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A New Dual Diagnosis Center in South Florida
October 2006

After Hurricane Destruction, Oglethorpe Buys Facility from Liberty Management

As hurricanes ravaged South Florida’s Treasure Coast, an area that stretches north of Palm Beach along the Atlantic coast where the epicenter of two major hurricanes have landed over the last three years, Savannas Hospital had sustained serious damage.

And a tragedy where a deranged and violent client of the psychiatric and substance abuse facility went on a rampage, killing four people with his bare hands, no doubt also took its toll.

Liberty Management Group, an addiction treatment services provider based in New Jersey that owned Savannas Hospital, decided to sell the facility. But Bob Cohen, a Florida behavioral health entrepreneur, was on the buy side.

Cohen, whose Tampa-based Oglethorpe Inc has been buying up facilities in several states, snapped up Savannas Hospital, which sits on 20 acres adjacent to a state preserve, for $4 million in cash.

Port St. Lucie Hospital, as the facility has been renamed, opened for business in November, with about 25 of its 75 beds currently filled. While offering the full range of care that psychiatric hospitals do, Port St. Lucie Hospital will have a strong component of addiction treatment, with about half its beds designated for substance abuse.

“As we are a psychiatric hospital, as well as a substance abuse treatment facility, we will have a major specialty in offering integrated dual diagnosis treatment in a primary care setting, a level of care that is offered nowhere else in the area,” says Dr. Victor Balta, Port St. Lucie’s medical director, who points that there are quite a few high quality extended care dual diagnosis centers nearby, like Advanced Recovery Center in Delray Beach, but no others that offer integrated inpatient dual diagnosis services.

Dr. Balta says that upon entering Port St. Lucie Hospital - which Cohen anticipates will get about 70 percent of its revenues from Medicare, 25 percent from commercial payors and perhaps 5 percent from private pay - clients are given a highly comprehensive psychiatric assessment to determine their needs.

And while Balta says that Port St. Lucie Hospital will have the capability to handle seriously ill patients - schizophrenics, for example, are thought to have addiction co-morbidity rates as high as 50 percent - into its dual diagnosis program, he anticipates the mainstay of the program will likely come from those that that are far less ill. “Our experience tells us that we will likely be handling mostly dual diagnosis patients that have psychiatric afflictions like major depression, severe to mild bi-polar, generalized anxiety and the like,” he says.

Port St. Lucie Hospital will also be engaged in highly aggressive monitoring and management of medications.

“Psychopharmacalogical management is a major core competence of any psychiatric facility, and we will be very aggressive in this area,” says Balta, pointing out that many treatment facilities in South Florida often find themselves with clients that need this expertise, but are unable to deliver it themselves.

“We are certainly an ideal referral resource for South Florida treatment centers who find themselves with clients who they find out later on are not appropriate, or not yet ready, for their programs,” says Balta, pointing out that Port St. Lucie Hospital will also be an ideal referral for those centers that realize on first contact with a potential client that they need a stronger level of psychiatric care before beginning treatment. “We will work with treatment centers to stabilize patients, getting them to a point where they can then be sent back to the center that made the referral for further treatment of their addictive disease.” For Bob Cohen and his Oglethorpe Inc, Port St. Lucie Hospital is the latest in a string of behavioral health and substance abuse acquistions that have made them a growing force in the Florida and Ohio markeplaces.

Over the past seven years, Cohen has bought four facilities, with his flagship being The Willough at Naples, in Naples, FL. The Willough also has a strong dual diagnosis focus, but built with eating disorders - which also have a 50 percent co- morbidity rate with substance abuse - and chemical dependency treatment.

With $30 million in annual sales, and growing, Oglethorpe is highly active in the acquisitions game. “I’m always looking at properties,” says Cohen, who points out that the behavioral health market has been on an upswing due to a more favorable Medicare and Medicaid reimbursement environment in recent years.

By and large, Cohen’s strategy is to buy distressed properties, or facilities that have been shut down, with the possibility that he may be making another such acquisition in South Florida in the near future. “But we are also looking at launching startups from the ground up. Maybe something at the high-end, which would be new for us.”

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