Opioid Addiction as Growth Industry: For-Profit Firms Crowd In

Print Share on LinkedIn More
Opioid-abuse

Dream Weaver / frankieleon

June 26, 2016; Cape Cod Times

As circumstances change, venture capital money and for-profit organizations are crowding into areas of addiction and mental health treatment that were previously covered mainly by nonprofit entities.

Massachusetts Chapter 258, passed in 2014, requires insurers to cover 14 days of in-patient addiction treatment without prior approval. It has been a boon to enterprising rehab facilities unwilling to settle for state reimbursement rates. Another factor that makes substance abuse treatment potentially more lucrative is the fact that that children can stay on their parents’ insurance plan until the age of 26.

The need for behavioral health services has been there all along, but the money was absent until the passage of Massachusetts’ Chapter 258 and the federal Affordable Care Act. “Venture capitalists, who are the ones lending the money, see behavioral health as a growth area,” said David Matteodo, executive director of the Massachusetts Association of Behavioral Health Systems. Kenneth Weber, whose Recovering Champions, Inc., opened Awakenings Lodge on Cape Cod in 2015 as a for-profit treatment center, concurs that the missing ingredient for his business plan was money.

One consequence of VCs and for-profits moving into the field is that nearby nonprofit facilities will see their work made more difficult as lower-paying MassHealth patients become more dominant in their income mixes.

NPQ readers will remember this same dynamic took place in hospice care over the past few decades, driving up Medicaid costs through a combination of practices that do not benefit patients. In fact, one could argue that quality of service for patients has declined. Are these, perhaps, areas where nonprofits should get contract preference and capital to expand? And, finally, for the umpteenth time, why do state governments contracting for services get away with not paying full costs?—Ruth McCambridge