How to Start a Rehab Center: A Complete Guide

Updated on February 6, 2022

The rehab industry is currently worth a staggering $42 billion. With about 21 million Americans with at least one addiction, the market is ripe for the taking. If you’re looking to start a business that will not only make you money but make a difference in the world, this is it.

That said, it’s a business based on reputation and customer service, so one wrong move and you have a lot to lose. There is so much that goes into starting a rehab center, but if you get it right, it’s going to be well worth it.

So, where do you start? We have compiled a detailed guide that will help you immerse yourself in this industry. We’ll take you through various considerations and necessities that will help you start and maintain a profitable rehab business.

Conduct a Market Analysis

The first thing you should do is conduct an in-depth or comprehensive market analysis. You need to know what kind of facility can thrive in your area or what type of rehab center will get customers. It’s crucial for you to conduct a feasibility study that will help you understand exactly where to start.

How many patients would you like to start with? You need to implement the right strategies because it doesn’t make sense to start your facility with hundreds of beds that you’ll not be able to fill. You need capital and a marketing strategy that will get you customers.

Consider the population in your area and the likelihood of getting customers regularly. The demand in your area will give you insights into how large of a facility you should start with. It’ll also help you set a realistic budget that will see you through until you’re able to make enough profits to run the facility.

Consider Focusing on a Particular Addiction

Starting a rehab facility involves deciding what type of rehab to open. It may seem like a good idea to accept all kinds of addictions and help everyone. However, as great of an approach as it is, it’s not advisable since you’re just starting out.

The problem with treating many types of addictions is that you’ll require a bigger budget. Treating numerous addictions means hiring a wide range of experts. It also means you need a larger facility so you can diversify the sections in the building for each one.

Additionally, one of the primary reasons why many rehab centers fail is lackluster care. By trying to treat many forms of addiction at once, you may experience lackluster care in the facility, especially if you don’t have the right staff. It’ll take time for you to develop an effective approach to one form of addiction, so when you concentrate on several of them, you decrease your chances of success.

It’s advisable to choose one or two types of addiction and focus on treating patients successfully. The best thing about this is that you will gain a positive reputation, which will bring in more customers. After some time, you can always expand your rehab center and open new departments to deal with other forms of addictions.

Consider the Finances

Starting a rehab center is just like starting any other type of business that needs to be profitable. You need to figure out the finances that’ll get to from the starting point to the profits without struggling to thrive. Otherwise, you may not succeed in helping people actually get past addictions.

Consider some of the basic operational costs such as rent, employee salaries, utilities, medications, and all other basic necessities your facility will need. Put all these costs in a spreadsheet, then considering your center’s capacity, you’ll be able to figure out how much you should charge clients to break even and make a profit. You can start with a small profit margin, then charge higher as the business grows.

Hire the Right People

Having the right people in your facility is perhaps the most critical factor. It’ll determine the success of your business and your reputation practically hinges on it. If you hire incompetent staff, it’ll be impossible for you to provide help to the addict, which is technically your end goal.

It’s essential that you hire experts in different fields that are experienced in the addictions you’ve decided to combat in your facility. Hire people that are experienced in working in rehab centers. Inquire what their job description was, their daily responsibilities in those facilities, and what strategies they used to pull people out of their addictions.

Go the extra mile and ask for references, then call previous employers to confirm that everything they say is true. During the interview, present several scenarios that would happen in a rehab center and ask them to describe how they would handle it. The answers will give you insight into their experience and their ability to think of solutions and solve problems on the spot.

You’ll need to hire executive staff like medical directors, medical staff, caseworkers, clerical staff, administrators, janitors, managers, intake staff, etcetera. Also, consider getting management software that’ll help you manage more efficiently.

Get Licenses and Insurance

Licensing and insurance are an important part of your business. Keep in mind that you will be treating people who have a dire need of mental health, so your facility is almost like a medical facility.

Depending on your state, you may also need a Certificate of Need (CON) for your rehab center. You’ll also need all the right insurance policies to cover your business, such as general liability and workers’ compensation, among others.

Consider the Optimum Location

The location of your facility will have a big impact on its success. It doesn’t necessarily mean that you need to base your rehab clinic in a major city, but it needs to be accessible for both patients and staff. If you plan to have a residential facility, you’ll need to find a property where you can house patients and have an office space for consultation purposes.

Get Accreditation

When patients are researching the best rehab center, it’s vital for them to identify quality care. They will choose your facility if they have the confidence that you adhere to high-quality standards. Getting accreditation is an intensive process because your program will undergo an evaluation process by industry-respected accrediting bodies.

Two accrediting bodies that come highly recommended include CARF and JCAHO. They will have to examine client care, safety programs, policies, staff, and other operations.

Starting a Rehab Center: What You Needed to Know

We hope that our guide has given insight into what you need to start a rehab center. By following these tips, you can easily navigate your way to the market and embark on a journey to start an incredible business.

Beyond that, please check out our blog section for more informative posts.

Throughout the year, our writers feature fresh, in-depth, and relevant information for our audience of 40,000+ healthcare leaders and professionals. As a healthcare business publication, we cover and cherish our relationship with the entire health care industry including administrators, nurses, physicians, physical therapists, pharmacists, and more. We cover a broad spectrum from hospitals to medical offices to outpatient services to eye surgery centers to university settings. We focus on rehabilitation, nursing homes, home care, hospice as well as men’s health, women’s heath, and pediatrics.