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Michael Cartwright: A Prolific Addiction Treatment Entrepreneur
Written by Ted Jackson   
September 2012

Among the very earliest dual diagnosis pioneers...

... and now a comprehensive new wellness model

As Jerrod Menz talked about merging his tiny Forterus affordable center company with Michael Cartwright’s American Addiction Centers, AAC, little did Menz know that, slightly more than a year later, he would emerge as a walking advertisement for everything that Cartwright and AAC are all about – radical transformation through the rigorous application of wellness therapeutic techniques.

Budding Empire

Now over 100 pounds trimmer,Menz appears as an entirely new man; not only personally but professionally as well, which is emblematic of the infectious enthusiasm with which Cartwright surrounds his efforts and that now see him emerging as among the most prolific entrepreneurs in the 150 year history of the U.S. addiction treatment industry. After AAC’s acquisition late this summer of Treatment Solutions, Menz is now CEO, with Cartwright functioning as a very hands-on chairman, of a budding treatment empire stretching across six states. The new AAC assets are Forterus’ A Better Tomorrow in Southern California, an over-the-top conversion of the old Nieman spa outside of Dallas into The Greenhouse, recently opened Treatment Solutions properties in Florida and New Jersey and a major soon-to-open 140-bed center in Las Vegas, which will function as flagship.

New Level

That Cartwright might be preparing to take things to a whole new level in the addictions space is apparent from the composition of his board. One of his outside directors, Lucius Burch, was an original investor in HCA from the 1960s and, more recently, a backer of Psychiatric Solutions, the phenomenally successful mental health facility roll up. The other outside director, Dick Ragsdale, was a co-founder of Community Health Systems, another huge national healthcare provider. Few, if any, addictions ventures have ever been able to attract this kind of heavyweight healthcare player interest.

Nashville Roots

Simple proximity is one reason Cartwright has been able to get close to guys like this. His roots run deep in Nashville, where AAC is based, and which is to medical entrepreneurialism what Silicon Valley is to tech entrepreneurs. “The advantages of being from here [Nashville] are too many to count,” he says. Cartwright started in the Medicaid/ Medicare trenches along with his secret weapon wife, Tina. Mrs Cartwright is a crack utilization review expert who is a key to business success, both past and future. Foundations Associates, the 1990s venture that set Cartwright out on to the national addictions stage, was heavily reliant on government payors and private commercial payors and thus provided both the Cartwrights with fundamental expertise in an absolutely key arena, which in the private pay, post-managed care addictions world many treatment executives lack.

Dual Diagnosis

It was around this time, through efforts like dualdiagnosis.org, that Cartwright became an early pioneer in the key clinical trend of the past twenty yrs, while offering turnkey therapeutic solutions to smaller players with the website. Later on, Cartwright began to expand in the for-profit arena with his Foundations Recovery Network, buying centers in California and founding some, like La Paloma, in Nashville. A few years ago, Cartwright cashed out and sold Foundations to a Chicago-based private equity group, a transaction that in and of itself would have made Cartwright among treatment’s most successful entrepreneurs. With the creation of AAC, not to mention a new book written with a top NY Times author, Cartwright may be moving into a class all his own.

National Footprint

With its rapid expansion by acquisition over the last year or so, the aim with AAC, Cartwright admits, is to create an enterprise with a national footprint. And with the sum of CRC Health Corp.’s parts looking at this point like they might be worth more than the whole, it could be that Cartwright’s AAC will emerge as the lead- ing contender to build a successful national model. Behind Cartwright’s AAC is a vision of a new kind of healthy America, with a medical system far more oriented to- ward prevention than acute intervention. In the addictions space, AAC seeks to bring together addiction treatment and the wellness movement, with a strong emphasis on nutrition and fitness. For Cartwright, it is far more than just a business, it is a calling.

Getting Paid

Part of the problem of implementing this kind of vision within the medical space is persuading the health insurers to get on board. And one look at the high-end type of facility that AAC has among its properties could lead to a conclusion that AAC has as its revenue model primarily private, client-out-of pocket pay. That conclusion would be wrong. Even at ultra high end facilities like The Greenhouse in Texas, according to Cartwright, AAC is getting fully 80 percent of its revenues fulfilled by commercial insurers, with just 20 percent client out-of-pocket. This type of performance is a testament to the deep U/R expertise developed by the Cartwrights over the years and is going to be a major competitive advantage for AAC, along with a highly aggresive salesforce acquired through Treatment Solutions which was primarily a patient referral company for many years before its expansion into treatment service delivery. And while Cartwright admits he is not going after Medicaid type business, he says it is AAC’s aim to offer recovery services to a “major cross-section” of the U.S. demographic. TJ

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