NAICS 623220 Quarterly Industry Report
Residential Mental Health and Substance Abuse Facilities
Comprehensive industry research for valuation professionals, business owners, buyers, and lenders
NAICS Code: 623220Sector: Health Care and Social Assistance (62)Updated: Q1 2026
About This Report
This industry profile for Residential Mental Health and Substance Abuse Facilities (NAICS 623220) draws on data from the U.S. Census Bureau[6], SAMHSA[9], Bureau of Labor Statistics[10], and SBA size standards database[7]. Published by Fair Market Value and updated quarterly, it provides valuation professionals, behavioral health analysts, and treatment industry investors with current market data. All quantitative claims are sourced to publicly verifiable databases.
Industry Snapshot
Key metrics for the residential mental health and substance abuse facilities industry.
NAICS Sector
62
Health Care and Social Assistance
Industry Definition & Overview
Residential Mental Health and Substance Abuse Facilities (NAICS 623220) encompasses establishments primarily engaged in providing residential care and treatment for patients with mental health and substance abuse conditions per the U.S. Census Bureau[5]. These facilities provide room, board, supervision, and counseling services in a structured treatment environment. While medical services may be available, they are secondary to the counseling, behavioral rehabilitation, and support services that define this classification.
Roughly 4,508 businesses operate 8,416 locations employing approximately 220,000 workers per Census Bureau[6] economic survey data. Facility types include residential substance abuse treatment centers, sober living homes, halfway houses for individuals in recovery, and residential mental health treatment programs. Average treatment stays range from 28 days to 6 months depending on program intensity and clinical need. The opioid crisis and broader behavioral health demand have driven increased admissions, with residential treatment capacity straining to meet referral volume in many states.
Per the SBA Table of Size Standards[7], the size standard is $19 million in average annual receipts. State licensing requirements govern residential substance abuse and mental health treatment programs, with SAMHSA[8] providing federal oversight and certification for opioid treatment programs under 42 CFR Part 8. The Mental Health Parity and Addiction Equity Act requires commercial insurers to cover residential behavioral health treatment at parity with medical and surgical benefits. Medicaid covers residential treatment in facilities with 16 or fewer beds under the Institution for Mental Diseases (IMD) exclusion waiver, with CMS granting state plan amendments to expand Medicaid coverage for short-term residential stays. Staff credentials vary by state, with licensed counselors, clinical social workers, and certified addiction professionals providing direct treatment services.
What's Included in This Industry
- Residential substance abuse treatment and rehabilitation programs
- Residential mental health treatment and stabilization
- Sober living and recovery housing program operations
- Halfway house management and transitional living services
- Group and individual counseling in residential settings
- Detoxification support and withdrawal monitoring (non-hospital)
- Dual diagnosis treatment for co-occurring mental health and addiction
- Family therapy and visitation program coordination
- Relapse prevention planning and aftercare referral
- Medication-assisted treatment support in residential settings
NAICS Classification Hierarchy
| Level | Description | Code |
|---|---|---|
| Sector | Health Care and Social Assistance | 62 |
| Subsector | Nursing and Residential Care Facilities | 623 |
| Industry Group | Residential Intellectual and Developmental Disability, Mental Health, and Substance Abuse Facilities | 6232 |
| NAICS Industry | Residential Mental Health and Substance Abuse Facilities | 62322 |
| National Industry | Residential Mental Health and Substance Abuse Facilities | 623220 |
Related NAICS Codes
| Code | Description | Relationship |
|---|---|---|
| 622210 | Psychiatric and Substance Abuse Hospitals | Psychiatric and Substance Abuse Hospitals provide acute inpatient care with 24-hour medical supervision that precedes residential treatment placement, with hospital discharge planning directing stabilized patients to residential facilities for continued recovery in less medically intensive settings |
| 621420 | Outpatient Mental Health and Substance Abuse Centers | Outpatient Mental Health and Substance Abuse Centers deliver step-down treatment following residential program completion, with intensive outpatient and partial hospitalization programs serving as the next level in the behavioral health care continuum after residential discharge |
| 623210 | Residential Intellectual and Developmental Disability Facilities | Residential Intellectual and Developmental Disability Facilities serve populations with co-occurring developmental and behavioral health conditions, with dual-diagnosis residential programs addressing combined substance abuse or mental health needs in individuals with intellectual disabilities |
| 623990 | Other Residential Care Facilities | Other Residential Care Facilities operate halfway houses and transitional living programs that serve overlapping populations including individuals in recovery from substance abuse who need structured community re-entry support without clinical treatment programming |
| 621330 | Offices of Mental Health Practitioners (except Physicians) | Offices of Mental Health Practitioners provide individual therapy and counseling that continues after residential treatment discharge, with community-based therapists maintaining treatment gains achieved during residential program participation |
| 624190 | Other Individual and Family Services | Other Individual and Family Services deliver case management, peer support, and social service coordination that assists residential treatment graduates with housing, employment, and community reintegration during the early recovery period |
Geographic Concentration
Top states by share of national establishments.
| # | State | % Est. | Total Est. |
|---|---|---|---|
| 1 | California | 14.6% | 1,266 |
| 2 | New York | 8.4% | 727 |
| 3 | Florida | 5.1% | 445 |
| 4 | Pennsylvania | 5.1% | 440 |
| 5 | Massachusetts | 5.0% | 432 |
| 6 | Arizona | 4.5% | 387 |
| 7 | Minnesota | 3.5% | 308 |
| 8 | Texas | 3.5% | 300 |
| 9 | Ohio | 3.4% | 295 |
| 10 | Oregon | 2.7% | 235 |
% Of Establishments
0%
15%
Source: County Business Patterns, U.S. Census Bureau[3]
SBA Lending Summary
448
Total SBA Loans
$326.1M
Total Loan Volume
$728K
Average Loan Size
14 yrs
Average Loan Term
10.13%
Average Interest Rate
10,776
Jobs Supported
Source: SBA 7(a) Program Data, U.S. Small Business Administration — FY 2025[4]
Key Insight: Per the SBA Table of Size Standards[7], Residential Mental Health and Substance Abuse Facilities (NAICS 623220) has a size standard of $19 million in average annual receipts for federal contracting purposes. SBA lending programs[11] support facility acquisition, treatment program expansion, and capital improvement for qualifying residential behavioral health operators. Eligible businesses can access SBA 7(a) loans[12] for working capital, equipment, and acquisition financing, while 504 loans[13] support major fixed-asset purchases including real estate and heavy machinery.
Top SBA Lenders
| # | Lender | Loans | Volume | Avg Loan |
|---|---|---|---|---|
| 1 | Live Oak Banking Company | 80 | $119.1M | $1.5M |
| 2 | Southern Bancorp Bank | 16 | $22.7M | $1.4M |
| 3 | Celtic Bank Corporation | 8 | $22.1M | $2.8M |
| 4 | Home Bank, National Association | 8 | $18.8M | $2.3M |
| 5 | Gulf Coast Bank and Trust Company | 24 | $18.3M | $764K |
Frequently Asked Questions
Common questions about this industry.
What is the NAICS code for residential treatment centers?
NAICS 623220 covers residential mental health and substance abuse facilities providing room, board, supervision, and counseling treatment services per the U.S. Census Bureau[5].
What is the SBA size standard for residential treatment facilities?
The SBA size standard[7] is $19 million in average annual receipts, determining eligibility for federal small business contracting programs and SBA lending products.
How many residential treatment facilities operate in the U.S.?
Roughly 4,508 businesses operate 8,416 locations employing approximately 220,000 workers per Census Bureau[6] economic survey data, with capacity strained by opioid crisis-driven demand in many states.
How long do residential treatment programs last?
Treatment stays range from 28 days to 6 months depending on program intensity and clinical need per SAMHSA[9] treatment episode data, with longer programs generally associated with improved long-term recovery outcomes.
What is the IMD exclusion for Medicaid coverage?
Medicaid covers residential treatment in facilities with 16 or fewer beds under the Institution for Mental Diseases exclusion per CMS[14] waiver policy, with states obtaining waiver amendments to expand Medicaid coverage for short-term residential stays in larger facilities.
What does mental health parity require for residential treatment?
The Mental Health Parity and Addiction Equity Act requires commercial insurers to cover residential behavioral health treatment at parity with medical and surgical benefits per CMS[14] enforcement guidance, preventing discriminatory coverage limitations on residential treatment program lengths and admission criteria.
What staff credentials are required?
State licensing governs staff credentials with licensed counselors, clinical social workers, and certified addiction professionals providing direct treatment per SAMHSA[8] workforce guidance, with credential requirements varying by state and program level of care.
What is the difference between residential treatment and sober living?
Residential treatment provides structured clinical programming with licensed counselors per state licensing requirements, while sober living homes offer peer-supported recovery housing without formal treatment services, serving as transitional environments after clinical program completion.
Sources & References
Government datasets and editorial sources used in this report.
- [1]U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages bls.gov
- [2]U.S. Census Bureau, Economic Census census.gov
- [3]U.S. Census Bureau, County Business Patterns census.gov
- [4]U.S. Small Business Administration, SBA 7(a) Loan Program Data data.sba.gov
- [5]U.S. Census Bureau census.gov
- [6]Census Bureau data.census.gov
- [7]SBA Table of Size Standards sba.gov
- [8]SAMHSA samhsa.gov
- [9]SAMHSA samhsa.gov
- [10]Bureau of Labor Statistics bls.gov
- [11]SBA lending programs sba.gov
- [12]SBA 7(a) loans sba.gov
- [13]504 loans sba.gov
- [14]CMS cms.gov
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