Orlando Health announced Tuesday another partnership with a for-profit company to provide outpatient services, this time around behavioral health.
The not-for-profit health system said it has formed a venture with Acadia Healthcare, a publicly-traded company and the country’s largest standalone behavioral health provider, to expand behavioral health services in Central Florida. Orlando Health will own 30% of the new for-profit enterprise.
The deal is intended to expand Orlando Health’s existing inpatient and outpatient behavioral health offerings, which are currently limited, said Greg Ohe, the health system’s senior vice president of ambulatory services. The companies haven’t fleshed out exactly what their partnership will look like, but Ohe said it could eventually include construction of a new behavioral health hospital.
Right now, Orlando Health’s only inpatient behavioral health unit is at its South Seminole Hospital in Longwood, just north of Orlando. Acadia will take over management of that program. Orlando Health’s outpatient behavioral health services are also “fairly limited,” but the health system hopes its joint venture with Acadia will grow those, Ohe said.
Under the deal, Orlando Health will continue to provide all the staffing for its behavioral health programs. The health system has seven psychiatrists plus advanced practitioners and social workers. Acadia brings management expertise.
“We did a fair amount of due diligence on them and their approach toward healthcare and specifically in this instance behavioral healthcare equated with ours,” Ohe said. “They embrace some of the same values that we do as we approach patient care.”
Orlando Health is no stranger to partnering with for-profit companies that offer outpatient services. Last year, it struck a deal with publicly-traded LHC Group to offer home health and community-based services in four Florida cities. That deal appears to be structured similarly to this one: a joint venture in which Lafayette, Louisiana-based LHC bought a majority stake.
Orlando Health also has a deal with private equity-owned FastMed Urgent Care, which operates more than a dozen co-branded clinics through its newly acquired CareSpot Urgent Care.
Meanwhile, Franklin, Tennessee-based Acadia has made significant headway into the not-for-profit provider space in recent years. Earlier this year, it formed a joint venture with Geisinger Health to provide inpatient behavioral health services.
Acadia has 13 health system partnerships in total, the company disclosed in its most recent financial filing. That includes planned hospitals with Henry Ford Health System, Scripps Health and Covenant Health. Acadia drew $2.1 billion in revenue in 2020 and operated about 570 behavioral health facilities in 40 states.
Dr. Jeffrey Woods, Acadia’s operations group president, said in a statement that his company has strong, experienced leaders.
“We look forward to working with the Orlando Health staff to continue providing exceptional care and exploring paths to expand access to meet the great demand in Central Florida,” he said.
An Acadia spokesperson did not return a request for comment beyond the news release.
Headquartered in Orlando, Orlando Health has 10 hospitals. The health system drew $152 million in operating income on $4.5 billion in revenue in its fiscal 2021, which ended Sept. 30, a 3.4% operating margin. That’s down from fiscal 2020, when its operating margin was 8.5%, or $328 million on $3.9 billion in revenue. The 2020 results include more than $82 million in federal stimulus funding, compared with just $570,000 in 2021.