In the ever-evolving field of substance use disorder (SUD) treatment, the conversation is increasingly centered on the expansion and growing popularity of outpatient services. From partial hospitalization programs (PHP) to intensive outpatient programs (IOP), the industry is pivoting towards more flexible, less intensive care models. However, despite this shift toward outpatient services, one of the nation’s largest nonprofit addiction treatment providers, the Hazelden Betty Ford Foundation (HBFF), continues to see residential addiction treatment services driving the bulk of its revenue. This raises an interesting question: in a market that seems to be moving toward outpatient treatment, why does residential care remain so integral to the foundation’s financial health?
Financial Performance: Residential Addiction Treatment Services at the Core of HBFF’s Success
Recent financial disclosures from HBFF indicate that while outpatient services are on the rise, residential addiction treatment services continue to play a major role in the foundation’s growth. In its second-quarter financial report for 2024, HBFF reported a significant uptick in its net patient service revenues, a trend driven primarily by increased utilization of its detox services and residential treatment programs.
In fact, 65% of the foundation’s net patient service revenue came from its residential addiction treatment services, showing that despite the increased focus on outpatient care, residential treatment remains a key revenue stream for HBFF. This data suggests that many individuals still require the intensive, 24/7 care offered by residential programs, highlighting the ongoing demand for these services.
Moreover, HBFF’s net patient service revenues exceeded the budget by $1.6 million, marking an impressive 8.6% increase over the same period in the previous year. This growth in revenue can largely be attributed to the strength of residential addiction treatment services, as well as the organization’s ability to meet the needs of a diverse population in various stages of recovery.
The foundation’s total operating revenue for the first half of 2024 reached $119.2 million, a notable 11.3% increase from the previous year. With recovery services accounting for 77.5% of total operating revenue, it’s clear that residential addiction treatment services and other in-person treatment options still form the backbone of the foundation’s financial success.
Hazelden Betty Ford Foundation’s Long History of Excellence
Founded in 2014 through the merger of the Hazelden Foundation and the Betty Ford Center, the Hazelden Betty Ford Foundation has become one of the largest and most respected nonprofit addiction treatment providers in the United States. The foundation operates 17 treatment centers across the country, offering a broad spectrum of services for individuals battling addiction and mental health issues.
Although the foundation’s programs are in-network with many major insurance payers, it’s important to note that HBFF does not accept Medicare or Medicaid, which limits its accessibility for some individuals seeking care. Despite this, the foundation’s comprehensive and effective treatment offerings continue to attract clients seeking high-quality, evidence-based addiction recovery services.
One of the key factors behind HBFF’s success is its focus on delivering care for both addiction and mental health. In recent years, the foundation has seen growing demand for its services that address co-occurring mental health disorders alongside addiction, a trend that’s contributing to the foundation’s financial growth.
The Shift Toward Diversification: From Residential Addiction Treatment Services to Outpatient Care
While residential addiction treatment services remain the cornerstone of HBFF’s revenue, the foundation is clearly diversifying its offerings to meet the changing demands of the addiction treatment market. Over the years, HBFF has expanded beyond traditional residential programs, branching into outpatient services such as partial hospitalization (PHP) and intensive outpatient programs (IOP). These programs provide more flexible treatment options for patients who may not require the level of care offered by residential programs but still need structured support as they work toward recovery.
As Robert Poznanovich, HBFF’s Chief Business Growth Officer, pointed out at the Behavioral Health Business’ Autism & Addiction Treatment Forum in July, the foundation’s initial focus was exclusively on residential addiction treatment services. However, as the landscape of addiction treatment evolved and HBFF began working with insurance payers, the foundation recognized an opportunity to expand its offerings.
“We started out for many years just doing residential care. And as we moved more into working with payers, we saw an opportunity to expand into partial hospitalization, which led to an opportunity to grow into intensive outpatient (IOP),” Poznanovich said. “Then we look at the gaps in the continuum; we can add recovery management services, coaching, peer support, and other forms of care, which are really driving a lot of revenue. So now 20 to 30% of our revenue comes from non-traditional services.”
This expansion into non-traditional services is a direct response to the growing demand for flexible treatment options. More individuals are seeking care that fits their schedules and lifestyle, making outpatient services like PHP and IOP an appealing option. This shift aligns with broader trends in the healthcare industry, where patient-centered care and the desire for more accessible services are becoming paramount.
Non-Traditional Services: Expanding the Continuum of Care
The increasing popularity of non-traditional services at HBFF reflects a broader trend toward integrating a variety of treatment options into a comprehensive continuum of care. Recovery management, coaching, and peer support are becoming essential components of treatment, offering patients the flexibility they need to recover without committing to the intensive, long-term stay required by residential addiction treatment services.
This continuum of care is essential because it recognizes that recovery is not a one-size-fits-all journey. People who are in different stages of recovery or who have varying needs can benefit from a range of services that provide both structured support and autonomy. This approach improves patient outcomes by ensuring that individuals can access care that is tailored to their unique circumstances.
Additionally, by expanding its services to include mental health care, family services, and other complementary offerings, HBFF is able to offer a more holistic approach to addiction recovery. Co-occurring mental health disorders, for example, are often a significant barrier to long-term recovery for many individuals. By addressing both the addiction and the underlying mental health issues, HBFF is helping to reduce the likelihood of relapse and improving overall outcomes for its patients.
The Future of Addiction Treatment: A Dual Focus on Residential and Outpatient Care
While outpatient services are undoubtedly growing in popularity, residential addiction treatment services continue to play a central role in the success of providers like the Hazelden Betty Ford Foundation. As the addiction treatment landscape continues to evolve, it is clear that the demand for residential addiction treatment services will not disappear. Many individuals still require the intensive, 24/7 support that only a residential treatment program can provide.
However, HBFF’s ability to adapt to the growing demand for outpatient care—and to develop a comprehensive continuum of services that includes both traditional and non-traditional offerings—puts the foundation in an excellent position to meet the diverse needs of those seeking recovery.
As more addiction treatment providers explore ways to diversify their offerings, HBFF’s ability to balance residential care with innovative outpatient services will continue to serve as a model for the future of addiction treatment. The focus on co-occurring disorders, integrated mental health services, and flexible care options ensures that the foundation remains at the forefront of the industry, offering high-quality, patient-centered care that helps individuals achieve lasting recovery.
In conclusion, while outpatient services are on the rise, residential addiction treatment services are still a vital component of Hazelden Betty Ford Foundation’s financial success. The foundation’s growth, fueled by a diversified range of services, shows how providers can adapt to meet the evolving needs of those struggling with addiction. The success of HBFF’s hybrid model emphasizes the importance of offering a broad spectrum of care options that can meet individuals where they are on their recovery journey. As the field of addiction treatment continues to evolve, one thing is clear: both residential and outpatient services will play critical roles in shaping the future of addiction care.
