Hazelden has signed contracts with two national health insurers this year that give more health-plan subscribers access to services from the Center City-based addiction treatment provider at in-network rates.
The agreements with Minnetonka-based UnitedHealthcare and Kentucky-based Humana continue a strategy shift in which Hazelden relies on a growing share of patients with insurance coverage as opposed to patients who pay their own way.
The change comes as Hazelden said the traditional 28-day inpatient stay for both insured and self-pay patients is shifting to a more individualized model that often features a shorter inpatient stay followed by several weeks of outpatient treatment.
"Even though we're getting less payment for residential … our patients are actually staying with us much longer," said Mark Mishek, the chief executive of Hazelden Betty Ford Foundation, in an interview. "That's a huge improvement."
In 2014, Hazelden Foundation and the California-based Betty Ford Center joined in a merger that linked two of the biggest brands in addiction treatment, with nearly 1,200 employees overall.
Hazelden Betty Ford Foundation last year eliminated 57 jobs while adjusting to discounted payment rates from health insurers plus cash-flow trouble related to a new system for electronic health records.
Mishek said much of the revenue impact from the switch to in-network payments from health insurers is now complete. Financial results in the first quarter improved compared with the previous year, he said, and April results were strong, as well.
During the first quarter, Hazelden posted $636,000 of net income on $42.2 million of operating revenue, compared with a loss of about $3.5 million during the same time period last year.
"Our board made that decision five years ago, six years ago … that if we're going to serve more people, we've got to become mainstream health care — we've got to get in insurance, we've got to be in-network," Mishek said. "We're there now."
UnitedHealthcare previously had contracts with Hazelden in Florida and Oregon, the nonprofit said in a financial statement, before this spring adding contracts for operations in Minnesota and California. Humana said the new contract provides in-network access to 13 additional locations in six states.
"Our new network agreement with Hazelden Betty Ford Foundation … will be in effect as of June 1, 2018, and is a natural extension of our 2015 network agreement regarding Hazelden's Naples, Fla., location," Jack Szczepanowski, vice president for Humana's behavioral health networks, said in a statement.
In its first-quarter financial statement, Hazelden said it also expects to execute a contract this year with Tricare, the large government health care program for uniformed service members, retirees and their families.
"As we continue to contract with such other major insurers on a national basis, management expects a further shift in the mix of payer sources in favor of managed care," Hazelden said in the financial statement. "However, we also expect the aggregate revenue impact from incremental volume to more than offset any reduction in revenue realization caused by the payer source shift."
Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck
