Owners of treatment centers often feel today’s business complexity distracts them more and more from their mission of helping patients in need. Many are tempted just to sell the facility outright. Concord Behavioral Health, a new startup based in Nashville, has created a joint-ownership model to respond to that market reality and allow the founding owners to continue their commitment to the community.
A for-profit, equity-backed organization, Concord is currently in the process of purchasing majority ownership in two facilities. Through its ownership, it will create the business backbone necessary to ensure sustainability of the centers. Ultimately Concord’s goal is to acquire a network of treatment centers nationwide and shepherd them toward consistent standards in clinical care as well as financial reliability.
“Many of the owners we engaged with say they started out as individuals in recovery themselves,” says Mary Pawlikowski, COO of Concord. “They developed the facility out of passion and heart and soul, but we find that they’re overwhelmed.”
Pawlikowski says Concord is looking at smaller treatment programs that might need to vary their payer mix and begin including commercial insurance. Her own background is in the mental health and addiction space with more than 25 years of experience, and she says she has expertise in navigating the administrative burden of working with insurers.
“With so many advances and with parity and the Affordable Care Act, where commercial insurance is now available, people want to use that as part of the recovery process so they can lengthen their stay and hopefully strengthen their sobriety,” she says. “We’re coming in to help the facilities switch over into commercial. We’re not looking at the high-end, self-pay facilities that cater to the elite. We’re into facilities that can serve you and me, or your neighbor or your mother or the teacher who lives next door.”
Once a property is engaged, the team then works with the owner on due diligence to make sure the acquisition is mutually beneficial. Concord has three basic criteria for facilities in its forthcoming network.
1. The organization must have a sound clinical base.
“We want to bring in a lot of corporate education across board, in clinical quality, training and education on compliance,” Pawlikowski says. “We expect all of our facilities to be accredited by the Joint Commission or by CARF.”
She also says the centers will use evidence-based treatment protocol, including ASAM criteria and best practices in medication-assisted treatment for detox services.
2. The organization must focus on providing residential treatment.
Sober residences and intensive outpatient services are also growing service avenues, but Pawlikowski says the main focus for Concord will be on a core residential capability.
3. The organization must have sound accounting practices.
“Whether it’s for profit or not for profit, in today’s world, it matters whether you have sound financial accounting and billing. So building those protocols and the checks and balances is something we bring to the table,” she says.
Concord expects to close its first two acquisition deals in the coming weeks. Although Pawlikowski can’t specify, the organizations are in the West Coast region, and one of them has multiple sites. The pipeline for potential acquisitions is “massive,” she says with 3,500 residential providers in the country right now.
She says the facility owners Concord has interacted with so far have been forthcoming with information, sharing their business outlook as well as what’s behind their mission.
“It’s gratifying to speak with and engage the owners,” she says. “They all have a story to tell, and the passion is just amazing.”
The Concord executive team also includes David Skelton, chief financial officer, who has a 15 year history in facility acquisitions with a buy-and-build strategy. Skelton will be responsible for creating Concord’s centralized billing and accounting infrastructure. The VP of development is David Bradley, who has 15 years of healthcare experience, and CEO Joe Cashia, a registered nurse, has worked on several other equity-sponsored models in renal care and fertility specialties.