As the economy slows, driven in large part by the drying up of credit in the wake of the housing bust, state and local government finances are being strained in a way that hasn’t been seen for many years. According to the National Association of State Legislators, the states overall are facing a massive $40 billion budget shortfall. This is very bad news for the $19 billion a year public side of the treatment business, where state contributions account for over 60 percent of revenues.

Providers in states particularly hard hit by the real estate downturn - states like Florida and California, for example - are already complaining about large actual and proposed cutbacks in addictions program expenditures. And, so, it’s not surprising that we here at Treatment Magazine have been getting calls from public providers seeking out our advice and expertise concerning possible expansions of their business lines into the private markets for addiction treatment services, especially the intensely competitive private pay market. Treatment Magazine does indeed have unmatched reach, through our proprietary subscriber list, into the private pay referral base, and we have successfully helped many private pay centers reach this market. But there is also no doubt that this market is getting very crowded, with the list of new entrants easily reaching into the hundreds over the past five years or so. And late last year, Treatment Magazine learned that one of the largest public providers, the developer of some of the nation’s most respected addiction treatment products, has been quietly and very closely been examining entrance into private markets. If they decide to move, and we think they will, this player will be a very formidable competitor indeed.

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