Addiction Recovery Care building in Louisa, photographed June 27, 2024. (Kentucky Lantern photo by Matthew Mueller)<\/p>\n
Addiction Recovery Care, or ARC, Kentucky\u2019s largest provider of treatment and recovery services, has announced its pending sale to Ethema Health Corp., a Palm Beach, Florida-based behavioral health company.<\/p>\n
ARC reported the potential sale in a news release Wednesday, saying the two companies have \u201centered into a letter of intent\u201d for Ethema to acquire the assets and operations of ARC. It did not disclose the sale price.<\/p>\n
Once the fastest-growing provider of addiction services in Kentucky, ARC<\/a> has foundered over the past 14 months amid reports of an ongoing FBI investigation<\/a> into possible health care fraud and closer scrutiny by insurers who process claims for patient care and had begun slashing reimbursement<\/a>.<\/p>\n Over the past year, ARC has closed multiple facilities and programs and laid off several hundred employees. At its peak in 2024, ARC had about 1,800 residential treatment beds, programs throughout Kentucky and about 1,350 employees.<\/p>\n Medicaid \u2014 the government health plan for low-income individuals \u2014 pays for nearly all of ARC\u2019s services, which include residential and outpatient care. ARC in 2023, received about $130 million in payments from Kentucky\u2019s Medicaid program, which gets about 70% of its money from the federal government.<\/p>\n Tim Robinson, the founder and CEO of ARC based in his Eastern Kentucky hometown of Louisa, did not immediately respond to a request for comment.<\/p>\n But in an email Wednesday to ARC employees obtained by the Kentucky Lantern, Robinson said the sale was not \u201ca decision we made lightly.\u201d<\/p>\n \u201cFollowing the necessary organizational changes, this strategic consolidation is the most responsible and forward-looking step we can take,\u201d the email said. \u201cIt ensures the necessary long-term stability and investment required to continue our core mission: providing high-quality treatment for addiction and co-occurring disorders across Kentucky.\u201d<\/p>\n He added that Ethema, operating under the name ARIA Kentucky, \u201chas indicated a strong intent to hire a substantial portion of the current ARC staff in the same or similar roles. There will be no disruption to your daily operations or client care, as the well-being of our clients is our top priority,\u201d Robinson said in his email to ARC employees.<\/p>\n Entities to be acquired by Ethema include ARC, the Bellefonte Hospital and Recovery Center, Pioneer Rural Health Clinic and a pharmacy and laboratory, Robinson\u2019s email said.<\/p>\n The announcement makes no mention of the FBI investigation which the federal agency has described as \u201congoing.\u201d<\/p>\n But in an email Wednesday, an FBI spokeswoman suggested it may have been affected by the current federal government shutdown due to an impasse in Congress.<\/p>\n \u201cDuring the current lapse in appropriations, (Department of Justice) operations are directed toward national security, violations of federal law, and essential public safety functions,\u201d the email said. \u201cInquiries outside of these functions will be considered when the lapse in appropriations ends.\u201d<\/p>\n \u00a0The ARC news release did not disclose a potential sale price or whether Robinson would retain a role in the new operation and company officials did not immediately respond to questions about the deal.<\/p>\n Shawn Leon, owner of Ethema, said in the news release the purchase of ARC would advance the company\u2019s goal of expanding addiction and recovery services in the region.<\/p>\n \u201cThis acquisition will significantly contribute to reaching our goal of building a network of 3,000 beds by the end of 2026 and solidifying ARIA Kentucky as a regional powerhouse in recovery services,\u201d he said,<\/p>\n Ethema already operates the former Edgewater Recovery Center based in Morehead<\/a>, whose previous owners came under federal scrutiny last year over alleged fraudulent billing practices. The company agreed to pay $2.2 million in a civil penalty for its role in a scheme to submit false laboratory claims to Medicaid and Medicare for drug testing, according to the U.S. Attorney\u2019s Office<\/a> for the Eastern District of Kentucky.<\/p>\n If the sale of ARC to Ethema goes through, it will bring to an end ARC\u2019s 17-year operation by Robinson, a lawyer and recovering alcoholic who founded ARC in 2008 as a single halfway house in Lawrence County. He later established ARC\u2019s headquarters in Louisa where it became the small town\u2019s largest employer.<\/p>\n Over the years, the company grew rapidly, fueled by the changes in Medicaid in 2014 that dramatically expanded access for adults in need of addiction treatment, opening a new stream of revenue.<\/p>\n Robinson, his employees and companies affiliated with ARC, also became substantial political donors.<\/p>\n