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The Lines Blur Between High-End Treatment and Spas
October 2007

PÃœR Detox, Laguna Beach, CA

PÃœR Detox Opens, The Right Step Goes High-End, Both As Addiction Center Spas

Bill O'Donnell always understood that there are strong and natural links between the high-end addiction treatment business and the spa experience. A major pioneer of high-end treatment as founder of the legendary Sierra Tucson, O'Donnell in the very early 1990s found himself in a tight spot, as did most treatment center operators.

It was a time when the addiction industry had hit the managed care wall hard, and at Sierra Tucson, which was then reliant on insurers for 70 percent of its revenues, sales plummeted 75 percent in just two years.

In addition to cutting Sierra Tucson's capacity by more than half, O'Donnell began to look for new business opportunities to spur growth at Sierra Tucson, by then a publicly traded company.

What was decided upon was to build a a first-class spa on property in Arizona owned by the company, which changed its name to NextHealth to reflect a new, broader focus on "wellness."

O'Donnell was thus among the very first players in what is now a multi-billion dollar, and very fast growing, wellness market, and the Miraval spa he built is world famous.

Of course, O'Donnell has sold the spa and Sierra Tucson, which CRC Health Corp. bought for the largest sum by far ever paid for a single treatment center. And since O'Donnell founded Sierra Tucson over 20 years ago, a big and thriving high-end treatment business has grown up that is, to a large extent, centered in Arizona and Southern California.

As competition has heated up on the highend, centers have increasingly been marketing a wide range of spa-like features, prompting what some in the industry have referred to as an "amenities arms race."

And while centers have been selling things like high thread count sheets, massage therapies and the like, up until now the spa angle has taken a backseat to treatment.

But recently, players have begun to put the spa piece out front and center, highlighting the treatment of the overall “wellness” of their patients.

A new entrant, PAR Detox, which opened its first facility in Laguna Beach, CA, last month and has ambitious expansion plans, openly touts its new center as a spa.

Dr. Allan Sosin, Chief Medical Consultant, PÃœR DetoxA high-end detox, where, according to Chief Medical Consultant Dr. Allan Sosin, "clients will never leave with a new prescription," PÃR Detox boasts expansive ocean views, integrative medicine and vitamin therapies, as well as the medical detox.

Once clients are detoxed, a rigorous sauna program is offered that removes drug metabolites that can cause physical cravings. PÃR Detox, which is owned by three principals, including interventionist Steven Bruno, is currently in the process of acquiring a $2 million home not far from the Laguna Beach facility in Capistrano Beach, which will bring the Southern California capacity to 12 beds.

And the PÃR Detox principals have plans to take the treatment center as spa concept to a whole new level. The principals are currently looking at a big property in Fiji. "We have our eye on a 20 room place in Fiji where we are planning to operate a recovery resort," says Steven Bruno. And for those who have been occupied primarily with delivering affordable care, the allure of the big margins at the high-end of the business have proven to powerful to ignore.

George Joseph, CEO of Houston-based The Right Step, one of the fastest growing affordable providers in the nation, recently gathered investors and this month will open Spirit Lodge Rehab Spa, a 35-bed facility located on a sprawling eight acre spread in the beautiful Texas Hill Country. JW

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