Inside The $35 Billion Addiction Treatment Industry

Inside The $35 Billion Addiction Treatment Industry | Apr 2015

The vast majority of addiction treatment is based either partially or entirely on the 12 Steps of Alcoholics Anonymous (AA), but is there scientific evidence to support AA as a clinical treatment?

Should addiction treatment centers make enormous profits by simply funneling substance abusers into the free fellowship of AA?

These are the primary questions behind The Business of Recoverya new documentary that opened earlier tonight at the Newport Beach Film Festival.  

Almost all residential treatment programs in the United States are 12 Step based, so their effectiveness will depend entirely on whether 12 Step programs work and the statistics for AA are not good. It is helpful for 5‒10% and that’s a good thing. That’s 5‒10% of people who are being helped by A.A. ‒ it’s a lot better than zero percent ‒ but it shouldn’t be thought of as the standard of treatment because it fails for most people ‒ for the vast majority of people. Lance Dodes, MD

The film is timely because the market [for recovery programs] does seem poised for accelerated growth based on a number of key attributes.

  • A real‒estate component that can easily scale to any size ‒ including the private, single family residence (called “sober living homes” ‒ by one estimate over 10,000 in Arizona alone).
  • Freshly minted federal mandates for payment parity with other chronic or acute health conditions like cancer or diabetes.
  • Almost no federal, state or municipal oversight for credentials or treatment pricing.
  • Advertised success rates of 80% (or higher) with no scientific evidence.

This last one is the most troubling since addiction is often couched in clinical terms like “disease” and “treatment.” The AMA first defined alcoholism as an illness (1956) and then a disease (1966), but there’s little scientific evidence to support a disease diagnosis. That also makes it challenging to categorize any program based on the 12 Steps of AA as clinical treatment ‒ even if there is a billing code.

AA is not really a treatment ‒ it’s a fellowship. If you go to your doctor to be treated for cancer or heart disease you expect your doctor to be doing what the science says is the best treatment available for what you have. That has not been the standard in addiction treatment.

Two events last year (not included in the documentary) also signal a healthy and growing commercial industry.

Every pain patient suspected or accused of addiction can be coerced to attend such programs, which makes us potentially desirable customers.

The first was the merger between two iconic treatment brands ‒ the world-renowned Betty Ford Center and Hazelden (founded in 1949). The combined non‒profit entities are now simply the Hazelden Betty Ford Foundation. As with many non‒profits, there are no outside investors to satisfy, but the salaries of key execs are often in the high six‒figures (and well above averages for even practicing physicians ‒ any specialty).

The second event was the IPO last fall of AAC Holdings, Inc. ‒ which is really the first attempt at a publicly traded company exclusively for addiction treatment (the AAC stands for American Addiction Centers).

The quoted price range for a 30-day “treatment plan” (again ‒ revolving largely around AA) was $15,000 to $26,000. The Hazelden Betty Ford Foundation is easily twice that amount and other, more exotic treatment facilities (often catering to celebrities in swank resort‒style locations) can easily run into the low six‒figures.

As a publicly traded company ‒ something that Betty Ford and Hazelden have both intentionally avoided ‒ AAC has already hit some significant headwinds in the form of accusations, short‒sellers and legal scrutiny. One of the reasons is that a sizable source of high‒margin revenue appears to be urine testing which can be used in high‒volume and is relatively easy to game for serial revenue and profits

The lack of certification also supports a very low barrier to becoming an addiction treatment counselor.

There is no mandatory national certification exam for addiction counselors.

This means anyone can decide they are an addiction counselor, and individuals can, and do, decide they are addiction experts and become media pundits without any qualifications.

The determination of whether a pain patient has pain or addiction is thus left in the hands of people without any qualifications or education or experience.

The 2012 Columbia University report on addiction medicine found that only six states required alcohol and substance-abuse counselors to have at least a bachelor’s degree and that only one state, Vermont, required a master’s degree.

Fourteen states had no license requirements whatsoever ‒ not even a GED or an introductory training course was necessary ‒

A supposedly medical issue (addiction) is thus treated by people who don’t even have high school diplomas. 

and yet counselors are often called on by the judicial system and medical boards to give expert opinions on their clients’ prospects for recovery. Gabrielle Glaser ‒ The Irrationality of Alcoholics Anonymous (The Atlantic)

I don’t know of any other life‒threatening illness where it’s controversial if you should have a college education to treat it, but it has been in the addiction field. William R. Miller, PhD

Even the judicial system contributes to the confusion by often mandating AA attendance to offenders who arrive in court as the result of criminal charges associated with substance abuse

It is completely inappropriate and dangerous for courts to be mandating AA treatment. This amounts to malpractice. It’s medical malpractice by the judge.

New drugs will also challenge the conventional wisdom around AA being the primary ‒ often only solution to substance abuse.

There is also the very real possibility that AA is not helping people with other mental or behavioral disorders that can be easily masked by substance abuse. The AA mantra of “more meetings” could well be counterproductive to many who arrive at the fellowship with a wide range of psychological, behavioral and other clinical issues.

Ultimately, whether AA is scientifically effective ‒ for whom and how many ‒ is a secondary issue. No one argues that it has helped to destigmatize substance abuse and it definitely helps some.

Unlike for-profit treatment plans, however, AA has never had fees or dues of any kind since its inception in 1935 ‒ and likely never will.

The real issue then is a $35 billion a year industry that’s largely based on funneling substance abusers into the free fellowship of AA ‒ or simply providing large doses of AA meetings themselves.

Patients (because addiction is a disease) are being coerced, by society and doctors, and forced, by courts, to support this completely unregulated and uncontrolled high-profit industry.

As highlighted through several tragic stories in the documentary, family members are naturally eager to spend whatever money they have ‒ and often money they don’t have ‒ in desperate attempts to save loved ones from the harsh realities of substance abuse and addiction.

Preying on this strong desire is the very real and profitable business of recovery ‒ and one that the documentary exposes with clear‒eyed and sober detail.   

This completely unregulated business is guaranteed customers by the courts of the federal and state governments.



4 thoughts on “Inside The $35 Billion Addiction Treatment Industry

  1. Pingback: Zohydro ‘Not a Public Health Risk’ | EDS Info (Ehlers-Danlos Syndrome)

  2. Pingback: Investors Earning Money From Addiction | EDS Info (Ehlers-Danlos Syndrome)

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