Drug rehabs during 2018 and for approximately the last five (5) years have been experiencing a trend which has been infecting the financial health and welfare of the addiction treatment industry. Dale Redlich, CEO of Pay2Patient and well respected past treatment center owner for over 20 years provides this article with his insight on some issues that owners are facing in our industry with this article.
A Snapshot of the business and Drug Rehabs Marketing Side
Drug rehabs have been experiencing a trend that has manifested itself in recent years with;
- selling off of assets
- staff firings
- lack of staff replacement
- lack of staff additions
- lower staff salaries
- changes in marketing techniques
- development of joint ventures with financially sound publically traded companies
- mergers and acquisitions
In addition, there is a desperate attempt by many owners and operators of addiction treatment facilities (including the detoxification and lab segment) to develop banking, investment, and other financial relationships which might result in an infusion of new capital into an otherwise unhealthy marketplace. Basically, inexperienced owners and operators where wasting financial resources hand over foot all in an attempt to “out do “ their competitors in order to try to offer more and more luxury within their drug rehabs as they were attempting to compete for a very limited supply of high paying clients
This trend has and will continue to affect not only full-service outpatient, PHP, inpatient, and residential addiction treatment centers West Palm Beach and across the nation, but also all of the ancillary support businesses including, sober living facilities, halfway houses, and private practice therapists as well as labs.
Drug Rehabs Pain Points
The signs have been evident for a substantial time period, but the problem has been and will continue to grow more severe as time continues. The reasons for this trend varies but in general, it can be seen as being attributable to a number of predictable factors such as;
- a severely growing level of competition for the same patients,
- changes in the number of payments made for treatment by the insurance industry
- new and far-reaching legislation which has severely limited the ability of such facilities to engage in traditional marketing
- a lack of sufficient capital from an operational standpoint
- rapid and unnecessary expansion
- an attempt to offer only the most high priced luxury
It may also be seen as a failure of the new wave of financially inexperienced and undercapitalized owners who have been unable to foresee such trends and also have miscalculated the effects of massive changes occurring in the insurance marketplace both for in network and out of network providers.
Insurance Companies Controlling the Drug Rehabs
One area which evidences this trend in the insurance industry. It is the growing direction for providers to attempt to change from out of network to full in-network providers. Most facilities these days are desperately becoming only in-network providers even though the amount per day paid by the carriers for in-network benefits has steadily been falling.
No longer do the carriers have to devise methods to try to forced drug rehabs to become in network. It was only a few short years ago when the carriers were paying exorbitant amounts per day to out of network providers and the thought process of owners at that time was to remain out of network in order to reap the benefits of the absurd amounts of money which the carriers were paying for out of network benefits. This could not continue forever.
In fact , there were some insurance carriers such as Federal Blue Cross Blue Shield and Empire in Florida which continued to pay large unsustainable amounts for all of the services insurable but rather than paying the provider the carriers were ( and some continue ) issuing their reimbursement checks directly to the patient or subscriber which resulted in many cases, and still does so result, in the insurance checks being cashed by the patient and the provider never realizing its fees for services rendered.
Understanding Drug Rehabilitation Centers Money Owed
Obviously, this was and continues to damage the providers financially as they are rendering services in good faith but never receiving the checks from the carriers. The reality is that many providers did not even realize that their check-in reimbursement for services rendered had not even been sent to them by the carrier. Some of the providers were losing exorbitant amounts of money in this fashion and in some cases not even realizing that this was happening.
The result of all of the above circumstances is that the drug rehabs have split into the “have’s” and “have-nots”. If you attend industry events you will likely realize that not only have the attendance numbers plummeted but the actual exhibitors themselves are often comprised only of the larger most well funded (and often time owned by publically traded companies). Many centers are looking for smaller, focused events that also provide business and drug rehab marketing education to survive the competitive landscape. In addition, they need to implement strategies of how to properly prepare for these addiction conferences.
It is unbelievably expensive for a facility to finance large numbers of their marketing staff to attend these events where they are actually only marketing to other marketing staff from other facilities. This is financial lunacy, without getting educated on proven business and marketing strategies, unless the provider has extremely deep pockets which some of them still do.
The savviest operators now realize that the money which used to be spent on traditional marketing and attendance at events that do not provide proven business and drug rehab marketing practices is much better utilized with drug rehab SEO, social media and other types of online selling of their services. One of the biggest mistakes they make is using boots on the ground as their main marketing strategy. Without a robust, healthy and planned marketing mix, many are at great risk of closing their doors.
Getting Control Over Debt Collection and Revenue Cycle Management
So, where does this leave us? The purpose of this article is not to claim that we have the one and only solution to the financial problems stated above which have grown in recent years
However, at the same time that are certain methods which at almost no cost can result in the infusion of additional capital into a sagging P/L statement. Debt Collection with revenue cycle management for drug rehabs is one potential partial solution to the financial problems being experienced in the healthcare industry and in particular, the addiction treatment industry.
The collection of a debt is a financial strategy which has been around since the time of the money lenders in biblical times. If a company lends money, or advanced money or fails to receive legitimate funds on component aspects of its business it should be entitled to take appropriate action steps to recover the resulting debt if such debt is attributable to the loan or advancement of funds to the potential debtor. There is nothing immoral about a company taking steps to collect its fair debt, In fact, it is business malpractice not to go after the fair debt which is owed.
What is Drug Rehab Revenue Cycle Management?
Revenue Cycle Management is a fancy way of describing the method of tracking accounts receivable and utilizing such funds at the appropriate time to pay operational internal debt on an ongoing and predictable basis.
Pay 2 Patient, LLC is not a billing company but strictly a debt collection company and also assists its clients in the RCM process so that the client is able to pay operational expenses as such becomes due. The collection of debt provides the company which is owed money to collect at least a portion of what is owed and thereby add to the pot of financial resources available to pay expenses. There are some addiction providers we know that have been owed millions of dollars in uncollected debt and ultimately had to go out of the business of course.
Reclaiming Precious Operating Capital
The problem experienced by the addiction treatment industry now in many cases is that the provider company has not taken sufficient steps to ensure that it has sufficient operating capital each week or each month to pay operational expenses when due. The money gets spent in a variety of other ways as described above. And often times there are is no margin of error which results in layoffs and other dire consequences.
It defies our understanding of why a health care provider which is owed money would not take every reasonable and legal action to collect money which it is owed. It seems to be lunacy but at the least very bad business practice.
Reclaiming Receivables Doesn’t Cost Much
The ROI to employ debt collection methods is so low as to beg for utilization. The process is very simple but at the same time there are Federal and State regulations which must be complied with and of course, the privacy of the patient/debtor needs to be protected. This can all be accomplished by utilization of the proper documentation.
Don’t get me wrong. It is not easy to collect the debt, especially the kind of debt when the carrier has sent the reimbursement check to the patient and the check has been cashed. Retrieval of those checks, or the cash itself, is very difficult, but none the less doable.
Collections methods vary depending upon the type of debt, the age of the debt, the identity and location of the debtor, Federal and State Law, peculiarities of the court system, and other factors but the fact remains that the collection of debt can be “found’ money and help immensely in providing additional and needed revenue to the provider to help with the covering of operational expenses.
Drug Rehabs Regaining Business Focus to Survive a New Industry
There is nothing dirty, or unseemly or embarrassing about a company taking every step possible to recover money which it is owed. After, all don ‘t companies which the provider owes money to try to collect such funds? And, if you’re worried about upsetting the debtor then think about the fact that your employees expect to be paid every week and in my own humble opinion those individuals are a lot more significant than the person who owes your facility money.
Whether you are after co-pays, deductibles, self-pay fees still owed, insurance checks which were sent to the patient, client loans, or other debt your company is entitled to take all lawful means to collect this money. To do less is to put your company at further financial risk. You can contact Dale Redlich for a free consultation at 954-592-1921 on reclaiming lost revenue.
California Addiction Executive Conference Educating on Business
BHNR has brought 14 successful addiction conferences to South Florida. These talk show host/town hall-style conferences provided proven business and marketing strategies to operators during the regulation of our industry in Florida. We are proud to bring our Addiction EMP Series conference to Costa Mesa, California on 1/22/19. Check out the addiction conferences EMP Series event in California.