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How a startup hopes to treat the rural opioid epidemic, at a profit

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When Elizabeth Zeinner turned 18, she used her savings to buy a run-down house on Conwell Street in Aurora, Indiana, a town of just under 4,000 residents on the edge of the greater Cincinnati area. Located on the banks of the Ohio River, it was a stop for barges bound for Louisville and St. Louis to unload gravel or stock up on grain. For decades, locals worked at homegrown industries, like the town’s largest employer, Aurora Casket, which had a plant just up the street from Zeinner’s house. But the business has struggled in recent years, and layoffs mounted.

Zeinner remodeled the house, sold it, and moved away. But within a few years, she found herself frequenting Conwell Street, not as a resident, but as a paramedic. The area had always been troubled, but recently, things had gotten much worse. “The first six years, I never ran a single overdose. But over the last five years, things have really changed,” she says. Aurora, like many towns in this triangle of Indiana, Ohio, and Kentucky, has been struck by the opioid epidemic. The week before my visit in July, the region saw 18 deaths and 180 overdoses related to opioids. These numbers were not out of the ordinary.

Zeinner, with soft features and a bubbly laugh, doesn’t exude the aura of a veteran hardened by trauma, but she’s seen it all. “I would work 24-hour shifts, and we averaged two overdoses a shift.” She was trained to use naloxone to bring victims back from an overdose. It saves their life, but sends them into sudden and intense withdrawal. “They are scared and don’t know what’s going on. I’ve been punched, kicked, throw up on, I can’t tell you how many times,” she says.

Elizabeth Zeinner, Midwest regional manager at Groups in the Aurora clinic.

She was frustrated by the fact that the same patients cycle through the ER over and over. “We weren’t trained to recognize the symptoms of addiction, how to counsel people, how to motivate people into treatment, how to find resources,” Zeinner says. “We were given nothing other than, ‘Here is how to keep them from dying. Get them to the hospital. See you later.’”

Between 1999 and 2014, the rate of drug overdoses in Indiana increased by more than 500 percent, passing car accidents to become the leading cause of death. A short drive from Aurora in any direction, addicts could find “pain clinics” that made obtaining prescription drugs easy. One doctor operated multiple facilities, each of which saw over 100 patients a day. Those who couldn’t pay cash could trade for their fix by working on his farm, or providing sexual favors.

Many in the region say that most of the drugs coming into Lawrenceburg and neighboring Indiana towns come from Cincinnati, Ohio, just a half-hour drive north.

But help was harder to find. Zeinner drove me to the road where the county’s only methadone clinic sat, one of the few treatment options available. Cars start lining up at 5AM, filled with patients trying to get their dose before heading to work. Many had driven an hour or more to get here. Zeinner had worked at a methadone clinic for years, and didn’t feel it was effective. “We treated people like a number. It was ‘get your dose and get on with your life.’”

It also encountered hostility from people in the community. “When people overdose or crash their cars on methadone, that makes the local news around here pretty quick,” Zeinner explained. For many in the area, medication-assisted treatment was seen as simply exchanging one drug for another. Articles in the local paper about efforts to expand treatment options often drew angry comments. “The only way to get them off drugs is to let them OD,” one woman wrote.

In April 2016, Zeinner found a new option. She got a job with Groups, a New York City opioid treatment startup that was opening its first facility in the Midwest. Instead of methadone, it prescribed Suboxone, which is similarly effective and harder to abuse. Groups is explicitly targeting towns like Aurora, small communities with populations of 10,000 or less and little access to care. It charged just $65 a week, keeping costs low by operating small facilities with a minimal staff.

The treatment program offered by Groups is lean. There is just one type of medicine, one form of therapy, and no option to upgrade to more intensive or comprehensive care. Its goal isn’t to offer the best treatment money can buy, but to offer good enough treatment to the largest number of people in need. At the time Zeinner joined, Groups had a single location in the area. Over the last year and a half, it’s opened up 15 new facilities just in the Midwest, and has plans for several more. “We’re bursting at the seams,” says Zeinner. “No matter how fast we grow, it feels like we can’t keep up with demand.”

Heather Williams (left) and Ashley Hall (right).

The opioid epidemic is now the worst drug crisis in American history. Last year, overdoses killed more people in the US than the entire Vietnam War. The scourge is deadlier than the HIV/AIDs epidemic was at its zenith, and in many places, it shows no signs of slowing down. To stop it would require a massive investment of federal resources. President Trump did call the opioid epidemic a national emergency, but he didn’t actually declare one, which would free up new funds to address it. So far, the Republican Party, which controls both Congress and the presidency, is focused more on cutting back existing health care than expanding funds to battle the opioid epidemic. So Groups has turned to the most American of solutions: find a way to fight back that also turns a profit.

Jan Karg works on an exercise in his weekly Groups meeting.

The story of the opioid epidemic begins with good intentions. In the 1980s, many prominent doctors began to argue that the medical community was doing too little to treat chronic pain, and that the psychological and emotional impact of that suffering was causing damage far beyond the identifiable injuries. Physicians were encouraged to believe their patients when they complained about pain, and to take aggressive steps to alleviate those symptoms.

At the same time, the Reagan administration was removing regulations that barred pharmaceutical companies from advertising directly to consumers. Massive companies like Purdue, Johnson & Johnson, and Mylan began to invest heavily in the production of pain pills. They also found ways to frame powerful opioids as a safe treatment for chronic pain. Purdue, in pushing oxycontin, told doctors, patients, and regulators that the medicine posed a lower risk of addiction and abuse than many of the common options already on the market.

The result was a flood of highly potent pain pills into the American bloodstream. Between 1999 and 2014, sales of opioid painkillers increased more than four fold. Not surprisingly, the rate of overdose deaths also quadrupled. Between 2007 and 2012, over 780 million doses of oxycodone and hydrocodone were shipped to West Virginia alone. That’s 433 pills for every person in the state — higher if you don’t count children. The drug companies reaped tens of billions in profit.

The widespread use and abuse of pain pills laid a foundation for harder drugs. In 2011, the formula for oxycontin was changed to make the pills harder to crush up, so they would be more difficult to snort or inject. Many addicts simply switched to heroin, which flooded the streets and was often cheaper than prescription opioids or marijuana.

As police tried cracking down on the supply of heroin from Mexico, dealers began ordering synthetic opioids like fentanyl and carfentanil, which could be found on the web and shipped from China to your doorstep. These drugs, used for surgery on humans and large animals, can be 100 to 1,000 times more powerful than heroin.

In November 2015, a report from Nobel Prize-winning economists at Princeton University found something shocking. Unlike every other age and ethnic group in the United States, the life expectancy for middle-aged white Americans was declining. The primary cause, they concluded, was a trio of despair: suicide, alcoholism, and drug overdoses.

There was a strong consensus in the medical community on the most effective way to combat the epidemic: medication-assisted treatment. The problem is that many Americans, especially in the hardest-hit areas, don’t have access to this kind of care. Cost and proximity are the primary hurdles. There is also the stigma around addiction, and using opioids to treat opioid addicts. As Zeinner had experienced, few people wanted a methadone clinic in their neighborhood, and many felt addicts didn’t deserve support, especially if it required funding with public tax dollars.

Just across the river from Aurora, for example, is Middletown, Ohio, where Groups has opened a facility. A local councilman there recently proposed that, after someone had been revived two times with naloxone, emergency personnel would no longer be dispatched to save them. The county sheriff also decided his deputies won’t revive citizens that overdose. “It infuriates me to the point that I can’t even think straight,” says Zeinner. “Those debates are wasted energy around hate. Letting people die isn’t going to solve this crisis.”

RiverWatch restaurant is a popular spot with locals and visitors to Lawrenceburg. It floats on a barge in the Ohio River.

Growing up in the wealthy Boston suburb of Watertown, Jeff DeFlavio, the founder of Groups, had little awareness of the rapid increase in pain pill prescriptions across the country. He learned about the perils of addiction, and the potential for recovery, from his favorite uncle, Hank Grassey, who wrote a book about his journey back from serious drug abuse.

In 2010, DeFlavio enrolled in medical school at Dartmouth and planned to find a career doing aid work abroad. But he soon discovered there were big problems right in his own backyard. As part of his education, he worked at a small primary care office in Newport, New Hampshire. “Throughout a day, we would see 15 patients and every single one would have a large prescription for painkillers, obvious IV drugs problems, or some other serious substance abuse issue,” DeFlavio recalls. “This was a community I felt a part of as someone from New England. I had come back home, and it was an apocalypse.”

The shape of the problem was well understood as far back as 2002, when a report from the New Hampshire Center for Public Policy Studies noted that there was “a critical shortage of emergency detoxification beds, residential treatment beds and intensive-outpatient services.”

DeFlavio wrote his senior thesis on the barriers to access for medication-assisted treatment. He also switched to a joint program for medicine and business. In 2014, he and a local Dartmouth doctor opened a clinic in Claremont, New Hampshire. That facility, which offered access to Suboxone and group therapy, became the model on which his startup was built.

“Our goal is to provide effective, evidence-based care to the largest group of people possible,” says DeFlavio. “Rather than exorbitantly expensive, bespoke care to those with means.”

Funding an effort like this would take serious capital. Luckily for DeFlavio, investors were eager to enter the space. Between 1989 and 2016, the size of the addiction treatment industry in America had tripled, to more than $35 billion a year. Private equity dollars poured into the business, and large chains consolidated and went public. With that came plenty of bad actors. As The Verge reported last week, a host of scammy treatment centers popped up, gaming Google search and paying for referrals of patients with good insurance.

Despite these troubles, the industry continues to grow rapidly. In 2015, Steve Schlafman, a principal at RRE Ventures, spent the winter researching the state of the opioid treatment industry. Schlafman now lives and works in New York City, but grew up in the middle-class Massachusetts suburb of Swampscott. “I’ve had a number of close friends and family suffer from addiction,” Schlafman tells me. “Multiple friends from high school that I played football with and knew growing up passed away from opioid overdoses.”

The model developed at Groups seemed to address many of the pain points Schlafman’s research had picked up on. First off, in many areas, the only local recovery option was Alcoholics or Narcotics Anonymous. These organizations largely operate off a 12-step, faith-based model pioneered in the 1930s, and advocate against the use of medication-assisted treatment. While the support and community they offer is undoubtedly helpful, several studies have found that the programs are no more effective at helping people get and stay sober than going cold turkey. Groups kept the simplicity and community focus of AA, but added medication.

Other available treatment options were often expensive or hard to access. There are numerous privately operated residential treatment programs in the US, but the costs can range from $10,000 to $50,000 for a 30-day stay. And that’s not counting the price of traveling to another state and leaving work and family behind. There are also publicly funded health facilities, but they typically have a long waiting list and are located in large, metropolitan areas, far from the rural counties and small towns where the opioid epidemic has hit the hardest.

Groups’ model, grounded in DeFlavio’s thesis from Dartmouth, targets the two barriers — proximity and price — by building low-cost facilities in small towns and rural communities. Each center offers a prescription for Suboxone and basic group therapy at $65 a week. “Today, most rehabs treat addiction like its an acute condition. High upfront cost, very little ongoing support and community,” says Schlafman. “Really it should be treated like a chronic condition, with an affordable subscription offering that is community enabled.” RRE led a $4 million round of seed funding for Groups in December 2015.

There are several ways Groups is able to keep costs so low. First, it’s targeting towns and rural areas, where real estate is far cheaper than big cities. Second, the startup keeps its operation small. Its facility in Aurora is around 1,000 square feet. The nearby methadone clinic is around 20,000. Groups typically has just two full-time staff per facility, and hires prescribing doctors on an hourly basis. It prescribes Suboxone, which has a lower risk profile for overdose or abuse than methadone. Because of that, it’s easier to write prescriptions for patients to take home, as opposed to dosing at the facility. Because it doesn’t dispense any medication, Groups can cut down on complex and costly security and storage. By keeping its storefront operations small and staff lean, Groups says it can be profitable with between 150–200 patients per facility. For now, however, the startup isn’t profitable overall, focusing instead on opening as many facilities as quickly as possible.

Even at $65 a week, it’s not always the cheapest option. Most of the patients Groups sees qualify for Medicaid, so they can fill their prescriptions at little to no cost. But for those without, the medicine can add another $30 to $60 a week. The only other option in Dearborn County is a facility owned by Acadia Healthcare, a massive chain with over 500 facilities in 39 states. It charges between $140 and $280 a week for Suboxone, depending on the dose. However, in September, Acadia facilities began accepting Medicaid, lowering the price for many. Groups is now working to contract with the state’s Medicaid plans so it can accept Medicaid as well.

Having a larger number of smaller facilities helps Groups solve the second part of the access problem: proximity. “Transportation was the biggest hurdle,” says Jeremy Carpenter, who worked for several years at Acadia Healthcare before becoming Groups’ executive director for the Midwest. There approach is to build large facilities near big metro centers. Groups is doing the opposite clustering facilities in rural America and small towns. “These are the same patients I would see, many of whom would drop out because they couldn’t find a way to travel a few hours once or twice a week.”

Getting small towns to accept their presence is now one of Groups’ biggest challenges. “I think what we battle now, in these small towns, is that they have to identify as addicts, and realize they have a problem,” says Carpenter. “By setting up a facility that treats addiction in their town, it means the community has to admit it has a problem.” To make the case, Carpenter relies on evidence generated by Groups’ patients. “I can bring them data showing that our facility an hour away has 30 people with their zip code and town address,” says Carpenter. “We want to beat the transportation and keep from losing them by making your town a home for us.”

Groups’ facility in Aurora is on Green Boulevard, neighboring a Dairy Queen and Dollar General. The day I visited, the parking lot was overflowing, and patients started improvising spots alongside the edge of the driveway. They cued up at the bathroom to collect urine samples for their drug test, filled out paperwork, and saw the doctor on duty. Fourteen signed up for services and one was turned away. Groups aims to accept everyone with an opioid abuse issue, but if patients have serious mental or physical conditions — for example, a history of recent suicide attempts — Groups will refer them to more intensive treatment options.

Groups requires patients take a drug screen every time they visit. If it’s the first time, they are expected to test positive for opioids; those who don’t aren’t right for the program. After that, Groups take a flexible approach. A patient must fail four consecutive drug tests before being asked to leave. The test also checks to ensure patients are taking their Suboxone, and aren’t diverting the supply by selling it on the street.

Photo by Amelia Holowaty Krales / The Verge

While Suboxone is harder to abuse than methadone, it’s not without its risks. Michael Barnett, assistant professor at Harvard’s Chan School of Public Health, expressed concern about Groups’ rapid growth and bare-bones approach. “There can be unintended consequences of being a very low-cost, very no-frills Suboxone provider with a light touch therapy. It may be a brilliant disruption people haven’t bothered with because of the stigma, or it could have unintended consequences and just shift the abuse patterns toward Suboxone.”

Groups’ own physicians are keenly aware of this risk. In Aurora, I met up with Philip Hill, a former urgent care physician who now works several days a week at Groups facilities around the region. He has become a believer in medication-assisted treatment, but it wasn’t always that way. Before coming to Groups, he spent time working at several addiction treatment centers in the area. “The pretense is that methadone and Suboxone don’t give you a buzz. We’ll all pretend that this is just medicine that makes you sober,” says Hill. “Well, there is more to the story than that. I came into it as a skeptic, and have seen this done very poorly, to this extent: it enables. When done poorly, this is just another pill mill.”

The key, he believes, is carefully policing patients’ use of the medication and offering more than perfunctory counseling. “Addiction treatment, when done right — and that’s the key — can result in a life change that’s as profound as any I’ve ever seen,” Hill says.

Experts who specialize in opioids saw pros and cons to Groups’ approach. “I applaud them for having the audacity and the mission to get out there,” says Barnett. “It’s clearly a benefit to have greater access to Suboxone, as compared to not doing anything at all. But I would simply point out that what a lot of these patients need is comprehensive mental health treatment. This startup is filling the hole to provide basic maintenance therapy to help people with opioid addiction get back to their lives and not have to search for drugs on the streets. But without a deeper mental health infrastructure, we’re still going to be struggling with the roots of the problem.”

The ideal approach would involve integrating addiction treatment with basic medical and mental health access. “Is this the optimal model for providing Suboxone treatment? No,” says Leo Beletsky, an associate professor of Law and Health Sciences at Northeastern University. “I believe maintenance therapy is done best, and the research bears this out, when it’s done at their primary care facility. People who have substance abuse disorders often have co-occurring physical and mental health issues.”

But given the reality on the ground, he agrees Groups was far better than nothing. “Access to medication-assisted treatment is dismal and artificially suppressed because of stigma. Anyone who is entrepreneurial and able to provide access is, to my mind, doing a public health benefit.”

Groups has its eye on expanding its offerings. It recently began offering crisis counseling that would support patients around the clock, instead of the current nine to five. And Joy Sun, Groups’ chief operating officer, told me that if and when the opioid crisis begins to abate, she hopes Groups locations could evolve to become community mental health clinics. Beletsky was hopeful, but skeptical. “It would be cool to see these facilities become an anchor, so they could spin out to address people’s other health needs, because the existing infrastructure is not. I guess the big question being, can you do that profitably? If you’re a one-trick pony, you have an assembly line structure, you can keep your costs down. As soon as you start to diversify, that becomes harder.”

DeFlavio bristles at the suggestion that trying to turn a profit means doing less for patients. “The unprecedented scale of opioid abuse requires a new way to treat this disease,” he argues. He points to places like Machias, a remote town of just over 2,000 people in eastern Maine, where Groups just opened a facility. It’s been badly ravaged by opioids, but is too small to support most treatment facilities, meaning the nearest detox center is over 200 miles away. It now has 10 patients in Machias, one of whom walked nine miles to sign up.

“If we insist that only the government and charity can address these problems, we’ll never reach most of the people who need help. To suggest that drug addiction treatment somehow operate on a different logic — outside of the market — is just another way to ghettoize people struggling with drugs and prevent them from receiving the care they need to get well,” DeFlavio says.

The approach seems to be working. Groups has gathered enough data over the last three years to convince insurance companies that its approach is worth covering. In August of this year, it began accepting insurance for the first time in New Hampshire, where it has the longest history. Ohio, California, and Maine are set to follow this fall.

——

Photo by Amelia Holowaty Krales / The Verge

When Marie (not her real name) was growing up in northern Kentucky, a short drive south of Cincinnati, heroin was the party drug of choice. This was in the early 2000s, and a decade of pain pills had normalized the use of powerful opioids. “Our cheerleaders were on heroin, our football players were on heroin. It was crazy.” Kids actually made fun of other teens who stuck to prescription drugs. “We called the pain pills hillbilly heroin cause it was more expensive and not as strong.”

She started snorting it as a teenager, and by her 20s had begun shooting up on a regular basis. Marie was raised by a single mother who did what she could to get her daughter help. “I’ve done AA, NA, rehabs, countless different programs, just trying to not be a drug addict. I would do good for a few years, have a few years of sobriety, go through something tough, and go right back. That was kind of my cycle through my 20s.” Eventually she hit rock bottom, sleeping in a homeless shelter and forging checks to afford her next fix.

Today, Marie is sober, and a former member of the Groups facility in Aurora. We met up recently at her cozy ranch house, a short drive from the county seat in Lawrenceburg. The interior decor is a sort of Buddhist-goth, with peaceful altars and sticks of incense interspersed with skulls and pig fetuses floating in jars.

Like many former addicts, Marie is wary of exchanging one drug for another, and of falling into another trap. “Am I customer, or am I a patient? And I go back and forth. But I will say that Groups, compared with the methadone clinic and other places in this area, offers a much more patient and flexible approach. Other places give you a number like you’re in prison. You go up to the window, get your dose, and go home. They don’t talk to you or try and understand you. It’s ‘give me your money, and if you don’t have it, get out.’”

Marie relaxes on her couch as we talk. She has a wiry frame and long, jet black hair. Her right arm is covered in a full sleeve tattoo. She recently got engaged to her long-term boyfriend, and she lies wrapped in his arms, exuding a nervous energy. Marie is eager to discuss her progress and to break down what she sees as stereotypes about addicts. But even now, with her life under control for several years, she is wary of being judged and scorned by others. “It’s hard to be on Facebook, with people talking about how all addicts should die, and feel like you’re part of the community,” she says.

Her plan, based on Groups’ protocols, is to taper her off the medication completely within the next month or two. That will make her the company’s first graduate in the Midwest. She sees the success of places like Groups as a force opening up people’s minds to the use of opioids for treatment. “Sometimes people do need medication assistance, and the science around that is growing,” she says. She plans to enroll in one-on-one therapy, and is hopeful a day will come soon when she will wake up and not have to take any kind of pill. But if it doesn’t happen that way, it won’t be a failure in her mind. “If it was easy to fix, we wouldn’t have addicts.”

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