For three decades, alcoholics and addicts sought sobriety in the desert at the famed Betty Ford Center in Rancho Mirage.
But in recent years, the best-known name in substance abuse recovery lost much of its luster as internal strife, competition from luxury rehab centers and industry turmoil took their toll. All that led to the once-unimaginable takeover of the center last month by the Hazelden Foundation, another addiction treatment pioneer.
Now Hazelden, a Minnesota nonprofit, is looking to preserve the former first lady’s legacy with an ambitious expansion in Southern California and beyond.
Mark Mishek, Hazelden’s chief executive and a recovering alcoholic himself, wants to put the Betty Ford name on several new outpatient treatment centers in Santa Monica, San Diego, Phoenix, Dallas and potentially elsewhere starting later this year. Mishek pursued a similar expansion strategy at Hazelden after he took the helm there in 2008.
For him, joining forces with the Betty Ford Center was essential for the two nonprofits to remain relevant in the $35-billion addiction treatment industry.
Increasingly, the rehab business has been dominated by for-profit treatment centers backed by private equity firms. Newer rivals such as Passages Malibu tout addiction “cures” in splashy TV ads. Other high-end centers along Southern California’s “Rehab Riviera” boast of ocean views, massages, equine therapy and other fancy amenities.
By contrast, the Betty Ford Center never sought to sugarcoat the hard work of recovery or pamper its patients. On its well-manicured grounds, patients bunk together two to a room, make their own beds and dine in a cafeteria. The walls bear framed copies of the 12 Steps of Alcoholics Anonymous and the program’s Serenity Prayer.
“Nonprofits that have abstinence-based programs that are focused on the 12 Steps of Alcoholics Anonymous need to stick together,” Mishek said in his corner office with views of the San Jacinto Mountains. “We are under attack from a competitive perspective.”
That wasn’t the case when the Betty Ford Center opened in 1982. The former first lady brought addiction treatment into the mainstream by sharing her struggles so publicly. Her center quickly became the go-to destination for celebrities, such as Elizabeth Taylor and Johnny Cash, who had hit bottom from alcohol and drugs.
The 160-bed hospital has treated more than 100,000 people since it opened and has spawned countless imitators.
But shortly before Ford’s death in 2011 and as the industry was rapidly evolving, the center was plagued by infighting on the board and an acrimonious split with Betty Ford’s daughter, Susan Ford Bales. She left the center’s board in 2010.
Hazelden’s Mishek had to bring the Ford family back into the fold to pull off the deal and get a green light for expansion.
It helped that the Betty Ford Center always had close ties to Hazelden. The first lady visited the Minnesota institution before starting her center, and the Betty Ford Center’s longtime chief executive, John Schwarzlose, came from Hazelden.
Vaden Bales, Susan Ford’s husband, said they consulted with outside experts last summer when Hazelden first approached them with the idea of a merger. He said permission was granted for up to four outpatient centers bearing Betty Ford’s name, and they’re open to considering more.
Susan Ford Bales is trustee for the Elizabeth B. Ford Charitable Trust, which controls the use of the first lady’s name. Vaden Bales has joined the new Hazelden Betty Ford Foundation board on behalf of that trust.
The first lady “saw the Betty Ford Center as Harvard and there was only going to be one,” said Vaden Bales, a lawyer in Tulsa, Okla. “But if she had been presented with this information from Hazelden I think she would have made the same decision, no question. She was a really savvy businesswoman.”
Bales declined to address the previous discord. “Susan and I prefer to look forward, not back,” he said.
Many experts praise the Betty Ford Center for being a trailblazer. But they say it’s seen by some as too old-school and not keeping up with some medical advances. Even Hazelden allows certain medications to reduce cravings during initial treatment, while the Betty Ford Center staunchly resisted the notion of giving drugs to addicts.
“Betty Ford is so militaristic many people don’t go there anymore,” said Dr. Akikur Mohammad, chief executive of the Inspire Malibu treatment center and an adjunct associate professor at USC’s Keck School of Medicine.
Gerald Shulman, a longtime behavioral health consultant, said established treatment centers such as Betty Ford are often resistant to change.
“The 12-step model is still very appropriate, but it doesn’t suffice for many patients,” he said. “My concern is we’re still doing 1960s treatment for 2014 patients.”
Shulman said Hazelden was in very much the same position as the Betty Ford Center about a decade ago and it has made changes that “make it more relevant to today’s patients.”
For the year that ended in June 2012, the Betty Ford Center reported a loss of $208,000 on revenue of $39.2 million. Hazelden hit a similar rough patch in 2008, but its financial performance steadily improved. Hazelden’s revenue climbed 7% in 2012 to $135.8 million and it had operating income of nearly $7 million.
Mishek, 62, is a longtime healthcare lawyer and former hospital executive in Minnesota. He had strong personal ties to Hazelden before becoming CEO there in 2008. He and his late father, a family doctor, both got sober there.
His expansion plans are aimed at serving a much bigger population of patients in an outpatient setting.
Nationally, he said, 90% of current patients seek treatment on an outpatient basis, rather than a residential stay.
The Betty Ford Center offers outpatient care, but it’s only about 10% of the business. It is best known for residential treatment spanning 30 to 90 days.
But an increasingly crowded field of rehab centers is vying for a relatively small pool of patients who can afford to foot the bill themselves. Health insurers pay very little toward the cost of residential treatment, which is borne largely by the patients and their families.
A 30-day stay can run anywhere from $30,000 to $100,000 at the most luxurious spots. Betty Ford Center’s charges are generally at the low end compared with those of its upscale rivals.
Outpatient therapy can cost $5,000 to $10,000 — just a fraction of the cost of residential treatment — and most health insurers will cover the tab. In Minnesota, Hazelden said it charges about $7,500 for intensive outpatient treatment for adults.
In the outpatient setting, some patients come for several hours five days a week; others attend sessions at night and on weekends. These are more convenient for people trying to hold down jobs while seeking help and allow for more follow-up treatment for a chronic disease.
The demand for outpatient services is expected to grow now that the Affordable Care Act expands coverage for substance abuse treatment by designating it as an essential benefit. The healthcare overhaul has also spurred consolidation among hospitals and other medical providers as they try to better coordinate care and gain leverage with health insurers.
“Size and scale are important to be a player,” Mishek said.
The new Hazelden Betty Ford Foundation plans to open an outpatient center in Santa Monica or elsewhere in the Los Angeles area by the end of this year. From there, it wants to open one more each year in Southern California or outside the state.
By summer, Mishek expects to name a new executive to run the Betty Ford Center so he can return to Hazelden’s headquarters in Minnesota. In addition to Betty Ford in California, Hazelden has 14 treatment locations in eight states.
Mishek acknowledged that many of his for-profit rivals provide excellent care. But others, he said, plainly do not and lack any evidence to support what they do.
“There is not a field in the medical arena that is more filled with flimflam and quackery than the addiction field,” Mishek said, dismissing many of his competitors. “It makes me crazy.”