Starting an Alcohol/Drug Addiction Treatment Center

If you are interested in starting a substance abuse treatment facility, you are about to embark upon a journey as challenging as the one the patients you intend to treat are on.  Taking care of the lives of people with severely complicated diagnoses is not a simple task.  There are many things to take into consideration…such as regulatory compliance, fiscal viability, treatment modalities, physical plant requirements, clinical programs, staffing, politics, referral sources, managed care, etc. Let’s talk about each of these individually.

Regulatory Compliance

Each state has its own licensing division responsible for defining regulations and overseeing the quality of care being provided to individuals suffering from alcoholism and other drug addictions.  If you don’t know the government agency responsible for this in your state, a quick Google search should yield the appropriate department. 

Undoubtedly, the state division has a website that probably has an application that you could download to get the process started.  It would be a good idea to contact the division in your state to get all of the particulars you need to begin the application process.  Take your relationship with this division seriously.  They can be incredibly informative and they can also make your life a living hell.  They have the power to allow you to operate or stop you dead in your tracks.

Fiscal Viability

The State won’t give you a license to provide treatment if they don’t think you can afford to properly care for patients.  You’re going to need to rent an office to operate, you’ll need to pay staff and you’ll need to meet your business expenses until your business starts generating revenue. 

Treatment providers get paid in various ways: insurance companies, Medicaid, grants or by patients.  You’ll have to negotiate contracts with insurance companies and register with Medicaid to start receiving payments.  If you are a not-for-profit organization (501c3) you may quality for grants but grant writing is a talent in and of itself.  Uninsured patients will have to pay out-of-pocket so you may want to develop a sliding scale fee for service based on their level of income. 

Regardless of the payment source, receiving payment will single-handedly be the most challenging aspect of running this type of business.  Insurance companies will try to think of any reason not to pay you and if they actually do, they will most likely pay you late.  Billing Medicaid is an intentionally convoluted process that even medical billing specialists have difficulty decoding.  Patients will always cry the blues when it comes to paying for their treatment and will wrack up big balances if you don’t stay on top of them.  Either way, you have to count on being able to pay your bills for an extended period of time before you see any money coming in from your billing efforts.  Count on floating the boat for at least year before your facility is self-sustaining.

Treatment Modalities

If you are not a clinician, you may need to hire people who have clinical training in the field of substance abuse treatment.  You will need to decide exactly what type of clinical programs you want to provide at your facility.  Will you provide inpatient treatment, outpatient treatment or both?  Will you only provide substance abuse treatment or will you also treatment patients with mental health diagnoses?  Will you have specialty or dual-focus programs that can accommodate patients with eating disorders, domestic violence issues, sex offenders, occupational needs, hearing impairment, language barriers, etc.  This may require you to hire additional staff that specialize in, or have extensive experience in treating these individuals with special needs.

Physical Plant

Choosing a place to provide these treatment services will be important.  You will need to have specific knowledge of the state regulatory requirements when deciding where to operate.  You will need to make sure the space complies with all safety and handicap considerations.  If the space doesn’t meet these requirements, you may need to speak to your landlord about bringing it up to code.  Check with the licensing division in your state.  Treatment rooms may need to be a certain size in accordance with the regulations.  Means of egress are important to ensure patient and staff safety in the event of a fire.  Exit signs must be illuminated at all times. These are things that you will be cited for during an inspection if they’re not up to par.

Staffing

Your employees will be, at the very least, a combination of administrative and clinical staff.  Your state licensing division may require you to have a multidisciplinary team including substance abuse counselors, social workers and medical staff.  Managing staff is challenging in any business but if you won’t be supervising them yourself, you will need a director who can run the show when you’re not there.  Be prepared to do a lot of babysitting. 

Politics

If you think this field isn’t political, you are wrong.  One thing to take into consideration is that your state or county may have its own alcohol/drug treatment facilities.  If you are granted a license, you are now their competitor.  Relationships with these other entities may need to be cultivated strategically.  Your local community is also another entity that may work against you.  You think you’re the good guy for wanting to help people but in the eyes of the community, you are bringing alcoholics and drug addicts into their neighborhood.  The stigma in this field is a difficult one to battle and will require some creativity and finesse to keep it under control.  Unless your facility is in the middle of nowhere, be prepared to have some community opposition and have a plan to deal with it. 

Referral Sources

Marketing your programs will be critical to the success of your operation.  Unlike other areas of the medical industry where people know they’re sick and voluntary go for treatment because they want to get better, many addicts don’t want to stop using.  You may have some willing patients but many of your patients will be referred to you by law enforcement agencies such as the Department of Probation or the Division of Parole.  Some individuals are faced with the choice of either going to treatment or going to jail.  Informing these agencies of your company’s services can yield many referrals. Other referral sources could be hospitals, private health care practitioners, employee assistance programs, labor unions, etc.

Managed Care

If you intend to treat patients who are covered by private insurance plans, dealing with managed care companies is unfortunately unavoidable.  The days of simply treating a patient and billing an insurance company are long gone.  In the field of substance abuse treatment, the preauthorization of treatment is required for you to receive payment.  This means you or someone at your facility with clinical knowledge of an individual patient’s case will need to call the managed care company prior to treatment being provided in order to present the circumstances of the patient’s case.  If the managed care company feels that treatment is warranted, they will authorize it and you can then bill and get paid for your services.  This process is specifically designed to be clumsy and complicated so that health care providers make mistakes, giving the managed care companies a reason not to pay.  If you don’t have this area of your business organized, it could lead to a large portion of your services not being paid which could create severe financial distress.

The topics covered in this article are really just the tip of the iceberg.  Starting a drug rehab is very complicated and requires an extensive amount of preparation.  For more information or to hire a business consultant that specializes in the addiction treatment industry, call 305-849-9399 or visit www.AshlarConsultingCorp.com.