Center For Discovery acquires Cliffside Malibu

Center For Discovery and Cliffside Malibu are merging to form the newly created parent company Discovery Behavioral Health (DBH). Private equity firm Webster Capital has owned Center for Discovery since 2011 as a portfolio company and will now fold in Cliffside Malibu’s southern California facilities.

John Peloquin, PhD, CEO of Cliffside Malibu, will become CEO of the new organization. He’s an industry veteran who has served in previous leadership positions at CRC Health Group and Acadia Healthcare.

Peloquin tells Behavioral Healthcare Executive that as part of the natural conversations about the Cliffside Malibu transaction, it made sense to align the two behavioral health providers within the Webster Capital portfolio. Cliffside Malibu’s substance use disorder (SUD) programs will complement the Center for Discovery’s eating disorders, mental health and existing SUD programs.

But there’s still potential for new acquisitions. Peloquin says DBH is currently in talks with three behavioral health organizations to consider other possible add-on deals in the future.

“We are trying to expand our geographical footprint but also our complementary service lines,” he says.

While Center for Discovery delivers a variety of services in 11 states, Cliffside Malibu operates inpatient, outpatient, detox services and sober living around the greater Los Angeles area. So far this year, Cliffside has been in a growth mode, opening a new 2,000 square-foot outpatient facility in the Sherman Oaks community in January while also securing a lease for an additional outpatient center. Separately, due diligence has begun for a new residential facility in the Los Angeles area, Peloquin says.

Under DBH, the combined provider organizations will maintain their distinct brands. Clean and Sober Media—a brand launched by Cliffside founder Richard Taite that produces online treatment center reviews, directories and blogs—was not part of the Webster Capital transaction.

DBH will leverage a self-pay and commercial insurance payer mix, according to Peloquin. Generally, Center for Discovery is approximately 95% in-network, and Cliffside is approximately 30% in-network.

“We’re moving toward a hybrid model,” Peloquin says. “We have some beds in Malibu that will stay high-end, amenity-rich, private pay. What we’re trying to do is not only improve our service line and our geographic footprint but also have scale with our reimbursement.”