Ideal Option knows the addiction treatment industry is constantly in flux, making predictability and timely insights vital to success.
That’s why investing in lab services and advancing a value-based care contracting strategy is a top priority for the Kennewick, Washington-based outpatient addiction treatment provider, CEO Tim Kilgallon tells Addiction Treatment News.
“Companies like us can see the changes happening in real-time,” Kilgallon said. “The one thing we can predict is that there are going to be more changes. We are consistently seeing change. So we expect more.”
These changes include changes in the illicit drug supply. Over the last few years, fentanyl has been a deadly addition to the supply both on its own and as an additive to other substances. Even more recently, the veterinary tranquilizer xylazine, sometimes called tranq, has spread to several parts of the country, at times mixed in with fentanyl and other drugs.
The constant evolution of illicit substances requires constant adaptation on the part of addiction treatment providers. Kilgallon points to Ideal Option’s investments in lab services as providing critical insights needed to keep up with the changes and give personalized care to patients. It also offers vital market intelligence that typically comes after significant delays from local and federal law enforcement agencies.
The lab testing highlights the deepening trend of polysubstance use across the U.S. Ideal Option operates 86 clinics in several regions of the country: Alaska, Arkansas, Idaho, Maryland, Montana, New Mexico, North Dakota, Oregon and Washington.
In 2023, 75% of Ideal Option patients tested positive for more than one substance at intake, according to their latest outcomes report. In 2022, that number was 61% and 45% in 2021. The company had a patient census of about 16,000 at the end of 2023. It was founded in 2012 and employs about 650 people.
“Sometimes we do have patients that just come to us with alcohol use disorder, or stimulant use disorder by itself, but it’s increasingly rare because of the combination of fentanyl and other opioids in every substance that’s available on the street,” Kilgallon said.
Addiction Treatment Business sat down with Kilgallon. We talked about the company’s accomplishments in 2023, his priorities for 2024 and the connection between value-based care and making companies more valuable.
ATB: What would you highlight as the top accomplishments of Ideal Option in 2023?
Kilgallon: The main thing is that the company continues to consistently achieve objective outcomes, as well as consistency and stability.
We expanded and added clinics during the course of the year. But the real achievement is in creating stability in the workforce, showing stability in patient outcomes and showing that consistently year after year.
We also added xylazine to our standard drug testing panel. That’s a recent drug trend that requires specific machinery. Hospitals don’t test for it. So incorporating it and using it to personalize treatment plans was a huge achievement. I think we’re one of the first addiction treatment networks to do that.
Let’s talk a little more about clinic openings. I tracked several in 2023. Did the company change its approach to growth at all?
Not really. We’re still in the same nine states. We continue to expand in Arkansas, Oregon and Washington state. A lot of our activity has been around relocating clinics to upgraded facilities at better locations.
A quick follow-up on workforce: Across all our segments, we’ve been hearing a lot about how workforce issues have stabilized. When you look at 2023, it sounds like there were improvements at Ideal Option. How would you compare last year to others?
In our experience, ’23 was a big improvement in workforce stability and recruiting over ’22 and ’21. Of course, it was very difficult within that time frame. But turnover is way down, and the quality of the workforce is quite good.
We hear more people talking about polysubstance use in addiction treatment. And Ideal Options outcomes report details that 44% of patients at enrollment tested positive for three or more substances. Is that any different from years past?
It’s a growing trend. It’s been materializing over the last five years and accelerating. You’ll notice that 75% of patients have more than one substance in their system when they first come to us. There are a lot of additives in the substances that are available today. The additives include xylazine, which is an additive as opposed to a specific drug people seek out. Another one that is becoming increasingly prevalent is acetyl-fentanyl.
How do you approach treating people who are exposed to fentanyl or have that as part of their use?
It stays in the body longer. As a consequence, it’s harder for patients to switch off fentanyl to buprenorphine. And yet they do it. Basically, all of our patients come to us with fentanyl use disorder, and have been coming to us for years. These patients come to us from homeless encampments. They come to us from county jails. And they still succeed in getting on buprenorphine. It’s not easy for patients, and we have to support them between visits. Patients come to us in the first week or so, every three days or so, until they’re stable. In between, we have a nurse care team that supports them as they potentially go through precipitated withdrawal and so forth.
We saw the elimination of the X waiver. Has that done anything to or for your business?
It has allowed us to respond more nimbly to the patient flow. We can have multiple providers available to see patients if they all come in at the same time, sometimes in-person sometimes on telemedicine. The logistics associated with that having gone away have accelerated our ability to get prescriptions out within two or three hours. Patients can pick up the prescription now at the pharmacy. It’s been a major breakthrough for us. Picture a patient coming to a clinic for a visit, is prescribed medication and then has to wait. They don’t have to wait anymore.
What are your top objectives for 2024?
We continue to work on dialogue with payers to establish value-based contracting. I think there is a big opportunity for payers. Providers like us are willing to take risk on the frequency of care and risk on that cost of care. It could work out better for payers than they probably realize to embrace value-based contracting.
We have seen that there’s difficulty for payers in administering non-fee-for-service claims. Switching over to even more simple formats is sometimes difficult for payers. So that might be an obstacle. But we do have plans today that are moving towards bundling care, and that flexibility tied to the kind of outcomes you see in our report would allow us to help more people and do a better job of it.
What percentage of revenue is derived from value-based care today?
It’s close to 10% today.
Let’s make sure we make the connection to care outcomes. If you have flexibility from bundled payments or take on risk with the cost or frequency of care, how does that lead to better outcomes?
There are a lot of things that we do that are not reimbursable through fee-for-service models. We have to be cautious about what we spend because the margins are thin. For example, our nurse care team — which is helping people through that transition we talked about with fentanyl — none of that is compensated. In many cases, our peer support and peer outreach efforts are uncompensated as well.
A consistent approach to reimbursement would allow us to have the flexibility to hire the kinds of physicians and deploy people in roles that are not necessarily covered under fee-for-service — that would lead to not only retention, but outcomes like you’re seeing in our report for those abstaining from illicit substances.
What does value-based care do for the company in terms of it as an investment? Varsity Healthcare Partners made their investment in Ideal Option in October 2018. There has to be some consideration about how initiatives like this translate into making the company more valuable than it was five years ago.
Addiction medicine is a new specialty, one of the newest medical specialties. To us, it’s very inconsistently reimbursed across the United States, even across the same state by various payers. Any form of consistency in reimbursement and acknowledgement of outcomes would advance the growth of the sector. Capital would come into it; capital will follow where there’s predictability. The lack of predictability in this space makes it difficult for capital to come in. If we as a society want addiction treatment to expand, we need consistency. Not necessarily more money per patient. Consistency in reimbursing and tying to outcomes is what’s required, and capital would follow and everyone would benefit.