New SUD-Focused Fund Behavioral Health Acquisitions Launches with $85M, Plans to Expand Luxury Rehab Arsenal

A new investment fund focused on luxury rehab – a corner of the addiction treatment space that has seen little interest over the past couple years – has launched with $85 million in capital.

It has already made its first acquisition as well, landing an upscale Hawaii rehab center for an undisclosed sum.

Dubbed “Behavioral Health Acquisitions,” the fund is led by father-and-son team Dr. David Nesenoff and Adam Nesenoff. The pair currently own luxury rehab Tikvah Lake, which is based in Sebring, Florida, and they plan to use the funds to grow their arsenal of upscale rehab centers. Tikvah Lake is a private-pay facility with six beds.


The father-son duo teamed up with an unnamed health care investor to start the fund.

“With this fund, we’re seeking to bring our expertise in operations and marketing into the larger rehab world. And we want to do this through acquisitions,” Adam Nesenoff told Behavioral Health Business. “Our first acquisition is Maui Recovery in Hawaii, and it’s very similar to our own, and that’s why we liked it.”

The fund’s first acquisition, Maui Recovery, is similar to Tikvah Lak. The eight-bed private-pay provider is a luxury rehab in Hawaii.


This new fund is being launched at a time when substance use disorder (SUD) rates are at an all-time high. According to the CDC, one in seven Americans aged 12 and over reports having experienced an SUD.

Since the COVID-19 pandemic, rates of opioid overdoses have skyrocketed. Overdose deaths increased by 31% from 2019 to 2020.

This new fund is looking to address the crisis in the high-end market. While Maui Recovery is the fund’s first acquisition, the team is looking to deploy the funds over the next 18 months to acquire “a lot of rehabs” throughout the U.S.

Because the fund isn’t a private equity or hedge fund, the team can move fast on investments, they explained. It also allows the fund to prioritize keeping the existing management teams in place.

“We’re a family-owned business ourselves. We look to keep on the [same] management and just bring a level of organization for budgeting and operations,” Adam Nesenoff said.

Behavioral Health Acquisitions lists specific criteria for providers to meet before considering them for an investment. This includes being fully licensed, profitable for at least three years, and having a site manager who manages the staff and day-to-day operations, according to the fund’s website. Additionally, the providers must have clients pay through private pay, in-network insurance, or a combination of the two.

A focus on luxury

The new fund will start by focusing on private-pay treatment centers, but that interest could expand over time.

“I’d say initially, we’re first interested in luxury,” Adam Nesenoff said. “However, it’s definitely not going to just be for luxuries. Even within luxury, though, my personal perspective on it is a great entry point for marketing and branding. But from there, it could trickle down into regular insurance, etc.”

Adam Nesenoff said the fund’s approach is similar to the hotel chain Marriott’s technique of having a broad range of high- and low-end facilities.

“A great example of that is the Marriott, which of course, owns high-end hotel brands. They own the Waldorf, and they also own the Fairfield Suites,” Adam Nesenoff said. “Now they’re all very good; it’s all under Marriott, … but they have the full spectrum. Because Marriott established itself as a high-end brand from the start, which allowed them to be very competitive in the border space. So that same type of concept, I want to bring to this.”

While Behavioral Health Acquisitions has its sights set on the luxury space, that’s against the grain for industry trends.

In 2021, most SUD transactions were in the affordable to the mid-range service sector, according to data from M&A advisory firm The Braff Group. This is a change from 2012 to 2016, when most deals in the substance use disorder space were in high-end programs.

Last year saw a similar trend.

“All the money is in state-funded, and in low and affordable private pay in the local markets where people are getting the service,” Dexter Braff, president of The Braff Group, previously said during a webinar. “That’s where the money is, and it may not be glorious – it certainly isn’t where you get lobster Cordon Bleu or something like that. But it’s where the [people] are.”

Still, SUD impacts individuals across all socioeconomic statuses, and there is still a demand in the high-end market.

“Luxury clinics, I find, are able to fill the beds and are able to have a consistent business model,” Sam Fuhrer, head of behavioral health investment at M&A advisory firm American Healthcare Capital, told BHB. “This approach works for operators who own centers in locations where high net worth individuals want to be and have a good understanding of who their clients are. This allows them to focus on the few rather than the many, which has been a successful approach for some treatment owners. Its important to have a good reputation in the community, as referrals are the lifeline of the business.”

American Healthcare Capital advised Behavioral Health Acquisitions on their purchase of Maui Recovery.

Overall, the substance use disorder industry is a hot market for M&A deals. In 2022, middle-market private equity firm Lee Equity Partners acquired SUD provider Bradford Health, large SUD provider BayMark Health Services acquired seven opioid use disorder-focused providers, and BrightView Health acquired medication-assisted treatment and psychotherapy provider Column Health.

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