The arrival of 2026 will require substance use disorder (SUD) treatment providers to adjust the sails and tighten the ropes on areas providers do have control over during what could be a pivotal year for both policy and market activity.
Unlike other areas of behavioral health in 2025, the SUD sector experienced an M&A market decline and investor disinterest as headwinds — including federal agency consolidations, Medicaid eligibility tightening and other legislative moves — pushed many investors to focus on better-performing areas, like the mental health and autism sectors.
The underwhelming year that was is a signal to the industry to redirect their focus and prioritize value-based care, integrated care models and adapt to change, industry insiders said during a Behavioral Health Business-hosted webinar.
“2025 was marked by significant disruption and fear over disruption to the Medicaid program, predominantly through congressional funding vehicles that were initially envisioned to passively end the Medicaid expansion,” Dr. Rebekah Gee, founder and CEO of Nest Health, said during the webinar. “Next year will be a year of significant coverage loss, particularly for individuals who are working, individuals who are not pregnant or children because of the increased requirements.”
New Orleans-based Nest Health provides in-home behavioral health and SUD treatment.
Although most Medicaid beneficiaries are working, Gee said, the “paperwork requirements can often disrupt coverage in important ways,” which can be harmful to individuals undergoing SUD treatment.
Federal funding has also been a key challenge. Although the SUD field will benefit from some of the Trump administration’s work, like the recently renewed SUPPORT Act, its cuts to programs and grants that fund essential work in the space were damaging, Mark Dunn, Public Policy Director at the National Association of Addiction Treatment Providers (NAATP), explained.
“It’s been a very challenging and frustrating year,” Dunn said during the webinar. “Obviously, funding is a huge key to increasing access to care, and when the administration came in and indiscriminately cut programs and grants, it was a very disruptive thing for the marketplace. Not only them, but also the treatment providers around the country that depend on those funds.”
NAATP is a professional membership and advocacy association for addiction treatment providers.
Looming political uncertainty, midterm elections and another critical congressional budget deadline of January 30, 2026, which, if unsettled, could launch the country into another shutdown, paints an unpredictable year ahead for providers, Dunn explained.
But the headwinds are also creating room for new opportunities and renewed focus on data and outcomes, Dr. C.J. Davis, CEO-elect of Centerstone, said.
“I really believe that this is the opportunity for all providers to focus on data and outcomes,” Davis said during the webinar. “And I think that the creativity of care is important. This may be one of the biggest moments for us to become more critical and more creative in our care space, especially as utilization management is questioned. I believe that integration is going to continue to be an opportunity to show that whole-person care is critical and important.”
Centerstone is one of the largest nonprofit behavioral health care organizations in the U.S. It provides mental health and substance use treatment, education and support across multiple states.
A focus on integrated care, value-based contracts and further development of hybrid in-clinic and telehealth models will be of growing importance in 2026, Davis anticipates, particularly as payers look for innovative models.
“What we’re going to look for as we’re trying to all read the tea leaves is what are the creative value-based models that we can present a business case for to legislative bodies in an effort to be more creative?” he said. “For far too long, our services have been built and based upon either conveniences or old models that are not really indicated or prescribed by research. I think that’s the real opportunity here: How are we going to really articulate a case of more value in the new legislative world?”
The ongoing push for cost savings is also a factor that will be driving investments in alternative care and payment models, Gee explained.
“It is so much better to pay for outcomes than fee-for-volume,” Gee said. “If you pay a company to provide outcomes rather than pay for individual services, these companies have more incentive to provide what’s right to the families and patients rather than what’s profitable at the time.”
“When we think about enabling providers to get paid for outcomes, in our case, those outcomes are follow-ups after hospitalization for mental illness, as well as things like vaccines and well visits,” she added. “We also get paid for a portion of our savings.”
Increased attention to whole-family care models, social determinants of health and integrated care are likely to be themes in 2026, both Gee and Davis predict. This may help move the field forward into more value-based arrangements.
But the biggest gap in achieving value-based contracts across the field, she said, is that many SUD providers, particularly federally qualified health centers (FQHCs), are vastly underfunded. Such resources and funding are required to get access to the tech tools needed to track and analyze care and outcomes data.
AI adoption could also help advance the industry’s ability to prove value. Already other industries look to AI to address complex data analysis and alleviate administrative burdens. However, it matters how providers incorporate it into their 2026 strategies, Ray Terwilliger, Vice President of Operational Services at Healthcare Services Group, said. It’s important to be in a position to leverage those technologies and make the most of their use before broadly adopting them.
“We all know what powers AI can have, but how do you integrate it into your current strategy?” Terwilliger said during the webinar. “How do you make smart investments instead of just being first to the marketplace or on the leading edge of these technologies?”
Healthcare Services Group provides dining, nutrition, housekeeping and laundry services for health care and behavioral health communities.
Outside of technology, another critical area providers must stop underestimating as they enter 2026 is “the administrative burden of compliance,” Davis said.
“It’s a challenge for us given the number of states that we’re in and those particular providers that span multiple states in our country,” Davis said. “The multiple-state system is great for our scale. But you have to find ways for centralized monitoring and also decentralized operational playbooks. I think that’s really the key: How do you have compliance, plus state strategies and federal strategies? Many of the things that we deploy are thinking about both state and federal simultaneously, which is challenging because they seem to be on a little bit of a different playbook.”
Davis and Terwilliger stressed the power of strengthening relationships with state and academic associations as SUD providers enter 2026.
Investing in those relationships will help navigate compliance and regulatory uncertainties throughout 2026 and beyond.
“We’re really trying to stay close to those state associations,” Terwilliger said. “I think you have to empower people at the state level to make decisions on a day-to-day basis. You also have to be very close from a central perspective so that you can continue to audit processes and make sure that the operations are in line with compliance.”
In addition to compliance, as providers head into 2026, they should be ready for increased scrutiny around finances, waste, fraud and abuse, the panelists echoed.
Dunn noted that NAATP has developed a program to help members navigate through some of the scrutiny and compliance details.
Adopting an overarching focus on efficiency across SUD organizations will help align providers with some of the areas that are likely to face increased pressures.
“Especially with the increased scrutiny that is coming, all of your dollars are going to be scrutinized,” Terwilliger said. “How are they being spent? Where are they being spent? Where are they being allocated? So continuing to look for those efficiencies that we can drive with support services will be critical to success, especially in an environment where there’s going to be pressures on financing.”