The Conversation: Drew Rothermel

Berks County native Drew Rothermel is leading a Florida-based addiction treatment company through one of its largest expansion periods since its founding.

Not only is Origins Behavioral Healthcare expanding from its base in Texas, but Rothermel, Origins CEO, says there are plans to expand up and down the East Coast, including Pennsylvania. In December, Origins acquired two treatment facilities in Florida from Caron Treatment Centers and moved its headquarters from Texas to South Palm Beach, Fla. The acquisition included Caron’s Hanley Center and Gate Lodge facilities.

Business Weekly: What prompted the recent acquisitions in Florida?

Drew Rothermel: I was brought on at Origins with the charge of growing a national platform, both geographically and with a diversity of programming. Origins has good market penetration in Texas, and then a shotgun spray elsewhere across the country. South Florida is a good prospect for the Eastern U.S. Hanley Center was good to reach the Florida and Eastern U.S. populations. Hanley is also the pre-eminent name for treatment of young people and baby boomer populations. It’s a flat campus and it has great medical capabilities. As we were looking to grow our program, we had additional land and ability to expand our offerings. We added 110 beds immediately. It doubles our size. But there’s room for another 100 to 200 beds in expansion on that land. It really gives us a growth story for the future.

BW: With growth as the main theme for the company, do you expect any expansions or acquisitions in central or eastern Pennsylvania?

DR: We have several that are in the works that we are pursuing with varying degrees of intensity, one of which is in Pennsylvania, but it’s really early in the process. These things have a long life, so I can’t say much about them.

BW: What kind of timeline is there for finalizing such acquisitions in this industry and what are the issues that have to be resolved?

DR: It’s all over the place. The first thing is, has (the selling) organization made a decision itself? If it’s made a decision to sell, has acquired professional talent such as an investment banking firm, there are willing buyers, and the price expectations are realistic, then you could probably (close a deal) in four to six months. But most organizations are small and have unsophisticated financial talent in-house, so it can take a long time. Just getting to the point when there’s a decision to sell could be a yearlong process. It’s not a consolidated industry. There are a lot of small players. Most of the places that have grown have done it with lots of very small acquisitions.

BW: What’s the most difficult part about operating substance-abuse treatment centers?

DR: Attracting the best talent and retaining the best talent is number one. The second thing is having the scale to have and understand the revenue cycle. Most of the smaller places don’t take insurance or require payment upfront. That’s one way to prevent those issues, and you don’t have to employ a health care billing team. It’s a very complicated process. Because a lot of places are smaller, they probably have to outsource that financial process until they reach a certain scale.

BW: There’s often resistance in many areas to locating a drug treatment facility in a community, yet these communities also don’t want drug problems. Are their concerns justified, and how do such issues affect your business?

DR: It is very complicated to work through those issues. The easiest thing is to find a community or a location in the community where you have the absolute right to operate. But often those locations are places where you don’t want to operate. Municipalities can’t discriminate. The perception of risk is far greater than the actual risk to the community. There’s a high level of supervision at a licensed facility. The facilities are more concerned with people in the community interacting with the facility than people getting out. There’s more concern of people trying to bring substances into a facility than a person harming the community.

BW: Does the presence of spot drug problems in a region determine where a company such as yours chooses to locate?

DR: It could be one indicator of a need, but the need is usually more flat across the board. The focus can be highlighted in local media revolving around a tragedy, and that draws attention to a problem for a while, but the need is present in every community.