Across five health systems, behavioral health leaders are seeing a fundamental shift in how integration is financed: moving from siloed service lines and short-term funding toward enterprisewide cost strategies.
Rather than treating behavioral health as a standalone service, leaders said systems are embedding it across care settings and budgets, reflecting its impact on overall patient outcomes and utilization.
Arpan Waghray, MD, CEO of Renton, Wash.-based Providence’s Well Being Trust, told Becker’s the shift requires a broader view of where behavioral health fits across the system.
“We don’t think of behavioral health funding as just a service line,” he said. “Our intent is to think about this in a much broader context. So thinking about all the care that’s delivered outside of the behavioral health specialty for patients … and intentionally building these into the operating budgets of every unit.”
Other leaders echoed the importance of embedding behavioral health into core operations rather than treating it as optional.
Elicia Bunch, vice president of behavioral health at Aurora, Colo.-based UCHealth, said integration must extend into financial and operational structures.
“When it’s embedded in our operational budgets, reimbursement strategies and comprehensive patient outcomes, it really does become sustainable,” she said.
Tracey Izzard, vice president of behavioral health services at Norfolk, Va.-based Sentara Health, said the system has structured behavioral health as a horizontal service line that spans care settings.
“It’s where we’re combining our health plan, our ambulatory and our acute care, and we are embedding behavioral health along the way,” she said.
The system’s vertical behavioral health service line includes the behavioral health unit, emergency department, outpatient programs, partial hospitalization, intensive outpatient services and outpatient medication management.
Utilization and costs
Leaders said this shift is driven in part by the significant role behavioral health plays in hospital utilization and costs. Often, patients who could have entered outpatient programs depend on crisis care for social, mental health and substance use needs.
The financial implications are also substantial.
Mental illness costs the U.S. economy $282 billion annually, researchers at New York City-based Columbia University found. Behavioral health conditions are also linked with up to threefold spending increases for individuals with otherwise similar physical disease burden, according to a study published in 2025 in JAMA Network Open.
“Since we are a payer and we’ve been scaling services, our goal is to start to measure that, to see if that reduction other organizations are seeing, if we’re realizing that value,” Dawn Zieger, vice president of psychiatry and behavioral health at Danville, Pa.-based Geisinger, told Becker’s.
Ultimately, leaders frame integration as a mechanism to reduce total cost of care and improve system efficiency. Embedding behavioral health into primary care and other settings is seen as key to reducing avoidable costs.
“Continuing to treat it as a one-off or an ancillary service — that’s where we continue to absorb all of that cost,” Ms. Izzard said. “There’s all that extra cost where we can embed it and where we can work hand in glove with primary care. That’s where we start to see the total cost of care reduced.”
At the system level, leaders also emphasize aligning financial incentives across entities to support integration.
“All those expenses and all those revenues are ultimately the system’s,” Mr. Jones said. “We’re trying to avoid the sometimes perverse incentive of thinking, ‘Well, what’s good for the department versus what’s good for the hospital?’ We are thinking about what’s good for the patient, and then let’s figure out how the finances work behind the scenes.”
Reimbursement challenges
Despite the potential for return on investment, leaders highlighted persistent reimbursement gaps that require alternative financial strategies. In some systems, behavioral health services continue to rely on internal subsidies.
Maurizio Fava, MD, chair of psychiatry at Somerville, Mass.-based Mass General Brigham, said long-standing reimbursement challenges have required systems to step up.
“Our level of reimbursements for services in the state of Massachusetts has always made it hard to actually support the salaries of our clinicians, and so there has always been substantial subsidy of psychiatric services,” he said.
At Geisinger, reimbursement does not cover outpatient services, Ms. Zieger said. She added that fortunately, the system has other specialties including orthopedics and cardiology with a margin to help pay for the services the community needs.
These financial pressures are compounded in systems with a high proportion of Medicaid patients, in which reimbursement rates are typically lower.
“Fifty percent of our payer mix is Medicaid, which is often populations that have social determinants of health challenges,” Ms. Zieger said. “We’re looking really hard at how to optimize our payment, the fee-for-service commercial space and our Medicaid care so that we can make sure we’re able to have sustainable operations. It’s a hard hill to climb.”
To address these gaps, systems are expanding beyond traditional reimbursement models, including community benefit investments and partnerships.
“Last year, we invested in our community benefits almost $2.1 billion across our seven states. So it’s not an insignificant amount,” Dr. Waghray said. “We’re trying to align our Community Health investment dollars in a way that provides them better support and structure.”
The bridge between clinical care and community partnerships is also critical, particularly when working with organizations that may have more favorable reimbursement structures, he said.
Others have worked to align reimbursement models with integrated care delivery.
“That really includes using collaborative care codes, which are funded primarily under the medical plan, and then also supporting traditional behavioral health benefits where that model works best,” Ms. Bunch said. “A key has really been matching the care model to the reimbursement pathway in a way that really optimizes both the clinical and the business model approach to care.”
Philanthropy, high-margin service lines and grants
Leaders also highlighted the importance of partnerships and alternative funding sources. For example, over the past several months, Los Angeles-based UCLA Health, Monterey, Calif.-based Montage Health and Boston Children’s Hospital have received large gifts for behavioral health.
“Philanthropy was used as a source of discretionary funding by each hospital and by each investigator,” Dr. Fava said. “Now we have a single team that oversees fundraising and philanthropy. … There will be donors that are going to say, ‘I would like to fund research in this area,’ and that may lift all boats in terms of philanthropic support across the entire department.”
Bernard Jones, vice president for behavioral and mental health and the psychiatry department for Mass General Brigham, said interventional psychiatry and procedural services can help improve financial sustainability.
“We are particularly interested in those sort of cutting edge services delivered through a department of psychiatry that not only help advance patient care significantly, but are often the most favorably reimbursed,” he said. “So thinking about interventional psychiatry and some of our procedural services, and that’s also a good way within an integrating department to make things financially sustainable.”
Long-term sustainability must be built into financial models, particularly when relying on grants.
Dr. Waghray cautioned against short-term funding strategies that cannot be maintained.
“The worst thing we can do is get some funding or grant and then support somebody for a short duration of time, and then have to take a service, pull the service back, just because there’s no sustainable pathway,” he said.
Systems are increasingly evaluating sustainability at the beginning of grant-funded initiatives to avoid these disruptions.
“So how do we make sure on the other end of the grant we understand exactly what we’re going to be able to do,” Ms. Zieger said. “We know that we’ve got to be nimble on the other side of the grant infrastructure.”
Governance
Financial integration is reinforced through governance structures that align decision-making across the system. Ms. Izzard said cross-functional leadership alignment is critical.
“Having those standard committees where you have the CMOs, COOs and CFOs from all three divisions come together to make decisions on how to best proceed in the behavioral health area — a lot of alignment is met when we meet in those areas, but then we can also see where the divergence is.”
Ms. Bunch added that executive-level prioritization is essential to sustaining progress.
“When behavioral health is represented in executive decision making priority, strategy and financial planning, it really ensures the work remains central to the organization’s mission and strategy, and that is certainly how UC Health has demonstrated this mission.”
Editor’s note: This is the first of a three part series exploring what behavioral health integration looks like financially, clinically and operationally. Check out Becker’s behavioral health newsletter to see more coverage on the topic.
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