CRC’s Excessive Methadone Profit Push Coming Home to Roost

Addiction Treatment Industry Newswire
03/10/2013 -ATIN-  As CRC Health Corp seemed finally to be putting a series of patient care and
 regulatory issues behind it, not to mention working its way out of the financial morass that was its ill-timed $300M foray into therapeutic schools, the nation’s largest addiction treatment drug rehab alcohol rehab center operator finds itself under the microscope yet again, with CEO Andy Eckart this time writing open letters defending the company’s profit engine methadone clinics.

Waiting for Shoe

We here at Treatment Magazine have been waiting for the shoe to drop on this one for a long time, having been the first to write, back in 2006 when CRC began reporting as a public entity, on how enormously lucrative the clinics were and how they acted then, and continue to act, as the key profit engine for Bain Capital, CRC’s private equity owners. One line from an SEC filing clued us into how, eventually, quality of care issues would surface at the clinics, with likely regulatory scrutiny sure to follow.

Packing Them In

In a marketing regulatory document known as a prospectus – CRC was taking public a $200M private bond deal it had used to finance the Sierra Tucson purchase – the company couldn’t wait to tell investors that 82 percent of methadone clients were private pay with clinics averaging 428 clients each, twice the industry norm. Healthcare being an industry of service and care, bragging about pushing through twice what most clinics can handle might appeal to investors but is a major red flag to anyone wondering about CRC’s devotion to quality of care.

Comments and Emails

In the years since we published our AMERICA’S METHADONE KING article, comments posted online and emails sent to us confirmed our suspicions that profit was perhaps being put way ahead of clinical at CRC’s almost 60 clinics nationwide. And now, following a February investigative piece by Bloomberg, state regulators a few days ago opened probes. And CRC executives are once again on the defensive.