Hazelden grows with health plan coverage

Hazelden Betty Ford Foundation says its two largest adult-treatment facilities saw their highest-ever numbers of residential patients last year as more health plans covered services at the addiction-treatment provider.

The strong demand for care stems from contracts Hazelden Betty Ford has negotiated with insurance companies, rather than changing patient needs, said James Blaha, the chief financial officer at Hazelden Betty Ford, a prominent addiction-treatment provider that operates in nine states.

The Minnesota-based nonprofit group says it is moving forward with a $15 million construction project in Center City to replace residential units for patients while also moving administrative staff from its facility in St. Paul to make room for more outpatient care.

"More people who need treatment are actually able to get it, thanks to insurance," Blaha wrote in response to questions from the Star Tribune.

Hazelden Foundation merged in 2014 with the California-based Betty Ford Center in a deal that linked two of the biggest brands in addiction treatment and created a Minnesota-based nonprofit with roughly 1,200 employees overall.

In late April, Hazelden Betty Ford Foundation disclosed to bondholders financial results for last year that show operating income of $6.5 million on $191.3 million in revenue. That was better than the nonprofit group's $13.6 million operating loss the previous year.

In 2017, Hazelden eliminated 57 jobs, including 40 in Minnesota, as the treatment provider adjusted to discounted payment rates from health insurers as a growing share of patients switched from self-pay to third-party payment. Expense reductions dating to 2017 helped the financial results last year, Blaha said, along with increased demand from patients with health-plan coverage.

Residential admissions were expected to hold steady in 2018, but actually increased 7% over the previous year, according to a financial statement. The filing with bondholders said the group's "two largest adult treatment centers in Center City, Minnesota, and Rancho Mirage, California, saw the highest residential patient volumes ever experienced."

In Center City, which is Hazelden's headquarters, the nonprofit last year had its highest volume of patients in its 70-year history, officials said, with 62,000 patient days of residential care and nearly 14,000 day treatment sessions. At Rancho Mirage, which was home to the old Betty Ford Clinic, the number of residential patient days and day-treatment sessions hit their highest mark since the merger.

In general, alcohol remains the most prevalent substance misused by patients at Hazelden Betty Ford, said spokesman Jeremiah Gardner. Use of stimulants like cocaine and meth have been rising, Gardner said, as has use of benzodiazepine drugs among youth.

Opioid use has been relatively consistent, Gardner said, adding that it's often the case that patients are using more than one drug and also have mental health conditions.

Among young patients, most now suffer from "cannabis use disorder," he said, often alongside other diagnoses.

"I am not aware that the overall rates of addiction have changed dramatically," Blaha, the chief financial officer, said in his written response. "They tend to remain pretty consistent over time across the population, so the number of patients needing treatment is probably also consistent. However, today's cases are more complex, the drugs are more potent, and the mix of substances is more dangerous."

Last year, Hazelden announced new insurance contracts with a subsidiary of Minnetonka-based UnitedHealth Group as well as with Humana, a large insurer based in Kentucky. The UnitedHealth Group contract is particularly important, Blaha said, because the company's Optum division "has one of the largest networks of enrollees in the country." This year, Hazelden is working on contracts with large health insurers in the Pacific Northwest, where Hazelden opened a new clinic in the Seattle area.

The shift from self-pay patients to those covered by health plans has cut both ways for Hazelden, with patients in many cases receiving fewer days' worth of coverage for residential treatment than they used to pay for out-of-pocket. Even so, health plans have been willing to continue paying for outpatient care, which is one reason Hazelden expanded its outpatient services in St. Paul as part of a construction project that was completed in 2016.

Development and corporate staff who work in the historic Manor building on the St. Paul campus are being relocated to leased offices, Blaha said, in order to create space for more day treatment and outpatient groups.

"St. Paul has reached capacity levels ... about a year earlier than anticipated," Blaha said.

In 2013, Hazelden's board approved a plan to replace all six residential units for men on the Center City campus, and the first phase to demolish two units and construct a replacement facility was completed in late 2014. The second phase was scheduled to begin in 2016, but was delayed because of the Betty Ford Center merger, Blaha said, as well as investments in a new electronic health-record system.

When the project moves forward later this year, it will include demolition of two men's units.

Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck