The CEO of two newly combined addiction treatment organizations with a strong presence in Houston and Austin, Texas firmly believes that the type of business transaction he has seen to completion will be duplicated in many other locations.
“I think for nonprofits, it’s the future,” says Mel Taylor, who at the start of 2013 became CEO of both The Council on Alcohol and Drugs Houston (his former position) and Austin Recovery. With the addiction treatment community looking at lagging reimbursement rates and uncertainty regarding the future of federal block grant funding, more facilities will at the least be looking for the chance to share overhead costs with someone else, Taylor indicates.
But for the entities in Houston and Austin, the merger that has been finalized offers additional opportunities. With the Houston council traditionally focused on outpatient services and prevention, and the Austin facility specializing in residential care, the principals see the merger as enhancing a continuum of care and serving as a vehicle for sharing expertise.
“Our greatest surprise was that when we looked at their staff capabilities, they exactly matched with ours,” Taylor says of Austin Recovery. “We are both very recovery-focused, and we also both work with significant co-occurring populations.”
Taylor says acquisitions have consistently been a priority at The Council on Alcohol and Drugs Houston, an agency that has become the hub for individuals seeking services in the Houston area (it processes around 350,000 calls a year and refers individuals to numerous agencies, not just its own programs). Talks between the agency and Austin Recovery originated several years ago and then died down for a time; Taylor in the past also has consulted with Austin Recovery on issues of fundraising/philanthropy.
When the replacement for Austin Recovery’s longtime CEO left the organization after only 18 months, discussions about the two organizations joining forces re-intensified, Taylor says. Austin Recovery will operate as a supporting organization under the merger, with its board reporting to a larger board entity. Both Austin Recovery and The Council on Alcohol Drugs Houston will retain their name and brand identity in their respective communities for the time being.
“It didn’t make sense to resurrect a new brand or a new look at this point,” Taylor says.
And while some administrative functions such as CEO and chief financial officer already have been consolidated for the two organizations, there will not be a large number of staff consolidations at the outset. One area, however, that should quickly benefit from joint planning is implementation of electronic health record (EHR) systems. The council already had been exploring the market for alternatives to its existing EHR system, Taylor says, and now Austin Recovery will be brought into that process as well. Austin Recovery has not had an EHR up to this point, he says.
Taylor does not see how more such business actions won’t occur in the coming months and years. “For an organization that is holding on to its own ways, trying to preserve its autonomy, we’ve seen a lot of those kinds of organizations close,” he says. “I would hope that boards would be more insightful.”
He says reactions to the merger from outside entities have been generally positive, with county boards enthusiastic about consolidation and foundations believing that the merger will allow them to stretch their dollars.