Federal funding will increase coverage for rehab services, poising clinics for growth
Los Angeles, CA (PRWEB) December 12, 2012
The US Substance Abuse and Mental Health Services Administration (SAMHSA) estimates the total societal cost of substance abuse in America at over $500.0 billion per year, which is about 3.6% of US GDP in 2012. It should come as little surprise, then, that the Drug and Alcohol Rehabilitation Clinics industry generates an estimated $7.5 billion in annual revenue trying to stem the adverse and wide-reaching effects of chemical dependence (i.e. addiction). Indeed, 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) will likely widen and normalize the care Medicaid recipients receive for substance abuse, says IBISWorld industry analyst Josh McBee. As such, the US government and this industry are closely intertwined: while the work of drug and alcohol counselors and therapists seeks to improve the lives and families of those suffering from addiction on an individual level, the government has an interest in ensuring a healthy population that minimizes the adverse flow-through effects of substance abuse.
Rehabilitation (rehab) clinics are poised for growth on the back of the PPACA and a slowly improving employment rate, both of which will expand the number of people with health insurance and increase the ability of consumers to afford rehab. Although the industry's revenue experienced a recession-related dip in 2008, subsequent recovery has been driven by expanding funding for Medicaid and an emphasis on health parity, which seeks to ensure that diseases such as substance abuse are treated on par with purely physical conditions, continues McBee. The Drug and Alcohol Rehabilitation Clinics industry is highly fragmented. Industry establishments tend to be small. In fact, about 60.0% of firms are expected to have fewer than 20 employees. Concentration varies for for-profit, public and nonprofit firms. For-profit firms tend to be larger, and this segment of the industry is more highly concentrated. The reverse holds true for nonprofit organizations.
In light of favorable legislation and a slowly recovering economy, industry revenue is expected to increase at an annualized rate of 0.7% during the five years to 2012. Marginal growth stems from losses incurred early in the period as the recession began to take hold of consumer spending. In 2011, revenue recovered beyond prerecession levels, and continued growth of 1.9% is expected in 2012. Through 2017, IBISWorld forecasts revenue to increase as healthcare reform changes included in the PPACA continue to take effect. For more information, visit IBISWorld’s Drug and Alcohol Rehabilitation Clinics in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes establishments with medical staff who primarily provide outpatient services related to diagnosing and treating alcohol, drug and other substance abuse. For-profit and nonprofit establishments are included, but the 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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