Home Upfront The Denver Approach: A Rare Eating Disorder Business Model
Upfront
The Denver Approach: A Rare Eating Disorder Business Model
February 2006

Over the past several years, a relatively rare model of treatment has emerged at Eating Disorder Center of Denver, one in which patients who have diagnoses of serious eating problems like anorexia and bulimia are being treated in an outpatient type setting, bucking the common notion that such patients always require treatment at inpatient or residential settings.

“While less than 15 percent of people who have an eating disorder require an acute level of care, virtually all these types of cases are traditionally referred to either inpatient or residential settings,” says Dr. Ken Weiner, Eating Disorder Center of Denver’s medical director, who has been practicing in the psychiatric specialty for over 20 years and teaches at the University of Colorado Medical Center. “We have introduced a model that keeps very high levels of quality care, while also reducing the cost significantly.”

The upshot at Eating Disorder Center of Denver is that its payment mix is significantly different than that of most private eating disorder facilities. “We get 75 percent of our reimbursement from insurance companies, with partial hospitalization getting our clients twice as much time in treatment,” says Executive Director Susan Peterson, who in her 25 years in the mental health field has moved from counseling, through therapist positions and then into management. “That payment mix is usually reversed at most private eating disorder centers, with 75 percent being private pay and only about 25 percent coming from insurance.”

Attracted to its innovative treatment and business model, veteran treatment industry investor Erik Akhund backed Eating Disorder Center of Denver four years ago when it was just a startup. Until last month, Akhund was an investor in the famed Meadows center in Arizona, which has been bought out by private equity player American Capital. Akhund also has stakes in centers like the Palm Beach Institute in South Florida. He acts as chairman at Eating Disorder Center of Denver. “My investment has generated superior returns,” said Akhund. “But you have to understand that these are relatively high-risk operations and that success is very dependent on attracting and retaining very high quality staff.”

It appears, though, that Akhund has been rewarded with his risk taking at Eating Disorder Center of Denver. Demand has been so strong that the center recently doubled its capacity to 24 beds. And with the current census at 23, Dr. Weiner expects a waiting list shortly.

Part of the Eating Disorder Center of Denver model also consists of attracting patients from all over the country by offering a residential component in the form of shared apartments with eight beds. In this sense the business model resembles one used extensively by addiction centers in Florida, where many treatment facilities bring in patients from throughout the nation by offering partial hospitalization while at the same time also arranging for housing either through a third party or an entity that is legally at arms-length from the treatment provider. Says Dr. Weiner: “By doing this we can significantly lengthen stays, which is critical with eating disorders that often require weight restoration at a measured pace over time.”

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