June 8: Betty Ford Center, Hazelden are thinking 'alliance'

Two of the world's leading pioneers in substance abuse treatment are pondering how to work together as millions more Americans soon will have access to their services.

Minnesota's Hazelden Foundation and the California-based Betty Ford Center said this week they are discussing a "formal alliance" in response to changes driven by the Affordable Care Act.

In 2014, the law will require insurers to sell plans on new state-based insurance exchanges that will cover substance abuse and mental health treatment as an essential service. Such care already is covered by Medicaid, the state-federal health insurance program, and 26 states have decided to include more people in the program next year.

Analysts predict that the increased access to insurance and the need to coordinate care to hold down costs ultimately will result in a wider variety of substance abuse services. Many will be offered in outpatient settings, not the cloistered stand-alone residential centers that have drawn celebrities and thousands of others to Hazelden and the Betty Ford Center.

"Providers are having to start looking at what is driving the cost," said Andrew Croshaw, of the health care consulting firm Leavitt Partners. "They think, 'If we're going to have to quarterback the whole patient health experience, we've got to have a way to intervene in mental health, or it's going to mean more visits to the emergency room, more overdoses, more expensive treatment.' "

Hazelden and the Betty Ford Center didn't release details about the nature of their talks and declined to comment beyond a prepared statement.

Hazelden, founded in a rural Minnesota farmhouse in 1949, is the older and larger of the two organizations, which share a similar, abstinence-based approach to treating drug and alcohol issues.

The Betty Ford Center started in 1982 in Rancho Mirage, Calif., with a vision set by the wife of former President Gerald Ford to tailor a drug and alcohol program toward the needs of women. While the Betty Ford Center also operates a children's program in Denver and in the Dallas-Fort Worth area, its focus has remained on the 160-bed hospital in a mountain valley two hours east of Los Angeles.

The Betty Ford Center has experienced conflict among its board members in recent years, and longtime CEO John Schwarzlose, who worked at Hazelden but has been at Betty Ford Center since its inception, is retiring early next year, making it a good time to explore a new organizational structure with a partner.

Larger forces are at work, analysts said.

While previous health mergers were about bulking up to reduce inefficiencies, the next wave will involve specialty care centers that will no longer be successful operating outside of the mainstream health care system, said Rajeev Kapoor, of the global management consulting firm A.T. Kearney

"This is not about scale," Kapoor said. "What we are seeing is movement of the market. Consolidation is occurring at the regional level, at the specialty level, at the disease level. This whole movement is about management of a patient's health vs. disease."

Treating people with addictions costs the nation's health care system $416 billion annually, according to the National Institutes for Health, more than cancer and obesity combined.

Insurance has traditionally covered inpatient services, such as detox programs, but not office visits. The law will provide for expanded coverage of such things as screenings, evaluations and counseling. That will potentially put substance abuse on par with treatment of other chronic illnesses.

And as reimbursement shifts away from paying doctors for each discrete treatment to a single payment that covers a range of care, institutions such as Hazelden and the Betty Ford Center will need to expand their outpatient footprint.

"The good news is that many more Americans who desperately need help will be eligible to receive quality treatment for their addiction to alcohol or other drugs," Susan Fox Gillis, Hazelden Foundation board chairwoman, said in a statement. "The challenge will be to pay for the expanded coverage and service. At this stage it appears that institutionally, only the strong will survive and thrive."