The Internet Has Been Transformational for Patient Acquisition
Addictions Internet Marketing Among the Most Challenging Specialities
As Barry Karlin addressed the Avondale Partners behavioral health investor conference years ago he made a revealing statement, saying that CRC Health, the company he founded that has had acquisitions at the heart of its growth model, had made as its most successful purchase not a treatment enterprise – Sierra Tucson most famously ,for example – but instead that honor went to an obscure Internet concern called 4therapy.com.
CRC agreed in 2005 to pay as much as $9M for the tiny company, a fortune given that 4therapy had less than $750K in revenues, not to mention free cash. But Karlin didn’t care about 4therapy as an enterprise; what he needed desperately at the time was a quick way to ramp private pay revenues after paying a reputed 13x cash flow for Sierra Tucson, which was to be the ﬁrst in a series of purchases that were to set CRC down a path of huge reliance on cash pay. So Karlin paid up even more for 4therapy than for Sierra Tucson and thereby also acquired what was to become the internal Internet marketing platform at CRC. He also acquired 4therapy founder and addictions Internet whiz Tom Brown along the way, as well as the $20M to $30M or so a year in annual high-end revenue Karlin told Treatment Magazine the Internet platform very quickly wound up providing CRC.
A $1B Annual High-End Addictions Internet Spend?
What the 4therapy tale shows, of course, is the enormous importance of Internet marketing to the $10B to $15B a year private higher end side of the addiction treatment business, as well the mega sums addictions centers will spend to get in front of wealthy and well-insured online treatment services consumers. These sums probabaly now easily equal at least a $1B-a-year aggregate high-end addiction center Internet spend. “For Internet marketing agencies, the importance of the addictions sub specialty is out of all proportion to the relative small size of the business,” says Mike Myles, founder of Active Internet Marketing, a Michigan based agency whose addiction center clients have spent $50M through him on the Internet over the last decade, he claims. “That’s because some addiction centers, especially at the high end, are willing to spend a very big chunk of their overall per client revenues on marketing, with the Internet often taking the lion’s share because the information rich nature of the addictions product can make the Internet an easy, highly preferred marketing channel for consumer admissions decision making.”
The trend of truly outrageous addictions Internet marketing spends began in the 1990s out of Malibu, where the high end there drove per click rates over $25 by the early part of the last decade. Despite the ﬁnancial crises, those rates have continued to skyrocket, reaching over $75 lately as the Malibu Model proliferated nationwide. New high end centers have opened in dozens of states – places like Florida, Pennsylvania and even harshly regulated, high barrier locales like New York. The cash pay Internet spenders have driven up patient acquisition costs across the board, with the founder of a large South Florida operation – not especially cash-pay reliant, but getting good out-of-network reimbursements, telling Treatment Magazine his per client patient acquisition cost has reached $7K in recent months. In other words, 1/4 of the cost of a $28K 30-day stay goes to Google and the like and passed on to the consumer through big-time higher preniums.
Dozen Top Shops
There are about a dozen top Internet marketing shops with a strong national addictions industry specialty practice, including larger players like Ranklab Interactive in LA and one-man operations like Bernie Grohsman. Mike Myles’ Active Internet Marketing is among the largest addictions specialty shops, with about a dozen people working mostly at getting their addiction treatment center clients the broadest online reach for their direct-to-consumer ads – aimed at people getting high or drunk that want help or their worried familes – as well as the best pay-per-click and display ad rates. In other words classic media buying, which in Active Internet Marketing’s case is just aimed at digital platform distrinbution of ads. And then there are the too many to count SEO shops who promise to make their treatment center clients winners in the never ending battle to get centers at the top of the “natural” Google rankings for the big consumer search terms like “drug rehab” and the like… a kind of never ending Google alogrithim tea-leaf reading contest.
Internet Marketing Millionaires
And 4Therapy’s Tom Brown isn’t the only Internet marketer to have made a lot of money off the addictions specialty, with Bernie Grohsman telling Treatment Magazine last year that he sold his patient referral site Treatment-Centers.net for $2M. And Tom Brown got $9M from CRC in two payments from CRC for 4therapy.com. In the earliest days of addictions Internet marketing it was “directory” sites like Sober.com that blazed trails and sometimes sold for big bucks. But despite it probably being the ﬁrst ever addictions Internet marketing site, Sober.com founder Harold Jonas spurned early multi-million dollar offers and waited too long to sell, much later moving the site for maybe a fraction of previous seven ﬁgure offers. He’s now trying to make lightning strike twice, toiling to make it happen with a new social networking based product, with social marketing of course having transformed addictions Internet marketing just like it has transformed Internet marketing everywhere else.
Content is King… Again
In Sober.com’s heyday well over a decade ago, gaming the Google algorithms – the computer code that determines search rankings – consisted of doing things like creating interlocking linked websites and the like, which Holistic G&G founder John Giordano’s son did with such clever and proﬁtable effect. But the proﬁts behind those tricks are ancient history these days as Google has tweaked and adjusted its search coding many times since then, along the way giving birth to the entire SEO marketing industry, the one dedicated wholly to the never ending pursuit of Google tea leaf reading. Emphasizing fundamentals, Mike Myles and other addictions Internet marketing experts say that good old fashioned high quality content is what gets a site a top natural ranking these days, with inbound links from sites that rank high in Google’s esteem in this respect especially valuable. And strongly aggressive Internet marketers like Elements Behavioral even have their own “magazines.” Our dedicated readers will ﬁnd the name of Elements’ online publication very familiar indeed, as did we… its Addiction Treatment Magazine. Hmm… Welcome to the Internet! TJ