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New England's Gosnold on Cape Cod
August 2008
In a Treatment Market Bifurcated by Payor Mix, It’s All Things to All People

New England's GosnoldThe treatment market is one that has traditionally been severely bifurcated along payor mix lines, with centers, by and large, either being public, and getting virtually all of their funding from federal, state and local governments, or private, and getting their money via private pay and insurers. And never the two shall talk, with both sides even having their own associations, TCA for the big publics and Naatp for the private side of the business. That’s why it’s quite rare to find a center, one like $19M a year Gosnold on Cape Cod, that straddles both these worlds and their often competing demands. CEO Ray Tamasi has been with Gosnold since its early days and well knows the center’s roots as an institution that grew out of passage of the federal Hughes Act in the 1970s, which first gave public dollars for treatment.

New England's GosnoldAnd now that Gosnold has grown into a large treatment organization - its revenues easily put it into the top 10 per cent of providers - the center’s payor mix is among the most diversified in the nation, with Gosnold getting big revenues from each of the major addiction treatment payor sources - government, insurance and private pay. “It is most definitely not easy satisfyall those constituencies, but our five different locations help to some expay tent in segregating populations, but we also match up people with counselors who are qualified to deliver services to particular patient needs.” In the late 1970s, following the lead of Chicago-based Kemper Insurance, health insurers began reimbursing and Gosnold took advantage, growing that part of the business to point where it now accounts for 40 percent of revenues. And in the wake of managed care, where insurers have cut by twothirds their contribution to industry revenues, Gosnold has very successfully entered the market for private expay services, in 2005 opening Gosnold at Cataumet. Now private pay accounts for about 25 percent of Gosnold’s business, and, like many other centers searching for ways to lengthen stays amid insurers’ unwilling to pay for inpatient, the 30-bed Cataumet is designed as an affordable way for clients to extend care. “Very clearly for us the fastest growing part of the business has been private pay,” says Tamasi, adding that the private pay contribution has risen 150 percent over the past five years. The success of Gosnold in enterthe private pay market is instructive for other centers that rely on public funding - Gosnold is still over 30 percent public - and that are looking at private pay for growth. Public centers, most of which are facing cutbacks in the wake of deteriorating state level finances, are increasingly eyeing private pay. In fact, one of the nation’s very largest public providers is now contemplating what could be a major entrance into the private market for addiction treatment services. TJ

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