Tampa investors converting old Riverside Heights hospital into rehab facility
By Ashley Gurbal Kritzer
Tampa Bay Business Journal
Published: Sep 23, 2015

A group of Tampa investors is planning to transform an abandoned mental hospital in Riverside Heights into a drug and alcohol rehabilitation facility.

Sixteen Palms Health LLC is under contract to acquire the former Charter Behavioral Health System property at 4004 Riverside Drive, with an anticipated closing in mid-October. The building was most recently used as a Department of Juvenile Justice facility.

Sixteen Palms plans to spend $4.5 million "essentially gutting" the building, turning it into a 60,000-square-foot, 135-bed in-patient rehab center to be named Riverside Recovery Center. About a third of the building will be for outpatient services, and the center will include a 9,900-square-foot fitness facility with a basketball court and swimming pool.

If all goes as planned, it will open in the spring.

Tim Sweeney, a Tampa attorney who specializes in drug and alcohol abuse cases, is CEO of Sixteen Palms. Eric Carl, a former investment banker who has worked for Piper Jaffray & Co. and Raymond James, is the chief financial officer. Tampa entrepreneur Kirk Kirkpatrick is the chief administrative officer and director of programs.

The principals come from diverse business backgrounds, but all of them say they see untapped potential in building middle-market addiction treatment centers - comfortable facilities where the focus is on clinical care. The facility will accept private pay and commercially insured patients, meaning it won't be dependent on Medicare or Medicaid for payments.

It will offer four different levels of care: Medical detox, which can range from four to eight days; inpatient residential care, which range from 21 to 40 days; partial hospitalization, where patients spend eight hours a day in the facility but do not sleep there; and intensive outpatient care, in which patients come to the facility for several hours a day but do not live on the site.

"Think Hampton Inn or Courtyard Marriott, not necessarily the Ritz-Carlton, and not necessarily a prison, either," Carl said.

"But in terms of clinical care, we're the Waldorf," Sweeney said.

Carl, the financier, said he was intrigued by the numbers: By his research, 188,000 people in Hillsborough County and 24 million people nationwide have substance abuse issues.

"The numbers here are what astounded me - the depth of this disease," Carl said. "I've known [Sweeney] forever, and I knew he was frustrated with what he was doing, but I never truly understood the model." The group is backed by private investors so far, and is considering a Small Business Administration loan for a portion of the project.

His projections show the facility operating in the black by the beginning of its second year. Because of the size of the facility - with 135 beds - he says Riverside Recovery will be able to undercut the competition on price because of the volume of its business.

Carl says its costs will be coming in at "significantly less than" $21,000, the average cost for private-pay, 30-day inpatient treatment in Florida.

"If you can do it right, the margins are attractive," Carl said. "The returns to investors will be significantly higher than they're used to seeing in the stock market or a typical commercial real estate transaction. This is an operating business."

Ashley Gurbal Kritzer is a reporter for the Tampa Bay Business Journal.