How To Start A Drug Rehab Center

Opening a drug and alcohol recovery center requires two essential building blocks. 

First, you must know how to legally operate a recovery center. Licensure is a must, since regulation and paperwork are foundational in this field.

Second, you must know how to keep the center profitable. Drug rehab centers aren’t like other medical practices; people aren’t just going to show up.

This guide explains how you can start a drug rehab center and make it profitable in the opening months and beyond. It also clarifies any expectations about the costs, marketing efforts, and accreditations required.

Starting a Drug Rehab Center: The Quickstart Guide

TLD;DR? 

Here’s the checklist version of opening a drug rehab center.

Keep reading for a breakdown of each category.

The Cost of Opening a Drug Rehab Center

The average cost of opening a treatment center depends on your business structure. The actual cost depends on your level of care, where you’re located, payer targets, and more. 

Your largest investment should be in the property and the people running the center. More on these later.

For now, let’s look at the most foundational up-front costs to consider, including the feasibility study.

Feasibility Study

The feasibility study determines how feasible it is to open a drug rehab center in a specific area. It’s also a pressure test for practicality and future profitability.

The first step is deciding what type of rehab center you want to run, including the level of care you’ll provide.

For example, will your center offer a full continuum of care, including detox, residential inpatient, PHP, and IOP? Or are you looking to open a simple IOP or residential center? Or do you expect to open a more specialized center focusing on one or two aspects of care?

We highly recommend going with the former.

For example, opening a residential and IOP center in West Palm Beach, FL could lead to a disastrous failure. This is already a saturated area, so it may be difficult to stand out from the crowd. Offering your service in a state like Ohio, however, could be very beneficial to many.

Next, you need to determine the size of your center. How many beds do you wish to operate? Install too many, and it could be difficult to keep them filled. Install too few, and you may suffer growing pains.

A feasibility study can help you answer both questions with candid, data-driven accuracy.

Marketing Budget

Many drug rehab centers don’t spend enough on marketing, which leads to a difficult launch and empty beds in the future. Remember: rehab centers aren’t like other B2Cs, and people aren’t just going to show up without a strong marketing message.

The amount of money you should budget for marketing depends on how many beds you have. It should be enough to cover the costs of lead generation and support online and traditional campaigns.

Your monthly SEO budget depends on your location and competition. States like Florida, California, and Texas, for example, are more difficult to rank in than others.

Finally, your website design and development budget depends on the complexity of your site. Massive platforms may require more budget, while a simple web presence may require less.

Don’t forget your incidental costs, including the price of branded materials, logos, and swag.

Consulting Budget

You may wish to work with addiction treatment consultants to ensure the most effective business strategy for your drug rehab center. Addiction treatment consultants work on every aspect of developing your business, while addiction marketing consultants focus primarily on marketing.

No two consultants are exactly alike, although many of their service plans have similar pricing models.

There are three in particular you’re likely to see:

1. Pay Per Hour: Some treatment care consultants provide extremely granular care so you can niche down on the level of support you need.
2. Pay Per Project: The pay-per-project model is for those willing to do a lot of the work to open a rehab center. They usually need help managing the particulars, such as writing a pro forma or adding their billing systems. Size and complexity is a major factor.
3. All-Inclusive: This is for those who want “set it and forget it” support. Addiction treatment consultants work with you every step of the way to set up licensing, select facilities, create policies and procedures, hire staff, prepare your EHR, integrate billing systems, develop programs, and much more. The cost may depend on the state you’re in (or the type of addiction treatment center you have). Be sure to ask the treatment consultant if you can lower the cost with financing options. 

As always, be sure to chat with multiple consultants so you can compare different quotes and choose the right service for your needs.

How to Start a Drug Rehab Center

You have two options for opening a treatment center: running the business from your home, or constructing a separate building.

There are pros and cons to each approach:

If you’re opening an in-home treatment center, be sure to review the laws applicable to your city and state. You may need to jump through more hoops with certain licensing programs or think more strategically about marketing your business.

If you’re building a commercial drug rehab center, consult with your construction team to avoid potentially expensive mistakes. You may need to provide specific site information to the state, such as zoning compliance, certification of occupancy, and disclosures of specific equipment.

Addiction treatment consultants work alongside you to identify problems and avoid obstacles in advance.

How to License a Drug Rehab Center

Like any other type of medical practice, you must be licensed before opening a drug rehab center. 

This requires swift communication with local authorities and involves zoning laws as well. 

If you are looking to open a residential recovery center in your home, for example, your residence may require commercial medical zoning. 

Of course, each state is different. If you have six beds or fewer in the state of California, you aren’t required to be zoned commercial. You still need a license, however.

A big part of your licensure starts with your program and Policy & Procedures manual. The licensing board needs to understand: 

• The type of treatment center you are opening
• Your program and P&P documentation
• How you plan to serve the community

If you don’t have proper documentation, or if you skip a piece of a P&P, the licensing board may reject your application. 

Writing a Business Plan for Your Drug Rehab Center

You need to create a professional business plan and write a pro forma before attempting to open a center. Not only does this organize your thoughts about the business, but it also serves as a solid foundation for what your rehab center could become.  

To write a business plan for your drug rehab center, you must:

• Write an executive summary
• Summarize the specifics (execution, target market, milestone outline, etc)
• Cover your financial plan and financing

Keep in mind most banks and serious investors require a business plan before considering your venture. Without one, it may be difficult to secure funding or get the best possible rate for your drug rehab center.

Drug Rehab Center Staff and Training

Like in any other business, your ‘boots on the ground’ are the ones who create amazing, life-changing experiences for patients.  

You need to hire the following staff to open a drug rehab center:

• Executive Staff
• Medical Director
• Executive Director
• Intake Staff
• Medical Staff
• Clerical Staff
• Janitorial Workers
• Case Workers
• Managers
• Administrators

You may need to hire specialist roles depending on the center you’re trying to open.

Getting Accreditations for Your Rehab Center

More and more insurance companies require accreditations from CARF or The Joint Commission (JCAHO) to cover rehab care.

This means patients won’t have to pay out of pocket, serving at-risk individuals who cannot wait to get help.

Let’s break them both down:

• • CARF: This acronym stands for the Commission on Accreditation of Rehabilitation Facilities. In short, it’s an entity approved by the American Society of Addiction Medicine to certify drug rehab centers. The accreditation process includes a self-evaluation and survey, the latter of which requires a fee.
  • The Joint Commission (JCAHO): Stands for Joint Commission on Accreditation of Healthcare Organizations. This certification enables you to receive federal funding from Medicare and Medicaid. Keep in mind the average cost was $46,000 per year in 2010. Accreditation consultancy may cost extra and is not included in this figure.

You can learn more about both of these certifications in our guides to each.

Addiction Treatment Centers and Marketing Execution

Addiction treatment centers ignore marketing at their own peril. Many companies don’t allocate enough budget in the beginning, then run out of money (or open with empty beds).

The best addiction rehab center marketing takes a two-step approach. The first is investing in organic search. The other is lead generation.

Organic search (SEO) targets search engines like Google, Yahoo, and Bing. As you start creating your patient funnel and building a professional website, you can work towards getting licensure, accreditations, and a finalized P&P document. 

That said, your SEO flywheel may not have completely matured by the time you open your doors. It may generate a few one-off intakes, but you still need to budget for lead generation services.

Lead generation searches for leads through TV, radio, paid search, and social media. Although it costs more per intake than organic search or SEO, it’s easy to control the flow so you can achieve a steady intake rate.

Remember: you want to engage a marketing team as soon as feasibly possible. Planning ahead with addiction marketing is key and can save thousands of dollars before and after you open.

Bringing Your Drug Rehab Center to Life

If you’ve read this far and feel overwhelmed, remember drug rehab centers are a team affair. You’re not expected to manage everything on your own — addiction treatment consultants can alleviate the burden.

First, spend time building a robust vision and mission. Then, bring it to life with a comprehensive business plan. Action brings clarity in many ways, and one small step can bring you that much closer to the finish line.