Med Surg Making Big Move Back into Addictions Markets

Addiction Treatment Industry Newswire
11/04/2013 -ATIN – 
In a major reversal and one that will likely have an enormous impact on the shape of the addiction treatment competitive landscape nationwide, medical surgical health systems are starting to pile back into offering addiction treatment services. Hugely significant players in the massive expansion of the addiction treatment industry during the 1980s, with a large market share, hospitals exited the business in droves post managed care. But with the reimbursement possibilities represented by ObamaCare, significant integrated dual diagnosis expansion investments are now being made by med surg players.

Big Buffalo Play

A recent and archetypical example of these major med surg addictions plays is in Buffalo, where Erie County Medical Center, ECMC, and Kaleida Buffalo General Hospital have merged their addiction treatment programs. For years the two programs struggled with underinvestment and lack of attention from top hospital executives. But now all that has changed with a flurry of investment and expansion in the wake of the treatment program merger.

Big New Downtown Center

Just opened in downtown Buffalo, in an impressive rehab and conversion of an old book bindery factory, is a 13,000 sf soup-to-nuts outpatient addiction treatment services center. And in a major example of the effort nationwide to integrate addictions into the overall healthcare system, and to rid treatment of its “orphan” status within that system, the new downtown outpatient center is also where clients are getting primary care medical services, everything from treating a bad cough all the way through to the annual medical check-up. The merged Buffalo hospital programs now have three similar outpatient operations throughout Buffalo; and business is booming. The new downtown outpatient center, with about 20 clinical staff currently, has in a matter weeks gone from serving 350 patients who came for 2,000 visits a month to 525 patients with 2,600 visits a month.

Big New $25M Build

Anchoring the addictions merger between ECMC and Kaleida is a massive and highly innovative behavioral health investment as ECMC takes over the psychiatric side for the two institutions. ECMC is in the midst of a $25M new build on its campus that will bring the key dual diagnosis element to the merged addictions operations. The facility will have a very innovative addictions/psychiatric emergency room that will link to an inpatient addictions and psychiatric operation.

1980s Med Surg Boom

Med surg entrance in a big way into addictions care started and was spurred by the new widespread access in the 1980s of the middle class to 28-day residential addiction treatment stays through a massive commercial insurance move into offering addictions coverages. The commercial insurer play into addictions started in the early 1970s when Chicago’s Kemper Insurance offered the first addiction health coverage ever and grew slowly over about a decade. Coverage took off like a rocket in the very early 1980s and, at the height of the addictions health insurance boom in the mid 1980s, commercial health insurers accounted for almost 40 percent of the nationwide addictions industry payor mix. Post managed care that has dropped steadily to the point where we at Treatment Magazine believe commercial insurance payors now account perhaps for as little as just 8 percent of the overall nationwide addictions payor mix. In the early 1980s many med surg players were suffering with a bed capacity glut, with some hospitals sitting with entire wings shuttered and entirely empty. Many med surg players saw the new access to commercial insurance addictions reimbursement as a godsend. The conversion of shuttered hospital wings into addiction treatment programs was a relatively easy new business gambit, requiring little capital investment and fitting nicely into existing key med surg areas of expertise like utilization review and insurance billing experience and expertise. The boom ended, and quickly reversed, when managed care came along in the early 1990s and now, overall nationwide, med surg is a relatively negligible force in addictions treatment services.

New York’s Med Surg Disgrace

There are some markets in which med surg are still significantly large players in addictions. One example is in New York, where med surg players still make big money off addictions due to extremely misguided, and frankly downright scandalous, state government addictions funding programs. The state government gives extremely generous compensation- $2,000 a day is common – for very short-term detox type hospitals stays that aren’t linked properly to longer term care. The result is a kind of revolving door where med surg makes lots of money off short-term addictions stays, many of which are the same people checking into the hospital over and over again in a scandalous waste of billions of taxpayer money year-after-year.

Med Surg Still Strong In Chicago

For reasons Treatment Magazine has never really been able to figure out, Chicago has been is a huge metro market that until relatively recently has been bereft of stand-alone specialty addictions operations. But with Gateway Chicago moving into the private markets in a big way in recent years, the Chicago competitive landscape has been changing rapidly. However, med surg – players in the city like Rush Presbyterian, St Joseph’s and others – remains a key and potent competitive force in the metro area addictions services marketplace.

read our story on George Mann, Med Surg Addictions Pioneer


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