Virginia’s Venerable Rubicon Center Faces its Own Rubicon

Addiction Treatment Industry Newswire
10/28/2012 -ATIN- Among the nation’s oldest and most venerable addiction treatment drug rehab alcohol rehab centers, Virgina’s Rubicon, is facing a cash crunch that may prove fatal to the 42-yr-old non-profit. On Friday the addiction treatment center could not pay its employees as state officials put liens on bank accounts based on failure to pay payroll taxes. While the state has apparently lifted the liens, the Board Chairman John Shinholser is desperately trying to to Rubicon alivecenter still owes federal taxes and his behind on the mortgage that finances its complex of treatment facilities in Highland Park, VA. John Shinholser, who is board chairman of Rubicon and founder of another famous foundation called McShin and is among the earliest pioneering founders of the addiction industry’s non-profit sector, likened Rubicon’s situation to the Alamo, highlighting the dire possibility that the institution might go under.

Operating Deficit

Apparently Rubicon’s problems have been some time in coming as the company appears to have been operating at a deficit for at least the last two years. In fiscal 2010, for example, revenue totaled $4.9M while expenses were significantly higher at over $5.6M. Total arrears appeared to be approaching $2M as Shinholser pointed out that Rubicon has been struggling to pay its bills since the advent of the financial crisis five years ago.

Public Non-Profit

It’s probably no accident that Rubicon’s problems began with the financial crisis and they are very likely linked to cutbacks at the state level in payments for services that Rubicon specializes in delivering, such as alcoholism and drug abuse care for the homeless and poor that are dually diagnosed, services for those coming out of prison and a host of other services that have been slahed nationwide creating similar problems for legions of other addictions centers dependent on public funding flows. Centers like Phoenix House, Gateway Chicago and Operation PAR have been forced to seek out more clientele from the private side of the business, those with insurance or that can afford to pay out-of-pocket, all the while increasingly making meaningless the former clear and firm distinction between the public and private sides of the addictions business.

Assset Sales

Shinholser says Rubicon will try to sell real estate assets to which it has full title in order to raise cash and is desperately seeking donations from its support base. Phoenix House recently acquired assets in the Middle Atlantic states area – the CEO of nation’s largest non-profit has never returned emails seeking comment on the nine-state center’s acquisition strategies – but Phoenix House has not been known to be a purchaser in distressed situations.