Addiction treatment has become big business. If you haven't noticed it yet, investors certainly have. The U.S. Substance Abuse and Mental Health Services Administration projected the market for addiction treatment at about $35 billion for 2014.
Since 2006, private equity firms have invested more than $2.2 billion in substance abuse treatment companies. The private equity firm Bain Capital paid $720 million for CRC Health in 2006 only to turn around and sell it for $1.18 billion to Acadia Healthcare Company Inc. in 2014. Acadia operates 76 facilities with about 5,800 licensed beds in 24 states, Puerto Rico and the U.K.
Why are addiction treatment companies so lucrative, with profit margins of over 20 percent? Largely because of the booming specialty of addiction psychiatry, which has exploded and muscled its way into standard rehabilitation and monetized it.
“The insurance companies told the rehabs they would no longer pay for inpatient rehab for heroin, cocaine or alcohol unless there was also another Axis 1 psychiatric disorder like bipolar disorder or major depression,” explains psychiatrist Phil Sinaikin, author of Psychiatryland. “I was working in a drug treatment facility when the change happened. Since addicts typically complain of anxiety and depression, a completely understandable emotional response to their toxic lifestyles, it was no problem to add a new label and throw a few psychiatric drugs at their now relabeled ‘dual diagnosis.’”
Unlike older treatments for alcoholics and addicts, addiction psychiatry treats substance abusers much like primary care physicians treat physically ill patients—with drugs, even though their problem is drugs. As illogical as it may seem, the practice of harm reduction is addiction psychiatry’s standard operating procedure, substituting one or several drugs for the original substance with the goal of stabilizing the patient, not necessarily recovery. The treatment model essentially tells patients nothing really can be done about their addiction except to provide them more drugs, sometimes for life.
Helping the increase in drug patient pools, in 2013 the American Psychiatric Association loosened the definitions of alcohol use disorders, eliminating “legal problems” but adding “craving.” (The APA’s financial links to Big Pharma have been widely reported.) The problem with the harm reduction/maintenance model is obvious; the substance abuser never recovers, but simply stays hooked on another or multiple drugs, while Big Pharma cashes in.
“This basis for [such harm reduction] treatment has its analogy to other chronic disorders,” psychiatrist Stefan P. Kruszewski at the Center for Drug Safety and Effectiveness, Department of Mental Health, at Bloomberg School of Public Health and John Hopkins University Medical School, told us in an interview. Addiction is thought of “like often-cited diabetes and hypertensive heart disease, with the following logic: chronic conditions need chronic care and we have drugs
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