Your Primer to Healthcare Mergers and Acquisitions

How The Addictions Epidemic Is Changing Treatment

Aug 16, 2016

by Tom Schramski

By Tom Schramski, PhD, CM&AA

Volume 3 Issue 17, August 16, 2016

Nearly 50 years ago, Anais Nin wrote that “we don’t see things as they are, we see things as we are.” Her observation about human projection fits well for the addictions treatment market, where we are in the midst of continuing evolution.  One of the most significant changes is the shift away from large inpatient facilities that rely on extended occupancy to outpatient options that have become the bedrock for all addictions intervention. Words such as “treatment” and “recovery” at one time were synonymous with “inpatient treatment.”  But that association has definitely changed.

Today’s shift toward outpatient treatment is part of a new healthcare vision that is based on the following:

  • Most healthcare is headed the outpatient way:  From ambulatory surgery centers (ASCs) and vascular outpatient labs (OBLs) to endoscopy clinics, we are seeing a movement led by physician entrepreneurs to provide clinical services in outpatient settings.  Interestingly, clients love the access - and the quality of care ratings are higher than in hospitals.  It’s worth noting that hospital census rates are the lowest they’ve been in the last century.
  • Research supports the trend:  While there will always be situations where inpatient treatment is medically necessary, the proliferation of intensive outpatient (IOPs) and partial hospitalization programs (PHPs) is partially due to the growing evidence that these models can be very effective in the recovery process.  By keeping clients close to their home community, the likelihood of generalizing treatment effects is increased.
  • Treatment coordination is easier:  As with all healthcare, the more complex the therapeutic management process becomes, the greater the likelihood of a breakdown in that process.  Many treatment programs now focus on a comprehensive continuum of outpatient services to reduce this problem.
  • Reimbursement is changing:  There is a gradual shift to more favorable reimbursement for outpatient addictions treatment approaches, as is the case across healthcare.  Out-of-network commercial insurance payment issues remain, but they appear to be more pronounced for inpatient centers.
  • Increasing focus on long-term recovery:  Treatment is becoming more sophisticated and attentive to the importance of social support to maintain sobriety, including housing, education, and employment. This direction strengthens outcomes and the outpatient model.
  • Reduced investor risk:  Inpatient facilities can reap big rewards for investors, but the start-up expense is large and payer reluctance is growing, creating increased investor risk.  Outpatient services, which are increasingly preferred, can often be acquired or launched and scaled for a much smaller investment.

It’s impossible to know exactly where the addictions treatment market is headed because of the complexity of the numerous factors involved.  Yet, the trends driving the change are clear and they point to new opportunities, as long-held assumptions give way to a new generation of ideas.  It may be as the 18th century German writer, Ludwig Borne, noted: “... losing an illusion makes you wiser than finding a truth.” 

Tom Schramski

Tom Schramski PhD, CM&AA


Tom was the Founder and Managing Partner of VERTESS. He was a Certified Merger & Acquisition Advisor (CM&AA), consultant, and Licensed Psychologist with over 35 years of very successful national experience in the healthcare marketplace, including co-founding and building a $25 million behavioral health/disabilities services company. Tom represented sellers and investors across the healthcare spectrum and was recognized for his executive leadership in the 2005 Entrepreneur of the Year issue of Inc. Tom passed away in December 2018.

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