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Substance use disorders (SUDs) are often treated episodically, but unlike other conditions, patients’ needs can persist indefinitely after they move into recovery.

Even though higher needs are theoretically more lucrative for providers, the lifetime value of an SUD patient is routinely undervalued in current reimbursement models, industry leaders told Behavioral Health Business.

“Most providers only account for the revenue from a single treatment episode, but the real value spans years — through step-down care, alumni programming, wraparound services like therapy, psychiatry, coaching and even digital tools,” Ashley Loeb Blassingame, co-founder of Lionrock Recovery, told BHB. “To capture this, providers must look beyond short-term reimbursement and toward relationship-based models, where clients re-engage when needed — more like chronic care management than acute treatment.”

Petaluma, California-based Lionrock Recovery is a for-profit, online addiction treatment provider. It operates in California, Florida and Texas.

Thoughtful reengagement strategies and integrating patients into a longevity continuum of care model, she said, can drive the lifetime value of an SUD patient up while improving outcomes and driving down the societal cost of impact in the long run.

The total societal cost of substance abuse is more than $740 billion annually, including loss of productivity, health care costs and crime. Per person, this is about $15,640 in medical costs per year – a total of $35.3 billion annually across the U.S., a 2023 study estimates.

A growing number of employers and payers are demanding better outcomes and transparency around their return on investment (ROI) due to the high cost burden SUD brings. But unless reimbursement models are updated to match value-driven, longitudinal care rather than episodic – ROI won’t prove its worth.

“Payer models currently incentivize stabilization and discharge, not continuity,” Loeb Blassingame said. “Fee-for-service rewards intensity and volume rather than outcomes or retention. This drives providers to front-load care instead of building longitudinal pathways.”

Payers are beginning to be more open to bundled payments, value-based contracts and tiered step-down models that support long-term recovery, but fee-for-service still dominates the majority of how SUD care is reimbursed. Changing that on a large scale would require a better alignment of incentives between providers and payers.

It could also bring the lifetime value of SUD patients up, if the continuum of care can be stably managed, Ankit Gupta, CEO of Bicycle Heath, explained.

Boston-based Bicycle Health is a virtual medication-assisted treatment (MAT) provider for opioid use disorder.

“Patients with substance use disorders are typically 5 to 10 times more expensive than the average patient, and when the patient is stably managed on medication-assisted treatment, the total cost of care reduces by about 50% and overdose death rates reduced by about 50%,” Gupta told BHB. “There’s a significant reduction in total cost of care for the patient from a health care perspective. In some ways, the lifetime value of a patient who is stably managed with SUD from a hospital system standpoint is lower than the lifetime value of a patient with unmanaged SUD from a hospital system. That’s why it’s hard to look at lifetime value in isolation.”

It really comes down to getting patients connected with the right care at the right time and managing their condition long-term, he said.

A full system shift

Defining the lifetime value of a patient as a provider is also challenging because “treatment should not be in the business to return value to shareholders,” John Driscoll, CEO of Caron Treatment Centers, said.

“What we’re trying to do is have recovery be the product and the margin be the by-product,” Driscoll told BHB. “It’s where the focus should be.”

Caron Treatment Centers is a nonprofit addiction treatment provider headquartered in Wernersville, Pennsylvania. It operates inpatient, outpatient and recovery center locations across six states and Washington, D.C.

Mirroring chronic care models that prioritize keeping symptoms at bay and recovery in the forefront, Driscoll noted, would do more to deliver care in the right amount along a patient’s journey and prioritize value.

“I would hope that as an industry, if we’re using this term – lifetime value of a patient – that it is less about how much money patients can give us and instead more about how much value can we give,” Driscoll said. “Because if we’re giving good value, then our business should take care of itself.”

Advancing toward outcome-driven models is where this comes in, but it would be a “full system shift” to move beyond episodic SUD care and provide services in a long-term recovery continuum, Driscoll added.

Carter Paine, CEO and co-founder of Wayspring, and Troy Mashburn, the company’s vice president of network strategy, echoed this notion. Wayspring is a Nashville, Tennessee-based addiction treatment provider.

“The holy grail is to give everyone access to outcomes data, to put everyone on the same page to understand what services are ultimately rendering better outcomes for members versus what services lead to the long-term value of that patient for the provider,” Paine said.

As an addiction treatment provider, Mashburn explained, providers are accountable for multiple years of outcomes for their patients. Given that, a shift toward value-based care has to include providers understanding there will be relapses, good times and bad times, and accounting for that as part of SUD being a chronic condition.

“You have to look at it from a chronic condition management lens,” Mashburn said. “What we see working in terms of outcomes spans across a few themes. … One is around timely access to care. Another big theme is around smooth care transitions when patients come from a more acute setting, which requires really good discharge planning. Then the third theme is consistent adherence to treatment plans and medications.”

Expanding care to include both high-intensity and lower-intensity services for SUD patients may help with longer engagement, too, but it shouldn’t stop there. Utilizing telehealth flexibility, value-based pilot programs and emerging digital tools for “smart re-engagement automation,” Loeb Blassingame said, is “essential to making long-term care sustainable” in addiction treatment.

Service lines that currently have the highest margins in SUD care that are the most scalable are employer-funded programs, recovery alumni and aftercare memberships, group-based telehealth, and cash-pay outpatient programs, she said. While untapped areas for growth range from relapse engagement, dual pathways for chronic pain and SUD care, aftercare, and family support services.

“The pre-contemplation and early contemplation stages are completely underserved,” Loeb Blassingame said. “This is where tech can play a powerful role — through community, education, assessments and even early tele-coaching.”

Constructing the continuum

Building a sustainable model for long-term care continuity for SUD patients also requires that providers optimize therapeutic product mix to balance outcomes with financial stability.

One approach is having a tiered, blended team model that combines licensed, certified and peer providers — supported by digital infrastructure — that delivers both cost efficiency and clinical robustness, Loeb Blassingame said.

But this is where behavioral health as a field has often lagged behind other parts of health care.

“Treatment has been fighting to be a part of health care for decades,” Driscoll said. “Imagine if the only thing that we had to determine high blood pressure is if you became red in the face and fainted. That’s not a good metric. We need more sensitivity than that. It’s time addiction and mental health caught up.”

Most of the industry’s resources right now are “spent in the crisis mode of the disease,” he said, rather than the continuum. What the continuum needs to support the lifetime value of a patient is a prioritization on integrated care, education, prevention, better screening, more outpatient clinics and medication management.

“As we see a major shift from payers and patients away from a traditional 28-day residential model, the challenge for us as an industry is to match that shift – even though many of our businesses were built around episodic care,” Driscoll said. “… It doesn’t mean that we don’t need residential treatment or that a patient won’t need three- to five-week residential stays for stabilization and treatment initiation, but it means that as providers, we need to be more than just that. It means that we need to provide a full continuum of care that meets people where they are along that continuum.”

Ultimately, SUD care cannot be short-term or about service utilization. The continuum of care will shift meaningfully when providers “stay ahead of the curve,” Gupta added.

“We have to think about it as a cost of care reduction exercise across the system, broadly,” Gupta said. “Especially when it comes to Medicaid, it can’t just be about health care service utilization. It has to be about the cost to society, the public health cost and the decrease in that.”

This is among the topics that will be discussed at the upcoming Addiction Treatment Forum, taking place July 17 in Chicago, during a panel titled “Designing for Lifetime Value: Patient-Centric Innovation in SUD.”