"Heads in Beds"

When Addiction Treatment Facilities Place Cash Over Care

santa barbara addiction treatment.jpg

There are over 14,500 drug treatment facilities and 60,000 sober livings in the United States, as well as over 2 million individuals in need of addiction treatment. The addiction treatment realm has evolved into a $35 billion industry, where unfortunately, many companies are unregulated. Additionally, for many individuals, rehab has become a revolving door of continuous relapse and readmission.

Although the overriding interest of addiction treatment facilities should be the long-term recovery of their residents, many treatment centers place profit above all else. This, in turn, is reflected in the way that they go about doing business.

When it comes to managing a profitable addiction treatment facility, the owners’ main goal should be to provide high quality care; however, often of equal importance is for the facility to put “Heads in Beds”. This well known and unethical practice involves clients being prematurely transitioned through various phases of a treatment program based on census rather than clinical readiness.

There are companies specifically designed to help rehabs market themselves, regardless of the quality of the service that is provided. “American Rehab” is just one example. On their home page it says: “Our direct response marketing services for drug rehabs and addiction treatment centers focus on boosting your business’s online presence, including turning your website into an admissions generator.” That seems fair if the owner of the facility wants to boost his/her online presence in order to help more individuals achieve long-term recovery. But imagine if you are one of the unethical individuals who decides to open a rehab facility with financial gain being your predominant objective. So you hire a few under-qualified, uncertified individuals who have a year or two of sober time under their belt to lead groups and drive clients to 12-Step meetings. Now, all you need is clients. You hire American Rehab to help you design an upscale website that ranks #1 on google in your area, and you start stealing the clientele of the more qualified rehabs in your area.

Patient brokering (“body brokering”) is a common practice which happens when an unscrupulous treatment center hires a marketer to “recruit” clients who are in desperate need of treatment. The rehab marketer is paid for each person that he/she is able to funnel into the treatment center. This too is unethical. Sometimes, these individuals even admit themselves to another rehab facility in order to steal that facility’s clients. In other words, the hired person will enter treatment, scope out who has good insurance, convince those individuals to relapse on drugs, and then entice them to come to his/her treatment facility to get back on their feet. These tactics are both unethical and illegal; however, they happen more often than people realize.


The above picture depicts a legitimate Facebook post from an addiction treatment profesional.

The above picture depicts a legitimate Facebook post from an addiction treatment profesional.

Unethical addiction treatment facilities admit patients inappropriately, as they are aware that their services are not what the patient needs to recover; however, because they are profit driven, they are willing to claim that their services are a “perfect fit” for the struggling individual. For example, a dual diagnosis patient may be convinced that substance misuse is their main concern and therefore, a treatment facility which specializes in the 12-Steps is the best fit for them when in reality, they need a service that will address their mental health more so than the substance misuse. It is important to distinguish between affiliated and unaffiliated treatment placement specialists, as only those who are unaffiliated remain unaffected by clandestine financial incentive. At the end of the day, a profit-driven marketers' main goal will be to meet their quota, or place "Heads in Beds."

Online marketing tactics have fueled this problem. For example, a treatment facility may create a generic treatment website that directs people to a toll-free treatment helpline. These phones are generally managed by people with little to no clinical experience. The caller (typically the struggling individual or family member of the struggling individual) is asked generic questions and then told they are being “evaluated” by a “specialist.” Ultimately, a referral suggestion is made to a specific treatment facility. The caller may think that this suggestion is the “best fit” for him/her, but it is actually just the name of the treatment center that is paying the operator to refer. These are 35+ questions that should always be asked when beginning a new treatment journey.  

Some treatment facilities even hack into Google to change the contact information on another treatment center’s website. An individual will think that they are calling a specific treatment center or recovery support service, when in reality, they are calling a completely different one. This is an despicable practice that sends patients with specific clinical needs to ill-equipped facilities. In fact, this happened to our website at Recovery Fusion, located in Santa Barbara, California, this past summer.

Another online tactic is “virtual offices”, which involves treatment centers paying for placement on Google so it appears that they are located in an incorrect area. For example, an individual may research “addiction treatment facility in Wisconsin” and a facility that is located in Illinois will pop up with a Wisconsin address. This false advertising hinders individuals’ ability to navigate facilities that are actually within their desired state. The goal of these places is to coerce the individual to get on a plane and travel to the out-of-state facility. Then, once their insurance runs out, the individual is stranded at the facility.

The above picture depicts a legitimate Facebook post from an addiction treatment profesional.

The above picture depicts a legitimate Facebook post from an addiction treatment profesional.

Unethical practices have become increasingly frequent with regards to insurance as well. Most treatment centers will only treat clients with a specific insurance policy. Some facilities will promise an individual that his/her time at treatment will be covered by insurance. Then, a few weeks into the program, the individual is informed that his/her insurance will no longer cover the duration of his/her treatment. If the individual cannot pay out of pocket, he/she is kicked to the curb.

There are also treatment centers who will sign individuals up for an insurance policy and pay for their first month, as long as they attend that specific center. In fact, some facilities tell clients that they are getting a “scholarship” to go to rehab, when in reality, they are secretly getting signed up for insurance. Once the individual is insured and in the facility, unethical operations run up daily medical bills, covering everything from psychological counseling to detox monitoring, and even excessive drug testing at exorbitant costs.

The above picture depicts a legitimate Facebook post from an addiction treatment profesional.

The above picture depicts a legitimate Facebook post from an addiction treatment profesional.

It is important to note that while local drug stores sell $25 urine tests that immediately indicate the presence of most narcotics, many treatment centers routinely ship urine samples to distant labs that yield the same results for thousands per test.

The above picture depicts a legitimate Facebook conversation regarding unethical addiction treatment practices.

The above picture depicts a legitimate Facebook conversation regarding unethical addiction treatment practices.

Sober livings homes and residences for people in recovery from substance misuse are not exempt from these unethical practices either. The sober livings are structured in a way that avoids some of the limitations of halfway houses. The essential characteristics include:

  • An alcohol and drug free living environment for individuals attempting to abstain from alcohol and drugs.

  • No formal treatment services, but either mandatory or strongly encouraged attendance at 12-step groups such as Alcoholics Anonymous (AA).

  • Required compliance with house rules such as maintaining abstinence, paying rent and other fees, participating in house chores and attending house meetings.

  • Resident responsibility for financing rent and other costs (Polcin & Henderson, 2008).

Well-run sober living homes can help many recovering substance misusers; however, many remain overcrowded, unstable, and unregulated. Where no treatment is provided to residents, no license is required; therefore, sober livings do not require a license and are not overseen by city or state agencies. Residents are subjected to the regulations put in place by the owner of the sober living; some require mandatory drug testing, while others don’t require any drug testing at all. Consequently, sober livings often struggle with drug misuse within the home itself. Moreover, some individuals overdose and die in sober livings.

Partnerships among sober livings, treatment facilities, detoxes, and other recovery support services can potentially influence the places to which they refer clients. When hidden incentive affects an individual’s treatment placement, their long-term recovery is put at jeopardy for the sake of profit. For example, individuals may be referred to a specific out patient program, not because it is the best option for their long-term recovery, but because it will keep them in a specific treatment center’s network. That way, if the individual relapses, they will most likely return to the same treatment facility that they have already completed.

The above picture depicts a legitimate Facebook post from an addiction treatment profesional.

The above picture depicts a legitimate Facebook post from an addiction treatment profesional.

Additionally, some sober living owners receive kickbacks for sending house residents to a specific facility. The owner of the sober living home may even have an agreement with the treatment facility that they will offer their residents incentives (such as free rent, food, or cigarettes) to attend a specific treatment program. Likewise, some sober living owners use this tactic to entice residents to stay at the house for an extended period of time. This is called patient enticement, and it happens within treatment facilities as well. In other words, a facility may attempt to convince an individual to enroll by offering free airfare, rent, or other material items.

In 2014, the FBI launched “Operation Thoroughbred”—a federal investigation into accusations of kickbacks, patient brokering, insurance fraud, and money laundering in the Palm Beach County’s billion dollar addiction treatment industry. One of the facilities that was raided was a sober living home known as Halfway There. Multiple former employees admitted that the facility had forged medical records to collect on insurance money. Additionally, an affiliated doctor stated that the owner, Eric Snyder, used his license to order urine drug screens without permission. Agents found over 200 unrefrigerated urine samples, many without names, in a makeshift lab that were going to be tested at the insurance company’s expense. According to federal prosecutors, Snyder used the sober living home to trick insurance companies, ultimately resulting in $58 million in fraudulent claims. At times, the owner used bribes, strip club trips, and even drugs, to keep the beds full at his facility. He and his college were eventually charged with conspiracy to commit health-care fraud. This happens all the time, especially in places like Palm Beach County, where the addiction treatment industry accounts for $1 billion of the county’s annual revenue.

The above picture depicts a legitimate Facebook post from an addiction treatment profesional.

The above picture depicts a legitimate Facebook post from an addiction treatment profesional.

Snyder is not the only unethical player in this industry. Last year, addiction treatment center executive, James Kigar, faced 95 separate charges linked to cashing in on recovering individuals at a facility known as Whole Life Recovery. Kigar was allegedly involved in unethical practices related to patient brokering. Prosecutors say that Kigar kept his beds filled by paying sober living homes to send him residents for outpatient treatment. The payments were labeled as “case-management fees.” In other words, the sober living homes would scope out the individuals with good insurance and entice them, with free rent, to attend Kigar’s treatment facility. The list of those charged for being affiliated with Kigar’s unethical practices at Whole Life is quite extensive. For example, individuals connected to Southern Pal Oasis sober home, Integrity House, Saje House, Anchorage Sober Living, The Halfway House in Delray Beach, and Saved By Grace Recovery were all charged with multiple counts of patient brokering after police say that they accepted weekly checks from Whole Life.

The above picture depicts a legitimate Facebook post from an addiction treatment profesional.

The above picture depicts a legitimate Facebook post from an addiction treatment profesional.

Southern California is is home to over 1,117 licensed rehabs and thousands of sober living homes. It has often been referred to as the rehab capital of this country. Industry insiders refer to the Los Angeles area as the “Rehab Riviera.” Malibu, for example, has the highest per-capita concentration of rehab centers in California witch has 47 facilities and a population of fewer than 13,000 people. Former federal prosecutor, Deb Herzog, who investigated the rehab industry for Anthem Insurance, stated “It’s a horrible business. It doesn’t mean all rehabs are bad. But because of the lack of regulation, there’s a huge potential for fraud.”

Recovery Fusion conducted an undercover interview with a young man working as a marketing representative for a well known rehab in Beverly Hills. The individual  stated he was being paid “$2,500-4,500 per person to funnel people into The facility. ” The individual also said that he was allowed to bribe people; however, he preferred not to because then he would have to “deduct that from his cut.” 

According to the Orange County Register, a Southern California News Group investigation of the rehab industry uncovered the following issues:

  • On average, a person dies every two weeks while being cared for in a licensed rehab center in California. This number doesn’t include those who die on the streets after being kicked out of rehab, or in hospitals, or at sober living homes.

  • Almost anyone can run a rehab-related business in California, as there is no degree, medical or otherwise, required to get a license. Some centers are run by ex-cons who earned certificates in rehab center management from prison schools, others by doctors who have had their licenses in the crosshairs of the Medical Board of California.

  • From 2013 to 2016, consumer complaints about licensed rehab centers nearly doubled, from 266 to 509 per year.

  • There are only 16 inspectors, working in an office in Sacramento, to monitor nearly 2,000 rehab centers in California.

  • According to the National Center on Addiction and Substance Abuse, substance misuse and related hospital costs, crime, and lost productivity, account for over $468 billion a year nationally. That number does not include the out-of-pocket expenses paid for by recovering misusers and their families, or money spent by all consumers in the form of higher premiums.

  • It’s difficult to get unbiased information about rehabs. The state keeps official assessments only on paper and only in Sacramento, and detail on deaths inside rehabs is hard to come by because of privacy laws (Sforza 2017).

The above picture depicts a legitimate Facebook post from an addiction treatment profesional.

The above picture depicts a legitimate Facebook post from an addiction treatment profesional.

California offers more drug and alcohol treatment programs than anywhere else in the country. With financial incentive being the primary objective of many addiction treatment facilities, it is often difficult for the individual in crisis to distinguish between biased and unbiased information.

Despite the unethical practices in this industry many addiction treatment resources are very effective and help many people. In order to navigate a proper treatment facility, here are some important questions to consider:

  • Is the facility licensed and accredited?

    • Licensed facilities must abide to specific requirements in order to ensure ethical practice. The most common accreditation for addiction treatment facilities is the Joint Commission on the Accreditation of Healthcare Organization.

  • What does the facility’s evaluation process entail?

    • Each facility is in charge of assessing individuals before they enter treatment. Some facilities offer an extensive evaluation process to ensure individualized care. A short and generic evaluation process is potentially a red flag that the facility is more eager to fill beds than they are to provide customized care.

  • Does the facility address dual diagnosis?

    • Over 50% of individuals suffering from addictions also suffer from mental health problems, such as anxiety or depression. Dual diagnosis facilities address both addiction and mental health disorders, ensuring a more comprehensive approach to recovery.

  • How does the facility handle detox?

    • For many individuals suffering from substance misuse disorder, the first phase of addiction treatment requires detox in order to deal with the immediate withdrawal symptoms, which, in some cases can be life-threatening. Some facilities provide detox, while others do not.

  • What is the philosophy of the facility?

    • There are thousands of modalities and approaches to addiction treatment. Some facilities utilize a holistic program, which incorporates natural alternative remedies, such as acupuncture. Others employ a religious program based off of various spiritual philosophies. Some utilize progressive harm-reduction models, while others use a more traditional, abstinence based program. There is no cookie-cutter solution to addiction, so it is important to assess which approach is best for each individual.

  • What pathway to recovery does the facility encourage and/or embrace?

    • According to the American Society of Addiction Medicine, 10% of individuals who join a 12 Step program achieve long-term recovery, yet 90% of addiction treatment centers are 12 Step based. There are many paths to recovery; the 12 Steps is one path that works for a lot of people, but it doesn't work for everyone. There are many other pathways to recovery, such as SMART Recovery, Women for Sobriety, Secular Organizations for Sobriety, LifeRing, Moderation Management, The Seven Challenges, Refuge Recovery, and CRAFT.

  • Does the facility offer specialized treatment plans for each individual?

    • Each recovering individual has a specific set of needs and strengths that must be taken into consideration when navigating the proper treatment option. Some programs employ a more generic, traditional approach to addiction, while others approach addiction treatment from a customized stance, ensuring that each individual’s needs and strengths are catered to.

  • Does the facility offer inpatient, outpatient, or both?

    • Inpatient facilities require that the individual reside at the facility for the duration of the treatment. Outpatient facilities allow for the individual to live at home while attending a treatment program during the day.

  • How long is the program?

    • Research shows that the longer an individual remains in treatment, the higher his/her chance is at maintaining long-term recovery. Most programs range from a 28 to 90 days.

  • Is the facility private or public?

    • Public rehabs are funded by the government, therefore, they are typically much cheaper, and sometimes, even free. These facilities are often limited in the type of service they provide. Because there is such a high demand for treatment, public facilities often have a waitlist. Furthermore, public facilities employ a more cookie-cutter program with little customized care. In contrast, private facilities are typically more expensive, as they are not funded by the state; however, for this reason, they often provide a more customized, holistic, high-end experience.

  • What are the payment options of the facility?

    • An individual’s insurance may pay for part of or all of his/her treatment. In situations where an individual is uninsured or his/her insurance doesn’t cover treatment, some treatment centers will offer financial alternatives, such as payment plans.

  • What support options does the facility offer for families?

    • Addiction is a family disease—the whole family is affected whether they realize it or not. Thus, it is important for the family to learn about addiction in order to properly support their loved one. Some programs integrate the family in the treatment process through family groups, phone calls, and/or aftercare planning, while others lack in this area.

  • Does the facility offer aftercare support?

    • Recovery doesn’t end when treatment ends. When an individual leaves treatment, it is important that they are armed with an action plan that ensures continuation of his/her progress, as well as relapse prevention. Some facilities offer a step-down program, while others may even provide a recovery support specialist.

  • How is your treatment placement specialist vetting your care? How are they connected to the treatment facility that they are recommending?

    • Much like you would use an independent insurance broker, it is best to use an independent treatment placement specialist. There are very few in the country, but they are burgeoning due to the overwhelming demand for ethical navigation of addiction treatment services.

Interviewing multiple rehab centers to assess their efficacy and morality may seem overwhelming, especially during a time of crisis. And that’s why independent treatment placement specialist services should be the new norm.

Because there is no specific list of ethical or unethical marketing practices within the unregulated addiction treatment industry, treatment facility marketers have the same marketing freedom as food corporations, clothing brands, and all other free-market enterprises in this country. The concept of “ethical marketing” ultimately comes down to each facility’s subjective opinion. Whatever this opinion may be, it dictates every aspect of the facility, including the quality of the service provided.

The government has also taken measures to attempt to curb fraud in the addiction treatment industry. For example, US State legislator recently proposed a bill requiring facilities to have a written policy in their practice prohibiting gifting. Similarly, Prescott, Arizona, has enacted the first law in this country to regulate sober living homes by setting training standards for the management, as well as the requirement of licensing. The NAADAC has also established a set of ethical practices, with the foundation being the underlying concern for the well-being of recovering individuals. According to their website, “this concern emerges from recognition that we are all stakeholders in each other's lives—the well-being of each is intimately bound to the well-being of all; that when the happiness of some is purchased by the unhappiness of others, the stage is set for the misery of all. Addiction professionals must act in such a way that they would have no embarrassment if their behavior became a matter of public knowledge and would have no difficulty defending their actions before any competent authority. When an ethics complaint is filed with NAADAC, it is evaluated by consulting the NAADAC/NCC AP Code of Ethics.  This code is also utilized by state certification boards and educational institutions to evaluate the behavior of addiction professionals and to guide the certification process”. The approved Code of Ethics for the National Certification Commission for Addiction Professionals can be viewed at: http://naadac2016.sitewrench.com/assets/2416/naadac-code-of-ethics-033117.pdf.

The Facebook photos displayed in this article depict just a few of the thousands of conversations happening right now regarding unethical addiction treatment practices. The first step toward change is awareness. People are aware of the unethical practices occurring within the addiction treatment realm; it's time to change.


  • Smith, Dennis G. “Center for Medicaid and State Operations Letter.” downloads.cms.gov/cmsgov/archived-downloads/SMDL/downloads/SMD081507A.pdf.

  • Sforza, Teri, et al. “How Some Southern California Drug Rehab Centers Exploit Addiction.” Orange County Register, Orange County Register, 30 May 2017, www.ocregister.com/2017/05/21/how-some-southern-california-drug-rehab-centers-exploit-addiction/.

  • NAACP. “Introduction to NAADAC/NCC AP Ethical Standards.” Code of Ethics, www.naadac.org/code-of-ethics.

  • Polcin, Douglas L., et al. “Sober Living Houses for Alcohol and Drug Dependence: 18-Month Outcomes.” Journal of Substance Abuse Treatment, U.S. National Library of Medicine, June 2010, www.ncbi.nlm.nih.gov/pmc/articles/PMC2860009/.

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