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AAC deal has repercussions for other providers

July 10, 2015
by Julie Miller, Editor in Chief
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Earlier this month, American Addiction Centers (AAC) quietly announced it had acquired two digital marketing organizations—Referral Solutions Group and Taj Media—for $60 million.

On the surface, the deal seemed routine to many industry observers. However, deeper research reveals that Referral Solutions is operated by the same team that operates Recovery Brands, which is known for its Rehabs.com website that drives referrals to many treatment center clients who pay for the service.

It would appear that AAC has essentially purchased other treatment centers’ referral sources.

Why it matters

The distinction is important because now that AAC owns the large, online referral engine, it stands to reason that AAC centers would be prioritized for patient referrals over any other client. For other treatment centers, the deal could have direct repercussions.

“My guess is I can’t imagine them serving two masters,” says Jim Peake, CEO of Addiction-Rep, a digital marketing and analytics firm. “I really don’t know, but I would imagine they’re only going to serve one master, and that’s AAC.”

The precise role of Referral Solutions remains unclear to observers of the treatment field. AAC and Recovery Brands officials did not respond to multiple requests to be interviewed for this article.

Peake adds that AAC's purchase of a host of online referral sources was a brilliant move and makes AAC the de facto leader.

“The big win for AAC is the fact that they now have a publishing platform,” he says.

According to Peake, it takes a long time to establish a trusted platform that is recognized in search engines such as Google, and Rehabs.com has the advantage because it has already created that foundation. Search engine optimization (SEO) provides the best return on investment over television advertising or cost-per-click type advertising, he says, so owning a high-ranking site with SEO makes good business sense.

“Everybody is going to Google for answers, which means we’ve all got to become publishers of good quality content,” Peake says.

AAC last fall became part of a discussion of marketing practices in the addiction treatment industry when the chief executive of Utah-based Cirque Lodge discovered that Google search results under his facility's name were leading individuals to a toll-free number for AAC. AAC responded to Cirque Lodge's publicly stated concerns by terminating its relationship with the marketing vendor that it said was responsible for that campaign.

Value of the deal

For AAC, the ultimate measure of the value of the deal will be in how many leads are converted to admissions for AAC properties. At a price of $60 million, it would seem AAC is betting on a good return from the Referral Solutions deal.

AAC stockholders seemed to approve. Shares of AAC hit a new 52-week high on the first day of trading after the deal’s announcement, trading at $45.50 on volume of 102,711 shares. Overall, shares have been averaging $30.68.

Addiction Professional Editor Gary Enos contributed to this article.

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Comments

Rehabs.com was renting the number and forms to a large rehab company (for what $20-50K a month?). So, now that they sold off to AAC their relationship with said rehab is clearly over… But, what about all of the other treatment centers who are renting space on their site? Are they really willing to allow their newly acquired investment continue to benefit their direct competition?? I highly doubt they dropped $60MIL with the intent of keeping the indexable directory. I guess it could still be monetized (they can still rent the space and make a monthly residual) but is it worth it at the rate of something likely to be $100-500 a month per listing? Doubtful.

Curious to see how this pans out.