Rule #1: Every drug rehab deal has hair on it. There is no getting around it. Most rehabs are undercapitalized. Many of the rehabs have trouble filling their beds and keeping them full. Same holds true for OP’s, IOP’s and PHP’s. The few that are highly profitable seem to be snapped up quickly.
Rule #2: Addiction Treatment Clinical Care Counts. If you have little or no intention of providing the absolute best clinical care the industry does not need you. If you want to be successful you have to have good clinical care, it will lead you to profitability and help you build a better brand than most rehabs.
Rule #3: Addiction Treatment Business Process Matters. The areas that need most improvement in most rehabs are business process, things like: EMR, CRM, Billing, Insurance Contracts, Call Tracking, Marketing, Revenue Lifecycle Management, Alumni programs etc.
Rule #4: In the drug rehab space it is called “Let’s Make A Deal” and if you go on old tried and true financial models and valuations like 12 months trailing EBITDA you will probably be left out in the cold. Deals are being made quickly if there is value and if the rehab in a located in a desirable state and location.
Rule #5: The Addiction Treatment Industry is Experiencing Consolidation. There is a lot of new money entering the addiction treatment space. Out of network destination rehabs are feeling the pinch. Insurers are pushing back in reimbursements. MAT is becoming more prevalent in the industry. If you aren’t getting better outcomes you can get slaughtered.
If you don’t have any experience in the addiction treatment field you had better hire consultants and pay for the experience. Too often we have seen well meaning investors enter the space and try and “do it themselves” when it comes to marketing, EMR, staffing etc. The drug rehab space has many little nuances that are difficult to articulate but certainly show up when it comes to execution. The industry is a small industry and the old adage “everyone knows everyone” is an understatement. At the end of the day if your rehab does not convey trust then the clientele and Google and the influencers won’t hire you. For example, trust is what gets a website visitor to a phone call. Things like reviews, staff, images, website structure, branding, page speed, colors (yes colors), the person answering the phone all convey trust. If you try and cheat the system the system, the system will burn you and we see it happen all the time.
This is a very specialized niche, so investors can’t afford to go in not knowing the ins and outs of how to make a rehab center profitable. There are dozens of decisions to make before you invest a single dollar.
With over 35 years in marketing and over 10 years in the addiction treatment space since 2008 Addiction-Rep has been fortunate enough to help over 100 different addiction treatment centers in several different consulting arrangements. We originally started out working with an addiction treatment directory that served 1,000’s of different addiction treatment centers. We have been helping drug rehabs with their lead generation marketing and as the industry developed more investor money started showing up at our doorstep.
Many drug rehabs were under-capitalized and had a difficult time competing with the bigger players and the new money coming to the space. It because natural to help consult with investors and drug rehabs where the potential is for the best possible fit. We have experience with HIPAA compliant CRM’s, EMR’s, Billing Solutions, Zoning, Licensing, Certifications, Marketing Solutions and much more. Where we don’t have experience we are happy to refer you to our many best in class experts and consultant to assist you in the execution in your new venture(s).
Addiction-Rep Can Assist You with the Following:
Bottom line: We will save you a ton of time. We can help you scale your business through advanced systems that have already been proven. We have the data to back up our recommendations.
There’s a lot to know to be successful in the rehab industry, but here are a few key areas in which you can get started.
1. Plan to Start with One Facility – Even if your goal is to invest in 20 drug rehab centers, start with one first to get to know the business, then scale what works. Trying to do too much at once is a recipe for disaster.
2. Get Educated and Do Your Homework – You’ll need to understand the legal and health insurance requirements for your state. You’ll also need to learn about zoning and licensing, HIPAA compliance, real estate requirements, staffing and what type of marketing can keep the beds filled.
3. Start Building Your Team Now – As with all businesses, the team is just as important as the investment itself. Start making connections with key players and experts now, so you’ll be ready to move quickly when the time is right.
4. Plan on a Big Marketing Budget – Because there’s a lot of competition in this space, you can’t afford to skimp on the ad budget. Having a marketing partner who knows this industry well will also go a long way toward making sure that your money is spent wisely.
If we haven’t scared you off yet, then it’s time to talk. Send us some basic info about your investing goals and questions you have, and we’ll set up an initial consult with Jim.
Kind Regards,
Jim Peake
President, Addiction-Rep
781-405-5815
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