6 Directions For The New Addictions Rx Marketplace

By Tom Schramski, PhD, CMAA

Volume 4 Issue 25, December 5, 2017 

Nearly 50 years ago, Anais Nin wrote that “we don’t see things as they are, we see things as we are.” Her observation about human projection fits well for the addictions treatment market where we are in the midst of continuing evolution. One of the most significant changes is the shift away from large inpatient facilities that rely on extended occupancy to outpatient options that, until recently, were believed to be the bedrock of all addictions intervention. In fact, words like “treatment” and “recovery” were sometimes synonymous with “inpatient treatment.”

Today’s shift toward outpatient treatment is part of a new healthcare vision and is based on the following:

  • Most healthcare is headed the outpatient way – From ambulatory surgery centers (ASCs) and vascular outpatient labs (OBLs) to endoscopy clinics, we are seeing a physician entrepreneur-led movement to provide clinical services in outpatient settings. Interestingly, clients love the access and the quality of care ratings are higher than in hospitals. It’s worth noting that hospital census rates are the lowest they’ve been in the last century.
  • Research supports the trend – While there will always be situations where inpatient treatment is medically necessary, the proliferation of intensive outpatient (IOPs) and partial hospitalization programs (PHPs) is partially due to the growing evidence that these models can be very effective in the recovery process. By keeping clients close to their home community, the likelihood of generalizing treatment effects is increased.
  • Treatment coordination is easier – Like all of healthcare, the more complex the therapeutic management process becomes, the greater the likelihood of a breakdown. Many treatment programs now focus on a comprehensive continuum of outpatient services to reduce this problem.
  • Reimbursement is changing – As is the case across healthcare there is a gradual shift to more favorable reimbursement for outpatient addictions treatment approaches. The out of network commercial insurance payment issues remain, but they appear to be most pronounced for inpatient centers.
  • Increasing focus on long term recovery – Treatment is becoming more sophisticated and attentive to social support to maintain sobriety, including housing, education and employment. This direction strengthens outcomes and the outpatient model.
  • Reduced investor risk – Inpatient facilities can reap big rewards for investors, but the start up expense is large and the payer reluctance is growing, creating increased investor risk. Outpatient services can often be acquired or launched and scaled for a much smaller investment, combined with the fact that they are increasingly preferred.

It’s impossible to know exactly where the addictions treatment market is headed because of the complexity of the numerous factors involved. Yet, the trends driving the change are clear and they point to new opportunities as long-held assumptions give way to a new generation of ideas. It may be as the 18th century German writer, Ludwig Borne, noted that “losing an illusion makes you wiser than finding a truth.”

If you would like to personally discuss this article, the value of your company, or how to get the best price when you sell it, you can reach Tom directly at tschramski@vertess.com or 520.975.5347.