Maximizing Revenue Sources

Substance abuse treatment centers are facing increasing pressures to operate as efficiently as possible. With fewer available resources there is a growing emphasis on cost reduction (Lemak et al, 2003). Marsden (1998) argues that external environmental factors, (cost containment pressures, shifts in ownership and funding, and changes in federal and state policy) are forcing substance abuse treatment centers “to shift from residential to outpatient treatment, decrease patients' length of stay, and increase linkages to other systems of care.” The ability of a substance abuse treatment center to maximize its revenue, by increasing referral sources and operating at or near capacity, is essential to its survival.

The literature reviewed did not produce any results that directly addressed this issue. Most of the literature provided statistical analysis without providing guidelines to maximize revenue.

A study by Lemak et al (2003) examined the impact of administrative burden on outpatient substance abuse services. They concluded that as administrative burden grows, centers may need to cut programs or restrict access to existing programs. Treatment staff may have to shift some of their focus away from clients which may affect quality of treatment and outcomes.

An article by Zarkin et al (1994) presents strategies for substance abuse treatment programs to increase funding. The article presents an overview of drug treatment financing, and describes funding opportunities for drug treatment programs. Similar to the previous article, the authors predict an increase in administrative burdens which will result in a move from long-term and residential care to short term outpatient treatment.

Alexander et al (2003) reviewed changes in managed care and their effect on outpatient substance abuse treatment organizations (OSAT). They found that from 1995 – 2000

There was an increase in managed behavioral care nationally. There was a small decline in private managed care activity in terms of percentage of revenue covered by private managed care. Medicaid managed care has increased over the study period. The data also shows that OSAT units are in fewer managed care arrangements then they were 5 years ago. The authors suggest that one reason for this is that OSAT units may want to reduce the number of contracts due to the increased administrative burden. They also found that managed care activity increased with larger OSAT units that were able to link with other types of health and social services. A question this trend raises is how do smaller units contract with managed care? If managed care becomes a more important source of funding how will the smaller organizations survive?

Further research is needed in this area to address the issue of how to increase referral sources and maintain operating at or near capacity.