Front page story

by Valerie Canady

    CRC Health Group, Inc., the nation's largest for-profit provider of residential and outpatient addiction treatment services, announced in December the acquisition of National Specialty Clinics, Inc. (NSC), one of the most prominent providers of
methadone-based treatment for opiate addiction.

    This acquisition renders San Jose, Calif.-based CRC Health the nation's largest provider of methadone treatment, with services offered to 20,000 methadone patients daily.

    Company officials say the acquisition supports CRC's strategy of building a nationwide network of treatment
alternatives to provide increased access to high-quality care for those with substance abuse problems.

    CRC's acquisition of Comprehensive Addiction Programs Inc. (CAPS) last year made the fast-growing company the largest private addiction treatment provider in the country (see ADAW, March 3, 2003).

    The CRC system currently includes 65 traditional residential and outpatient treatment facilities, medically-assisted treatment for opiate addiction, and online substance abuse treatment programs under the eGetGoing umbrella. Services also include detoxification, partial hospitalization and day treatment.

The Nashville, Tenn.-based NSC operates a group of outpatient opiate treatment clinics. NSC treats more than 9,000 patients and employs 350 professional staff, including physicians, pharmacists, counselors and nurses. It owns and operates 17 methadone-based clinics in six states: Georgia, Illinois, Indiana, Kansas, Tennessee and West Virginia.

The acquisition of NSC allows CRC to expand its services into areas of the country where it previously had no presence. With the acquisition, CRC now owns a total of 82 facilities, including 47 methadone clinics, in 22 states, according to Barry Karlin, the company's chairman and chief executive.

In addition to expanding CRC's regional coverage, the NSC acquisition improves the company's economics and expands its array of services, Karlin told ADAW. "NSC is an excellent company all around.  High quality clinics have been around for quite some time. At the end of the day, health care is about high-quality treatment."

The acquisition also "offers new resources to our particular forms of treatment," including use of the relatively new medication buprenorphine to treat opiate addiction, Karlin said.  CRC also plans to offer new programs to treat young adults, he said.  "The linkage of NSC's clinics to the CRC Health Group system allows methadone-based treatment to be connected to a greater scope of treatment services," said David Gnass, NSC chief executive.

Gnass added, "CRC is on the forefront of developing innovative treatment services. Our patients now will have access to all that CRC provides through its ever-growing capacity." 

Although he would not disclose the acquisition price for NSC, Karlin said both equity and debt financing were involved in the deal. 

"We financed both equity and debt [and] raised well over $40 million in new equity," from a variety of sources, Karlin said. The company also has raised $130 million through several debt financings and restructurings, he said.

Future opportunities Karlin said CRC is always looking for new opportunities, in both the traditional residential and methadone treatment arenas. "We are a company that is acquisition-oriented," said Karlin, with the goal of enabling everyone to obtain access to treatment.

CRC has "plenty of room to grow and expand, even though we're the largest provider in the residential and methadone areas," said Karlin. "In the long scheme of things, we're still a very small part of this industry."

Karlin said one of CRC's facilities, the Life Center of Galax chemical dependency facility in Galax, Va., "cross-references" methadone treatment with its residential program if patients are in need of both types of services, a model he'd like to see expanded to other clinics.

CRC operates the country's only accredited Internet-based treatment system for addiction. Both eGetgoing and the adolescent program teenGetgoing offer interactive group counseling through live audio and video (see ADAW, Oct. 6, 2003 and Nov. 18, 2002).

Karlin said he hopes to get more involved in field-wide issues affecting the industry, as evidenced by his company's recent decision to become a member of the National Association of Addiction Treatment Providers (NAATP). "It's an excellent organization," he said.  "It's important we play a role and get more involved in national issues," he said. "We have some strong ideas we'd like to see happen in this industry."

Near the top of this list would be closure of the estimated treatment gap of 13 million addicts, Karlin said.  "The national issue is persuading the nation that chemical dependency is a disease … the single biggest factor preventing society in general from paying for treatment. Even though [it's been] accepted scientifically as a disease for several decades, the person on the street has yet to see it."

Karlin believes it's important that a person's quality of life be used as the primary measure of determining whether treatment is successful. "We want that to become the national standard — quality-of-life measures.  That's vitally important."

He said his hope is for "CRC and all the providers in the country to make a real dent, to make a difference in some of these issues."