Meridian goes upscale with addiction treatment center

meridian-recoveryCompetition in Minnesota and across the country is heating up among addiction treatment centers, with financial analysts predicting growth due to the large pool of patients currently going without treatment.

Last month, New Brighton-based Meridian Behavioral Health Services launched a new residential facility in Owatonna that caters to professionals who can pay $975 per day for treatment.

Offering equine therapy and fine cuisine in addition to standard treatments, the new facility puts Meridian up against longtime residential powerhouse Hazelden, which offers inpatient treatment for a similar list price in Center City.

Following a merger in 2014, Hazelden is expanding the Betty Ford Clinic brand in California while also investing in facilities here. There’s activity elsewhere, too.

“Of the nearly 22.7 million people who needed treatment for substance addiction in 2013, only 2.5 million actually received it,” wrote Ryan Daniels, a financial analyst with William Blair, in a research note last year. The increase in those needing treatment “is partly driven by nonmedical use of painkillers, from which an addict may move up to heroin as tolerance increases or painkillers become more difficult (and more costly) to find.”

Daniels sized up the market in connection with the $69 million initial public offering of stock last fall from Tennessee-based American Addiction Centers. Just this month, another Tennessee firm — Acadia Healthcare — closed on a roughly $1 billion acquisition of CRC Health Group, a national player in addiction treatment circles.

“Relative to other health care services markets, substance abuse treatment is highly fragmented,” Daniels wrote. “We believe the substance abuse treatment industry appears to be in the early innings of one of the largest remaining consolidation opportunities in health care.”

Meridian Behavioral Health says it’s the largest for-profit behavioral health company in Minnesota. For decades, that’s meant a focus on patients with coverage from state-sponsored insurance programs, said Fran Sauvageau, the company’s president and chief executive.

The Owatonna facility goes by the name Beauterre Recovery Institute, which Sauvageau described as a stand-alone brand and new direction for the firm.

“The best description I could give you is, this is Toyota creating the Lexus brand,” Sauvageau said.

‘Spalike’ setting

The company operates 10 outpatient clinics and seven inpatient addiction treatment facilities, including one it acquired in East Grand Forks, Minn., last year.

Sauvageau declined to provide information about revenue and earnings at Meridian Behavioral Health, which he said is owned by a private equity firm in California, a private investor in New York and Sauvageau himself.

But Beauterre paid more than $3.5 million last summer to acquire the old Daniel C. Gainey Conference Center in Owatonna from the University of St. Thomas. The 180-acre campus now includes a 61-bed residential addiction treatment and recovery center for adults who abuse or are dependent on alcohol or other drugs. The center also is available to people struggling with addiction in addition to mental health problems.

“We’ve invested, let me just say, several million dollars post our purchase price to create the environment that we have here now,” Sauvageau said. Jack Bice, the executive in charge of the Owatonna facility, described the setting as “spa-like. … Our food is spectacular.”

The target audience includes such licensed professionals as physicians, nurses, attorneys and pilots. The typical length of stay in residential care tends to be 30 days, but can vary.

Right now, Beauterre is relying on patients who pay their own way and those with “out-of-network” health plan benefits at the facility. In the future, the institute plans to become an in-network option for health insurance subscribers.

The institute is located near a private airport. Operators hope to draw patients initially from Minnesota and the Midwest, and eventually from across the country. Read more “startribune”…

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