While deals in the substance use disorder treatment space have been slow over the past year, addiction provider Crossroads has had an eye on growth.
Over the summer, the company completed a tuck-in acquisition of Family Health Services, expanding its reach in the Pennsylvania market.
Today, the provider has more than 100 centers across nine states–and is looking to grow through a combination of M&A and organic means.
At the same time, the provider is also looking to shape the conversation around value-based care in substance use disorder. The majority of the provider’s payers’ contracts now have a value-based component — and that could be growing.
BHB recently sat down with Crossroads’ CEO, Dr. Rupert McCormac, for our Perspectives podcast to discuss the future of the organization and the value-based care movement.
Highlights from that conversation are below, edited for style, length and clarity.
BHB: Let’s discuss some recent news: Crossroads has recently acquired Family Health Services. Can you walk me through the strategic rationale behind the acquisition and how it fits into your broader growth strategy?
McCormac: We’ve had the privilege and opportunity to do a number of those types of tuck-in acquisitions, if you will. And Family Health Services (FHS) happens to be in Pennsylvania, which is a really important state to us. We have really good payer relationships there, and have been able to create, really, what I will call industry-leading value-based contracts that actually reward for quality outcomes.
When we come across quality providers like Family Health Services, it creates a unique opportunity to build on the great work they’re already doing and overlay some of the work Crossroads has invested heavily in that creates these outcomes that we think are special and industry-leading and unique.
I’d like to talk about your larger growth strategy. How do you think about M&A and de novo growth? And how do you think about what market to enter?
We’re quite focused on filling in density in the states where we already operate through a de novo process that tends to make a lot of sense, and then also executing on some of the tuck-in acquisitions, like the ones we just mentioned with FHS in Pennsylvania. So it’s a little bit of a hybrid strategy within our current footprint, as we already have the infrastructure in those states to support either a tuck-in acquisition or a de novo.
Now, if we want to enter a new state, or we have very little density in that state, then a larger acquisition could make sense.
We do not like to de novo, our way into a new state,that’s really done through acquisition. So that’s really our radar right now, is looking at what states make the most sense, and then looking to see if there’s a really quality patient, first high-quality clinical model operator out there, and then we would diligence that heavily and enter the state through that pathway.
Last year, you implemented a new measurement-based care model. What drove that decision? And how has that transformed your clinical approach and patient outcomes?
This is near and dear to us, and we’ve been doing it for almost a full two years. It’s very much in line with our vision statement, which is to be the most convenient, comprehensive, highest quality operator out there. I’ll just touch on that third one —the highest quality, which means a lot to us. It means a disciplined adherence to evidence-based approaches.
Measurement-based care is a clear winner in the evidence-based approach.
When we refer to measurement-based care, we mean real-time measurement-based care, which involves sending digital health screens to each of our patients via a text link. They can click on it with their thumb. It’s a clinically validated instrument. They can fill it out within three to five minutes, and the results of that digital health screen are imported into a provider dashboard that we monitor around the clock. We have a centralized team of interventionists that monitor the scores of various digital health screens.
When a score exceeds the threshold, we will reach out to that patient and ask them if there’s anything they need, or inquire as to what’s going on, depending on what digital health screen it is and what the score was and we can reach out via text or phone. We conduct thousands of outreach events every month, and it’s really potent and impactful to their lives. We believe that life happens between visits.
These digital health screens are helping us gather real-time data about our patients and intervene before that patient has further declined. So if their urge to use the screen, for example, is peaking, meaning they might be having cravings or urges, then we need to call them and text them. And we do, and we find out, are they without their prescription, whereas there’s something going on that is stressful in their life, and that can literally keep them from going to the ER or getting admitted inpatient or going to the ICU, which is how we drive a lot of our outcomes.
How have those measurement-based care models impacted your relationships with payers?
It really changed the course of Crossroads. There are a lot of providers struggling, and a lot of that has to do with how our industry is set up, with regards to payment structures, and a lot of it is still what I would call a bastardized fee-for-service structure, which is perhaps rewarding people for volume and not quality, and that is the opposite of what Crossroads is about.
We only want to be compensated for the quality outcomes we deliver to our patients. Our ability to execute on measurement-based care, actually pipe this data that emanates from the digital health screens through a proper enterprise data warehouse and visualize the data and then demonstrate that data and show it off to the point of your question, and in this case, to the payers, has been transformative. And what I mean by that is it’s allowed us to now convert over 60% of our census to true value-based contracts.
I want to say what I mean by that, because a lot of people talk about value-based care and contracts, and it becomes a buzz word, and so I want to be very clear about what I’m talking about with over 60% of our contracts, these are value based contracts that have a bundle associated with them, which is, I believe, a really nice, proper way to reimburse for the services that someone like Crossroads delivers on, but also there’s a bonus upside performance to it based on outcomes. Mandating that, the patient gets what they needed and the outcomes that they deserve, and the payer then sees those outcomes, then we get a bonus, and it’s our ability to collect the data, produce the data, demonstrate it, and actually execute on those value based contracts that transformed our way of operating, because now we can provide services that didn’t have a code associated with it.
