Retreat Behavioral Health Death​ Shuts Down After Financial Troubles and Leadership Tragedy

Retreat Behavioral Health Death, an acclaimed addiction center, has shut down in what has been characterized by severe financial strains and the death of two major executives. The recent passing of the CEO and CAO of Retreat Behavioral Health through death is one that has elicited emotions among employees and patients as well as within the larger behavioral health fraternity.

The Rise and Unanticipated Fall of Retreat Behavioral Health

Established in 2011, Retreat Behavioral Health grew rapidly in terms of coverage of states it offers services in addiction treatment, both in the form of residential and outpatient across Connecticut, Pennsylvania and Florida. At first, it was very successful in establishing an extensive client base because of varied services to people suffering from addiction. But the team experienced financial problems and on June 27, the issues lay off notices, closed the company immediately leaving many employees and patients trapped.

Financial Struggles and Missed Payments

Retreat Behavioral Health experienced multiple problems related to finances which worsened in the last few months. These included:

Delayed and Missed Paychecks: Payroll was then communicated to employees as being on hold from June 7th due to what was termed as technicalities. This delay stretched to missed payments by June 21 that worsened the already poor financial situation even further.
Lawsuits and Loan Defaults: It had some legal issues; owed $26000 to Docebo NA for payment; and it defaulted on $17.2 million loan related to its Palm springs Florida treatment centre. This lawsuit involving property owner Coal Capital Group brought into light the magnitude of financial woes of Retreat.

These losses impacted daily operation and further caused ripple effects damaging staff relations and the ability to continue much needed health assistance.

Leadership Losses Add to Financial Woes

Besides the financial pressure leading to the “Retreat Behavioral Health death”, the company was further struck by and two more executives’ unexpected passing. Peter Schorr, the CEO and founder of the company, died on June 21st at the same time employees received notices they would not be paid. Little over two days later, the Chief Administrative Officer, Scott Korogodsky likewise passed on. This dramatic moment created a leadership vacuum at the time when determined leadership was sorely lacking.

Chief Financial Officer Alexander Hoinsky said he did not have much control over the financials of the business, stating it was under Schorr’s discretion. When both leaders disappeared at such a vulnerable point several questions cropped up and the firm compounds were pressurized on financial status.

The Private Equity Factor: Stonehenge Capital’s Involvement

Another twist to Retreat Behavioral Health’s shutdown came with a recent acquisition by private equity firm, the Stonehenge Capital. Founded in 1980, Retreat first received a $6 million development loan from Stonehenge but later bought the company in an effort to prop it up. But, the financial problems were too acute here, and the organization’s “Retreat Behavioral Health death​” occurred before significant improvements could be made there. Currently, there has been no public statement from Stonehenge regarding the shut down and it has not elaborated on how the remainder of resources will be addressed.

The Immediate Impact on Employees and Patients

The abrupt shut down put both employees and patients in narrow ropes. Employees still served the organization for years and they could not even get the final wages paid to them and had no job security guaranteed to them. The public was offered little time to adopt facilities that replaced those providing long-term addiction care.

Korogodsky fired employees through an email on June 23 where he ordered them to shift the patients to other facilities. But in any such case, it was rather difficult to plan the proper continuity of care that plays a crucial role in the substance use disorder treatment. This shutdown underscores other areas that the “Retreat Behavioral Health death​” impacts, both the employees and the patients.

Broader Challenges Facing Behavioral Health Providers

I found the case of Retreat Behavioral Health a good starting point for our discussions about the financial challenges of the behavioral health sector. Today, behavioral health care organizations face many operational challenges such as high overheads, excessive regulation, and tight profit margins. For addiction treatment centers, such financial constraints are even higher, resulting from complicated patient requirements and eligibility for insurance compensations.

Lessons from the Collapse of Retreat Behavioral Health

The “Retreat Behavioral Health death” of both the company and its top leadership contains important lessons for the industry. As such, behavioral health providers may have to enhance the extent of their financial transparency and governance to meet more enhanced requirements. Key lessons include:

Strong Financial Oversight: Therefore, there should be an organize to avoid the concentration of power in the hand of one person or entity which could lead to embezzlement of Financial Resources.
Responsibility in Private Equity Acquisitions: The current business environment calls on investors to undertake proper appraisals to ascertain that the acquired healthcare providers are socially responsive and would be financially viable enough to withstand future shocks.

The sad chain of events seen at Retreat Behavioral Health is a cautionary example. One post attributed to an anonymous employee said, “The answers to what you seek most likely died with Peter and Scott” signifying perpetual ambiguity of the companies’ sudden shutdown.

Conclusion

Unfortunately, the recent shut down of Retreat Behavioral Health along with the sad demise of its CEO and CAO underlines that healthcare firms need to address key financial and operational issues. The major effect of the “Retreat Behavioral Health death​” will be to shift the backdrop of the sector to leadership and transparency. The behavioral health providers experiencing a growth in their population should ensure they adopt clean financial practices and lead ethically to avoid the consumers and employees being dumped.

Certainly, as the industry looks to the case of Retreat Behavioral Health and asks how similar failures can be prevented, the goal must be to ensure that lessons from this tragedy will help keep addiction treatment services strong and sustained for those who really need this kind of care.