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Distressed Drug Rehabs and Addiction Treatment Centers

Distressed Rehabs

Since 2013 we have met and seen many distressed drug rehabs and addiction treatment centers.  There is no doubt that as time marches on it is getting more and more competitive in our addiction treatment sector with more and more new money entering the space.  The problems are numerous.

Let’s face it there are a ton of moving parts in the addiction treatment field let’s make a short list:

  1. Clinical care (you have to have the best clinical care in order to establish trust)
  2. Marketing (you have to be able to keep filling the beds and the seats if it is an IOP)
  3. Systems (you have to be able to manage all the EMR, EHR, CRM, Billing, revenue lifecycle management, outcomes, VOB’s, HIPAA, call tracking and alumni remarketing programs to name a few)
  4. Capitalization (you must have enough capitalization where you aren’t cannibalizing yourself to keep the beds full and keep the staff employed and many others)
  5. Real estate (if you own or lease you have to be able to have the right facilities to make it all work)
  6. Financial oversight (this is probably the most overlooked item in the addiction treatment space)
  7. Billing / Insurance reimbursements (so many rehabs are not getting reimbursed what they deserve and there are many reasons for this)

If you are in distress you need to change what you have been doing in order to get a different result.  The first place that must be changed in our experience is bean counting.  We can’t tell you how many rehabs can’t generate a P&L or a Balance Sheet at a moment’s notice.   Getting access to this data can take days, weeks or sometimes months.  If this is the case, we can assist you, immediately.

If you are a small business under 100 beds we recommend that you hire a bookkeeper and use Quickbooks Online, not Quickbooks Enterprise.  The reason why is because if you need to share your drug rehab financial information it is extremely easy to share this information securely with your bookkeeper, CPA and investors and other executives.

If you are in distress start by getting your books together and get them balanced.  Without doing this you stand the chance of getting taken to the cleaners as time marches on and you need financial help.  You have a lot more negotiating power if you know exactly where you stand financially.   There are no surprises with any outside help.  Investors do not like uncertainty and risk.  They can tolerate losses especially if there is a plan to make the fixes.  Investors can’t tolerate incompetence.

We can help consult you in terms of getting your books balanced no matter how bad they are and we can help introduce you to people who can assist you with a financial strategy moving forward.  Sometimes it might be bringing on a new partner sometimes it might be selling the business and keeping a portion of the business or maybe it might be a joint venture of some sort.

Step #1 is to get your financial house in order and do it today.

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