Planning Paves Way for Prosperity

Editor’s note: This is the second and final part of a series. Read part one here.

As an addiction treatment/behavioral healthcare company begins to grow, a great leader has built a great team to deliver on the organization’s mission and build its culture. That leader looks to the future, lays out plans early and starts to work toward them. These include things such as moving in network with insurers and beginning the negotiation process. It involves becoming accredited and having a seal of approval and great reputation. It also means thinking far into the future to what disruptors and changes may occur in the industry, such as regulation changes or measuring outcomes.

“I wish we’d started smaller and built up gradually and learned that way,” says Kirk Kirkpatrick, CEO and co-founder of Riverside Recovery in Tampa, Fla. “Getting accredited early is a bright move, as well as going in network as soon as possible. We make sure there is no shame-based treatment, especially with the staff we have that has experienced recovery.”

Value-based care

Allow me to emphasize: Insurance is not the enemy. Insurance has a growing presence within the field, and will continue to run the show, but wise providers understand that it is necessary to make insurers happy as well. How can we make it apparent to insurers that we do not waste their money, but provide great care, and experience success for their customer/our patient? Show them value. Begin the process of tracking results and outcomes and engage your alumni and community.

“Deliver value-based care,” says Akua Mind and Body co-founder Kenny Dewan. “Business has to make sense and be profitable for everyone involved, or it won’t work. If one party in the business cycle is not satisfied and does not make money, the business will not work.”

Fit first

If you feel your organization is reaching a plateau, consider taking on a partner, or additional investment capital, to grow to the next step. Taking investment from a big company doesn’t have to preclude you from delivering on your mission to help the patient population. Be aware of the work that goes into this. It will be like having another full-time job, even while using an intermediary, to gather all necessary information, become organized, tell your story well, and map a clear path to future growth and success for the investor.

Jonathan Wolf, CEO of Pyramid Healthcare, advises that there is a significant amount of work to taking on capital. Due diligence can strain a business owner, but owners can prepare themselves beforehand by meticulously organizing files, compliance documents and licenses, and other key business data.

When evaluating proposals for acquisitions or investments, do not feel compelled to always take the largest offer. The confluence and similarity of culture, goals, personalities and plans will often determine to a much higher degree how a business relationship progresses through good and bad times, and therefore the future growth and success of your business, and more importantly its mission to help the patient population to a greater extent. The focal point here is to use these strategies mentioned to grow your business’ value correctly and become a very attractive target/opportunity for an interested buyer/investor/partner/funding.

Being a buyer

If you have run a lean, growing, profitable smaller business, and have some cash on hand and a relationship to secure a business loan, you may want to acquire other competitors of similar or smaller size in your line and scope of business. Conversely but just as effectively, you may want to acquire or merge with other complementary businesses that allow for operational synergies while consolidating departmental costs and centralizing operations. Either arrangement can provide a more robust, full continuum of care that may allow you to greatly increase market share and increase value. Many organizations attempt to do this after taking on funding, but whether it is with a capital partner/sponsor, on your own, or with a loan, consolidating at some point in this industry is inevitable and will help the patient experience in the long run and make things more efficient. Don’t try to fight battles on many different fronts. Allow help from the right partner so that you can continue to do what you do best and only you can do.

Addiction treatment and behavioral health have a bright future. The industry seems to be shaking itself free of fraud and bad actors over time through consolidation and changes with insurance payors and policies and laws, so that there are fewer and fewer unscrupulous activities and bad business strategies. As the industry becomes more professional, stay up to date and surround yourself with great human capital that also has corporate business experience and can understand both worlds. Balance is key. Don’t get stuck in the weeds on either front. Keep doing the right thing, think to the future with lean growth and efficiencies, and eventually opportunities will present themselves for you to make the leap to the next level and be able to do more good for more people, while still doing well for yourself and your families.

Jacob D. Lynch is associate partner for Stoneridge Partners, a merger and acquisition advisory firm that focuses on selling home care, hospice and behavioral health agencies.