The U.S. has an enormous unfulfilled need for drug and alcohol treatment centers. Of the 23.5 million people who need addiction treatment, only about 11.2% receive it at a treatment facility. Although some of this gap can be attributed to a patient’s reluctance to enter treatment or inability to pay for treatment, a large percentage of this gap is due to a shortage of treatment facilities. For example, many of the best rehab clinics are located in affluent cities and suburbs. This leaves rural areas and dense urban areas without adequate treatment facilities.
In addition to serving a need, the best rehab clinics are often highly profitable. Under the Affordable Care Act, insurance companies are required to include substance abuse treatment among the services they cover. This means that anyone with health insurance should be able to pay for at least some treatment.
Here are some tips for starting a treatment center and turning it into the best rehab clinic possible:
Choose a Treatment Model
Drug and alcohol treatment facilities can take many different forms depending on the focus of the facility’s treatment philosophy. Treatment philosophies often include:
- Spiritual: 12-step programs treat addiction as a spiritual issue, with reliance on a higher power being a key part of addiction recovery.
- Psychological: Addiction also has a psychological aspect. Many addicts use mind-altering substances to cope with emotional trauma and mental illness. Helping addicts work through these issues or finding alternate ways to deal with them can be critical to overcoming addiction.
- Physical: Some drugs, like opiates, are associated with a physical dependence on them. Medical care clinics, detox centers, and other facilities that treat the physical aspects of addiction are important to help treat addiction.
A treatment center might address all of these aspects of addiction. However, some of the best rehab clinics focus only on medical detox and forego long term psychological and spiritual treatment programs. Similarly, some programs do not provide medical detox services and require patients to detox before checking into the treatment center.
Before opening a treatment center, a prospective owner should work with addiction experts to decide which treatment model to offer since the model will affect many other aspects of opening and operating the treatment center. For example, providing detox services will likely require medical personnel on staff and may require more secure facilities to safely house residents during detox.
Select a Business Model
The business model is almost as important as the treatment model. Without a sound business model, even the best rehab clinic will go out of business and be unable to provide treatment to its clients. Some examples of possible business models include:
- For-profit: A for-profit corporation has greater flexibility in how it handles its finances. Specifically, tax laws allow corporations to spend on salaries, facilities, and activities without restriction. Moreover, tax laws allow for-profit businesses to raise money through investment and debt and allow profits to be paid to investors. However, for-profit corporations are required to pay federal and state taxes on their revenues.
- Non-profit: Non-profit organizations do not pay federal income tax on its revenues. However, to qualify for non-profit status under the tax laws, the organization must limit its activities to public services and must be fully transparent in its finances. This can be a major drawback for non-profits that want to keep their funding sources secret or want to engage in activities besides public services.
- Government-funded: Government-funded organizations usually use a combination of government grants and programs to operate. For example, a state might offer grants for alcohol intervention and other addiction treatment programs. A treatment center might combine a grant with enrollment as a Medicaid and Medicare provider positioning the treatment provider to accept low-income, disabled, and elderly clients while receiving reimbursement from the state.
Find a Good Location
Unfortunately, many of those with addictions to drugs or alcohol are unable to access treatment. Thus, a key element of success may be to locate the treatment center in an underserved area. For example, rural areas often do not have a convenient treatment center and densely populated urban areas often have too few treatment centers to meet demand.
Once you find a suitable location, you will need to decide whether you are going to build a new facility or lease an existing facility. The tradeoffs include:
- Leasing allows you the flexibility to move or build after establishing your facility. If you gain a reputation as the best rehab clinic in your area, you might be able to invest in buying or building a facility after the lease ends.
- Building a facility gives you complete control over the design of the building. Working with architects and commercial building companies can give you the exact size and layout that your facility needs.
- Buying a facility can be a good investment since the equity in the building becomes an asset of your business. The drawback is that you may have trouble selling it if you decide to move, particularly if you customize the building to your particular needs.
Building the best rehab clinic takes resources. Funding can come from a few sources including:
- Investors: If the business is structured as a corporation or limited liability company, you can sell shares or ownership interests in the business. The benefit of investors is that they are usually not guaranteed any return on investment. This spreads the risk of downtimes across all the shareholders or owners. The drawback of investors is that they usually have a say in how the business is run, even if their input is not useful.
- Loans: Any business can apply for a commercial loan to support the establishment and operation of a business. For example, if your facility needs a new roof, you can apply for a bank loan for professional roofing installation. The benefit of loans is that the lender usually has little to no input about how your business is run. The drawback to loans is that you will need to generate enough revenue to service your loans, including interest payments. Another drawback of loans is that they can be onerous to apply for and can take a long time to receive approval. One way to skirt these limitations is to apply for hard money loans that can be approved and funded in as little as seven or eight days.
- Grants: As discussed above, many public service organizations are eligible for government or private grants. The benefit of grants is that they usually do not need to be repaid. The drawback to grants is that the grantor (the government or private donor) usually places restrictions on how grant money can be used. If the grant requirements are not satisfied, the grantor can require repayment of the grant.
The best rehab clinics have a high staff to client ratio. This allows your facility to guarantee that each client receives the level of interaction needed to overcome their addiction. However, this also means that you will need to hire a lot of staff.
Typically, your first hires will be in management positions. Managers and directors can help you develop and implement your treatment philosophy. More importantly, they will help you decide what your staffing needs are and hire the people needed to fill those needs.
These staffing needs will vary depending on the emphasis of your treatment model. A treatment facility that uses a 12-step program might need a spiritual coaching expert, while a rehab center that emphasizes psychological treatment may need therapists and counselors.
Hiring staff can be a daunting prospect, particularly if you are not accustomed to managing human resources (HR). As a result, you may want to hire an HR manager or engage an HR consultant to help you. HR experts can help you:
- Develop hiring practices that will help you find the right people.
- Maintain compliance with state and federal employment laws.
- Create employment policies to maintain a safe and productive workplace. For example, an HR expert can help you develop a mediation program to resolve workplace disputes.
- Establish job descriptions and expectations so you can measure employee performance.
HR consultants can also help you identify which positions require employees and which tasks can be outsourced to contractors. For example, you may have part-time custodial staff to keep your treatment center clean, but you may outsource your once-per-year deep cleaning to a cleaning company with carpet, concrete, and marble cleaning specialists.
Think About Safety
The best rehab clinics place their primary focus on the safety and health of their clients for several reasons:
- Treatment centers have a moral responsibility to take care of their clients.
- Injuries or accidents suffered by clients can tarnish a clinic’s reputation.
- A rehab clinic has a legal responsibility to take reasonable measures to protect clients from accidents or foreseeable intentional acts.
- A center’s insurer will base its premiums on the claims paid. The more letters a treatment center receives from personal injury law firms, the higher the insurance premiums will be.
To become one of the best rehab clinics, safety must be built into the clinic’s culture and philosophy. For example, staff should be trained to keep the facility clean and to respond immediate during a medical emergency. Similarly, a clinic should build a culture of responsibility, so staff is encouraged to report any safety or health problems to management.
If your facility includes residential treatment, you will be responsible for clients around the clock. This can be an enormous burden, so you should be prepared to meet it with good staff, responsible management, and well-maintained facilities. Equally importantly, you must implement policies to limit the risk of accidents and sexual assault. If you plan to provide transportation to residents, you should also implement a policy to ensure that every staff member who transports residents is properly licensed and insured.
Even with a culture of safety, accidents can happen. If an accident happens, having the right insurance policy with the right levels of coverage might be the difference between withstanding the accident and going out of business.
The best rehab clinics may require a few different forms of insurance coverage:
- Property insurance: A property liability insurance policy covers all the normal premises liability accidents as well as damage to your property. A slip-and-fall down your facility’s stairs would be the type of claim that is covered by a property insurance policy. Keep in mind that if your facility includes features that the insurance company considers a safety hazard, such as custom pools, you will need to disclose this fact to your insurer to make sure the policy covers them.
- General business liability: Business liability includes accidents caused by your employees. For example, if your staff fails to secure the door at night and a burglar strikes a resident while stealing from the facility, a business liability policy would likely cover the resident’s claim.
- Medical malpractice: Medical malpractice insurance covers claims by clients against anyone providing healthcare services for your facility. Therapists, doctors, nurses, and pharmacists with your treatment center might need medical malpractice insurance to cover any injuries or damages they cause.
Because of the risk associated with a lawsuit from a client, you will likely want to work directly with an insurance agent to ensure that your business and facility are fully covered. Specifically, you should not just rely on an insurance agent’s statement “we cover that.” Instead, you should work with an agent that can point to language in the policy that covers your activities and facility.
Becoming Medicare-certified can be critically important to your business, even if you do not plan to accept Medicare. The reason is that many private insurance companies use the government’s criteria for certifying Medicare providers to decide whether to credential a healthcare provider. For example, if you want to become an approved provider for XYZ Health Insurance, the easiest path might be to become Medicare-certified because you would then satisfy all of XYZ’s requirements for credentialing.
Generally, the steps to becoming Medicare-certified include:
- Fill out the National Provider Identifier (NPI) application so you can be assigned an NPI.
- Complete your state’s enrollment application to become a Medicare provider.
- After you are approved, you will be enrolled as a Medicare provider.
Becoming credentialed by private insurance companies requires one additional step. Most private insurance companies use a standard application from the Council for Affordable Quality Healthcare (CAQH) to review and approve providers. Your facility can prepare a CAQH application and submit that application with your Medicare approval to each private insurance company you want credentialing from.
Be Diligent With Your Billing
Although you may have started your business to help people with addictions, you also need to stay in business to help them. Billing is a necessary process, even if it is distasteful.
When a client has insurance, your facility will bill the insurance company directly. When a client is uninsured, you will need to bill the client. Keep in mind that regular billings will be appreciated by your clients, particularly those who receive disability benefits, since those billings may be needed by their disability attorneys to support their claims.
Launching the best rehab clinic is not easy. However, given how much need the U.S. has for addiction treatment, opening a treatment center can be very rewarding. Developing a business plan, lining up your financing, hiring good staff, and protecting the health and safety of your clients can create a smooth path to success.