The following is an interview conducted by Alcoholism & Drug Abuse Weekly in its September 10, 2012, issue with Jim Dredge, The Meadows CEO, regarding The Meadows' new pricing model.
Treatment Program Profile
Arizona center with trauma focus moves to up-front pricing model
Among the many uncertainties that addiction treatment patients and their families encounter when they initiate a treatment stay, the cost of services often becomes the greatest moving target and one of the most troubling aspects of the experience. Finding out after the fact that numerous services that appear central to the program were not included in a treatment center's quoted price at admission could result in an individual having to make treatment decisions based on financial considerations rather than therapeutic value.
Determined to keep financial concerns out of the picture for both patients and the clinical staff, The Meadows in Wickenburg, Ariz., decided as of July 1 to move to a virtually all-inclusive pricing model that gives patients and their families a clear sense of the cost of treatment from the outset. Primary treatment at The Meadows, typically lasting 35 days, costs a total of $44,000. Extended care, usually involving a 60-day stay beyond the original five weeks, costs $500 a day.
The center, which in its 36-year history has acquired a national reputation for its clinical focus on healing from trauma, codependency and process addictions, has retained a limited set of variable costs that are not part of the quoted price for treatment. These include the cost of some medications for illnesses such as HIV, diabetes and arthritis; pharmacy co-payments; and services rendered by off-site providers. Outside of that, all on-site services and amenities are included in the pricing that is quoted to patients at the start of treatment.
"Our overriding issue has to be patient care," Jim Dredge, The Meadows' CEO, told ADAW. "All too often the issue of finances gets in the way. We want our staff only to be focused on outcomes."
Dredge, who has been with The Meadows for a little over two years, said the center's executive team made the decision to initiate all-inclusive pricing after about seven months of deliberation. In order to inform the decision-making process on the subject of pricing, administrators spoke with patients, staff and referral sources. Around 60 percent of the center's referrals come from clinicians who are familiar with The Meadows' areas of focus, particularly its expertise in trauma that is reinforced by the presence of a team of clinical advisers/fellows that includes Pia Mellody, John Bradshaw and Jerry Boriskin.
"For our staff and our referral sources, this has been a relief," Dredge said of the decision to move to all-inclusive pricing.
He believes that too often in addiction treatment settings, individuals who seek healing are led to believe that a quoted price covers major services, only to find out later that services such as psychiatric visits or mind-body therapies are considered extra costs. He believes this can carry damaging consequences for individuals who already struggle to trust others, and also can result in patients declining certain services that could have benefited them.
"Common sense is going to tell you that if you're leaving treatment and you have unexpected bills, you're going to feel violated," Dredge said. "If you feel that you had been in a trusted environment and then this happens, I don't think that's going to contribute to your overall healing."
Dredge said the response from patients and staff to the change in how the cost of treatment is presented has been outstanding. "Our milieu has been stable," he said. Perhaps the most compelling piece of evidence supporting this has been that the pricing change took effect at a time of year when Arizona's temperatures well in excess of 100 degrees would indicate the
likelihood of having some empty beds in the facility for a period. Instead, the center remained full and carried a wait list throughout the first month of implementation in July, Dredge said.
Dredge said the move to all-inclusive pricing took place independently of any other business decision making or planning within the organization, and was executed mainly to retain an emphasis on clinical issues in treatment. "The focus of the staff and patients has to be on healing, not the dollars," he said.
Dredge added that the move does not have a major impact on the center's day-to-day financial management practices. The Meadows is a Joint Commission-accredited facility that operates as a psychiatric hospital with on-site medical services and 24-hour nursing.
The Meadows does not bill insurance directly, and all but about 10 percent of services (those that are set aside for military families covered by the TriCare program) are self-pay. About 25 percent of patients who complete primary treatment move on to the two-month continuing-care program at the center.
As ADAW was going to press, The Meadows was announcing another shorter-term initiative in the pricing area. To commemorate Recovery Month in September, it announced the availability of a discounted primary treatment rate of $36,000 for the first 15 individuals who initiate the treatment process on or after Sept. 1 and are admitted to The Meadows by Sept. 30. "We are pleased to recognize National Recovery Month with this exceptional offer," Dredge said in a news release announcing the September discount. "Recovery is our number one priority at The Meadows."
Reprinted with permission by John Wiley & Sons, Inc.