Treatment Center Cost Per Admission: The Published Numbers

No survey, government dataset or academic study publishes an industry-wide cost per admission for addiction treatment. One treatment operator has published its own: American Addiction Centers reported a cost of $3,304 to $3,929 per admission in 2016 and 2017, in an investor presentation. Its SEC filings let you check that number against its advertising spend. The figures that circulate on agency blogs give no method, so we leave them out.

What does a rehab admission cost to market?

American Addiction Centers (AAC) is a national chain that was publicly traded, so it reported its advertising spend and its admissions to investors. Dividing one by the other gives advertising per admission:

Three numbers, three meanings:

• Advertising alone: about $2,700 to $3,300 per admission in 2014 and 2015, while AAC was still growing into a national brand. By 2017, with more than twice the admissions of 2014, it was near $1,000.
• What AAC called its cost per admission: quarterly figures of $3,304 to $3,929 in 2016 and 2017, well above its advertising per admission, so it counts more than ads. The presentation does not define it.
• All sales and marketing: $29.0 million in 2014, including a call center of more than 75 people, or about $6,100 per admission and 21.8% of revenue.

Read them with the caveats: this is one company, from 2014 to 2017, with national scale and its own call center, and all of it predates Google's 2018 rule requiring certification for addiction ads. A single center without that scale should expect the 2014-2015 end, not the 2017 end.

How much should a residential center spend on advertising?

Start from the beds, not from a share of revenue. The admissions a program needs each month are:

Admissions a month = beds × share of beds filled × 365 ÷ average stay in days ÷ 12

Using AAC's 2017 averages of 78% of beds filled and 28-day stays, and its 2014-2015 advertising cost of $2,700 to $3,300 per admission:

That is why a residential program cannot run on a few thousand dollars a month: with 28-day stays, a full center turns over its census about once a month. The center in the case study below ran about $20,000 a month. Swap in your own occupancy target, length of stay and, once you track it, your own cost per admission. Outpatient programs have different stay lengths and revenue, so run the formula on their own numbers.

How do you calculate cost per admission?

Cost per admission = marketing spend for the month ÷ admissions from marketing that month.

Count every dollar: media, management, creative and the tools behind them. Count only admissions you can trace to marketing (a tracked call, a form, a chat), not referrals from a hospital or a court.

That one number tells you whether marketing is getting more or less efficient. It does not tell you why. For that, break it into the steps a caller goes through.

Where does the money leak?

Every admission passes four gates. Multiply them and you get the same answer as above, but now you can see which gate is failing:

A rising cost per admission with a steady cost per call is not a marketing problem. It is a call-handling, insurance or arrival problem, and more ad spend will not fix it.

How do you bring cost per admission down?

Two levers, and only one of them is advertising. The first is cheaper qualified calls: search for the people already looking, display and retargeting so the center is familiar when they search, in-market email, and social aimed at families. The second is turning more of those calls into admissions, which costs nothing extra in media.

One residential center whose plan Jarrett Phillips designed and ran (search, display with retargeting, email and Meta) shows both. Calls tagged as admissions-related averaged 323 a month in June through September, up 156.2% from 126 in April. Estimated spend per tagged call rose from $55.56 to $61.97, or 11.5%, as the monthly budget grew from about $7,000 to $20,000.

The same call reports showed the second lever. In April, 110 of 374 calls were missed and 34 abandoned. Missed calls fell to 74 by September even as total calls doubled. Every one of those calls was paid for, so answering them is the cheapest admission a center can buy.

How does that campaign compare with the published numbers?

The bar is low. At about $20,000 a month, the campaign beats American Addiction Centers' lowest reported cost per admission once 7 or more admissions a month come from it. That is 7 of the roughly 323 admissions-tagged calls it produced each month.

The center has not published its admission counts, so this is the bar, not a result we can report. When the center shares them, the real cost per admission goes here.

A tagged call is not an admission. The center's census also depends on follow-up, readiness, length of stay and people leaving against medical advice, which is why the calculation has to run all the way to admissions.

Three rules for tracking it honestly

1. Track every call. Use call tracking with a separate number per channel, and tag calls as admissions-related only when they are.
2. Count admissions, not leads. Leads are a step, not the result.
3. Never pay per admission. Paying a marketer per patient admitted can be a federal crime under EKRA. Pay for the work, not the patient.

If you want a second set of eyes on your numbers, get a free plan and Jarrett will walk through them with you.