Challenges of Running a Drug Rehab and How to Overcome Them

Unlike many other types of businesses, there are two very distinctive aspects of operating an alcohol and drug addiction treatment center.  One is the clinical aspect, the other is the administrative aspect.  It’s certainly possible for a CEO to be proficient at both but is not always the case.  Both are equally as important and critical to the stability of the company.  Even if you are proficient at both, you may be more proficient at one.  There’s nothing wrong with identifying your strengths and weaknesses as a professional and focusing on what you’re good at while delegating the rest.

Recovering from an addiction is one of the most challenging struggles an individual can endure.  Once accomplished, many recovering addicts decide that it should be their life’s mission to help others accomplish the same.  This is what brings many professionals to the substance abuse treatment field.  Others end up working in the field by sheer happenstance.  Nevertheless, this industry has a personality of its own, and like other industries, in order to be successful, a few landmines must be sidestepped.  

As a CEO, director, administrator or manager of a drug rehabilitation facility, you may never encounter some of the hurdles listed in this article while others you may face on a regular basis.  Either way, it’s always wise to attempt to foresee the unexpected so that you can take a proactive approach in managing your business, rather than reacting to problems as they arise.  When operating this type or any other type of business, the most prepared professionals should ask themselves, “what could put us out of business and how can we avoid it"?

Interference from Regulatory Commissions

Depending on what state you operate in, the licensing division could be a menacing entity in managing your business.  In any business where a government agency can just pull the plug and revoke your license, this is definitely an area of concern, particularly since we all know that municipalities usually lack the ability to think in an entrepreneurial sense.  Politics can play a vital role in defining the landscape of the industry in your region.  Mindless bureaucrats with political agendas can make your life miserable and your business less profitable.

When licensing commissions define regulations, they recognize that it’s virtually impossible for any agency to be 100% compliant.  Just the sheer aspect of human error prevents any facility from being absent of at least a few minor violations.  It’s important to know that if they want to, the licensing commission will exploit these minor violations and use them against you if they want.  It’s advantageous to employ a Compliance Officer who is familiar with the regulations to conduct regular audits and ensure your facility is as compliant as possible.  Even if your director is responsible for compliance to a certain extent, it’s always good to have a check and balance.

Remember that if the State licensing division has a reason to not want your facility to exist, it will find a way (either legally or illegally) to shut you down.  Don’t let them do this to you.  Take every precautionary measure possible to prevent this from happening.

Community Opposition

Everyone believes that drug rehabs should exist to help individuals suffering from addiction…just not in their neighborhood.  There is a very strong stigma associated with this industry and it’s difficult to fight.  Many people don’t realize that addiction effects all walks of life in almost every class, region and demographic.  The addicts are always there within the community, whether they are recognized as addicts or not.  However, we as professionals know that it’s not the people in treatment that the community should worry about.  It’s the guy at the local convenient store who just downed a bottle of vodka throughout the course of the day and drove drunk into town to pick up another bottle who poses a threat.  Trying to educate people on this point can sometimes seem like an act of futility.  Opening a treatment center or recovery home in the middle of a populated community will have the villagers wanting to lynch you as if you were Dr. Frankenstein. 

There may not be much you can do to change the closed-minded thinking of the local gentry.  Your best bet in winning this battle is to establish an understanding with the local government prior to opening the facility.  People can complain all they want but ultimately it’s the local government that has the ability to make your life hell in this instance.  They could try to levy fines, impose eminent domain proceedings or claim zoning violations to bully you out of town.  However, if you are in the good graces of the town’s mayor or supervising official, these problems can magically disappear. 

If you didn’t think you would have to play the political game, you’re in the wrong business.  Consider strategies like attending political fundraising events, donating to political campaigns, developing personal relationships with local politicians and law enforcement officials, etc.  Making the right friends within the community where your facility operates can go a long way.

Health Insurers and Managed Care Companies

It’s no secret that insurance companies have the upper hand in controlling how your facility gets paid.  No matter how you negotiate your contracts, the insurance companies can change the rules unexpectedly.  By conducting a break-even analysis, you can determine your facility’s cost of doing business per treatment session.  There are a lot of factors that can go into determining this figure but the simplest way is to take your total operating expenses for a given period of time (i.e. the previous calendar year) and divide that number by the total number of treatment sessions for the same period of time.  This will give you your break-even point.  This dollar amount is important because your fee for service cannot drop below this number.  If it does, your company will encounter cash flow problems and eventually go bankrupt.

If the insurance companies are attempting to diminish your profit by lowering your reimbursement fees, there may some things you can do to lower your expenses.  You can put more patients in a group or decrease the length of treatment sessions but doing so can potentially jeopardize the quality of care you provide to your patients.  Consider developing a consortium with other treatment providers in your area in an effort to establish collective bargaining power.  If there are no treatment agencies in your area that are willing to drop their fees below a certain point, the insurance company will have less leverage.

For more information on managing a drug rehabilitation center, please call Ashlar Consulting Corporation at 305-849-9399 or visit www.AshlarConsultingCorp.com.