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Treatment centers brace for impact of financial crisis

October 1, 2008
by Gary A. Enos, Editor
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From prospective treatment clients worried about whether they’ll be able to keep their job, to staff members watching their retirement savings shrink, to boards of directors rethinking facility expansion plans, addiction treatment centers are already feeling multiple effects from the nation’s financial calamity.

The various anxieties out there come as no surprise to Caron Treatment Centers president and chief executive Douglas Tieman, who worked in the field during the late 1980s when a period of massive expansion soon was followed by an industry bust that forced many facilities to shut operations.

“I think we’ll see some closures,” predicted Tieman, who has often addressed the field on fundraising and other financial challenges facing treatment centers. He added, “Clearly, the economy has always had a pretty significant impact on the addiction treatment industry.”

Tieman explained that the economic concerns start with persons who might be in need of addiction services but who in tough times will tend to “go more underground” in order to focus on preserving their jobs. He said some facilities already have seen an erosion of their census in recent months, and some will reply with the risky strategy of becoming creditors themselves—offering loans to clients who enter treatment, in the hope that they will be able to pay once economic conditions improve.

Tieman believes newer facilities might struggle more over the coming months, as they do not have the history of responding to financial crises that more established centers have experienced. He said Caron had already adopted for the current fiscal year a “recession-proof budget” that focuses on critical patient care functions and slows the pace of activity in other areas such as public policy work and conference sponsorship.

Ronald J. Hunsicker, D.Min., president and chief executive of the National Association of Addiction Treatment Providers (NAATP), said he suspects that treatment facilities and their clients across the board are feeling the tightening of credit. “This may impact any capital expansion as much as anything,” Hunsicker said.

But Tieman added that facility boards and administrators might not want to shelve altogether any expansion plans at this time. “This is ironically a good time to build,” he said. “It’s cheaper for one thing, and if the project takes a year to do the economic conditions may improve by then.”

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