Insights

February 2015

Addiction Executives Industry Summit: Three Key Takeaways

Last week, we had the opportunity to meet and interact with addiction industry leaders at the aXis (Addiction eXecutives Industry Summit) in Naples, FL. It was an exciting and informative week, with many interactive sessions and one on one conversations. Here are three key takeaways from our experience:

  1. New buyers continue to enter the industry: The confluence of increased coverage, both realized and anticipated (via parity, the ACA and Medicaid expansion), combined with the highly fragmented landscape of providers has created an environment ripe for consolidation. Record amounts of cash in the Private Equity (PE) coffers is driving acquisitions and development of new platforms, allowing providers to create scale similar to other healthcare services providers.
  2. Grassroots consolidation: M&A activity isn’t just driven from the top down. Many practitioners are seeking to expand their services with the goal of providing the full spectrum of care. While much of the demand trend revolves around lower-cost treatment options such as outpatient and e-therapy, in some cases it may also consist of adding services such as detox, inpatient treatment, laboratory services or seeking to partner with another facility that has complementary treatment options.
  3. Buyers’ needs are evolving. There is a great deal of uncertainty around future reimbursement for UDS testing and out of network benefits.  Buyers are making their own assumptions about what those reimbursements will look like going forward. Simply put, some buyers will value these revenue streams more richly than others.

We’re also seeing an increased number of strategic buyers seeking      alternative evidence-based treatment options. The divide between abstinence-based treatment and medication-assisted treatment is filling in with other proven treatment models that can complement a strategic buyer’s existing offerings and perhaps lower reimbursement risk.

If you have any questions about the current marketplace for quality addiction treatment centers, please contact us at (770) 888-1171, or [email protected]