Cumberland Heights is one of the most consistently profitable non-profit treatment programs in the country. If you look at the 990s of many well-known non-profit treatment programs, they have consistent annual fiscal deficits when donor contributions are removed from the P&L. In fact, if we look at non-profit NAATP member organizations, many of them have regular fiscal shortfalls when donations are removed (as non-profits, all these providers have publicly available financials posted online each year).
In this case study, we’ll look at the publicly available information to help us understand what has enabled Cumberland Heights’ financial sustainability and successful growth when so many other comparable non-profit and for-profit providers have not faired nearly so well.
Measured Growth in the Right Places
From our perspective, the number one thing that Cumberland Heights has done well is measured, local growth to expand its services and continuum of care. While most providers were only offering residential levels of care, Cumberland Heights opened their first Intensive Outpatient Program (IOP) in 1987, nearly 30 years before this began to become common practice. By 2016, Cumberland Heights had 10 IOPs opened around Tennessee, half near Nashville.
These IOPs weren’t opened halfway across the country where “reimbursement rates looked attractive”, they were opened in areas where patients were coming from and, most importantly, going back to. This hub and spoke model creates a virtuous feedback loop. Patients feel supported back home in their communities as they step down to IOP and this grows the reputation of Cumberland Heights in those communities, thereby increasing the number of patients seeking out Cumberland for both outpatient and inpatient levels of care.
According to current CEO Jay Crosson, “In addition to the hub and spoke concept, we also realized that, with managed care authorizations, we need to provide the continuum of care at a drivable distance from where our patients live and work.”
Today, Cumberland has the residential, 13 outpatient locations, a virtual program, gender specific teen programs and gender specific 12-step immersion programs all in Tennessee. Jay adds, "In 2024 we restarted our professional’s evaluation and treatment program that we had put on pause for nine years. In 2025, we opened a separate campus to treat adolescent girls under the ARCH Academy brand and will open our 14th IOP location in Memphis."
From the first IOP opening until the 10th, a period of 29 years passed. That’s some very measured growth.
Why Didn’t Cumberland Go National?
As we can see, Cumberland Heights has been a successful, sustainable, and expanding provider since 1966. The question might be then, why haven’t they gone national?
Their mission statement “to transform lives, giving hope and healing to those affected by drug and alcohol addiction” does not have any Tennessee specific language, so they weren’t constrained by mission.
Here, we’re coming to some historical speculation, but we can see how Cumberland’s growth strategy was quite organic. Presumably, each program or location was added on as increasing needs arose and the organization had the capital to cover the expansion.
This is the exact opposite of how many organizations try to grow. Many organizations today attempt to expand physically, and then “generate demand.” Of course, as we’ve covered numerous times before, there was/is often the false assumption in the field of dreams thesis of “build it and they will come.”
The reality is that success in behavioral health requires building a reputation in the communities in which providers operate. As anyone who has spent time in the Nashville recovery community knows, Cumberland Heights has done an excellent job of this. Talk to anyone “in the rooms” or healthcare professionals with knowledge of the SUD space and they will almost invariably mention Cumberland. As the leader of a competing organization once said, “People in Nashville don’t even have to know Cumberland to recommend them. When someone asks for a recommendation on a program, people will step up and volunteer, ‘I’ve heard Cumberland Heights is good,’ even if they don’t know anything about the program.”
That’s the power of reputation. We can further presume that similar sentiments exist anywhere that Cumberland has an IOP, which covers every city of any size in Tennessee.
What if Cumberland were to open up a program in Denver or Salt Lake City or Chicago? There would not be a pre-existing reputation. They’d be starting from scratch, just one more provider among the numerous options that already exist in those cities.
This is not to say that Cumberland wouldn’t ultimately be successful in a new state, but just as it took them 60 years to get where they are today in Tennessee, they certainly wouldn’t be an overnight success in a new state. As we often like to point out, operational models alone do not enable rapid success.
Whether or not this reasoning played a part in the growth strategy is lost in history, but it’s important to reference here because this is the exact mistake that so many operators attempting to expand make today. They assume that, because they have a successful operation in their place of origin, they can copy/paste facilities and operations to a new market and be equally successful. This consistently has proven to not be the case.
With that said, this doesn’t mean it’s not possible. But it does point to the fact that the timelines required to establish success are longer than most initially suppose and, as we’ll discuss more below, there has to be regular adaptation and innovation to meet the changing requirements of patients, payers, and communities.
Adaptability and Innovation: Changing to Meet Varying Community Needs Over Time
We’ve already seen how Cumberland Heights expanded methodically over time as they saw, then met, the need for new programs and locations. One thing Cumberland has always done incredibly well is meet the needs of their communities. Many donors and board members are prominent members of the Nashville community, which certainly helps them keep their pulse on government policy, community trends, and large city or state initiatives.
Community Involvement and Focus on Reputation
But, more than that, Cumberland has always had a large focus on its alumni. This is a big reason why Cumberland has such a presence in the rooms and with the larger recovery community in Tennessee. Cumberland is the only treatment program we know to have a cemetery on site. Some alumni’s connection to Cumberland is so strong that they actually asked to be buried on site. That’s powerful.
Cumberland has traditionally hosted AA meetings in all of its locations, acting as a hub for the recovery community, it has regular large annual events, and numerous smaller alumni events. More than a treatment program, Cumberland provides ongoing fellowship in alignment with its founding 12-step ideals.
Furthermore, because Cumberland has kept such a local focus, this concentration allows for stronger bonds to be built. For programs that fly people in across the country, it’s quite hard for the average person to spend the time and money to fly to an annual alumni reunion, much less gather for more regular events.
By being local, alumni can easily attend larger annual and smaller regular events, forging strong and regular bonds with the community. This is a driving factor in Cumberland’s name being ubiquitous throughout Nashville and the state. As reported by a staff member at Cumberland, it’s often not surprising for 50% of the people attending a local AA meeting to be alumni of Cumberland.
Imagine if they pulled from across the country? You might have one Cumberland alumni in an AA meeting in LA and one other in Chicago. That’s not much of a presence. But by concentrating in a smaller area, over time, a tipping point is reached where community word-of-mouth becomes a dominant force in terms of marketing and outreach.
We’ve seen how Cumberland has adapted to the needs of the community by expanding locations and services as well as by building a strong fellowship in the recovery community. Most programs these days have built out a continuum of care and offer alumni programming. But Cumberland hasn’t stopped there.
Cumberland's treatment approach is deeply rooted in the spiritual tradition of the 12-steps, a kind of programming that resonates with a state where 72% of residents still identify as Christian (compare this to California where only 55% do). Since Bill W started Alcoholics Anonymous in 1935, the vast majority of treatment programs in the US were based in 12-step principles. Only in the past 5 years have we seen a significant shift away from 12-step being the central model of recovery within formal treatment programming.
Cumberland maintains its spiritual identity and approach, but has also updated its programming over time as research on evidence-based best practices have continued to immerge. While 12-step is an evidence-based approach with robust research documenting its outcomes, the field as a whole has moved towards additional pathways to recovery and Cumberland has moved with them.
Building Relationships with Payers
It’s not just the recovery community where Cumberland built relationships, but also with payers. At the 2024 SUD Executive Roundtable organized by us in collaboration with NAATP, Jay spoke on the importance of long-standing payer relationships as part of their success strategy.
By building relationships, consistently providing measurable, qualitative patient outcomes, and piloting innovative reimbursement models, Cumberland has been able to partner with payers to help more people, a distinct competitive advantage when the payers are your primary source of revenue.
Commitment to Quality and Transparency through Data
More than simply expanding its treatment repertoire, Cumberland went one step further and founded the Research Institute onsite, an initiative dedicated to tracking and providing patient outcomes. This institute costs over half a million a year to maintain, an investment that we don’t believe is matched by any other program in the country.
And this isn’t just data for data’s sake. As Dr. Nick Hayes, who heads up the Institute’s research arm, points out, the data is used to create constant feedback loops between operations and clinical, always looking for areas to improve care. To learn more about this process, we encourage you to listen to the podcast our CEO did with Dr. Hayes on this subject.
Each year, they publish the results of their research and outcomes in an extremely well done report. Many programs talk about the effectiveness of their treatment, but few actually track and publish on it, especially in such a transparent manner.
This information is displayed prominently on their website and accessible from the home page. Families patients, and community referral partners have already likely heard good things about Cumberland Heights. Then they go to site and can see the outcomes for themselves.
What’s more? Do a Google search for providers in Nashville or even Tennessee as a whole and pull up their websites. None of them list recovery outcomes.
For patients and families, transparent outcomes offers an incredibly strong, positive differentiator. For community referral partners, prominent outcome displays offer further examples of Cumberland's investment in and commitment to quality.
Fiscal Responsibility & Strategic Planning
While there are not many public narratives available online, Cumberland Heights’ ten plus years of 990s showcasing fiscal surplusses are a clear indication that the organization handles its finances well.
Like many treatment programs, both for-profit and non-profit, built prior to 2019, Cumberland Heights has massive properties with over 100 acres and numerous buildings. As we’ve seen from case studies where organizations are not as financially sustainable, a large contributor to fiscal challenges is the high cost of such large property maintenance.
Despite this expense, Cumberland Heights continues to post a surplus year after year. Clearly, expenses are well managed versus revenue. These retained earnings enable Cumberland Heights to make additional investments in such things as new facilities and programs or larger initiatives such as their research institute. They also provide a critical safety net to the organization which allows them to make measured decisions while not under financial pressure.
Not uncommon in today’s equity markets, heavy upfront capital expenditures are made under the assumption that this will enable returns later. This has certainly worked in numerous verticals, but has yet remained unproven in SUD at scale.
Waiting for an organization to build up enough retained capital to enable expansion is a very slow process, a time horizon that is too long for most investment groups. However, we can see the advantages of the model in Cumberland Heights’ case (it should be noted that, as a non-profit, Cumberland also has the added advantages of being able to do capital campaigns and not have to pay taxes.)
The real advantage here though is that, without fiscal shortfalls, the organization has the ability to organize a measured, strategic approach to growth and expansion. From our perspective of having worked with dozens of failed programs, pressure resulting from running in the red month over month leads to constantly being in a state of Stephen Covey’s Quadrant 1–burn out, high stress, and crisis–when everything is on fire all the time.
Being in Quadrant 1 means organizational resources, particularly employee time and focus, are hijacked. The executive leadership team is never able to get its collective head above water and plan for the future. Attention is diverted from all but crisis areas, meaning that much of the organization ends up neglected, eventually leading to yet another crisis in another area until it all collapses.
With steady, positive cash flow, Cumberland can try new things, recover from the inevitable failures or missteps, and take the time to do the heavy lifting of strategic planning and organizational improvement.
A Winning Model
Cumberland’s model isn’t rocket science. Strategic growth, adaptability, innovation, community involvement, and fiscal responsibility aren’t an esoteric secret sauce. It’s just good operations.
But, like any business, it all comes down to execution. The team at Cumberland has clearly continued to execute well over the decades, but, we’d argue, by having the patience to engage in measured growth and ensuring fiscal sustainability, they’ve given themselves the breathing room to enable consistent execution. Having many long-tenured staff also helps retain organizational knowledge and learnings. Many in leadership have been with the organization a decade or more. Perhaps not having fire drills every other day increases employee retention!
Admittedly, Cumberland’s execution of this model is a slow one. Most investors and organizations are looking for more rapid growth. However, the principles outlined here can certainly be used within accelerated timelines. The question of just how accelerated of a timeline is sustainable remains unanswered, but this model is a successful one. It just requires a bit of patience is all.