Dr. Dennis Morrison is the Chief Clinical Officer at Eleos and the owner of Morrison Consulting. Previously he has served as Chief Clinical Officer at Netsmart Technologies, CEO of Centerstone Research Institute (CRI), and CEO of Center for Behavioral Health (CBH).
If you’re a community behavioral health leader, you might be struggling to see any opportunity in the One Big Beautiful Bill Act (OBBBA).
Representing one of the most significant policy shifts of our time, OBBBA is projected to strip Medicaid coverage from roughly 10 million Americans. That’s a significant blow for many behavioral health orgs who rely on Medicaid funding to remain operable—and an urgent call to action for leaders to shift their strategy so they can continue providing lifesaving services to the nation’s most vulnerable populations.
With OBBBA, generic cost-cutting measures and incremental improvements to efficiency simply aren’t gonna cut it. The sheer magnitude of this funding reduction demands bolder thinking. In this piece, I’ll lay out a few actionable ideas for behavioral health and substance use disorder (SUD) leaders to consider as they chart their path forward.
Seeing Crisis as Opportunity
“Crisis” is a scary word, but as the old saying goes, with crisis comes opportunity. The OBBBA forces us to look at our operations, service models, and priorities with a much more critical eye—pushing us into change that, while uncomfortable now, will ultimately make us more sustainable. These kinds of large-scale shifts rarely happen under stable funding conditions, when the status quo is almost always the path of least resistance.
The key to capitalizing on this opportunity lies in:
- systematic analysis, and
- decisive action.
Perhaps most importantly: We must resist the temptation to make hasty decisions out of panic or fear. As my new friend Dominic Miller recently told me on the No Notes podcast, “Don’t panic, pivot.”
Assessing Programs Strategically: What Should We No Longer Do?
One of the most critical questions to ask during this period of funding uncertainty is: “What should we no longer do?”
This is not the time to continue programs or services simply because “they have always been done.” Instead, you must rigorously evaluate every service line and payer relationship against current realities and future sustainability. Here’s how:
Service Line Evaluation
Examine each service line’s financial performance, clinical outcomes, community impact, and strategic alignment with your organization’s core mission. Programs that generate consistent losses, serve small populations without clear pathways to sustainability, or duplicate services readily available elsewhere in the community are prime candidates for discontinuation or significant modification.
Payer Contract Evaluation
This strategy applies to payer relationships as well. OBBBA will likely pressure public and private payers to seek rate cuts from providers. As a result, you may be forced to end contracts because the proposed rates do not cover the cost to service the contract.
Who to Involve in the Evaluation Process
The internal strategic assessment process should involve key stakeholders, including, for example:
- clinical staff,
- administrative personnel, and
- board members.
This ensures decisions reflect both operational realities and mission alignment. Many organizations also involve consumers, peers, and other external parties in the process for these types of decisions.
Just don’t let healthy debate turn into inaction. Your evaluation committee must enter the process fully prepared to make difficult choices, potentially discontinuing programs that may be clinically valuable but financially unsustainable within the new funding landscape.
This process, while painful, creates space and resources for you to focus on your most impactful and sustainable services.
Managing Personnel Costs in a People-Intensive Industry
Behavioral healthcare is ultimately a service industry, which makes it inherently people-intensive. Personnel expenses typically make up 70–80% of an organization’s operating budget, with a significant portion of that going toward care providers.
When re-evaluating personnel expenses in the face of OBBBA-driven cuts, leaders must balance financial necessity with clinical quality and organizational mission.
Layoffs and position eliminations may be unavoidable, but it’s important to approach them strategically and individually rather than defaulting to across-the-board cuts.
It’s not necessarily an “all or nothing” thing. You can consider:
- restructuring positions,
- combining roles where clinically appropriate, and
- implementing alternative staffing models (such as contracted providers versus employees, technological replacements, or adjunctive supports).
This evaluation should also include an analysis of productivity metrics, caseload management, and service delivery efficiency. You might actually be able to maintain or improve service levels with fewer staff members through better organization, improved processes, or technology integration.
All of that being said, you must remain vigilant about maintaining appropriate clinical supervision ratios. Cost-cutting measures should never undercut care quality or create unsafe working conditions for remaining staff.
Driving Operational Efficiency with Technology
The COVID-19 pandemic proved that technology—in this case, rapid telehealth adoption—can transform behavioral health service delivery.
The OBBBA crisis presents another opportunity for tech innovation, particularly in areas where artificial intelligence and automation can enhance provider productivity and reduce administrative burdens.
While the initial investment in such tools can be substantial, it’s important to think about their long-term impact on operational efficiency, service capacity, and clinical outcomes.
Ambient Scribes for Office-based and Field-based Providers
Ambient listening and scribing solutions have shown remarkable effectiveness in reducing documentation time and empowering providers to spend more time on direct care. Even field-based staff and case managers have seen the benefits of these tools with more recent advancements in AI-based mobile solutions.
Given that the OBBBA will likely increase documentation requirements due to changing Medicaid eligibility criteria and work requirements, supporting these workers with AI-based technology becomes even more critical.
Consumer-facing Apps to Supplement Care
Consumer-facing applications can also help ease the strain of workforce constraints. These tools offer an alternative for individuals who might otherwise be placed on waiting lists or go unserved entirely. The Veterans Administration has vetted numerous consumer-facing mental health applications, providing a valuable resource for organizations seeking to implement these technologies safely and effectively.
Redefining Community Benefit for 501(c)(3) Organizations
Most community behavioral health organizations operate as 501(c)(3) tax-exempt entities. This means they receive tax benefits in exchange for providing community benefit (typically in the form of offering services for individuals regardless of their ability to pay). The OBBBA’s impact on Medicaid coverage will likely increase demand for these unreimbursed services, challenging organizations to redefine and quantify their community benefit obligations.
The Unreimbursed Care Quandary
The term “free care” is misleading, as unreimbursed services still incur real costs for personnel, facilities, utilities, and other operational expenses. So, these services are effectively subsidized by the organization rather than being truly “free.” While providing care regardless of ability to pay aligns with both the mission and culture of community behavioral health organizations, the capacity to provide such services is not unlimited.
Now is the time to work with your board of directors to establish clear parameters around community benefit obligations.
How much unreimbursed care can your organization sustainably provide while still fulfilling its mission? Setting an upper limit allows you to manage your community benefit activities strategically rather than reactively, ensuring your charitable care commitment remains sustainable over the long term.
Managing Increased Indigent Care Demand
Once you’ve quantified your capacity for providing low or no-cost services, you can apply management strategies similar to those used for traditional managed care contracts. For example, when you treat your indigent care budget as a capitated contract, you can establish rigorous utilization management processes—including internal prior authorizations and ongoing case management—to ensure appropriate use of limited resources.
Reducing No-Shows Early in Care
This is also a great time to reconsider your intake procedures with an eye toward reducing no-show rates for initial and second appointments.
The no-show rates for each of these appointments often exceeds 50%. Some organizations have addressed the initial appointment problem with open access (or same-day) scheduling, and when people do not show for those appointments, it’s difficult to determine why.
The Documentation Distraction
With the second appointment, though, clients are making an informed choice not to return based on their experience during the first appointment. This could be due to onerous documentation requirements providers must fulfill during that first session, which limits their ability to genuinely engage with the client.
Streamlining paperwork requirements for first sessions—allowing clinicians to focus on helping clients make informed decisions about treatment—can improve client engagement, encourage continued attendance, and reduce wasted appointment slots.
The Single-Session Opportunity
An often overlooked resource is Single Session Therapy. The rationale for this modality is seen in the following:
- The modal number of sessions in community behavioral health is already one.
- 20% to 50% of patients do not need a second session.
- 80% of patients receiving single session treatment reported it had solved or improved their problem(s).
But most providers treat every intake the same, assuming the client will return for more sessions. Why not incorporate a clear single-session offering into the service model?
Group Therapy as a Tool to Manage Demand
Group therapy is another underutilized resource for managing high client demand. With group therapy, organizations can serve multiple clients simultaneously—and the outcomes for most mental health conditions are clinically equivalent to those associated with individual therapy.
Historically, one barrier to expanding group therapy care has been the onerous documentation requirements (i.e., creating notes for the overall group as well as each individual participant). And up until now, group sessions have been a notoriously difficult use case for ambient AI tools due to the wide variation in acoustic environments and overlapping voices.
Eleos has now solved the group therapy documentation problem with its new Groups Audio Sessions capability, alleviating providers of the unique administrative burden that comes with this type of care.
Another challenge is the paucity of group training most therapists get in graduate school. Unless they are focusing on substance use treatment (where groups are the preferred modality), clinicians may need refresher courses in group techniques. Related to this, managers may need to change their clinical productivity expectations to incent group therapy versus individual therapy.
If you haven’t fully embraced group therapy models of care, there’s never been a better time to explore them as a cost-effective way to meet growing demand.
Learning from National Networks and Vendor Communities
The OBBBA’s national scope means that behavioral health organizations across the country are grappling with similar challenges, creating opportunities for shared learning and collaborative problem-solving. Organizations should leverage their existing relationships with peer organizations, both within their states and through national trade associations, to share strategies and learn from each others’ experiences.
Vendors—including tech partners—are an often-overlooked resource for innovative ideas. EHR vendors, in particular, maintain national client bases and have a birds-eye view on how their customers are responding to challenges like the OBBBA. These vendors, along with specialized AI technology companies like Eleos, can provide valuable insights into widely successful strategies.
The OBBBA era will separate the transactional vendors from those who truly act as partners.
The best vendor partnerships go beyond traditional sales relationships to include strategic discussions about industry trends, successful strategic solutions, and lessons learned from other organizations across the vendor’s client base.
Seeking Strategic M&A Opportunities
In the face of the OBBBA, your—and your team’s—primary obligation isn’t just preserving or maintaining operations and “riding out the storm.” Instead, your primary obligation is ensuring that the community you serve continues to receive necessary behavioral health services—even if it means making significant organizational changes like mergers, acquisitions, or other affiliations.
Don’t wait until a full-on financial crisis to develop merger and acquisition strategies. This could force you to accept unfavorable terms out of desperation.
The rollout of OBBBA-driven measures will be gradual, which also makes the impact fairly predictable. Knowing this, you should start building relationships with potential partners now, while you’re still in a strong position to negotiate.
The Anatomy of a Strong Partnership
Strategic partnerships can take various forms, from service-specific collaborations to full organizational mergers. Make sure you evaluate potential partners across a variety of factors, including:
- complementary strengths,
- shared values,
- geographic advantages, and
- long-term sustainability.
The goal is not merely surviving the effects of the OBBBA, but creating stronger, more resilient entities capable of serving community needs effectively in the face of funding challenges.
To learn more about mergers and acquisitions in the behavioral health space, check out this resource.
Summing it All Up: Next Steps for Leaders
The One Big Beautiful Bill Act is a watershed moment for community behavioral health, demanding strategic responses that go far beyond traditional cost-cutting measures. Organizations that approach this challenge systematically, embracing both the crisis and the opportunities it presents, will be better positioned to continue serving their communities effectively for decades to come.
To successfully navigate the OBBBA’s impact, leaders must:
- make difficult decisions about program continuation,
- embrace technological innovations,
- redefine community benefit approaches, and
- consider strategic partnerships or organizational restructuring.
While these changes may be painful in the short term, they can position organizations for long-term sustainability and enhanced community impact.
The behavioral health field has demonstrated remarkable resilience and adaptability over the years as we’ve faced everything from deinstitutionalization to managed care implementation to pandemic responses.
I believe that with careful planning, strategic decision-making, and a focus on collaboration, community behavioral health organizations can navigate the challenges posed by the OBBBA while maintaining their essential role in supporting community mental health and well-being. The path forward requires courage, creativity, and commitment to the fundamental mission of ensuring that all community members have access to necessary behavioral health services, regardless of their ability to pay.
