Behavioral health has become a leading frontier for digital health innovation. From virtual therapy platforms to AI-powered diagnostics, the sector has drawn massive investment and attention. However, most behavioral health providers still operate in a system powered by faxes, phone calls, and fractured workflows. The tools may be new, but the terrain beneath them hasn’t changed. And that makes all the difference.
This is a blind spot for the healthtech community. Most assume that digitization is at least underway across all sectors. But behavioral health never got on the modernization train to begin with. The 2009 HITECH Act, which kickstarted EHR adoption across general medicine, excluded psychiatric hospitals and substance use treatment providers from federal incentives. As a result, electronic records remain uncommon, and interoperability with other care settings is the exception, not the rule.
The problems don’t stop there. No universal system for behavioral health coverage verification or referrals exists. In much of the country, confirming a patient’s mental health benefits still requires a call center queue or a fax to a carved-out vendor. Real-time digital insurance eligibility checks, common in other parts of healthcare, are often unavailable. Some providers can’t even access the patient’s full medication history or recent discharge summaries unless a family member physically brings them in.
This infrastructure gap goes beyond inefficiency and into a danger zone. Without real-time visibility into bed capacity or outpatient availability, emergency departments board psychiatric patients for hours or days, even after medical clearance. When referral systems break down, patients fall through the cracks, repeat assessments, or abandon care entirely. Health plans often require different approval processes for mental health services than for medical care, creating parallel pathways that never quite converge.
Most digital health solutions assume a certain degree of interoperability, data liquidity, and system readiness that behavioral health lacks. When these assumptions don’t hold water, the tools underperform. Waitlists grow. Providers burn out. Patients give up.
To fix this, healthcare IT leaders need to focus upstream. Innovation at the user interface layer will continue to stall unless we modernize the foundational infrastructure supporting behavioral health. That means:
Expanding EHR adoption and interoperability incentives for behavioral health providers:
Many behavioral health clinics still operate without certified EHR systems because they were excluded from HITECH funding and lack the scale or capital to invest in modern platforms. Policymakers should launch targeted infrastructure grants modeled on HITECH, with technical assistance aimed at small or community-based organizations. EHR vendors must also tailor offerings to mental health’s unique workflows, including group therapy documentation, treatment planning, and consent-driven data sharing. Importantly, behavioral health EHRs must integrate with health information exchanges (HIEs) and national frameworks like TEFCA. Interoperability across primary care, emergency departments, and psychiatric services is essential for continuity of care.
Reforming privacy rules to enable secure, consent-based data sharing:
Substance use disorder (SUD) data remains isolated under 42 CFR Part 2, which requires separate consent forms for every disclosure, even in emergencies. While protecting patient privacy remains paramount, current policies prevent critical coordination. Congress and HHS should finalize rule changes that align Part 2 with HIPAA while preserving patient protections, allowing care teams to view SUD history when clinically relevant and consented. In the meantime, healthcare IT systems can implement consent management modules that support granular sharing preferences instead of defaulting to total restriction. TEFCA participants should also standardize how behavioral data is tagged, masked, or released based on patient preferences.
Deploying shared capacity tools to reduce boarding and referral failure:
Hospitals, emergency departments, and community clinics currently rely on manual systems to find open psychiatric beds or timely outpatient appointments. The result is wasted time, higher costs, and patients stuck in the wrong setting. Health systems and states should fund regional capacity management platforms that include psychiatric bed registries, outpatient slot availability, and crisis service directories. These systems should update in real time and be accessible to both clinical staff and referring providers. Tech vendors can support this effort by building integrations into EHRs and care coordination platforms, enabling “bookable” behavioral health appointments that mirror scheduling tools in general medicine. Over time, predictive analytics can guide load balancing and improve regional resource allocation.
Implementing unified eligibility verification across behavioral and physical health:
Behavioral health providers need access to the same real-time eligibility and benefit verification tools available in other parts of healthcare. Too often, behavioral benefits are “carved out” to third-party vendors, forcing providers to navigate separate portals, phone trees, or fax workflows. Healthtech platforms should build APIs that aggregate coverage data across primary insurers and subcontracted behavioral health managers, including Medicaid managed care organizations. State Medicaid programs and commercial payers can accelerate this by mandating electronic eligibility interfaces for all vendors and enforcing service-level standards for turnaround time. Integration with claims data can also reduce redundant eligibility checks and speed up intake.
Some of these ideas are beginning to take hold. TEFCA now includes behavioral health data exchange in its framework. CMS’s new Innovation in Behavioral Health model recognizes infrastructure payments as essential to value-based mental health care. But awareness within the broader healthtech community remains low, and engagement from platform vendors and investors has been limited.
To move forward, stakeholders must treat infrastructure modernization as a baseline prerequisite. Behavioral health can’t benefit from advanced analytics, AI triage tools, or virtual-first models if the data they rely on doesn’t exist or can’t move. Seamless care requires systems that can talk to each other.
The next decade of health innovation will be shaped by how we solve behavioral health’s infrastructure lag. That challenge sits squarely in the hands of the healthcare IT community. We have the technology. Now we need the will to deploy it where it’s needed most.
About Sohar Health + CEO and cofounder Dr. Ashish Mandavia
Dr. Ashish Mandavia is the Co-Founder and CEO of Sohar Health, an AI-powered platform transforming front-end revenue cycle management (RCM) for behavioral health providers. Under his leadership, Sohar Health has developed a proprietary API-based system that delivers real-time insurance eligibility and benefits data with 99% accuracy and sub-30-second processing speeds.
