Costs Forcing Change in Drug Rehab Programs

Corporate America’s increasing efforts to establish drug-free workplaces--and its willingness to foot the bill for employee treatment--has led to a boom in drug and alcohol abuse treatment centers.

During the last 15 years, chemical dependency care providers in San Diego County have proliferated from a couple of operations to 20 major chemical care outfits. Nonprofit centers, hospitals and private facilities all have set up services to provide the needed treatment while tapping into a lucrative new revenue source.

Part of the attraction for providers is the high rates charged to patients trying to overcome chemical dependencies. The cost of a 28-day, in-patient detoxification and counseling program offered locally ranges from $12,000 to $30,000 per stay.

But now, employers and insurance companies are balking at runaway health care costs and are forcing chemical care providers to offer a variety of treatment packages at lower prices or risk losing reimbursements.

A field that once exploded is now quickly suffering casualties. Within the last year, two major facilities, Oceanview Recovery Center in Oceanside and CareUnit in San Diego, as well as several smaller, hospital-run programs have folded, primarily citing financial difficulties.

“We’re all trying to hang on . . . . It’s a game of who can hold out the longest,” said Shawn Miyake, vice president of marketing at nonprofit Vista Hill Foundation, one of the county’s chemical dependency care providers.

Such a “shakeout” of the chemical dependency care market has been hastened by the increased power of managed health care networks, which oversee its corporate clients’ health benefits for a fee. In an attempt to reduce companies’ spiraling health care costs, such firms manage every facet of a client employee’s treatment, from the type of care an individual receives to the duration of that person’s treatment.

But some care providers voice concern that the managed health care firms’ “bottom-line” approach, rather than a medically advised approach to treatment, is jeopardizing patient health. Others, however, say cost-cutting demands have forced them to re-evaluate treatment methods for the better.

“For the longest time everybody just offered 28-day, heavy-duty, in-patient care, but we’ve learned that for some people a lower level of care is better for them and cheaper for them, too,” Miyake said. “But now the question becomes how do you provide (the lower-priced product) in a profitable way.

“I can tell you it is becoming increasingly difficult,” Miyake said. “The margins are getting smaller and smaller.”

Such a scenario is a far cry from just a few years ago, when chemical dependency care was considered a lucrative field for medical entities to enter.

The market grew rapidly in the late 1970s and early 1980s as business leaders came to the realization that drug and alcohol abuse cost them billions of dollars annually in lost productivity, accidents, theft and absenteeism.

As a result, growing numbers of corporate officers have instituted programs to identify employees with problems and to help them overcome their addictions. Support groups such as Alcoholic Anonymous and companies’ employment assistance programs, or EAP’s, directed a steady stream of clients to chemical dependency care providers.

Today, more than 75% of Fortune 500 companies use some type of testing program and more than 70% offer employee assistance programs.

“Studies have shown that having an employee assistance program, rather than dismissing someone who has a problem, is 3 to 1 cost effective,” said Steve Chappell, corporate director of chemical dependency programs at Vista Hill Foundation.

“One, you save an employee who has a substantial amount of experience,” Chappell explained. “Two, the cost of assisting an employee is cheaper than training a new one. And three, you get the benefit of a loyal employee.”

Typically, an individual referred to a care provider was almost automatically admitted into a facility for a 28-day program. Such a program began with physicals and seven days of detoxification, followed by 21 days of rehabilitation, which included group and individual therapy, drug and alcohol education, family counseling and referral to support groups. The program was then supplemented by six months of after care.

Within the last two years, however, businesses, insurance companies and managed health care firms have all intensified their efforts to reduce chemical care expenditures, especially by reducing in-patient stays.

Managed health care networks, especially, have played a major role in forcing care providers to reduce treatment costs. Because managed health care firms have signed many corporate clients, they control a valuable client base that care providers desire. To access such clients, care providers join the managed health care’s network by providing its clients lower rates.

In addition, to survive in a more competitive marketplace, care providers have begun offering a variety of cheaper treatment packages--typically a variation of the 28-day model.

For example, at the McDonald Center for Alcoholism and Drug Addiction Treatment of Scripps Memorial Hospitals, a patient who is medically stable and progressing during recovery could be allowed to go home at night during the last week of treatment.

Carol Meyers, the McDonald Center’s community services manager, however, said the patient is released only if the individual can return to a sober, supportive family environment.

The 64-bed, nonprofit McDonald Center, which opened in 1984, is an outgrowth of the chemical dependency program that began at Scripps Memorial Hospital in La Jolla in 1979. The McDonald Center’s 28-day program costs $12,000.

But some care providers say the intense cost-cutting pressure is diluting the quality of care.

“There is over involvement by others who are not in the medical profession dictating what can and what can not be done . . . it is really interfering with effective patient care,” said Dr. Fred Berger, associate medical director at Charter Hospital of San Diego, an 80-bed psychiatric facility for children, adolescents and adults. About 20-25 of the beds are used for chemical dependency care.

“We have two, full-time people spending their entire time doing utilization review to satisfy the insurance companies that what is being done is absolutely necessary,” Berger said. “It’s time that could be used taking care of patients. That’s sad.”

Charter Hospital charges $545 per day for its 28-day program. “We don’t profess to be cheap, but we do a good job,” Berger said. But like others, Charter, a private, for-profit operation, has negotiated contracts with managed health care networks and offers the networks’ clients reduced rates.

“(Addicts) need to be placed in a safe environment where their entire time is spent trying to break down the minimization and denial they have built up,” Berger said. “It’s not an easy thing to do. If it was, they would be able to do it themselves or by talking to a minister.”

Meyers, the community services manager at the McDonald Center, is also concerned about some cost-cutters’ refusal to consider in-patient care.

“There are some individuals who are totally inappropriate for out-patient care, but you have some companies or some insurers, in an attempt to cut health care costs, who refuse to put people in in-patient facilities.” Last year, a man suffering from crystal and cocaine addiction, was referred to the McDonald Center, Meyers said.

“His company’s EAP counselor and our assessment counselor recommended in-patient treatment for this man because of his poor medical condition, but when we contacted the managed health care reviewer, the reviewer would approve out-patient treatment only,” Meyers said.

“He was unable to detox on his own and ended up with crystal psychosis (hallucinations),” Meyers said. “He was admitted to a psychiatric hospital.”