ARI SHAPIRO, HOST:
It's often said that every crisis presents an opportunity. When it comes to opioid addiction, investors and businesses see a big one. Lots of companies are already making money off the crisis. And as NPR's Alison Kodjak reports, the interest keeps growing.
ALISON KODJAK, BYLINE: The first time Ray Tamasi got hit up by an investor, it was kind of out of the blue.
RAY TAMASI: This guy called me up. He introduced himself. He said he knew about us.
KODJAK: The guy represented a group of investors. Tamasi didn't want to say whom, but they were looking to buy addiction treatment centers, like the one he runs in Massachusetts. It's called Gosnold on Cape Cod.
TAMASI: He had checked around and learned that we were one of the more reputable programs. We had a good reputation in the community. We had a nice array of services. And he wanted to know if we were interested in becoming part of his company.
KODJAK: Tamasi was intrigued. Gosnold is a not-for-profit group of clinics. It makes money on some services, like inpatient rehabilitation, and uses that income to pay for stuff that doesn't make money, like family support groups or putting counselors in schools. Tamasi knew the investors had the money to build new buildings and expand existing clinics, things that would take him years of fundraising. But when it came down to wait, the investors were only interested in buying the profitable programs.
TAMASI: A detox setting or a rehab program - they have a much wider stream of where revenue can come from. It's covered by insurance. People are willing to pay for it if they have the resources to pay for it.
KODJAK: But the money-losing prevention programs - the long-term care or sober residences - investors didn't want those. Tamasi thinks those things are important, though, so he didn't sell.
TAMASI: They're almost like investments that a community-minded provider would make in order to do the things that they think the community could use.
KODJAK: But since that first meeting two years ago, the calls from potential buyers keep coming. Last month at a conference, he was approached three times in a single day. He says the investors ask him occupancy rates, insurance reimbursement, future demand for detox and treatment.
TAMASI: There weren't a lot of questions about, like, what are you doing, what actually happens in these places - a little bit, but not much.
KODJAK: And that's a key issue, Tamasi, says. He's a health care guy who thinks about what a patient needs to recover. His suitors are money guys, looking to offer a product that's in-demand. Tamasi won't say which companies have approached him, but he says they include private equity firms and the biggest national chains. One national chain that has been on a shopping spree for addiction treatment centers is Acadia Healthcare. Six years ago, it had only six facilities. But today, it has 587 across the country and in the U.K. What's driving Acadia's growth? Joey Jacobs is Acadia's CEO. At an investor conference last month, he pointed to two recent balls.
(SOUNDBITE OF ARCHIVED RECORDING)
JOEY JACOBS: Mental Health Parity was the beginning. We saw a big benefit. And then the Affordable Care Act was very positive for our industry.
KODJAK: Jacobs declined our request for an interview, but he told investors that the Affordable Care Act is driving their growth in part because so many more people have health insurance. That combined with the Mental Health Parity law that requires insurers to cover mental health care, and suddenly there's a huge stream of cash for Acadia and other companies to tap into. Addiction treatment isn't all the company does, but it's certainly a big part of the business. It has more than a hundred inpatient and outpatient treatment centers and runs 110 opioid treatment programs, better known as methadone clinics.
(SOUNDBITE OF ARCHIVED RECORDING)
JACOBS: We do a lot of good right here in this space - a lot of good. And we think this market will continue to grow and the need for our services are most definitely out there.
KODJAK: Companies like Acadia fill a needed void, says Mark Parrino. He's president of the American Association for the Treatment of Opioid Dependence.
MARK PARRINO: There is a need for expanded access to care. Everybody seems to understand that.
KODJAK: He says the number of programs has nearly doubled in the last 10 years.
PARRINO: That expansion comes solely through the proprietary sector.
KODJAK: So it sounds to me like you think this is a positive development.
PARRINO: It is a positive development.
KODJAK: But not everyone agrees. Linda Rosenberg is the president of the National Council on Behavioral Health, a group that represents nonprofit addiction treatment programs. She says new treatment centers are certainly needed, but she worries that private investors are too focused on the profitable inpatient beds and will neglect the services that help patients re-enter society.
LINDA ROSENBERG: On the community side, there is no investment going on, and that's because the margins aren't attractive. And I think that that's the biggest danger.
KODJAK: So while it's likely that private investors will continue to expand addiction treatment where they can turn a profit, it's less clear who will pay for the ongoing work of helping those recovering from an opioid addiction stay off drugs. Alison Kodjak, NPR news.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.