Using Eb-5 Investment Funding for the Construction of a Substance Abuse Treatment Facility Project

Why not think about funding the construction and operations of a substance abuse treatment facility or other health care-related project through EB-5 Investment funding? Although the majority of EB-5 projects have involved hotel and hospitality industry projects, the time may be right for a new emphasis on health-care related new commercial enterprises. Substance abuse treatment centers are an especially attractive industry for EB-5 Investment financing.

The addiction treatment industry in America had revenues of over $34 billion in 2014, an increase of 55% from 2005. The vast majority of that spending — nearly 80% — was underwritten by public funding, and the remaining portion paid for by insurance or private fees. There are more than 11,000 addiction-treatment centers in the United States, according to the Substance Abuse and Mental Health Services Administration. However, this number of substance abuse facilities can only treat a very small proportion of those in need of treatment services.

In 2014, an estimated 21.6 million persons aged 12 or older were classified with substance dependence or abuse in the past year (8.2 percent of the population aged 12 or older). Of these, 2.6 million were classified with dependence or abuse of both alcohol and illicit drugs, 4.3 million had dependence or abuse of illicit drugs but not alcohol, and 14.7 million had dependence or abuse of alcohol but not illicit drugs. Overall, 17.3 million had alcohol dependence or abuse, and 6.9 million had illicit drug dependence or abuse.

In the wake of the 2010 Patient Protection and Affordable Care Act (ACA), healthcare financing in the United States is at a crossroads. The ACA contains numerous provisions to reduce healthcare costs, improve quality, and expand coverage. In addition, the ACA offers states the opportunity to expand their Medicaid programs, which will increase the pool of individuals covered by Medicaid.

The provisions of the Act also require substance abuse treatment to be put on the same level of treatment as other major disease categories and this parity requirement means that there is an expansion of treatment coverage under Medicaid and private insurance. These changes are filling the system with new payors and clients.

In 2014, the ACA established 10 mandatory “essential health benefits” for newly eligible Medicaid enrollees and most individual and small group health plans. Substance abuse treatment is among the required benefit categories. According to HHS, new laws and regulations will allow 32.1 million individuals to access substance abuse benefits for the first time and expand behavioral health coverage for 30.4 million individuals with existing behavioral health benefits.

Wall Street and other players in the investment arena are taking notice. In 2014, American Addiction Centers, the first public company whose business is primarily focused on substance abuse treatment, raised over $65 Million Dollars in its initial public offering (IPO). Since its IPO, this company’s stock price has remained strong, and the company has grown from 480 beds to a projected 1,200 beds by the end of 2016. Other large providers in the industry are buying up smaller independent treatment centers and consolidating the industry with similar IPO goals.

The substance abuse treatment industry offers other business advantages as well. Although regulated by state agencies, the medical and professional staffing of substance abuse treatment centers is limited compared to conventional medical facilities and labor and COG factors are very manageable for a start-up business.. The creation of full-time jobs and economic stimulation in surrounding areas are easily achieved by an abuse treatment center construction project. This factor also makes them attractive for EB-5 investment.

Consider using EB-5 Investment Funding for a substance abuse treatment center or other health care industry project such as an urgent care or assisted living facility. The EB-5 Investment funding process is available and a viable funding alternative in may different industries.

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