New York, New York (NetworkNewsWire) – The behavioral health
industry has mushroomed in recent years, largely driven by an
alarming rise in the misuse and abuse of opioids. In 2010, the
Patient Protection and Affordable Care Act (ACA) opened the door to
a new way of handling substance abuse by integrating substance use
disorder (SUD) treatment into the main health care system. The
result has been an expansion in facilities to treat substance abuse
and addiction. Today, opportunities for affordable care in the
behavioral health system have never looked better thanks to a mix
of large and small companies like Greenestone Healthcare
Corp. (GRST), (GRST
Profile) Universal Health Services, Inc. (UHS), Universal
Health Realty Income Trust (UHT), Acadia Healthcare Company Inc.
(ACHC) and American Addiction Centers AAC Holdings
Inc. (AAC).
In the past, SUD treatment regimens were ‘carved out’ from the
main health care system and concentrated on acute interventions to
reduce costs and improve care for the more serious cases of abuse
and addiction. But SUD requires a longer-term focus since it is a
chronic condition. As any alcoholic will readily admit, he may have
stopped drinking but he is not “cured.”
A chronic care regimen integrated into the main health care
system has the benefit of identifying at-risk patients and
providing services that reduce the risk of relapse. Integrated
systems have produced better outcomes, as a number of studies have
shown (1). And such programs are facilitated by the ACA,
which mandates that insurance coverage for SUD treatment be “no
more restrictive” than any other medical or surgical procedure.
Years after the passage of this provision, it finally bared its
teeth. Last fall, after pressure from New York’s Attorney General,
Eric T. Schneiderman, Cigna dropped a requirement that doctors
should seek ‘prior authorization’ before prescribing medications to
treat withdrawal systems and other drug abuse and addiction
conditions (http://nnw.fm/V1mTm). Other insurance companies have
taken note. In January, Anthem followed suit. And, more recently,
so did Aetna.
The rule has long had its critics. Physicians argue that telling
an addict to return tomorrow or next week to start a recovery
program most likely means never seeing that person again, and that
it is, in effect, an institutionalized system of procrastination
that raises both the dollar and human costs of SUD treatment. With
this hurdle now out of the way, there is likely to be a substantial
expansion of substance abuse and addiction services in facilities
across the nation, allowing companies like GreeneStone
Healthcare (GRST) to stretch its legs.
GreeneStone, with a market cap of over $7 million, operates in
the behavioral healthcare space, specifically in the treatment of
SUDs. The company has developed a unique style of treatment, and
within the last six years reports great success with in-patient
treatment for adults.
The company recently
announced an initiative designed to strengthen its balance
sheet and position it for sustainable growth in the U.S. health
care market. The strategy started with GreeneStone’s acquisition of
Cranberry Cove Holdings, which owns the real estate used by
GreeneStone’s addiction treatment facility in Muskoka, Canada.
GreeneStone then sold the operational assets of its Muskoka clinic,
and through its newly acquired subsidiary will continue to own and
lease the clinic building. GreeneStone then acquired the business
and real estate assets of Seastone addiction treatment center in
Delray Beach, Florida. The treatment model is an individualized
program based on and in-depth assessment to identify root causes of
addiction and co-occurring disorders – an approach well aligned
with the previously mentioned benefits of integrating a chronic
care regimen into the main health care system.
Another player in the behavioral health sector is
Universal Health Services (UHS), one of the
largest hospital management companies in the United States. Through
its subsidiaries, UHS operates 24 inpatient acute care hospitals,
three free-standing emergency departments, 213 inpatient and 16
outpatient behavioral health care facilities located in 37 states,
Washington, D.C., the United Kingdom, Puerto Rico and the U.S.
Virgin Islands. The company has a market cap exceeding $12 billion.
With a consensus price target of over $134, the stock is currently
trading around $125.
Universal Health Realty Income Trust (UHT),
which commenced operations on December 24, 1986, is a real estate
investment trust specializing in healthcare and human service
related facilities. As of September 30, 2016, the trust had 65
investments in 20 states, including acute care hospitals, medical
office buildings, rehabilitation hospitals, sub-acute care
facilities, freestanding emergency departments and childcare
centers. Based in King of Prussia, Pennsylvania, it has a market
cap of around $853 million. The stock, currently trading at about
$64, has a consensus target price of $93.
American Addiction Centers, going by the name, AAC
Holdings (AAC) is a leading provider of inpatient
substance abuse treatment services. Its facilities offer treatment
to adults struggling with drug addiction, alcohol addiction, and
co-occurring mental/behavioral health issues. The company has a
market cap of around $183 million. Its stock, currently trading
just under $8, has been set a consensus price target of $13.
With a market cap of roughly $3.8 billion, Acadia
Healthcare Company (ACHC) rests on the heavy end of the
primary behavioral health players. Its stock, currently trading
around $45, has had a consensus target price of $51 set by industry
analysts. The company is a provider of inpatient behavioral
healthcare services. It operates a network of 568 behavioral
healthcare facilities with approximately 16,900 beds in 39 states,
the United Kingdom and Puerto Rico. Acadia provides behavioral
health and addiction services to its patients in a variety of
settings, including inpatient psychiatric hospitals, residential
treatment centers, outpatient clinics and therapeutic school-based
programs. Acadia recently posted fourth-quarter revenue of $702.9
million, up 41.9 percent compared to $495.3 million for the fourth
quarter of 2015. Net income from continuing operations attributable
to Acadia stockholders was $41.8 million, up 21.1% from $34.5
million for the fourth quarter of 2015.
Source: 1. http://nnw.fm/semM8
For more information on GreeneStone please visit: GreeneStone
Healthcare (GRST)
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