AAC Outlines 2021 Blueprint Following Recent Restructure

American Addiction Centers (AAC) has started a new chapter in the company’s history.

After years of financial struggles and a Chapter 11 bankruptcy filing, the substance use disorder (SUD) treatment provider recently completed a financial reorganization. The restructuring has helped AAC reduce its debt load by about $500 million and position the company for its “next phase of growth.”

Specifically, the next chapter in AAC’s journey will be marked by various organic expansions to meet the nation’s high demand for SUD services, CEO Andrew McWilliams recently told Behavioral Health Business.

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Headquartered in the Nashville area, AAC touts itself as the largest behavioral health provider focused solely on SUDs. It has 26 locations across eight states and offers both inpatient and outpatient treatment services.

BHB recently connected with McWilliams to learn more about AAC’s recent restructuring, as well as his vision for the future. With the reorganization in the rearview mirror, McWilliams said the company is now focused on adding inpatient beds, accelerating its telehealth capabilities and expanding its outpatient offerings.

You can read about all that and more below, in BHB’s recent conversation with McWilliams, which has been edited for length and clarity.

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BHB: The last time we did an interview like this was back in February, right after you stepped into the CEO position at AAC. What a crazy first year on the job. Can you walk me through all of the changes the company has undergone since then?

McWilliams: Obviously, the biggest thing for us was navigating COVID-19 — and continuing to navigate COVID-19 today.

How do we keep our patients and employees safe from COVID, but, at the same time, provide the life-saving care that’s so critical? Our team was just incredibly resilient and passionate and did a remarkable job.

We started off having twice a week calls with key leaders at every facility. In the early stages, it felt like the Wild West of health care, especially when it came to securing personal protective equipment (PPE). But there was great partnership with health care entities in terms of sharing and helping each other to try to get equipment.

Then, COVID testing became a challenge. Fortunately, we have our own in-house lab that essentially processes and does laboratory diagnostic testing for all of our facilities. We were able to stand up our own COVID testing there, so, pretty early on, we were testing every single admission that came in the door for COVID. Plus, we were able to test out employees. We also had screening procedures, temperature checks and all that.

We were also able to take our capabilities and offer them to other providers and the community at large. Today, we’re processing about 2,000 COVID tests per week for our own patients, our own employees and for other providers.

Probably our biggest accomplishment related to COVID has been our transition in the outpatient service area. With stay-at-home orders, travel restrictions, etc., our outpatient business was decimated temporarily — but we were able to quickly launch telehealth services. We were able to stand up our own telehealth service offering inside of our EMR. 

Then, with states relaxing some of the cross-border licensure requirements, we were able to expand the number of states where we can actually offer services. Historically, from a physical footprint, we offered services in eight states. Today, we’re providing services in over 40 states because of telehealth. So when we looked at the volume of patients dropping out of in-person outpatient services, we were able to counteract that with our telehealth services.

Today, we’re actually providing more outpatient services that are a combination of outpatient visits and telehealth than we did pre-COVID. That’s something that we’re continuing to invest in and expand upon because I do think that’s here to stay, even after COVID.

Amid all that, AAC also concluded its bankruptcy reorganization, getting rid of about $500 million in debt.

We’ve emerged with a really clean balance sheet that is positioned to give us great growth opportunities where we need it.

As we look to 2021, we’re focused on organic growth, both inside of our inpatient and outpatient services. I wouldn’t rule out an acquisition opportunity inside of 2021 as well, given our new capital structure. 

So you really had your feet put to the fire in your first year as CEO.

It was a lot. None of us would prefer COVID, but there are silver linings.

One is our management team. The connectivity of the organization is so much stronger today than it was pre-COVID because we were forced to do it.

Then you throw in a financial restructuring. The key to that was making sure our employees understood what that was — and what it wasn’t. My concern was that it would insert, at a really bad time, additional fear and anxiety over the health of AAC as a whole, at the same time employees are dealing with COVID.

We really focused on how we communicated the restructuring, and I’m proud of how we did that. We were very direct and transparent with all of our employees.

This isn’t a liquidation, where you see the closing signs on doors. We didn’t furlough any employees. We didn’t close any facilities. We really grew during this period in our ability to outreach to more patients, and a lot of our metrics really improved during this process, in the midst of everything else.

Like you said, one of the benefits of the reorganization is that it sets the company up for future growth, allowing AAC to help more people. Can you provide any more color on your growth goals for next year and beyond?

What we’ve started in 2020 and will continue into 2021 is focusing our inpatient on higher and higher acuity of addiction and substance abuse services. We’re combining that, then, with a more robust outpatient offering than we’ve historically done.

When somebody comes to an AAC inpatient facility, if they’re not close to one of our outpatient centers, we might have historically referred them to an outpatient center in their area. But with COVID, a lot of outpatient centers are closing.

With our telehealth offering, we’re really excited about the ability … to continue patients’ journey with AAC if there’s not an outpatient center that’s capable of servicing them post-inpatient stay.

Also, we receive a lot of inbound inquiries into treatment services, and not all of those call for an inpatient stay. Historically, if folks weren’t in an area where we had an outpatient center, we’d refer them to another outpatient center; but now, if they’re appropriate for it, we can begin their journey with a telehealth offering at that stage.

And then, in certain markets, we’re looking at bed expansions. Some of our markets desperately need bed expansion at the inpatient level. We’re running waiting lists, and we can’t serve everybody that needs help in that area.

And then, when I say acquisitions, I think of those as tuck-in acquisitions that round out some of the markets we’re in or expand the geographic footprint of markets we’re in. Again, we’re very focused on that higher acuity inpatient stay with robust outpatient centers.

The other aspect of our growth is expanding our payer relationships. That includes both commercial and government. The other area you’ll see us expanding in 2021 will be in more government-type arrangements: Medicare, Medicaid, Tri-West Veterans Affairs.

Besides growth, what are your main goals going into 2021?

Growth is our number one priority.

Besides the business, there’s just such a need for those services. Unfortunately, that’s not going to go away. Demand’s higher because of COVID, and it’s going to stay higher, so it’s critical we expand our ability to help folks. 

The other thing we’re very focused on is our clinical product and our customer service experience and improving both of those. We have a phenomenal clinical product today, but we’ve really been busy in 2020 behind the scenes improving upon that. One of the tasks that we’re also launching in 2021 is improving the patient experience outside of clinical, from how they’re greeted to how we handle billing.

All healthcare organizations have some room to improve upon that, and we’re no exception.

You recently told BHB that you predict 2021 will see an expansion of telehealth to help rural Americans struggling with opioid use disorder (OUD). What’s on AAC’s docket on that front?

In terms of telehealth, specifically, the goal is to expand.

We have lots of clinicians that are highly qualified and very capable, and our outpatient centers don’t have the volume they did because of COVID. So we were able to transition them and get them licensed appropriately to provide telehealth services.

But now we’re at the stage where we need to expand upon our clinical folks so we can reach out more and really get more specific on the programming.

One example: We know the effectiveness of clinical groups is in how well you can organize your groups when you’re doing group therapy. With telehealth, you can now get very specific on your groups and your offerings to match clinicians with the exact right group and put the exact right people in a group to make it very effective. That’s kind of the next iteration of our telehealth offerings.

We need more clinicians to deliver those services. And we’ve been working on the product to make that more specific for a telehealth environment.

The rural comments we were making are really related to bed expansion opportunities long-term. There’s a severely unmet need in rural America. We also know that a lot of rural hospitals, pre-COVID, had some additional beds. I think there’s a great opportunity to utilize some of the excess bed capacity, partnering with hospitals to provide robust outpatient service offerings with that. 

What are you hoping to see on the federal and state regulation front in the year ahead?

First off, I hope that we make some of these relaxed cross-border licensure regulations permanent, such that telehealth can become a permanent reality. All signs are certainly indicating that’s going to be the case.

This space is severely underfunded. More funding into substance abuse is certainly needed so we can provide the right access.

I’m very concerned that, with COVID-19, a lot of providers haven’t been able to keep their operations open. There’s fewer substance abuse treatment options today, both inpatient and outpatient, than there were pre-COVID. So the federal government and states really need to step in to make sure there’s adequate funding on the reimbursement side so that we can have a good network of treatment options.

You’re also one of seven new board members for AAC. Can you tell me a little bit about the new board and the goals there?

We have a group of 20 or so investors, and about five of those together hold a majority stake. No one investor owns more than 50% of the company. But with that, they get certain rights to board seats, given their ownership levels.

Our chairman is Bowen Diehl, who previously served as the chairman of The Meadows for eight years. He understands our space from that. Plus, he’s obviously a financial guy as well.

The rest of the board is rounding out. Right now, we have a group of folks that understand the operational aspect of behavioral health; we have folks that understand the financial aspect of running a behavioral health company and the different options you have for how to deploy the capital; and we have folks that have some expertise around behavioral health sales and marketing.

The board will continue to round out here probably over the next six months.

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