Amid Opioid Epidemic, Drug Rehab Operators Eyeing SNF Properties

January 31, 2018, Maggie Flynn, Skilled Nursing News - As millions of Americans grapple with opioid abuse disorders, skilled nursing facilities are attractive locations for drug treatment facilities.  With more than 2 million people in the U.S. having a substance abuse disorder, according to the Department of Health and Human Services (HHS), the demand for care is spiking.

“There’s this huge need for additional treatment centers,” Dr. Deni Carise, chief scientific officer for Recovery Centers of America (RCA), told Skilled Nursing News.  “Anything that can get a treatment center up and running quickly can save more lives.”

RCA is a treatment provider based in King of Prussia, Pa., with locations in Massachusetts, Maryland, New Jersey and Pennsylvania.  It offers inpatient and outpatient drug addiction treatment services.

Structural advantages

RCA is looking to add a location in Sayreville, N.J., and an affiliate of the provider is seeking a use variance and amended site plan approval for a property that was approved for a long-term care nursing home facility by the Sayreville Planning Board in 2014.

RCA would not comment directly on the Sayreville site.  But old SNFs are excellent places for drug treatment centers because of the overlap in structural needs, Carise said.

“There’s patient rooms — the skilled nursing homes tend to have an exercise room, like a gym where you could do yoga or stretching,” she said.  “That’s great for us.  Sometimes there’s [physical therapy] or [occupational therapy] rooms, which are good for group therapy use.  There’s a kitchen and a place to eat.  There’s this great structural thing to start with that makes these types of facilities very easy to transition between.”

Patient monitoring is another advantage of t he nursing home layout, according to Mark Myers, executive managing director at Institutional Property Advisors.

“The nice thing about a nursing home as opposed to an apartment complex is that if you’re doing group therapy, you’ve got a [registered nurse] or a security guard watching,” he said.  “It’s a lot easier to do that in a nursing home layout building than in an apartment complex.”

A SNF buyer looking to convert the facility to a rehabilitation center can also open far more quickly than if they had built from scratch.

“If we can start from a building that has all these pieces and make it perfect, it’s a lot faster than to have a piece of land and build a building,” Carise said.

There is potential for zoning restrictions and community opposition, however. In Sayreville, residents expressed concern about a recovery center near residential areas, CentralJersey.com reported.   

Steve Thomes, managing director at Chicago-based Blueprint Healthcare Real Estate Advisors, has seen a certain amount of NIMBYism on drug rehabilitation transactions, but even traditional health care facilities such as memory care buildings have drawn resistance from neighbors, he noted.

“There certainly will be some pushback, so that broad health care designation with the zoning is extremely helpful,” Thomes said.

Sellers and buyers benefit

The Sayreville, N.J., nursing home isn’t the only SNF being sought for conversion to a drug treatment center: In Forsyth County, N.C., Addiction Recovery Care Association Inc., is looking to expand its services in a former nursing care facility, the Winston-Salem Journal reported.

There are likely even more to come, Thomes told SNN.  With skilled nursing operators facing competitive pressure, stringent regulatory requirements, and declining occupancy, running a SNF is increasingly daunting, he said.  Selling the facility for conversion to a drug rehabilitation center could be an attractive step for a provider looking to exit gracefully and make some money from the property.

“It’s burgeoning,” he said of the movement to convert SNFs into drug treatment centers.  “I think there are groups that are on the tip of the spear, that are on the cutting edge.  I think as those groups roadmap this, a lot of folks are going to copy that model.”