Substance use disorder (SUD) treatment provider Meridian Behavioral Health has acquired Gateway Recovery Center, adding a crucial element to its continuum of care.
Gateway provides medical detoxification, a service for which Meridian previously had to refer patients elsewhere. The acquisition is also part of Meridian’s strategic growth plan, which CEO Lewis Zeidner estimates will involve purchasing three or four businesses a year.
“For some substances, [patients] need medical support to be stabilized,” Zeidner told Addiction Treatment Business. “That’s not something you can do in a traditional residential care program. The alternative, if someone comes to you in a residential care program, is to send them to an emergency department.”
By acquiring Gateway, Meridian can medically care for these patients and safely transition them to other levels of care within the company.
Headquartered in New Brighton, Minnesota, Meridian operates 654 beds across 13 inpatient and eight outpatient facilities in Minnesota. The provider treats approximately 700 to 800 patients monthly, about 90% of whom are Medicaid beneficiaries or receive benefits through Minnesota’s Prepaid Medical Assistance Program (PMAP).
Meridian treats specific demographics through several specialty programs, including recently incarcerated people, women with histories of homelessness, people with severe mental illnesses (SMI) and people in the LGBTQ+ community.
Renovus Capital, a Wayne, Pennsylvania-based private equity firm, owns Meridian. The firm’s portfolio also includes SUD treatment provider Ascension Recovery Services, and autism therapy and diagnostic company Behavioral Framework.
Inver Grove Heights, Minnesota-based Gateway consists of two inpatient facilities, one in Inver Grove Heights, and another in Brooklyn Park, Minnesota. In addition to medical detoxification, Gateway provides therapy, case management, peer support groups, and Alcoholics Anonymous and Narcotics Anonymous meetings. Care is offered in “resort-style” environments, according to Gateway’s website.
Providing care in the right environment was a crucial factor for Zeidner when considering the acquisition.
“When people come to you in crisis, they’re feeling a lot of shame, often they’re feeling a lot of disgrace,” Zeidner said. “If you wake up in a very dingy place that looks like it was built in the 50s that looks more like jail than it does like treatment, it says something, even if you have the best of staff and the best attitude. What Gateway brought us was a detox program where both the people and the environment said what we wanted to say to the patients we treat, that you are worthy.”
Despite Meridian’s focus on Medicaid populations, Meridian plans to continue its roll-up of SUD treatment programs. Sometimes a Medicaid focus can be a challenge due to lower margins and less ammo to get deals done.
Each of its residential programs was originally independent before being purchased by Meridian.
Zeidner is specifically eyeing lower-acuity care models for future growth.
“We’re seeing a need right now for step-down programs from residential care,” Zeidner said. “When we move people from one program to another, we need there to be continuity so that they’re not feeling like they’re all answering all the questions again and starting all over again, the way you would with a new program. Some of our investments and to the future will be … elements that support that continuum for our patients.”
Experts predict that 2025 could be particularly fruitful for M&A. Oceans Healthcare, PAX Health and Iris Telehealth have also completed acquisitions thus far this year.