|Addiction Treatment Industry Newswire|
|09/03/2013 -ATIN – Foundations Recovery Network, FRN, one of the nation’s largest for-profit pure play addiction treatment drug rehab alcohol rehab enterprises, is moving to implement a clinical offering profile that fits a chronic disease model of care in order to improve outcomes, CEO Rob Waggener told Treatment Magazine, agreeing that failure to implement this type of care throughout the nation’s addiction treatment system has led to an over-reliance on expensive acute addictions interventions and a revolving door for clientele at the detox and residential levels of care. Primarily known as a higher end provider of residential care, with inpatient centers in Malibu, Palm Springs and Memphis, Waggener says FRN is in the midst of an aggressive expansion into outpatient care and just before Labor Day opened its latest such clinic in San Francisco.
Mergers No Comment
In a cat-and-mouse exchange, Waggener steadfastly, and with good humor, refused to answer a barrage of reporter’s questions concerning possible FRN mergers and acquisition activity, which is the subject of never ending speculation in addictions executive suites following last summer’s blockbuster news that the Pritzker family of Chicago acquired FRN. Literally among the world’s very top investment dynasties with a market-moving multi-billion dollar fortune founded on the Hyatt hotel chain, family scion Nick Pritzker did not buy FRN to stand still, Waggener made clear to Treatment Magazine at the time of the deal. Treatment Magazine considers that the Pritzker FRN
deal will likely become among the most significant addictions industry transactions ever, on a par with Bain Capital’s acquisition of CRC Heath Corp in 2005. Since the Pritzker news, treatment CEOs and entrepreneurial founders have said Waggener has paid them a visit, though all said they had zero interest in a deal with FRN, each with their own variety of reasons. Common among them was a fear, as treatment booms, of leaving money on the table by getting out too early. Said one founder: “What am I gonna do with the money Waggener would give me for what I built? Reinvest it in Treasuries (short-term money market federal treasury bills) at negative real rates?” (Because inflation is running at a higher annual rate than the interest offered on federal bills currently, it means that investors in inflation-adjusted terms are literally paying the government to park their money safely. It’s a highly unusual phenomenon that has occurred very infrequently in U.S. monetary history, just a few times, known as a negative real interest rate environment.)
Following the Client
“We are a national medical services provider, getting our clients from all over,” says Waggener, pointing out that FRN’s marketing and patient acquisition efforts cast a wide net throughout the country. In order to follow the client and provide chronic disease model step-down levels of care, Waggener says FRN will have to literally follow its residential clients home by opening a nationwide network of outpatient clinics. Of course, the outpatient clinics will also service the localities in which they operate not only relying on FRN residential graduate clientele and, thus, FRN will be able to follow the trend that Obamacare seeks to implement, which is a shift toward treating addiction before highly acute detox and residential interventions become necessary. Indeed, Obamacare is seeking overall to rid addictions of its “orphan” status within the healthcare system, with a greater integration of care into med surg and primary care doc offices.
FRN has for a long time had an outpatient operation in Atlanta and operates outpatient where it has residential locales inPalm Springs and Memphis. In addition to the new San Francisco clinic, FRN is currently offering outpatient services in Santa Monica and Nashville, bringing to six clinics the total outpatient profile. FRN owes its strong presence in Tennessee – not particularly an addictions “hub” like Arizona or South Florida, although Nashville is to med surg medical entrepreneurialism what Silicon Valley is to tech entrepreneurialism – to the fact that the original aggregator of FRN’s treatment assets, Michael Cartwright, is from Nashville and founded the company there in the 1990s. Since then Foundations has been, including last summer’s Pritzker purchase, the subject of two major transactions in the last decade – first by Cartwright to suburban Chicago private equity firm Sterling Partners, which exited through the Pritzker deal.
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