For many behavioral health organizations, the coronavirus has increased costs while decreasing revenues. Social distancing protocols have made things especially difficult for residential providers, forcing many to reduce their censuses, even amid heightened demand for services.
But for Recovery Centers of America (RCA) — a private equity-backed substance use disorder (SUD) treatment provider — the coronavirus has coincided with growth.
In 2020, the company expanded into the Midwest and rolled out a digital health network, in addition to continuing to invest in its treatment and business models. As a result, RCA has seen an increase of nearly 300% in patients across its business lines this year, according to company founder and CEO Brian O’Neill.
It’s a trend that O’Neill says will continue into 2021, with the ultimate goal being to make SUD treatment accessible to every person nationwide.
“Growth is a required component of achieving that goal, but it’s not the goal,” O’Neill told Behavioral Health Business. “The goal is to get affordable, quality care for every member of society, regardless of their financial capabilities.”
Headquartered in King of Prussia, Pennsylvania, RCA started out serving communities in the Northeast but has recently begun expanding into the Midwest.
O’Neill founded the company in 2014 to address the lack of high quality, easily accessible SUD treatment in America. Specifically, he was troubled by the fact that so many providers were out-of-network with insurance companies — or had an entirely private pay model.
“The result of that is the co-pays the clients are paying are astronomical,” O’Neill said. “The reimbursements that payers are paying are astronomical. And, therefore, it is extremely painful for patients and their families to access treatment.”
As such, RCA accepts private insurance, while also partnering with a number of Medicaid managed care organizations in the New England area, where it’s treating thousands of patients on Medicaid. Additionally, it has invested nearly $1 million dollars in helping write legislation to improve Medicare beneficiaries’ access to inpatient SUD treatment.
On top of being financially accessible, RCA also prioritizes geographic access. Rather than making people travel to different states to receive care, it caters to local clients in the communities where its facilities are located.
“My philosophy was to be in-network, to be in the neighborhood, to answer the phone in one ring or less and to help patients … by providing transportation locally,” O’Neill said. “And I wanted to enable patients to go down the street to our behavioral hospitals in exactly the same way they would to treat strep throat or a broken arm.”
While O’Neill acknowledged that many out-of-network, destination SUD treatment providers have quality service offerings, they’re not always accessible to working class people.
“I think of them as Neiman Marcus and our company as Target,” O’Neill said. “We have a very first-class offering, but it’s affordable and attainable to all of society.”
Today, RCA has eight inpatient centers, seven outpatient facilities and four opioid treatment programs (OTPs) across Maryland, Pennsylvania, New Jersey, Massachusetts and, most recently, Chicagoland.
RCA opened its newest facility in St. Charles, Illinois, this September, marking the beginning of its geographic expansion into the Midwest and beyond.
“We’re opening, as we speak, in Indianapolis and in Pittsburgh,” O’Neill said. “We have a number of other cities on our radar screen, including Houston, Dallas, Charleston, Atlanta, Raleigh-Durham and several cities in Florida, in the West and in the Midwest.”
RCA plans to open in Indianapolis and Pittsburgh by the end of the year, then launch in Texas in the first quarter of 2021. From there, the plan is to continue to add new locations in cities across the country every quarter for the next two years, O’Neill said.
Growth amid COVID-19
Amid the coronavirus emergency, substance misuse has become an even bigger problem than it was pre-pandemic. About 13% of Americans have started or increased drug use amid COVID-19, according to data from the Centers for Disease Control and Prevention (CDC). Plus, suspected overdoses were up 42% year-over-year in May, according to a Washington Post report.
RCA was equipped to handle that increase in demand — and in COVID-19-related business stressors — thanks in part to its financial backing from Deerfield Management Company and its early access to COVID-19 tests through its sister company, a medical lab called Genetworx.
As a result, RCA was able to continue treating patients in person without any care interruptions amid COVID-19. Plus, it began to care for patients remotely with the roll out of its digital health network, in which it continues to invest.
“That [digital] growth rate is such that that could be actually bigger than our core business in the next 18 months,” O’Neill said.
The company has also recently started working with real estate investment trusts (REITs) to free up capital to help it reach its goals.
RCA has a relationship with Sabra Health Care REIT (Nasdaq: SBRA) and is in “active negotiations to do a series of sale-leasebacks with one or two major REITs,” according to O’Neill. He said the relationship is designed to help the company grow to treat more patients.
“The ability to expand requires a tremendous amount of capital,” he said. “Because we’re a real estate-based service organization, we have begun to work with Sabra and many other REITs on sale-leaseback structures, which enable us to continue expanding across the United States, utilizing a very frothy real estate capital market, which is less expensive than the venture capital market.”
On top of that, RCA is in the midst of recapitalizing, O’Neill said.
“We’re being called every day by every major fund in the world that wants to do that,” he said during a Nov. 12 interview with BHB. “So that’s on our agenda for the next 180 days.”
Other plans in RCA’s immediate future include rolling out a series of products designed to help underinsured and inner city populations across the United States, in addition to developing a psychiatric offering, which O’Neill said is in its early stages.
Today, RCA doesn’t treat acute psychiatric challenges unless they’re secondary to a patient’s primary diagnosis of SUD. However, it wants to. O’Neill said the company is looking at acquisition targets to help make it happen.
“This would be a sister company that would treat comorbidities, where there are psychiatric challenges as the primary diagnosis and addiction as a secondary diagnosis,” he said.
RCA is also beginning to look at partnerships with medical providers to teach doctors how to identify behavioral issues in their diagnosis of physical health conditions, while also helping to provide medical care to RCA patients.
The company already has experience with continuing education and training in the behavioral health space, with RCA Academy doing just that for professionals in the SUD treatment field — even those who don’t work for RCA themselves. Again, it comes down to RCA’s aim to make SUD treatment available to people nationwide, with clinicians key to making it all possible.
“I could not be more proud of the thousands of employees that work for our company — or the tens of thousands of employees that work for other companies — and the sacrifices that they make every day,” O’Neill said. “It’s not an easy job, … but it’s an essential contribution to humanity, especially during COVID-19.”
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