Patients with substance use disorders (SUDs) often struggle with social determinants of health, including housing and transportation. Sober living and other housing options for people undergoing SUD treatment can allow patients to focus on recovery.
But a history of fraud and abuse gave sober living a negative reputation that has only recovered in the last five to ten years, according to Chad Koller, divisional vice president of SUD at Universal Health Services’ (NYSE: UHS) behavioral health division.
Now, sober living is poised to become increasingly common across the SUD treatment industry, offering clinical and financial benefits while aligning with payer interests.
“In the field, folks understand the value of the housing component and sober living… as we move forward, we’ll see more growth on the outpatient side, reflecting payer influence,” Koller told Addiction Treatment Business. “So the sober living piece arguably becomes more important to build out the outpatient level of care the most supportive way.”
King of Prussia, Pennsylvania-based UHS operates acute care hospitals, behavioral health facilities, outpatient centers and ambulatory care access points in the U.S., Puerto Rico and the United Kingdom.
UHS’ standalone SUD treatment service line, Foundations Recovery Network, operates nearly 200 beds through multiple models and is actively exploring opening more. The company directly owns and staffs some facilities, leases and manages other facilities and maintains vendor partnerships with third-party operators.
Offering housing to patients with SUD is one part of providing patients a full continuum of care, according to Koller. Housing is the social determinant of health that providers are most able to address, he said.
Patients usually pay for sober living out of pocket, though some grants offer funding. Treatment centers can subsidize sober living but must navigate strict regulations, including the Eliminating Kickbacks in Recovery Act (EKRA).
Clinical upsides
Nutrition, housing and lack of transportation can all significantly impact a patient’s likelihood of relapse, according to Jeff Gershman, CEO of Square Medical Group.
To address these social determinants of health, Square instituted an approach that Gershman calls “proactive housing.”
“People that are just going to the emergency room because they’re cold, they’re hungry, they don’t have access to good housing, we want to take those folks and be able to give them some level of housing, whether it’s more acute in recovery residences or less acute in the sober homes, and divert them away from inpatient care,” Gershman told ATB. “This helps both Medicaid, which saves a tremendous amount of cost, but it also places the patient in the appropriate level, so that they’re not restarting their whole life.”
Having a sober living component also allows clinicians to focus on their job: treating behavioral health conditions. Without housing options, clinicians may spend time discussing where a patient might sleep that night rather than treating the concern the patient presented with.
Watertown, Massachusetts-based Square focuses on Medicaid patients with co-occurring conditions and operates three locations in Massachusetts. It offers medication management, individual and group therapy, intensive outpatient and partial hospitalization programs (IOP/ PHP), day treatment, residential treatment and transcranial magnetic stimulation (TMS).
The provider currently operates about 100 beds across multiple categories of patient housing across acuity levels. Some of its housing is self-pay, others are paid for by Medicaid at a daily rate.
Square plans to radically increase its number of beds in the next year. It has invested between $15 and $20 million in housing and currently has four construction projects underway, Gershman said. By the end of 2025, the company plans to operate 200 beds and be among Massachusetts’s largest providers of recovery residences.
Housing “makes a lot of sense” with a value-based care model, Gershman said, though Medicaid companies are not always open to seeing the benefits. He works to convince Medicaid companies to pay for case managers and housing for most acute patients.
“If we’re talking about outcomes, being able to just offer a bed on demand is everything,” Gershman said. “We are getting very good success rates from co-occurring recovery residences because they afford a three to six-month stay. Massachusetts is encouraging more of these to be built because they’re seeing that it’s a great way to keep people stabilized. It’s a good housing option in a state which has an immense housing crisis.”
While having housing options impresses Medicaid companies, it does not significantly help with negotiations, Gershman said, because payers are entrenched in fee-for-service payment models.
Financial benefits – and staying on trend
SUD treatment housing models intersect with best business and clinical practices.
There is a strong business case to be made for the real estate component of housing, Gershman and Koller both told ATB.
“I’ve known some folks that are in the sober living business that didn’t make a ton of money with sober living,” Koller said. “Their hearts are in the right place. They’re not charging absorbent fees, but they grew this real estate portfolio and with the rapid appreciation of real estate in the past five years, made a killing.”
Square has found investors “more than willing to invest pretty serious dollars” to build recovery homes and sober living facilities. The company leases facilities for 15 years at a time, and sees housing as a stable component of its outpatient care model.
Providers may also see long-term benefits of providing housing when negotiating with payers.
Though insurance companies may currently be unwilling to pay for sober housing, providers investing in these facilities may be strategically positioned as healthcare trends shift.
UHS and many other providers have witnessed a steady trend of opting for outpatient models over inpatient or residential care. Shorter inpatient stays and increased focus on outpatient care may make housing support more important than ever for insurance companies looking to find the most affordable treatment pathways.
“If I’m the owner of an insurance company, sober living is very cheap,” Koller said. “You might pay $1,000 a day, $500 a day for inpatient treatment that would pay for a month of sober living.”
