Promises Austin Opens, First Geographic Expansion of Brand

Addiction Treatment Industry Newswire

11/11/2013 –ATIN – Private equity-backed Elements Behavioral has finally expanded the storied Promises high-end addiction treatment drug rehab alcohol rehab brand beyond its Southern California founding locale, rebranding a key asset acquired last year as part of the purchase of The Right Step. Ever since Elements bought Promises from its founder the question began to be raised about how and when, or even if, the renowned addictions brand would be used in a geographic facilities expansion play either regionally or nationwide. Now Elements, a So-Cal-based almost “pure play” addictions enterprise that has had acquisitions at the heart of its growth model, has given an indication of what the answer might be to those questions, which Treatment Magazine has been asking to top Elements execs pretty much every chance we get.

Spirit Lodge = Promises

As part of an effort to expand his Houston-based Right Step operations beyond low margin affordable in-network care, renowned addictions entrepreneur George Joseph founded high-end Spirit Lodge that has now been rebranded as Promises Austin. Joseph, whose knowledge and skill around addictions private insurance utilization review and other commercial payor related expertise is matched by only a tiny few in the addiction treatment industry, was a pioneer also in being among the first to open a high-end center in the Austin area, which has now developed into an addictions “hub” on a par perhaps with Prescott, AZ. The area to the northwest around Austin, where Promises Austin is located, is a lake-filled, sometimes rolling hills beautiful location anchored around Balcones Canyonlands National Wildlife Refuge with the Colorado River winding its way through. Joseph began to seriously move on the idea for a high-end facility as part of the Right Step around 2006, was well under way with planning and development, facility location and choice and capital raise by 2007 and, after some frustrating delays, officially opened Spirit Lodge in 2008 with the help of a team that included Paul Auchterlonie on the marketing side.

Frazier and Promises

Backed by what is arguably the savviest behavioral health private equity style investment player, Frazier Healthcare of Seattle, Elements acquired Promises in 2008 from its legendary founder Richard Rogg, who was one of the key pioneers of the Malibu addiction treatment market post managed care in the 1990s. Frazier has decades long experience in the “addictions space” having been the initial backer of the phenomenally successful therapeutic schools giant Aspen Education, which CRC Health bought for around $300M in late 2006. Elements CEO David Sack comes out the Frazier behavioral health complex of investments, having worked as the medical director at Aspen. The choice of where to locate the Promises brand geographically outside of its So Cal founding base has no doubt been a key management preoccupation ever since the purchase from Rogg, and Frazier seems to have made the choice with its usual methodical discipline.There are few places anywhere nationwide that could have been better to locate a new Promises locale after 25 years operating and expanding the brand in Southern California. The ability to upgrade and expand Spirit Lodge was no doubt a key, if not the key, rationale behind Elements decision to pursue an acquisition of The Right Step.

Austin Locale … Bullseye

It could be argued that Austin is the cultural capital of the Southwest, with numerous music and other festivals that now have worldwide fame, as well as being the state capital of Texas. Not only are the demographics of a state capital always excellent, especially one of a state the size and stature of Texas, but Austin is also home to the flagship campus of the University of Texas system. One of the very top universities in the world, University of Texas brings an outstanding super well-paid, educated and insured demographic. And in no small reason because of the University of Texas, Austin has emerged as a significant venture capital and entrepreneurial hub with a growing worldwide reputation. The bottom line is that not only will Austin itself represent a great source of cash pay high end clientele, as will as the major Texas cities of Dallas and Houston, but it is extremely attractive as a “destination” addictions market for the key youth clientele that may wish relocate and start anew in the area. Austin over the last ten years has developed a significant sober living transitional addictions market to support the plethora of new treatment enterprises in much the same way that the enormous South Florida sober living industry has grown up around the treatment industry there since the mid-1980s.

Significant Texas Competitive Shift

Needless to say, the addition of Promises Austin has brought an enormously powerful potentially game changing new force to a Texas private addictions market that in the last five years has grown hugely competitive, with Promises Austin representing a significant threat to players like Enterhealth and Sante Center not only with its unmatched name but also very deep marketing pockets.

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