How To Start A Drug Rehab Center
Opening a drug and alcohol recovery center (rehab center to most) requires two pieces that most people forget about. First, how to legally open a recovery center. There is a lot of paperwork and regulation in this space, so licensure is a must. Two, how to keep it profitable and open. The number one issue we see when people launch a center without our consulting is they don’t have a solid marketing plan in place. You’re not opening a Subway; people won’t just show up. The Drug Rehab Agency Consultants can help you start your center and make it profitable in the opening months and beyond. However, if you would like to look into how to open a center yourself, we outline what needs to be done here.
How Much Does it Cost?
Opening a treatment center can be costly. Your largest investment will be into the property and the people running the center. The issue with answering this question is that each center is vastly different. What type of center are you opening, modalities, level of care, city and state, etc. A large part of our feasibility study is the pro-forma, which outlines the costs associated with a center. If you are not ready to invest $7,500 into the feasibility study, but would like to understand the finance side of the business, we are happy to speak with you. We charge $250/hour to discuss your specific states start up costs and even offer a pro-forma for $5,000. On average, the cost of opening a treatment center is $500,000-$2M depending upon level of care, city and state, payer targets, modalities, and much more.
Feasibility Study
First step is a feasibility study. This will help you determine exactly what is needed in your local area (or the area in which you wish to open a center). In this phase you will need to determine the type of rehab center you want to open. By type, we are referring to the level of your treatment center will provide. For example, will it be a full continuum of care center? Which we highly suggest. Full continuum of care is detox, residential inpatient, PHP, and IOP. Or, are you looking to open a simple IOP or Residential center? This is important in this phase because you need to understand what your local area needs. For example, opening a residential and IOP center is West Palm Beach, FL would not be advisable as there are so many in that area already. It’s saturated. However, offering that in Ohio would be very beneficial.
Next you need to determine the size of the center. How many beds do you want to operate? A pitfall we have seen in the past is opening up a rehab center with a large quantity of beds, but without a marketing strategy and budget that can fill the beds. Or, there is not enough need to warrant the number of beds the center starts with.
Performing this feasibility study will help you determine what is needed in the area you which to do business, and give you valuable insight on how to plan a budget for opening the center.
Licensing
As opening a rehab center is like opening a private practice in medicine, you need to be a licensed to conduct business in the addiction field. This is done through the local authorities. This involves zoning as well. If you are looking to open a residential recovery center the home or living location of your residence could require commercial medical zoning. Each state is different, like California. If you have 6 beds or fewer in the state of California, you are not required to be zoned commercial, however, you still need a license.
A large part of your licensure is going to be your program and Policy & Procedures manual. The licensing board will review what type of treatment center you are opening, and also how you plan to service the community. This is why your program and P&P are squared away with the involvement of your medical director (or consultant). Not having the proper documentation or skipping a piece of a P&P will result in you being rejected and having to wait even longer to open a center.
Business Plan
Like any business, you need to create a professional addiction center business plan and pro-forma. The business plan puts your thoughts to paper and creates what the business will become. This is required by all banks and most serious investors. To learn more about how we can help with your business plan writing, click here
Staff and Training
The recovery industry is not much different than most. Your staff will create an amazing experience for your patients. You need to hire the following staff to open a center:
Executive Staff
Medical Director
Executive Director
Intake Staff (handling inbound leads for treatment)
Medical Staff
Clerical Staff
Janitorial Workers
Case Workers
Managers
Administrators
Accreditations CARF and Joint Commission
Accreditation from CARF or The Joint Commission (JCAHO) is highly valuable these days. More and more insurance companies are requiring one of these two accreditations in-order to enter treatment which means if you allow a patient to enter your facility and are not accredited, they will not pay out for the services your provided.
Marketing Execution
As we said before, marketing is where most people fall flat in the recovery business. They don’t provide enough budget to cover what is needed and end up running out of money or have empty beds when they open.
Marketing for addiction rehab centers is a two-pronged approach. The first prong being long term investment in Organic Search and your brand. Organic search (SEO) is Google, Yahoo, and Bing. The value in organic search is incredible once the results are seen, which can take 4-6 months. Obviously in-order to show up in the search engines, you also need a website. Hire a quality addiction marketing company (like us) to produce a professional website. It is very important. The idea here is that if you are at the beginning stages of opening a rehab center, you want to engage the marketing team as soon as possible. As organic results take 4-6 months (which aligns well with how long it can take to get licensure and everything set-up) you can open your doors with clients ready to enter. Rather than starting your online marketing when you get licensure and have 2-3 months of little organic result. Being able to plan ahead in the addiction marketing arena is key and can save you thousands of dollars when you open.
The second approach is lead generation. More than likely, your SEO won’t be in full ROI mode by the time you open. It will generate a few intakes, but you will need to budget for lead generation services to fill the remaining beds. Lead generation is done through TV, Radio, Paid Search, and Social Media. Lead generation costs more per intake that organic search, but can be turned off and on quickly to ensure a proper intake rate.
Marketing Budget
A good rule of thumb for budgeting marketing spend is $5,000 per bed you have. This will help cover costs of lead generation. A monthly SEO budget should be between $1,500-$5,000 per location you open and varies based on the location and competition. (Florida, California, and Texas are more difficult). The website design and development budget should be around $4,000-$5,000 depending on the complexity of the site. Obviously, it can be more than $5,000 if you are looking to build a massive lead generation platform.
The Drug Rehab Agency Consulting Offering
If you are like most people who read this and felt overwhelmed, don’t worry, we can help. The Drug Rehab Agency Treatment Consultants can help you every step of the way. We offer consulting for each piece of opening a center as well as an all-inclusive offering that will handle every aspect of opening a treatment center. More clients choose for us to handle all aspects of their rehab business as it allows them to focus on other areas. If, however, you would prefer to do the vast majority of the work yourself, you can always call us for help with:
· Pro-Forma Creation
· Program Development
· Policy and Procedures Manual
· Marketing Plan and Budget Creation
· Marketing implementation
Consulting Pricing
Our consulting is done one of three ways based on the needs of our clients and the availability of our consultants.
1 - Pay Per Hour - Our hourly rate for consulting starts at $275/hour and goes up to $350/hour depending upon the subject matter and needs. We sell our time in 5 hour blocks.
2 - Pay Per Project - The Pay Per Project model is for those that have an idea of what they are looking for, and are willing to do a lot of the work themselves but need help writing a pro-forma, or need an audit of their billing systems. We offer financing for this option.
3 - All-Inclusive - This is for those that want us to handle everything possible for them. A “set it and forget it” style of consulting on opening a treatment center. Our consultants will work with you every step of the way including licensing and facility selection, policies and procedures creation, staffing, EHR set-up, billing set-up, program development, HR documentation, admission documentation, etc. We do it all. The pricing for this service starts at $95,000 or $11,875/month and goes up based on the state and what type of center you are looking to open. Be sure to ask about how we can help spread out the cost over 12 months with our financing options.
The Drug Rehab Agency treatment consultants have over 20 years of experience in the recovery industry, opened and sold centers of their own, and been CEOs of large facilities. Our real world experience, mixed with our dedication to ongoing education makes our agency the right fit for anyone looking to open a rehab center in the United States.
