Federal Mandates, Not Incentives, Drive Psychiatric Hospitals to Replace EHRs, Black Book Survey

Netsmart ranks as top EHR software in 2025's Top HIT Vendor for Inpatient Behavioral Health Systems

WASHINGTON, D.C., WASHINGTON, D.C. / ACCESS Newswire / July 28, 2025 / Psychiatric hospitals and behavioral health facilities across the U.S. are rapidly modernizing their electronic health record (EHR) systems, driven not by new incentive funding, but by urgent compliance requirements. According to a Q2-Q3 2025 survey by Black Book Research, behavioral health providers face mounting regulatory pressure from the Office of the National Coordinator for Health IT (ONC), the Centers for Medicare & Medicaid Services (CMS), and the Substance Abuse and Mental Health Services Administration (SAMHSA).

Despite being excluded from federal EHR incentive programs like Meaningful Use, psychiatric hospitals and residential treatment centers face strict regulatory obligations under the 21st Century Cures Act, including interoperability compliance and information blocking prohibitions. CMS rules emphasize system-wide data exchange readiness across all care settings, and SAMHSA's crisis response funding now requires IT systems that enable real-time integration with 988 hotlines and emergency response teams. This policy environment is forcing digital modernization, even in the absence of federal financial incentives.

"Behavioral health providers are reaching a tipping point where modern EHR systems are essential to meet evolving federal mandates," said Doug Brown, Founder of Black Book Research. "With ONC enforcing interoperability and information blocking rules, CMS tightening data exchange requirements, and SAMHSA linking funding to crisis response readiness, outdated systems pose serious regulatory and operational risks."

Policy Context: Why Behavioral Health EHR Replacement Can't Wait

Under the 21st Century Cures Act Final Rule, behavioral health providers must comply with ONC certification, support patient data sharing through standardized APIs, and avoid practices deemed "information blocking." Non-compliant systems risk vendor decertification and reimbursement challenges. At the same time, SAMHSA's 988 and crisis response infrastructure funding increasingly requires IT alignment, including real-time clinical documentation and coordination with mobile crisis teams. Though providers were excluded from past incentive programs, the regulatory burden continues to increase-placing urgent pressure on outdated behavioral EHR systems.

Survey Highlights Significant Compliance Gaps

The Black Book polls gathered insights from 4,081 behavioral health EHR users across hospitals, practices and affiliated behavioral health providers. Of those, 1,445 respondents represented inpatient psychiatric hospitals, detox centers, residential programs, and acute care behavioral units.

Key survey findings include:

60% of behavioral health organizations plan to replace or upgrade their EHR systems within the next 24-36 months.

91% indicate their current EHR systems do not comply with ONC interoperability and information blocking rules.

65% are actively pursuing SAMHSA or state-level grant opportunities to support EHR modernization.

Fragmented Technology Still Dominates Behavioral Health IT

According to Black Book's 2025 user survey of psychiatric hospitals and affiliated behavioral providers, 82% of respondents reported using multiple systems or partially integrated platforms to manage clinical documentation, billing, and care coordination. Fragmented technology environments remain a leading barrier to compliance and interoperability, especially in inpatient psychiatric and substance use disorder (SUD) settings.

Major Pain Points Underscore Urgency for Replacement

Behavioral health executives and clinical end users consistently identified poor external system integration, weak analytics capabilities, and limited configurability as the most pressing challenges with their current EHR and care coordination platforms. These limitations directly impact care coordination across organizations, inhibit participation in quality reporting initiatives, and increase administrative burden-especially in resource-constrained facilities.

Netsmart Leads 2025 Behavioral Health EHR Rankings

In Black Book's annual inpatient behavioral health EHR satisfaction survey, Netsmart's MyAvatar platform secured the top spot, outperforming 20 competing vendors by ranking first in 12 of 18 critical key performance indicators (KPIs). Netsmart MyAvatar received the highest scores for psychiatric workflow innovation, interoperability with crisis response systems, successful deployments, and user satisfaction in high-acuity psychiatric settings.

"Netsmart's strong performance underscores their alignment with psychiatric hospitals' specific needs, particularly in interdisciplinary documentation, real-time clinical decision support, and integration with community and emergency crisis services," added Brown

Behavioral Health-Specific Functionality Drives Buying Decisions

When selecting replacement EHR platforms, 85% of surveyed behavioral health leaders ranked psychiatric-specific workflows and assessments as a top priority. Additional key selection criteria included seamless integration with scheduling and billing systems (67%) and user-friendly interfaces optimized for clinical staff (66%). This marks a shift toward specialty-driven platforms designed for the unique demands of behavioral care, rather than adaptations of general medical systems.

Outdated Systems Impair Value-Based Care Participation

Providers operating in paper-intensive environments or on legacy behavioral EHRs reported significant difficulties capturing the metrics and documentation necessary for value-based contracts with payers. Among inpatient psychiatric and SUD treatment facilities surveyed, 69% indicated that their current technology infrastructure limits their ability to demonstrate outcomes, coordinate care across settings, and qualify for alternative payment models. Respondents also emphasized the growing importance of evidence-based decision support tools, especially in coordinating care for dual-diagnosis patients and improving connections between primary care and SUD services. Behavioral health IT systems that lack this functionality are seen as a strategic liability-limiting clinical innovation and payer engagement potential.

Black Book's research identified the following KPIs as most valued by psychiatric and behavioral health IT leaders: Regulatory Alignment, Psychiatric Workflow Innovation, Staff Training & Adoption, Cultural & Clinical Fit, Ethics & Transparency, Specialization Breadth, Deployment Expertise, Clinical Documentation Customization, Integration & Interoperability, Scalability, Workforce Optimization, High-Risk Clinical Stability, Stakeholder Reputation, Enhanced Care Planning, Long-Term Market Stability, Data Security & Consent, Responsive Support, and Usability & Efficiency.

Action Steps for Behavioral Health Leaders

Despite the absence of direct federal incentives, compliance urgency has never been greater. Black Book advises behavioral health executives to:

Evaluate Current EHR Compliance: Benchmark existing platforms against ONC, CMS, and SAMHSA requirements.

Pursue Grant Opportunities: Seek available SAMHSA and state-level funding tied to 988 and IT modernization.

Select Proven Vendors: Partner with vendors that demonstrate behavioral health-specific EHR success.

Monitor Legislation: Track developments around federal legislation such as H.R. 3331, which could potentially expand EHR funding eligibility to behavioral health providers.

About Black Book™

Black Book™ is a trusted source for unbiased, crowdsourced data on health IT software and services. Since 2010, Black Book has surveyed over one million healthcare IT users to identify top-performing vendors and emerging market trends. Black Book is independently owned and does not accept vendor sponsorships or influence in rankings. To download the full 2025 Behavioral EHR Vendor Report: research@blackbookmarketresearch.com or go to www.blackbookresearch.com

SOURCE: Black Book Research