Entrepreneurs Focus on New Jersey as State Lacks Residential

Addiction Treatment Industry Newswire
10/15/2012 – ATIN – Back in February Governor Christie of New Jersey made a big deal about addiction treatment drug rehab alcohol rehab in the state, probably because he has been influenced by one of his best pals, who is a top guy at a huge halfway house/corrections operation whose massive growth almost exactly tracks Christie’s political rise and whose quality and purpose has been big-time investigated and questioned. Throughout the year, Christie New Jersey Governor Christie's focus on treatment access amounts to little more than jawboning has also made a big policy commitment for treatment versus jail and in recent days a commission looking into addiction treatment availability has been touring the state. The latest stop was Camden, a super scary place that is proof positive of the existence of a permanent underclass, and the stories coming out of the commission have been the usual ones of utter ruination, heartbreak and death.

Turn Key Millionaires

When it comes to New Jersey, though, nothing is likely to get better. For things to get better it’s going take money and there is no state money in Jersey because, among other things, they have county turn keys there that retire on $250K a year. We are not kidding. A Monmouth County prison guard somehow is going to retire as if she’d been some ubber successful risk taking entrepreneur instead of having performed a task her entire life that, based on its skill requirements, should be among the lowest remunerated. And what does it say about a society’s priorities when this kind of dough is paid to a turn key when addiction counselors, even at some of the best centers, are barely paid a living wage?


So when it comes to the poor and poorly insured – and that’s a lot of people in New Jersey because in-network benefits tend to be low, dominated as they are by tight-fisted insurance gatekeepers like Magellan – there are not a lot of options and what there is, is  often poor quality. A fairly typical example of 

The moonscape that is Camden, NJ...it was the latest stop for a state addictions commission that has been touring New Jersey in recent weeks looking into treatment availability.
how low quality care came to proliferate in New Jersey is Seabrook House, which was totally unable to maintain its formerly high standards post managed care and has degenerated into a center whose staff is heavy with techs who oversee a prison-like atmosphere where clients are locked out of their rooms all day – if u call converted trailors a “room.” Alina Lodge is pretty much the only national quality name in the state. Because of the low in-network reimbursement, and the dominance in the state of the booming Florida market when it comes to out-of-network addictions benefits, the residential market in Jersey is relatively underdeveloped.  And what’s happened with the flood of corrections business lately into residential – with centers no doubt happy to be dealing less with the Magellan’s of the world – is that only 20 percent of residential beds in the state remain available for non-corrections census flows. So, in the absence of new state money, Christie’s supposed cutting-edge addictions focused policies amount to meaningless jawboning that have created a bunch of new problems and have not moved the state forward one inch in terms of improving the addictions treatment access problem. It is highly unlikely that much new state money will be put to work given that New Jersey is routinely cited as having among the worst fiscal problems of any state in nation.

Entrepreneurs fill Gap

There’s no doubt that the relative addiction center underdevelopment, and the sudden shortage of residential beds, has attracted private center entrepreneurial interest. GenPsych has been a fast growing outpatient player that recently entered the residential market with a few dozen beds and with aggressive plans for hundreds more as well as seemingly equally aggressive NIMBY issues. (See our Editor’s Note below for more on GenPsych) Treatment Solutions, the former marketing outsourcer turned 

CEO Peter Schorr invested big converting The Retreat at Lancaster into a top notch treatment destination
treatment operator recently acquired by Michael Cartwright’s new American Addiction Centers opened a center in New Jersey a couple years back and Cartwright recently told Treatment Magazine he’s interested in greenfield development sites there.

Like a Good Neighbor…

Of course, with addictions booming Pennsylvania a stone’s throw away and it being arguably the leading state in recent years behind Florida for new center openings, why build in New Jersey? Behind Pennsylvania’s success in the treatment arena, to a large extent, are laws that are the most stringent in the nation in terms of guaranteeing access to treatment, easily on par with those in Minnesota. In essence, Pennsylvania law puts the utilization review decision in the hands of treatment center medical staff, and takes it out of the hands of the insurance companies. In such an outstanding regulatory environment, in a region that is driving distance from three of the nation’s largest metro markets, it’s little wonder that big bucks get thrown around in Pennsylvania when it comes to treatment center expansion and investment. If New Jersey Governor Christie really wants to juice access to treatment and encourage investments like the $10M or so that founder and CEO Peter Schorr recently made opening his Retreat at Lancaster County, then Christie might want to consider getting legislation passed that takes New Jersey addictions U/R decisions out of the hands of the Magellan’s of the world and puts it into the hands of treatment clinicians.

Editor’s Note on GenPsych:  Earlier this year we wrote a story in which we speculated that GenPsych might be a big competitive threat to New Jersey census-flow-reliant players like BHOPB and Florida House as GenPsych brought 100+ beds online by January 1. Frankly, we were skeptical he’d get that done, especially as it was to happen at a number of different locations and CEO Dr. Henry Odunlami had already had substantial NIMBY issues with the couple of dozen residential beds already up and running. But we gave Dr. Odunlami the benefit of the doubt. Since the story we have had reason to get even more skeptical. Treatment Magazine recently sent Dr. Odunlami an email asking him if we should go with a follow- up story: “Is Odunlami Writing Checks With His Mouth That GenPsych Can’t Cash?”… we await his response and will let u know…