Private Equity Firm Hopes for Profits From Substance Treatment Facilities

By Join Together Staff | April 16, 2014 | Leave a comment | Filed in Addiction,Community Related, Insurance & Treatment

The private equity firm Bain Capital recently took over the largest chain of substance treatment facilities in Massachusetts, The Boston Globe reports. Bain, which usually makes investments in brand-name companies such as Dunkin’ Donuts, sees treating addiction as big business.

Bain paid $58 million for Habit OPCO Inc., which has 13 locations in Massachusetts. It made the purchase through another company it owns, CRC Health, the largest provider of substance abuse treatment and behavioral health services in the nation.

Substance abuse treatment is a $7.7 billion industry, and is growing at a rate of about 2 percent annually, the article notes. A growing number of people addicted to opioids are middle- and upper-middle class, according to Deni Carise, Deputy Chief Clinical Officer for CRC Health.

At Habit OPCO facilities, patients are charged $135 a week for methadone treatment, including daily doses of liquid methadone, access to healthcare professionals, and other services. While some patients have private insurance, others are covered through Medicaid or pay cash.

Dr. Kevin P. Hill, director of the Substance Abuse Consultation Service at McLean Hospital in Belmont, Massachusetts, says he is concerned about the care that some for-profit methadone clinics provide. “The problem I find with some of the for-profit clinics is the absolute minimum required by law becomes the absolute maximum they’re willing to do for their patients,” Hill said.

Habit OPCO and CRC staff say profits are not their main goal. “Frankly, the way to make a lot of money in this particular business is to do it badly,” CRC’s Carise said. “We’re just not going to do that.” She noted the Affordable Care Act, and a law that requires equal insurance coverage for mental health conditions, will give clinics more access to private health insurance. The new laws will help make treatment more affordable for people who previously had no insurance, she said.