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  • Writer's pictureJDS Consulting Inc.

The Climate of the Substance Abuse Treatment Industry

From all of us here at JDS, we hope that 2019 is shaping up to be a very good year

for you. It’s crazy to think, it’s April already! Time sure fly’s when you’re having fun

they say, so we must be having a lot of fun!

As I’m sure most of you know, the substance/behavioral health industry is going

through some growing pains, especially California, Arizona and Florida. From

increased state and federal regulations, increased treatment requirements, raised

treatment standards by insurance companies, stricter marketing/admissions

standards, increased competition from new and growing providers in a market that

can already seem saturated, it’s not easy to be a substance/behavioral health

treatment provider right now.

That said, I deliberately described our industry as going through growing pains

because that is what I believe we are experiencing right now. That is the reason I

believe it’s a great time to be a part of this industry. I’d like to take a moment here,

to tell you why.

Most individuals in this country do not understand substance/behavioral health

issues. The public mindset and stigma attached to addiction and mental health is

still very much alive and well in the U.S. Because of this, treatment for these

illnesses is limited. What treatments we have had, have been poorly researched due

to various reasons. The biggest reason I believe, is lack of funding. Who is going to

fund multi-million-dollar research studies on addiction/behavioral health, when the

general public still consider it a moral failing? Despite the American Center for

Disease Control publishing their finding in the 1950’s that addiction is a disease.

This is beginning the change finally, but slowly and only because addiction and

substance abuse issues have gotten to epidemic proportions and it has finally

broken through to the mainstream consciousness in the U.S. It seems that every 5

minutes, another celebrity or famous person is going to rehab, overdosing, or are

talking about their struggles with addiction. Addiction and behavioral health issues

are finally getting the attention they deserve, which is a good thing! It’s going to

take some time though, before we really understand it, the treatment for it, and

change the stigma around it.

The Affordable Care Act, signed by President Obama, (I won’t get into politics or

in depth about the ACA) did something wonderful. It finally provided coverage,

and thus access to, addiction and behavioral health treatment. This is at least one

part of the ACA that was a triumph. The people in need of treatment could now

get that treatment. Remember what I said earlier about limited treatments and

the ones we do have being poorly researched? Well, now the American people

had access to care, we just didn’t have a lot of options. We also didn’t have the

providers in place, that could handle the massive influx of people seeking


That is how the current substance/behavioral health industry in California,

Arizona, and Florida were born. We had thousands of individuals in need of

treatment, and a massive shortage of providers. Being a capitalist economy, it

didn’t take long for business savvy individuals to figure out there was money and

opportunity in treatment. State and federal regulations were already lax on

licensure requirements because there hadn’t been a huge need for it. Recognizing

the increased need and shortage of beds after the ACA passed though, some

regulation and oversight decreased.

Fill out a form, pay the fee and boom, you had a licensed facility. States were trying

to accommodate for the need and allow providers to set up shop quickly. What they

didn’t count on were the less than reputable “providers” out to make a quick buck.

They probably expected some “bad players”, but I doubt they had any idea how

bad it would get. They made things too easy, and the industry grew at an alarming


Now, what about this new insurance coverage? Great thing, right? I believe, in

concept, this was absolutely a great thing. People should be able to get the help

they need. That said, think about the state license situation. Insurance companies

had for years not been covering substance/behavioral health issues because they

didn’t have to. The only time they did, was when it was a higher end policy. Now,

they must cover every single member they had, along with providing coverage for

all the new members! Talk about a logistical nightmare!

Insurance had basically ignored substance/behavioral care, and the only data

available to pull from was from the high-end policies that they already had. They

had nothing to pull their data from, which is how they establish reimbursement

rates, so they paid according to what they had. The insurance companies paid at

rates that weren’t sustainable long term.

That bring us to the present. I’ve given you an overview of HOW we got here. I

hope I’ve also given you an understanding of WHY the insurance companies

increased requirements while simultaneously reducing reimbursement, and the

state and federal regulations we are now dealing with came into being.

You’re probably wondering what on Earth makes me think this is a good time to be

in this industry? Well, its growing pains. The substance/behavioral health industry

as it stands today, was born the day the ACA went into effect. It grew up quick, it

grew up dirty. It was the wild west, where anything goes and there were few or no

standards and regulations. We learned how to run, before we properly learned how

to walk. New requirements and regulations give our industry definition. Yes, they

made things tougher in the short term, but they needed to be tougher! We didn’t

need to raise the standards, we needed the standards in the first place.

Our industry isn’t going anywhere because substance/behavioral health isn’t going

anywhere. It is being defined, and those of us in the industry that learn, grow, and

adapt to these definitions are helping to create those definitions! We are creating a

better industry, better treatment, better care, and ultimately, I believe better

outcomes. It hurts right now, because a lot has changed quickly. Those of us who

adapt and change with it, will be the leaders of the industry tomorrow. The pain we

are experiencing today, won’t last forever. These are growing pains, because our

industry needed to grow up.

If you are struggling with these growing pains, know that the entire JDS team is

here to help!

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