Substance Use Disorders (SUDs) are complex conditions that affect not only the mind but also various aspects of a person’s life, including their social and economic circumstances. Among these, housing and transportation often become major barriers to recovery. For individuals undergoing treatment for SUD, a stable living environment can make all the difference in their ability to focus on their recovery and rebuild their lives. However, the concept of sober living has faced significant challenges in the past, primarily due to issues of fraud and abuse, which have historically tarnished its reputation. Fortunately, over the past five to ten years, this model has undergone a transformation, and it is now recognized as a critical component in the treatment and recovery process.
Housing options like sober living homes offer patients the opportunity to stabilize their lives while receiving the support necessary to remain sober. As a result, this model is gaining traction across the substance use treatment industry, bringing both clinical and financial benefits to patients and providers alike. This trend is poised to become more widespread as payers increasingly see the value of offering safe housing, which aligns with their interest in affordable, long-term recovery solutions.
A Shift in the Perception of Transitional Housing
Historically, housing options for those in recovery struggled with a negative reputation. Reports of fraud, abuse, and poor oversight led to skepticism and reluctance in the industry. However, as Chad Koller, Divisional Vice President of SUD at Universal Health Services’ (UHS) Behavioral Health Division, pointed out, this reputation has been shifting. Over the last several years, these housing options have undergone a revival, as providers and patients alike have recognized their potential in supporting long-term recovery.
Now, such housing options are being recognized not just as a place for people to live but as an integral part of a comprehensive treatment plan. “In the field, folks understand the value of the housing component… as we move forward, we’ll see more growth on the outpatient side, reflecting payer influence,” Koller explained. As more patients seek outpatient care rather than inpatient treatment, sober living homes are becoming a vital component of these care models. With this shift, it’s gaining traction as a fundamental building block of a patient’s recovery journey.
Universal Health Services, one of the largest healthcare providers in the U.S., has embraced this model with the creation of its standalone SUD treatment service line, Foundations Recovery Network. This service manages nearly 200 beds and operates under multiple models, actively exploring the opening of more housing options for patients. For UHS, offering housing to patients with SUD is not only about providing shelter but about addressing a critical social determinant of health that can directly impact a patient’s recovery.
Addressing Social Determinants of Health
Housing is one of the most important social determinants of health that providers can address in the treatment of SUD. As Koller highlighted, it is an area where healthcare providers have the most ability to make a direct impact. When individuals in recovery do not have a stable place to live, their chances of maintaining sobriety decrease significantly. This is why having stable housing options like sober living homes for patients in recovery has become such an important part of the recovery process, allowing patients to focus on treatment without the constant worry about where they will sleep at night.
Additionally, the provision of housing addresses other social determinants of health, such as access to nutritious food and transportation. As Jeff Gershman, CEO of Square Medical Group, explained, these factors are crucial to maintaining a stable recovery. “Nutrition, housing, and lack of transportation can all significantly impact a patient’s likelihood of relapse,” Gershman noted. To address these challenges, Square Medical Group has instituted a “proactive housing” model to help patients move away from emergency rooms and inpatient care by offering stable housing options at various levels of acuity. This proactive approach helps individuals stabilize their lives while receiving treatment, reducing the need for more costly inpatient care and helping patients maintain long-term sobriety.
Gershman’s organization serves primarily Medicaid patients with co-occurring conditions, operating several locations in Massachusetts. They offer a wide range of services, including medication management, therapy, intensive outpatient programs (IOP), and transcranial magnetic stimulation (TMS), as well as housing options. By addressing basic needs like housing, Square Medical Group can divert individuals from emergency rooms and inpatient care, saving healthcare systems significant costs in the process.
“We want to take those folks and be able to give them some level of housing, whether it’s more acute in recovery residences or less acute in sober homes, and divert them away from inpatient care,” Gershman explained. This model benefits both the patient and the healthcare system by providing patients with appropriate housing while reducing unnecessary emergency room visits and hospital stays.
The Financial Case for Housing Options in Recovery
While the clinical benefits of housing are clear, there is also a strong financial case to be made for these options. The real estate component of recovery housing can be a stable and profitable investment. Both Koller and Gershman highlighted the significant financial potential in these models. With the rapid appreciation of real estate in recent years, many recovery housing providers have seen substantial returns on their investments. For example, Gershman shared that Square Medical Group has invested between $15 and $20 million in housing and currently has several construction projects underway. By the end of 2025, the company plans to operate 200 beds across Massachusetts, positioning itself as one of the state’s largest providers of recovery residences.
Real estate investors are also recognizing the value in housing options for those in recovery. As Gershman pointed out, investors are “more than willing to invest pretty serious dollars” in recovery homes and sober living facilities, viewing these investments as stable and long-term revenue sources. These properties are often leased for 15-year terms, providing providers with consistent revenue streams.
Moreover, housing options have the potential to offer significant financial benefits for providers negotiating with payers. While insurance companies may currently be hesitant to reimburse for sober housing, investing in these facilities now could put providers in a stronger position as the healthcare landscape shifts toward outpatient care models and value-based reimbursement structures.
“If I’m the owner of an insurance company, sober living is very cheap,” Koller said. “You might pay $1,000 a day, $500 a day for inpatient treatment that would pay for a month of sober living.” As insurance companies increasingly look for more affordable ways to treat SUD patients, housing for recovery offers a cost-effective alternative that still supports long-term recovery.
The Future of Recovery Housing
As the treatment landscape continues to evolve, sober living homes and other housing options for patients in recovery are likely to play an increasingly central role in the recovery process. Providers are already recognizing the value of offering housing as part of a comprehensive continuum of care. These options not only provide patients with a safe and stable environment but also address crucial social determinants of health that can impact recovery.
With Medicaid and other payers increasingly recognizing the benefits of housing for recovery, this model is expected to grow in importance. Providers like UHS and Square Medical Group are already investing heavily in housing, and other treatment centers are likely to follow suit. As more treatment facilities adopt this model, the integration of stable housing into outpatient care will become more common, offering patients the stability and support they need to maintain sobriety and rebuild their lives.
The benefits of housing in recovery are clear: they offer clinical support for long-term recovery, address critical social determinants of health, and provide a financially viable model for providers and investors alike. As the industry continues to shift toward outpatient care and value-based models, housing in recovery is set to become an increasingly important component of the SUD treatment landscape. For patients, these housing options may be the key to a more stable, successful recovery journey. For providers and investors, they represent a promising opportunity to invest in both the financial and clinical success of the treatment system.
