Federal funding will increase coverage for rehab services, poising clinics for growth
New York, NY (PRWEB) February 27, 2014
The US Substance Abuse and Mental Health Services Administration (SAMHSA) estimates that the total societal cost of substance abuse in the United States is over $317.0 billion per year, which comprises 1.9% of US GDP in 2014. Accordingly, the Drug and Alcohol Rehabilitation Clinics industry generates an estimated $7.7 billion in annual revenue, as operators try to stem the adverse effects of chemical dependence (i.e. addiction). Federal funding through Medicaid and Medicare represents about 60.0% of this industry's annual revenue, and the government's 2010 Patient Protection and Affordable Care Act (PPACA) is set to widen and normalize the care Medicaid recipients receive for substance abuse.
Therefore, the US government and the Drug and Alcohol Rehabilitation Clinics industry are closely intertwined. Thus, while drug and alcohol counselors and therapists seek to improve the lives and families of those suffering from addiction, the government has an interest in ensuring a healthy population and minimizing the adverse flow-through effects of substance abuse.
According to IBISWorld Industry Analyst Sally Lerman, “Rehabilitation clinics are poised for growth as a result of the PPACA and an improving employment rate, both of which will expand the number of people with health insurance and increase the ability of consumers to afford rehabilitation.” This is also expected to contribute to rising profit margins over the period. Furthermore, aside from a slight decrease in 2012 resulting from an isolated drop in federal funding for Medicare and Medicaid, industry revenue has been on an upward trajectory after a recession-related dip. “The subsequent recovery has been driven by the expansion of the Medicaid program and an emphasis on health parity, which seeks to ensure that diseases such as substance abuse are treated on par with purely physical conditions,” says Lerman.
As a result of favorable legislation and a slowly recovering economy, industry revenue is expected to increase at an annualized rate of 2.2% during the five years to 2014. This marginal growth stems from losses incurred early in the period as the recession began to take hold of consumer spending. In 2009, revenue recovered beyond prerecession levels, while continued growth of 4.4% is expected in 2014. Additionally, in the five years to 2019, IBISWorld forecasts revenue to increase as healthcare reform changes included in the PPACA continue to take effect.
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in the US industry report page.
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IBISWorld industry Report Key Topics
The Drug and Alcohol Rehabilitation Clinics industry comprises clinics with medical staff that primarily provide outpatient services related to diagnosing and treating alcohol, drug and other substance abuse. For-profit and nonprofit establishments are included, but this industry excludes facilities that treat inpatients.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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