Orlando Area Mergers Create Southeast Non-Profit Juggernaut

Addiction Treatment Industry Newswire
06/15/2013 –ATIN – The desire to provide greater integration of services driven by the deeper understanding in recent years of the comorbidity between mental health and substance abuse is a primary driver of a major merger of three Orlando non-profit services providers into a $90M Southeast regional juggernaut. Effective July 1, the deal creates a new Aspire Health Partners non-profit that will be formed out of the former Lakeside Behavioral, Center for Drug Free Living and Seminole Behavioral Health organizations, a merger that like many such efforts will take some time to effectuate. The long predicted, but slow in coming, merger wave among the myriad non-profits populating the highly fragmented mental health and addictions spaces has picked up steam, drawing considerable attention to the trend last week when icons Hazelden and troubled Betty Ford announced talks and in the wake of some big deals like the key union early this year in Texas of that state’s two largest non-profits.

Widely Admired

Taking over the CEO helm at Aspire will be the widely admired Dick Jacobs of Drug Free Living, while the equally well-known and well regarded Jerry Kassab of Lakeside will assume the title of president. The three boards will over time be whittled down to one, with Seminole EVP Debbie Driscoll becoming COO and Seminole CEO Jim Berko taking the opportunity to retire. It is through this mechanism – retirement/attrition – that Aspire’s now 1,500 or so employee total will gradually decline, though management said in local press reports that the merger was not so much being driven by cost efficiency goals and thus reducing employee compensation – typically BY FAR the largest cost line item at large addiction centers – was not expected to be a big management goal going forward.

Pricing Power

Economists, and not to mention anti-trust enforcers at the Federal Trade Commission, have considered med surg merger waves over the last 20 years to often have turned out to be highly anti-competitive, with especially smaller and medium sized non-profit mergers billed as efficiency driven and thus good for consumers when in fact the deals are later mainly used to jack prices by huge margins to hapless insurers who often have little alternative go along if they are to adequately cover lives in the merged providers’ service area, with consumers later left red-faced and spitting mad when they see premiums going up by double digits year-after-year. Aspire has used the same argument – the merger will increase provider power vis-à-vis insurers – but since the economics of behavioral health, and especially addictions, are as separate and unique as their healthcare industry “orphan” status, the argument that the creation of Aspire out of three formerly competing entities will be a consumer friendly event could likely turn out to have considerable merit. That’s especially true when one considers that Aspire’s new power will likely be used to advocate not just for better pricing, but also for whether or not consumers get benefits at all at any decent therapeutic level, a daily struggle nationwide in the still carved out world of addictions and behavioral health.

READ our story on the biggest ever merger of Texas non-profits