Spectrum Health Systems

New rehab facility caters to high-end patients

Published On: August 30th, 2016Categories: In The News

The Boston Globe
Date: 3/22/15

Mornings start with yoga and meditation. Then there’s breakfast, the first of three gourmet meals a day. After dinner, a massage helps to calm the mind and muscles before bed.

This isn’t a resort vacation. It’s rehab.

As the heroin epidemic has grown in Massachusetts, so has the number of addicts with deep pockets looking to kick their habit. And to tap into this market, Spectrum Health Systems Inc., a Worcester-based addiction services provider, next month will open a residential treatment facility that offers such amenities in this Central Massachusetts town. The new facility will serve people who want to escape a life of drugs and can pay as much as $500 a day to do it.

Spectrum is one of many companies — both nonprofit and for-profit — looking to boost their bottom lines by catering to this lucrative end of the market. The $35 billion drug treatment industry has attracted for-profit heavyweights such as the Boston private equity firm Bain Capital and spawned companies such as Tennessee-based American Addiction Centers Inc., which launched a successful initial public stock offering in October.

Another industry leader and publicly held company, Acadia Healthcare Co. of Tennessee, saw its revenues rise 41 percent last year, to $1 billion.

It’s a profitable business, said Paula Torch, a senior analyst at Avondale Partners LLC in Nashville. There’s so much demand. There’s a lot of people who need help and not enough beds for treatment.

For Spectrum, a nonprofit with locations across Massachusetts, revenue from its new 36-bed treatment center will help subsidize care for people on the other end of the income scale, addicts whose treatment is funded with taxpayer dollars, said Charles Faris, Spectrum’s chief executive.

We want to respond to the opiate demand, Faris said. We’re going after some of the private market that will allow us to continue serving the public market.

Founded in 1969, Spectrum operates a variety of inpatient and outpatient treatment centers in 13 Massachusetts communities. Spectrum’s earnings have slid in recent years. The company earned $1.6 million, on revenue of $51 million, in the fiscal year ending June 30, 2013, the most recent year for which data are available.

A monthlong stay in the new facility, called the New England Recovery Center, will run about $15,000, six times higher than what the state pays for inpatient rehabilitation. With the higher price tag come perks such as yoga and meditation classes, a fitness center, laundry service, housekeeping, and, for an added cost, massage therapy and personal training. Residents here will get more personalized care. The program also includes services to help their families cope.

The New England Recovery Center bears no resemblance to Spectrum’s lower-end facility across the street, with its dated brick facade, cramped rooms, and dark hallways. The new building is bathed in light and painted in bright blues and reds and yellows. The focal point is a common room with a high ceiling and wood beams, almost like a ski lodge.

We want it to feel state of the art, Faris said. The environment matches the quality of care we’re providing.

The building, set on a quiet street here, 30 miles west of Boston, cannot compete with the super-luxurious spa-like rehab centers on the warm beaches of Malibu and Fort Lauderdale — which can run $50,000 a month or higher. But Spectrum executives believe it will appeal to financially well-off addicts who want to get treatment close to home. Staying in Massachusetts for residential treatment means it will be easier for patients to continue meetings and counseling once they transition to outpatient treatment.

That aftercare plan is vital to recovery, said Kristin Nolan, Spectrum’s vice president for outpatient services.

Heroin use and overdoses have become such a scourge in Massachusetts that then-governor Deval Patrick declared a state of emergency last year, and lawmakers later passed a law to tackle the problem through a variety of measures, including strengthening requirements that insurers pay for addiction treatment.

Many addicts first get hooked on prescription painkillers, such as oxycodone and morphine, then switch to heroin because it’s a fraction of the price of pills. The state Department of Public Health estimated there were about 980 deaths from opioid overdoses in Massachusetts in 2013, a 46 percent jump from 2012. The department has not released figures for last year.

Spectrum and other drug abuse treatment providers have noticed a change in the profile of their clients. For years, the people seeking treatment tended to be poor and jobless. They had criminal records and lacked supportive families. But now the population includes many educated young adults from well-off suburban families. Their parents are desperate to do — and pay — almost anything to get them healthy.

The opiate crisis has really reached middle- and upper-middle-class America in a way that perhaps didn’t exist five or 10 years ago, said Raymond V. Tamasi, chief executive of Gosnold on Cape Cod, another nonprofit addiction services provider.

Gosnold serves a range of patients, including those who pay $16,000 a month for a program that offers perks similar to what Spectrum is planning.

For those who can afford it, places such as McLean Hospital, part of the Partners HealthCare network, offer more luxurious surroundings, services, and amenities. McLean opened a new rehab facility last week in Camden, Maine, that is priced at $2,250 a day — or $67,500 a month.

The Camden facility, which has just eight beds, is set on a hilltop estate with private ocean-view bedrooms, a bowling alley, a movie theater, and a beauty salon.

They’re able to get a richer therapy experience, said Philip Levendusky, senior vice president of business development and communications at Belmont-based McLean. In the self-pay market, we can build in therapeutic strategies that are above and beyond.

Insurance companies typically cover the costs of outpatient services — such as clinics that provide methadone, a common treatment for opioid addiction — but they usually don’t cover residential programs that last weeks or months.

As a result, most of Massachusetts’ rehab beds depend on public funding. The state pays $75 per person per day for these programs — well below what it costs Spectrum to provide them, Faris said.

That’s why the company needs to pick up more paying customers, he said — it’s about the survival of the business. In addition to the New England Recovery Center, Spectrum is constructing another facility on its Westborough campus that will offer added services to some program residents at a higher cost.

That’s the reason we’re doing this, Faris said. We want to serve both ends of the population.

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