It is no secret that public companies are subject to a higher level of costly reporting, and regulation, not to mention public scrutiny. It is a gamble for any private company to go public, particularly, one in the healthcare industry, in which regulations and missteps are as costly to revenue as scandals are ruinous to reputations. The unprecedented success of American Addiction Centers, Acadia Healthcare and Universal Health Services is a testament to their being held to a greater standard, focused on the details, and their utilization of a successful, highly focused treatment method.
The Substance Abuse Industry
The biggest motive of private rehab facilities, some of which charge upwards of $50,000 – $75,000 a month, is profit. Middle class parents, desperate to save the lives of their drug dependent children were unable to meet the financial stresses. The substance abuse market is estimated to be worth $35 billion annually, and while almost 23 million Americans suffer from addiction, only about 4.1 million receive treatment each year, according to 2013 data from the U.S. Substance Abuse and Mental Health Services Administration. American Addiction Centers has certainly tapped that market, and in so doing, funded a nationwide expansion, introducing a consistent standard of care, and create “a national brand” serving all segments of the population by going public. They have become the only publicly traded option for people in need of focused care, not multiple segments served. Most experts feel that this pure focus is the most effective model for creating significant change in the treatment space.
American Addiction Centers does not now, nor has it ever accepted Medicare or Medicaid. In the event that the Trump administration successfully privatizes Medicare, American Addiction Centers will remain unaffected. Most of its clients are largely out of network. This makes a significant difference to anyone interested in supporting brands being publicly traded.
Acadia Healthcare and United Health Services
CRC Health Group says it serves 40,000 patients per day at more than 100 facilities. While that’s only about a 2 percent market share, in addition to addiction, CRC treats a range of other disorders, including Asperger syndrome and Anorexia. International behavioral-health-care giant Acadia Healthcare acquired CRC for $1.2 billion. Foundations Recovery Network was sold to a private equity firm in 2007 for $22 million. Universal Health Services acquired Foundations, treating addiction and behavioral issues, for 350 million in 2015. A focused approach on strictly substance abuse treatment, necessary in the battle against the country’s opioid addiction epidemic has led to more prodigious results in the case of American Addiction Centers,
American Addiction Centers – Emerging As The Trusted Brand
American Addiction Centers’ facilities are upscale, though hardly over-the-top luxurious. They cater to people with solid out-of-network insurance coverage. Each client pays about $800 per day, or $24,000 per month, roughly 90 percent of which is covered by insurance providers, according to Michael Cartwright. The company’s profit margin, he says, is about 15 percent. This presents a solid and effective brand to the consumer and more importantly, provides a level of care that will undoubtedly holdup to any future healthcare reform.
Each facility has doctors and psychologists with expertise in substance abuse, and most have an on-site pharmacy. The company also has its own laboratory in Nashville. The centers, which have a staff-to-patient ratio slightly greater than 1 to 1, also treat concurrent psychological issues, because as many as 90 percent of AAC’s patients have mental-health diagnoses in addition to a substance abuse disorder.
Every successful treatment results in the loss of a customer in the substance abuse industry but recidivism rates are high, which is a bittersweet since it speaks directly to the skyrocketing addiction epidemic and the limited options people have for effective treatment. Ultimately, all publicly traded treatment companies are a bright spot for the future of treatment and a population that needs them now more than ever. By being publicly transparent, we can all hold them to a higher standard of care and ethics, which is the only way our nation can alter this tragic trend.
