Texas Non-Profit Hit Hard By Fed Sequestration Cuts

Addiction Treatment Industry Newswire

09/10/2013 –ATIN – In an example of how the breakdown of bi-partisan cooperation at the federal government level has hit and harmed addiction treatment drug rehab alcohol rehab centers, a Texas non-profit focused on meeting the needs of women has lost funding responsible for nearly 10 percent of its annual budget as a result of the series of automatic federal budget cuts known as sequestration. The sudden and unexpected nature of the loss of two federal grants compounded the problem because planning a transition to new funding sources in an orderly manner was not possible.

Alpha Home

Venerable Alpha Home, a nearly 50-yr-old San Antonio center with a heavy mandate and mission of treating pregnant women, has seen $300K of its approximately $3.2M annual budget suddenly jerked out from under it by sequestration. Sequestration refers to the $1.2 trillion automatic federal spending cuts spread over the next 10 years, and which went into effect in March. Roughly $85 billion in cuts are slated for this year. The cuts are across-the-board and indiscriminate, and completely fail to take into account the setting of policy priorities. That, ultimately, is the job description of a politician, to set policy priorities, and sequestration is reflective of the utter dysfunction of the highly polarized political stasis that has overwhelmed the federal government recently.

Unit Basis

The pulling of the $300K in federal treatment grants has a serious effect on Alpha Home that is outsize in relation to the 10 percent cut because Alpha Home is not self-supporting on a unit basis. The $74 it gets per client from Texas Medicaid payments doesn’t cover the full cost of each client and thus the federal grants play an outsize role in the financial health the organization and their loss cascades through Alpha Home with MUCH more deleterious effect than at a, for example, South Florida for-profit. These organizations overwhelmingly rely on out-of-network reimbursements of the well-insured with per client daily rates that are self-supporting on a unit basis and in most cases are indeed quite profitable for the treatment entrepreneurs that own centers in the nation’s largest “destination” addiction treatment market.

Preventive Medicine

And it makes little sense to pull the infinitesimally tiny $300K from Alpha Home on a policy basis. There are few things that are as tragic to witness and more expensive over a lifetime in terms of human and societal costs than a crack or feral baby. That tiny federal spend goes to heart of what it means to have a medical system that is efficient, preventive and pro-active as opposed to the system we have now, which is grossly inefficient, reactive and hugely reliant on very expensive last minute acute medical interventions.

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