After CRC Buy, Echo Malibu Founders in New Adolescent Venture

Addiction Treatment Industry Newswire
05/06/2013 – ATIN – Following the expiration of their non-competes with CRC Health Corp., which typically last five yrs post acquisition, the founders of high end adolescent addiction treatment drug rehab alcohol rehab provider Echo Malibu are once again in the business of providing super high quality care to young addicts with the opening Paradigm Malibu about a year ago.

Quick Exit

CEO Cole Rucker and Clinical Director Jeff Nalin were part of wave of acquisitions by CRC pre-financial crisis in the high end of the treatment business following the Cupertino, CA-based provider’s entrance into the private pay arena thru its mega purchase of Sierra Tucson in 2005, which at $130M is still the biggest money ever paid for a single treatment center in history.  Realizing on an exit strategy that many dream of, but relatively few addiction treatment entrepreneurs have managed to actually effectuate, Echo Malibu was sold in 2009 to CRC within just a few years after its founding, making for a quick multi-million financial windfall for Rucker and his partner. “It’s not we like needed or wanted to sell Echo Malibu,” explained Rucker, adding that at the time of the sale CRC was just one of three bidders vying to purchase the 12-bed adolescent provider, the other two being private equity type    adolescent provider,  “The financials were just too good to pass up.”

New Wealth

Rucker says that while he and Dr. Nalin initially enjoyed the fruits and freedoms of their newfound wealth, they relatively quickly began to chafe under the constraints of the CRC non-compete agreement that virtually all treatment entrepreneurs sign when they sell their centers to CRC, or most anyone else for that matter.  So when time was up last year, Rucker and Nalin were eager to get back in the addictions arena, with Rucker admitting that if there was ever a good time to sit out the treatment business, the deep recession of the financial crisis was it. “Our sale timing was excellent.”

Pushing the Envelope

As its name suggests, Paradigm seeks to push the envelope in when it comes to adolescent care. And at almost $40K for thirty days, the one-to-one client/staff ratio certainly does not come cheap.  In a nod to the new environment post financial crisis, Paradigm Malibu accepts insurance and gets heavily involved in utilization review, as many centers do now  in the formerly all cash-pay bastion Malibu Market. According to Rucker, 6-bed Paradigm gets just 10 percent of its payor mix from commercial insurers, with the rest being cash-pay – in line with other Malibu providers who are slowly buidling their U/R expertise and insurance industry penetration.

High Standing

With the kind of high standing that Rucker and Nalin have in the adolescent care sector of the addiction treatment arena, it’s no surprise they have had little trouble keeping their tiny new center filled to capacity, with Rucker saying a that jump to 12-beds is likely, though not necessarily any time soon.

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