How Data, Technology and Big Business are Changing Everything

A major transformation in the addiction treatment field is underway.

Multiple, significant factors are converging to create a new era wherein data, technology and market forces are constructing a new and enhanced path forward.

This transition presents the best opportunity the field of Behavioral Health has experienced in decades to improve treatment success rates, standardize clinical protocols and secure its rightful place as a valid and valued healthcare specialty.

The decisions treatment providers, their financiers and insurance companies will make in this transition will have a profound influence on the addiction treatment space for many years to come.

In order to understand the transformation the field of addiction is currently undergoing, it is important to fully understand the complex mosaic of business and economic interests in the addiction treatment space.

Our nation’s entire healthcare system is undergoing a radical transformation in the provision of healthcare and specifically in addiction treatment. Reimbursement for the provision of care is dramatically changing and rates for addiction treatment services are declining.

One of the most important components for treatment providers to consider is the pervasive position that health insurance companies do not believe many treatment modalities are broadly effective. Because most treatment providers cannot produce data to demonstrate the long-term clinical efficacy of their programs, payers are beginning to scrutinize the value of subsidizing treatment for their members. This may be particularly true of abstinence-based programs.

Mergers and acquisitions by sophisticated private equity firms are increasingly common in the healthcare sector and the addiction treatment field is experiencing the same, resulting in a more consolidated and corporatized industry.

These investor groups have a fiduciary duty and operate to consistently achieve financial performance milestones. A major factor in the surge of mergers and acquisitions is driven by the massive delta between the 22.7 million Americans who need addiction treatment [1] and the 2.5 million Americans who actually receive treatment at a licensed facility [2].

When the number of 20.2 million untreated Americans who fit the criteria for a substance use disorder diagnosis is combined with the rollout of the Affordable Care Act (ACA), astute and savvy investors recognize an enormous opportunity.

Most acquisitions, which are valued by using various financial formulas to arrive at an Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA), also factor in toxicology revenue and out-of-network reimbursement rates in order to arrive at purchase prices.

As a revenue generator, toxicology services are rapidly coming to an end. Additionally, out-of-network providers face greater obstacles than ever to being paid by insurance carriers. Reimbursement rates for out-of-network insurance claims are diminishing and insurance companies have implemented long-term, cost-effective strategies to preclude their members from accessing out-of-network providers for treatment.

The terms and quality of many policies provided through the ACA have been disappointing for providers. High deductibles and co-insurance have left some people seeking treatment with coverage that is cost prohibitive and virtually inaccessible.

In addition to the combination of the varied business and economic factors impacting the addiction treatment field, the manner in which insurance companies and the government view addiction treatment is also changing.

As a result, more than any other, abstinence-based providers stand to be disempowered by the movement toward pay-for-value models.

Medication Assisted Treatment (MAT), which involves medication as an adjunct to therapy has been buttressed by the dozens of safety and efficacy trials required by the FDA for drug approval.

The data behind MAT is therefore much stronger than the data supporting any other approach to treatment. Insurance companies and investment groups will require demonstrable validation of efficacy rates.

In 2016, U.S. Surgeon General, Dr. Vivek Murthy, plans to release a report on substance use, addiction and health, the first of its kind to be released by a Surgeon General.

His report will largely establish MAT as the clinical backbone of opioid treatment.

As a strategy, insurance companies are seeking quality MAT programs to fill the ranks of their networks and to be the ‘go-to’ facilities for their members. Government and commercial insurance companies have begun to pivot away from abstinence-only providers as the solution to treating many who suffer from addiction and a small and growing contingent of abstinence-based providers recognize this substantial shift.

On the surface, future prospects for many commercially reimbursed, abstinence only addiction treatment providers may seem gloomy and wrought with existential issues. It stands to reason that some providers may not be able to navigate the evolving landscape however many providers have embraced the change.

Treatment providers who were previously unconcerned and disinterested recognize the critical need to demonstrate treatment outcomes, to embrace technology platforms to improve clinical services and to some degree engage insurance companies.

Computer-based technology has a rewarding history in healthcare, although the Behavioral Health space, especially addiction treatment, has largely eluded its influence. However, with the advances in Electronic Medical Record (EMR) technology and the advent of sophisticated platforms for outcomes data collection and demonstration, this is changing.

There are many positive implications associated with the utilization of technology in this field and while in its relative infancy, the potential benefits are widespread.

Much like the field of Oncology and other evidenced-based models, the field of addiction treatment will be well-served to be empowered with state-of-the art technology platforms in order to reach the millions of Americans who are going without treatment.

Telehealth is proving to be successful in other segments of healthcare and is on the horizon to constructively transform the provision of addiction treatment. Healthcare reimbursements are declining although telehealth has proven to be a bright spot and resides at the beginning of a considerable growth curve.

Google and other major corporations have made significant investments in telehealth and other healthcare technology platforms.

In concordance with the progress toward technology, the addiction treatment field is sitting on the cusp of embracing data as a method to improve its clinical outcomes.

With the advent of MAT and the collection of outcomes data, providers will be better informed as to their rates of efficacy and success which will result in improved treatment protocols and the alignment of patients with the treatment provider best-suited for their particular disease state.

The collection and demonstration of outcomes data will drive the manner in which health insurance companies’ contract with providers. As in other segments of healthcare, a value-for-performance aptitude is imminent.

The field of Behavioral Health is in transition. With the advent of MAT, EMR and breakthrough technology applications, addiction treatment providers have the opportunity to collect outcomes data that demonstrate their success rates to health insurance companies who are adapting to pay-for-performance models.

The interests and agendas of investment groups will insure the field will continue to be consolidated and corporatized.

Without the capacity to demonstrate long-term positive outcomes and embracing technology and data, it is likely that programs will become antiquated as the increasingly savvy consumer will seek treatment based on demonstrated rates of efficacy.

In this regard, abstinence-based programs may be particularly vulnerable. These changes, while intimidating to some, will ultimately distinguish treatment providers to insurance companies and potential patients and further validate and recognize the field of addiction treatment.
[1], [2]

Data concept image available from Shutterstock

How Data, Technology and Big Business are Changing Everything

Jacob Levenson

Jacob Levenson is the founder and CEO of Austin-based MAP Health Management, LLC. MAP is the nation’s leader in the provision of a comprehensive, accessible technology platform specifically developed to improve treatment outcomes for individuals treated for Substance Use Disorder, addictions and other behavioral health illnesses. Levenson is a frequent contributor to leading addiction, healthcare IT and population health management publications and was recently recognized by Becker’s Hospital Review as one of the leading healthcare entrepreneurs in the nation. For more information, visit


APA Reference
Levenson, J. (2015). How Data, Technology and Big Business are Changing Everything. Psych Central. Retrieved on February 16, 2020, from


Scientifically Reviewed
Last updated: 3 Nov 2015
Last reviewed: By John M. Grohol, Psy.D. on 3 Nov 2015
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