![]() The addiction treatment business - highly fragmented with 12,000+ players, 90 percent being outpatient operations, the average residential center having just 40 beds - is dominated by non-profits, about 80 percent of the $50 billion industry. In last week's press release headlined by the recapitalization, Waggener said Promises growth initiatives include "organic, acquisitions and M&A," including the acquisition of a facility in Texas as well as new outpatient programs in Tennessee, Massachusetts and other markets. Pieri later revealed, through his public relations agent, that AHP, which controls the "majority" of debt and equity in Promises, had reached a decision to convert its Promises debt to equity. In an email, AHP managing partner Jim Pieri maintained there is "no bankruptcy concern" and that AHP continues to fund Promises’ growth. ![]() ![]() The board already knew that Promises lost $20 million in the first half, they say. Ward made a presentation to the Promises board in August, they say.Īt the meeting, board Chairman and CEO Rob Waggener informed members that Promises hadn’t been able to arrange refinancing for approximately $75 million in debt and that large payments on the debt are due in December, sources say. ![]() Sources say the Promises board this summer retained bankruptcy attorney Chris Ward of the Chicago firm Polsinelli, who shepherded Elements through its Chapter 11 travails. They pared down assets, reorganized and rebranded as Promises Behavioral Health, moving the headquarters from California to Nashville.īut well placed sources, speaking on condition of anonymity, reveal that just a few short years after Elements re-emerged as Promises, those same Elements addiction treatment assets, however pared down and rearranged, are not performing well. AAC, after going public in 2014, was delisted by the NYSE in 2019, shortly after declared bankruptcy and just last December arranged finance to continue operations.įollowing Elements’ downfall, in stepped Assured Healthcare Partners, AHP - then BlueMountain Capital - which, along with partners, paid $40 million for the senior debt of Elements and thus gained control of the company. Groaning under the weight of $500M in debt, private equity backed Elements Behavioral went under in 2018, the biggest bankruptcy in modern addiction treatment history. Private addiction treatment providers, many backed by a flood of private equity money that flowed behind opiate crisis headlines, have been impacted by the healthcare payer moves. The Biden administration, in the first federal enforcement effort ever of national parity legislation, this summer reached a settlement with giant UnitedHealthcare Insurance. Healthcare payers have tried "every trick in the book" to deny out-of-network as well as residential addiction treatment claims in recent years as the opiate crisis sent those claims soaring, says Michael Cartwright, a serial addiction treatment entrepreneur and founder and former CEO/chairman of American Addiction Centers, AAC, a major private addiction center operator.Īnd the states, alarmed at record overdoses year after year, have been fighting back, demanding that payers adhere to laws mandating the end of addiction and mental health claims payments discrimination, known as parity laws. Promises grew out of the ashes of Elements Behavioral Healthcare, which after years of rapid fire addiction center acquisitions succumbed to big structural changes in the addiction treatment industry as private healthcare payers began to scrutinize expensive out-of-network and residential treatment benefits, which formed a bedrock of the business model upon which Elements and much of the rest of the private addiction treatment center business had been built. But previously, in response to emailed questions about Promises' financial condition, Assured Healthcare revealed it planned to convert the provider's debt into equity. Promises, one of the nation’s largest addiction care specialists, last week announced it had completed a recapitalization of its debt burdened balance sheet, without elaborating on the transaction. After investing in an addiction treatment play, NY-based healthcare private equity specialist Assured Healthcare Partners, formerly BlueMountain Capital Management, is facing big losses on its investment in Promises Behavioral Healthcare.
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