Management Papers

Document Type

Journal Article

Date of this Version

10-2006

Publication Source

Journal of Substance Abuse Treatment

Volume

31

Issue

3

Start Page

255

Last Page

265

DOI

10.1016/j.jsat.2006.06.020

Abstract

Drawing on experiences in other industries, this article argues that the business of addiction treatment is likely to be transformed by the advent of a period of consolidation, in which a number of small independent programs will be acquired by larger, better capitalized, and managerially more sophisticated enterprises. Consolidation will be driven by opportunities to leverage new technologies, to exploit new regulatory initiatives, and to introduce economies of scale and scope into an industry that is currently highly fragmented. The process is likely to result in segmentation of the market, with the coexistence of large, generalist, highly standardized firms and a number of small highly specialized firms. When an industry consolidates, the types and quality of services provided can improve through the adoption of best practices and through increased competition among larger providers. If these larger providers are publicly traded, however, efforts to improve will inevitably be influenced by pressures to maintain or increase quarter-to-quarter earnings and share prices, leaving open the long-term impact on service quality.

Copyright/Permission Statement

© 2006. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

humans, industry, managed care programs, marketing of health services, substance abuse treatment centers, substance-related disorders

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Date Posted: 27 November 2017

This document has been peer reviewed.