand service offerings, and reduce operational burdens on the owner. Also, the combined entity may achieve higher valuations due to scale. Cons: The owner’s autonomy and original brand might diminish; integration challenges can arise.
- Full Exit (Sale of 100% Ownership): A full sale is appropriate when an owner is ready to step away entirely or when market conditions offer an exceptionally high valuation. This could be a sale to a private equity platform, a competitor, a hospital/health system, or another strategic buyer. In a full exit, the owner negotiates the best price and terms, helps transition the practice to new ownership, and then eventually steps out (immediately or after a transition period). Given the current environment, there is robust interest in behavioral health assets, so a well-performing clinic network might attract multiple bidders and a premium price. Pros: Maximal liquidity and the ability to diversify personal net worth (no more “all eggs in one basketâ€). It can be the culmination of the owner’s hard work, realizing the business’s value. Cons: The owner gives up all future upside, and there may be emotional difficulty in letting go of a business built from scratch. Additionally, staff and patients will experience change under new ownership, and ensuring a smooth handoff is key to preserving the legacy.
- Growth without Outside Investment (Organic Expansion): Although not a transaction, it’s worth noting that some owners choose to continue growing on their own, reinvesting profits to expand. This path avoids sharing ownership but can be slower and limited by the business’s current capital and bandwidth. In the context of this report, many owners eventually find that a partnership or sale is needed to reach the next level or to respond to increasing competition.
Each option carries different implications for control, financial outcome, and the future of the business. It’s wise for owners to start with a clear vision of their personal goals: Are they aiming to maximize immediate value, or do they want to stay and grow bigger with support? Are they looking to de-risk financially while still growing the company, or are they ready to retire or move on to other ventures? The behavioral health market’s strong outlook means there are multiple interested investor pools (from healthcare-focused private equity to large health companies) – owners have the opportunity to be selective and seek the scenario that best fits their objectives.
The Value of Partnership: Capital, Scale & Expanded Footprint
For many clinic owners, partnering with a larger organization or investor can unlock significant benefits that would be hard to achieve alone. A well-structured partnership can provide the following strategic advantages:
- Access to Growth Capital: One of the most immediate benefits is infusion of capital. Partners (be it private equity or a strategic healthcare company) bring funds to invest in new locations, service lines, and technology. For instance, a TMS clinic group could use partnership capital to purchase additional TMS machines and open in new cities, or a psychiatry practice could invest in a robust telehealth platform and patient acquisition marketing. With mental health demand so high, having the capital to scale up quickly can position the business to capture market share before competitors do.
- Operational Scale & Efficiency: Partners can help scale operations by introducing best practices and economies of scale. This might mean centralizing administrative functions (scheduling, billing, insurance credentialing) across multiple sites to reduce overhead, bulk purchasing for better rates (on medical supplies or equipment), and implementing advanced EHR and data analytics systems for efficient practice management. As clinics grow from a single-digit number of providers to dozens or more, these efficiencies become crucial. A partner might have a skilled management team or playbook that streamlines everything from hiring to compliance, allowing clinicians to focus more on patient care.
- Expanded Footprint & Network: By partnering, a practice can often expand its geographic footprint much faster. A regional psychiatry group partnering with a national platform could quickly scale from, say, 3 clinics in one state to 15 clinics across several states within a couple of years. This expanded footprint not only grows revenue but also builds a brand presence that attracts patients, payers, and even talent (providers may prefer to work at a larger organization with more opportunities). Additionally, being part of a network can drive intra-network referrals – e.g., a partner that also has primary care or substance abuse facilities could feed patients to the psychiatry/TMS clinics.
- Enhanced Services & Innovation: Partners often bring additional service lines or expertise. A merger with a therapy group could allow a psychiatry practice to offer a full spectrum of care (medication + psychotherapy). A partnership with an academic-affiliated entity might introduce cutting-edge treatments or clinical trials (like new psychedelic therapies or advanced neuromodulation techniques) into the practice. This ability to innovate and broaden services can differentiate the business in a crowded market. It also meets patient needs more comprehensively, which is increasingly important as payer models shift toward outcomes – comprehensive care often yields better outcomes.
- Stronger Payer & Referral Relationships: Larger organizations typically have more clout when negotiating with insurance payers or establishing referral agreements. A partnered or merged entity might secure better reimbursement contracts (by negotiating as a bigger group or obtaining in-network status more easily due to size). They could also forge partnerships with employer networks, accountable care organizations (ACOs), or insurance carve-outs that funnel patients to preferred providers. In mental health, being part of a recognized network can improve referral flow (for example, a hospital discharging a patient after a suicide attempt might refer to a partner-owned intensive outpatient program or TMS provider). Essentially, scale can improve market presence and credibility, which in turn attracts more business.
- Shared Risk and Resources: Running a healthcare business comes with risks – regulatory compliance, malpractice, reimbursement changes. In a partnership, an owner-operator is no longer alone in bearing these risks. A larger partner will have legal, compliance, and HR teams to manage regulatory and personnel issues. They may also have capital reserves to buffer against downturns or delays in payments. Sharing these burdens can reduce stress on the owner and provide stability. Moreover, having additional physician partners or an advisory board via the investor can help navigate tricky strategic decisions. The period of the COVID-19 pandemic was a lesson: larger organizations, with diversified services and better resources, weathered the storm more robustly in many cases than solo practitioners.
In summary, a partnership can act as a springboard for growth – propelling a business to regional or national prominence – while also providing downside protection and operational support. Of course, the specifics depend on the partner; the best outcomes occur when the partner’s strengths align with the business’s needs and both parties share a common vision for quality patient care and growth. For owners who want to remain actively involved, choosing a partner who values their clinical expertise and leadership ensures they can continue to drive the practice’s success under the new structure.
Navigating the Sale/Partnership Process with Covenant Health Advisors
Covenant Health Advisors – Guiding healthcare business owners through sales, partnerships, and growth strategies.
Covenant Health Advisors is a specialized consulting and advisory firm focused on healthcare M&A and partnership strategies. For owners of psychiatry, medication management, ketamine, Spravato, or TMS service businesses considering a sale or partnership, Covenant Health Advisors serves as a trusted guide and advocate throughout the transaction process. Our team understands the unique dynamics of the behavioral health sector – from valuation drivers like patient outcomes and payor mix, to the nuances of regulatory compliance that can make or break a deal.
How We Help Owners Achieve Optimal Outcomes:
- Comprehensive Valuation & Market Analysis: Covenant starts by performing a thorough valuation analysis of your business, examining financial performance, growth trajectory, and intangibles (such as clinical quality, brand reputation, and technology systems). We benchmark these against market comparables and current deal trends in the behavioral health space. Owners receive a clear picture of what their business is worth in the current market and what factors could enhance that value. We also identify the most likely buyer or investor pools (e.g., strategic healthcare companies, private equity firms with healthcare portfolios, or larger provider groups) and tailor our approach to those audiences.
- Strategic Positioning & Deal Preparation: Drawing on deep industry insight, Covenant helps position your business’s story in the most attractive way. This includes highlighting growth opportunities (e.g., untapped demand in your region or the ability to add new services like Spravato or telehealth to increase revenue) and addressing potential concerns proactively (such as relatively high reliance on a few payers or the owner’s personal clinical hours – areas a buyer will diligence). We assist in assembling detailed information packages, financial documents, and metrics that investors care about (e.g., patient volume trends, reimbursement rates, outcomes data if available). By packaging your business professionally, we ensure investors see the full value and potential, which drives optimal offers.
- Running a Competitive Process: One of the keys to securing the best valuation is creating a competitive bidding environment. Covenant Health Advisors leverages an extensive network of contacts in the healthcare investment and provider community to discreetly reach out to multiple qualified buyers/partners. We market the opportunity (under confidentiality) and solicit indications of interest, negotiating terms with multiple parties in parallel. This competitive process often leads to better pricing and terms​, as buyers know they are vying for a valuable asset. We carefully vet each interested party to ensure they have the financial capability and strategic fit to follow through, protecting owners from wasted time or deals that might falter.
- Deal Structuring & Negotiation: Our experienced dealmakers guide owners through the negotiation of price and terms. Beyond just the headline price, we pay attention to deal structure – for example, the mix of upfront cash vs. earn-outs or rollover equity, employment agreements or consulting roles for owners’ post-transaction, non-compete terms, and any contingencies. In a recapitalization or partnership, we help structure the governance so that owners have clarity on decision rights and future exit provisions. Our goal is to secure not only the highest valuation, but also favorable terms that align with the owner’s goals (whether that’s maximum liquidity, continued upside, or a quick close). With deep knowledge of market standards, we advocate effectively on our client’s behalf.
- Due Diligence & Closing Support: Once a letter of intent (LOI) is signed, the process enters due diligence, where the buyer examines all aspects of the business. Covenant Health Advisors project-manages this phase to reduce burden on the owner. We coordinate data requests, working closely with your team (accountants, lawyers, practice managers) to provide timely and accurate information. We also troubleshoot issues that arise – for instance, if due diligence uncovers a contracting issue or a compliance gap, we work to find solutions that satisfy the buyer and maintain deal value. Throughout this phase, we keep deal momentum and handle negotiations of definitive agreements in concert with legal counsel. Our hands-on support through closing helps ensure there are no surprises, and that the transaction reaches a successful conclusion.
- Post-Transaction Transition: Covenant’s involvement doesn’t stop at closing. We assist in planning and executing a smooth transition, whether that means integrating with the partner’s systems or communicating the change to staff and patients in a positive way. For owners who stay on, we help delineate their new role and set performance metrics if they have an earn-out. Our focus is on making sure the partnership gets off on the right foot, preserving the value that was just unlocked. Satisfied clients often note that our guidance made what could be an overwhelming process feel manageable and even exciting – after all, a well-executed sale or partnership can be a transformative milestone for both the business and the owner’s personal financial goals.
- Optimal Valuations: Ultimately, Covenant Health Advisors is dedicated to helping owners secure optimal valuations for their life’s work. We know that in healthcare, valuation is both an art and a science – it’s about the numbers, but also about the vision and impact of your practice. By combining financial acumen, industry expertise, and negotiation skill, we make sure that when you decide to sell or partner, you are rewarded for the full value of what you have built. Our track record in the healthcare M&A space, particularly in high-growth areas like behavioral health, speaks to our ability to deliver results. We pride ourselves on integrity, transparency, and alignment with our clients’ interests – your goals become our goals.
Conclusion: The psychiatry, medication management, ketamine, Spravato, and TMS sectors in 2025 offer exciting growth prospects amid rising demand for mental health services. For business owners, staying informed on market trends and knowing when to seek a strategic transaction is key. Whether it’s accelerating growth via a partnership or realizing a well-earned exit, preparation and the right advice are crucial. The data and insights in this report aim to empower owners to make informed decisions. And when the time comes to explore options, Covenant Health Advisors stands ready as a partner in achieving an outcome that maximizes value and secures the legacy of your business in this vital healthcare field.
We’d love to learn more about your business and share what we’re seeing in the market. If you’re open to it, let’s set up a brief, no-pressure conversation to explore your goals and how we can help.
Contact us today:
Chris Calcagno
Founder and CEO
O – 214-234-8812 #701
