Substance use disorder (SUD) provider Praesum Healthcare Services announced its first acquisition, but it hinted that this is only the beginning for the company.
Until this point, Praesum has focused its expansion efforts almost exclusively on de novo growth.
But its entry into the M&A field signals a change in strategy from the Lake Worth Beach, Florida-based provider.
“Praesum expects to engage a PE sponsor in 2024,” Drew McCartney, CEO of Praesum Health, told Behavioral Health Business in an email. “Demonstrating that the company is adept at engaging, diligencing, transacting and integrating an M&A target can only accentuate the attractiveness of a full continuum of care, MSO-centric, super-regional platform. We expect to close on another M&A transaction prior to [year end].”
Presently, the company is privately owned, but it expects to collaborate with a private equity payer looking to enhance its payer and strategic partner access, with a specific focus on primary care partnerships to serve Medicare Advantage members.
Praseum operates 33 facilities across six states and plans on adding one additional state in 2024. Its services include detox, inpatient, counseling and residential care. It operates on a managed services organization (MSO) model.
Praesum’s first acquisition was fellow SUD provider Beacon Point Recovery Center, picking up an existing 20-bed detox facility and 92 residential beds in the Philadelphia metro.
The new acquisition not only kicks off Praesum’s M&A strategy; it also helps it expand its entry into Medicare and Medicaid markets.
“Our Beacon acquisition is important for Praesum across several considerations. Since 2003,
we’ve grown our continuum-of-care network exclusively via de novo expansion,” McCartney said. “First, this has enabled us to control our service model by driving common protocols and processes. Second, we’ve received CMS [the Centers for Medicare & Medicaid Services] credentialing for most of our brands in our seven states of operation. As a Medicaid-centric platform, Beacon is an emphatic entry into the CMS markets.”
This acquisition is one of the company’s expansion plans for this year. It’s also rolling out its new brand, Abseil Heights, focusing on inpatient psychiatric care. The organization plans to open 40- to 50-bed Abseil Heights centers in New Jersey, Massachusetts and Pennsylvania.
“Many of our referrals come from health systems,” McCartney explained. “Health systems are overwhelmed with ‘frequent flyer’ patients who present with behavioral challenges. Greater than 35% of their emergency departments (ED) admitants have a primary or secondary drug or alcohol comorbidity. The ED cannot discharge these patients if they represent a risk to themselves or others. This was the impetus for Praesum to develop and introduce our newest brand, Abseil Heights Inpatient psych facilities.”
The new facilities will be rolled out between Q4 of 2023 and Q2 of 2024.