People with substance use disorders (SUDs) are more likely to have co-occurring disorders, including mental health conditions and physical illnesses.
With that in mind, residential SUD treatment providers are stepping up to offer more comprehensive treatment. Operators are weaving services like psychiatry and eating disorder treatment into residential offerings to provide the necessary breadth of care.
“Substance use disorder providers have become mental health providers as well,” Sarah Deutchman, executive vice president of operations at Pyramid Healthcare, said at Behavioral Health Business’ INVEST event. “It’s been an interesting process of obtaining licenses to back up the work that’s being done.”
Pyramid Healthcare Inc. provides mental health, substance use and eating disorders treatment programs for teens and adults. Headquartered in Altoona, Pennsylvania, Pyramid Healthcare operates over 80 treatment facilities and schools in five states.
To meet the changing needs of their patients, one SUD provider has looked externally as well as internally.
“Patients are coming in a lot more complicated than they used to be,” Peggy Gemperline, vice president of detox, residential, ambulatory and psychiatric services at Pinnacle Treatment Centers, said at INVEST. “We have higher acuity, we have co-occurring mental illness, we also have co-occurring physical illnesses and those are very costly. Organizations like ours are partnering within the organization, but also with organizations outside our business [like] mental health providers and psychiatrists.”
New Jersey-based Pinnacle Treatment Centers treats more than 35,000 SUD patients every day. The company has more than 135 community-based locations across nine states.
Residential SUD treatment will always be important, the executives said, but stays may get shorter in some instances.
“I’m seeing a push to shorten the residential stays and have patients access outpatient care as quickly as possible,” Gemperline said. “I think the trend is going to be shorter residential stays because people are going to need stabilization often at a residential level, but maintaining the patient’s services on an outpatient basis.”
Length of stay in residential SUD programs has already decreased in recent decades, Gemperline said, with stays in the 1990s lasting around 90 days — and stays now lasting between 21 and 28 days.
“Most of the patients that we’re admitting have an opioid use disorder along with other substances and mental illness,” she said. “I think that stabilization inpatient makes a lot of sense with medication-assisted treatment continuing on the outpatient side.”
Not all payers and locations are seeing the same push for shorter stays.
Some of Pyramid’s payer partners are taking a different approach to determining the appropriate length of stay.
“It’s really more of a vested interest in revealing claims data proactively to identify, on their end, how many of these clients are stepping down appropriately into their next level of care,” Deutchman said. “That has been more the focus, ‘What is your plan to ensure a safe transition? And what does that whole continuum look like within Pyramid?’”
An expansive continuum of care can also pay off for providers looking to make deals.
Having diversified treatment models can pay off when working with investors, according to Craig Sager, director at Provident Healthcare Partners.
Provident Healthcare Partners is a health care banking service with offices in Massachusetts, California, New York and Minnesota.
Sager reports that approximately 10% of Provident’s SUD deals were solely inpatient or residential. However, this modality is still critical for building a patient base because patients often start getting care through inpatient models.
“Investors don’t necessarily want to just lead with the pure inpatient residential. They want to have the full continuum,” he said at INVEST. “But you’re not going to find a model out there that starts at the outpatient and builds up the level of care. It’s totally the opposite.”
In-network residential SUD treatment providers have a silver lining amid the complications of a changing market, according to Sager. While out-of-network providers may have impressive top lines or “chunky” EBITDAs, in-network providers are experiencing a headwind.
“When you’re out of network, the rates are going to be at a premium, but a lot of that is getting passed off to the patient,” Sager said. “Unfortunately, that’s not really where we need things to go in health care and behavioral health. We’ll usually bring in a consultant or do back-of-the-napkin math. It will say, ‘If you move to in-network with payers in your state, whether it’s Medicaid or commercial players, the rates are going to drop, but the flip side is the volume is going to go up.’”
