Referral centres and the ‘unethical’ search giant earn millions by exploiting the desperately ill
In the suburban red-brick building on the outskirts of London, desks of office workers were taking calls from people desperately seeking help to overcome addiction-related problems. Addiction is an affliction that causes despair, ill health and even suicide, as the man sitting in the glass conference room at one end of the Elstree call centre on that winter morning knew only too well.
Daniel Gerrard is a former drug addict who often appears on television as an expert on the illness. His Addiction Helper call centre is billed as a free “treatment service” for a variety of addictions.But Gerrard, a former City bond trader, is at the forefront of an industry that is secretly stripping millions of pounds from the very people it claims to help. And those profits were shared with the internet giant Google — which was happy to make money from call centres such as Addiction Helper in the UK while barring the practice in America.
Gerrard was in the conference room that day, meeting two executives who were setting up a new luxury rehabilitation centre for addiction in the Cotswolds, Gloucestershire.The executives wanted to know how they could attract patients to their centre and had asked Gerrard to explain how the patient referral system worked. “It’s a very difficult industry to work in,” admitted Gerrard. “Some may say it’s highly unethical.”
But his business was generating millions from referring patients nonetheless. What the two executives didn’t tell him was that they were undercover reporters from The Sunday Times investigating a covert enterprise in which patients are traded to some of Britain’s biggest clinics for large sums of cash.The UK has become the addiction capital of Europe, with more people suffering overdoses than in any other country on the continent. However, in recent years funding for addiction services has been diverted from the NHS, forcing more people to seek private help for addictions such as drugs, alcohol and gambling.
Rehabilitation is not cheap. The recommended month-long detox programmes at the biggest clinic groups such as the Priory and Gladstones can cost up to £30,000.But the effects of addiction are so pernicious and detrimental that sufferers and their families will often remortgage homes, take out loans and raid savings to pay the high costs.
This has created an opportunity for firms such as Gerrard’s and several other “referral agents” including ADT Healthcare, whose owner also met this newspaper’s reporters.
In his willingness to impress the undercover reporters, Gerrard described in detail the secrets of how the referral system works — which he prefers to keep from those calling his helpline. Addiction Helper has arrangements with many clinics around the country to receive up to 30% of any fee paid by a patient it has referred.
The business even has on its books a luxury clinic where it can make £20,000 a month for doing little more than passing on a patient’s details. Sometimes the patients stay in clinics for many months or even years — a huge windfall for the referral agents, who are paid for the duration of the treatment.
Gerrard’s helpline recently agreed to merge with a firm called UK Addiction Treatment (Ukat), founded by businessman Eytan Alexander, which owns seven clinics around the country and is based in the same Elstree offices with only a glass partition dividing them.
Gerrard admitted that around 40% of the referrals made by Addiction Helper go to its sister company Ukat, and the rest go to other clinics that agree to pay referral fees.
His Addiction Helper website does not state that it receives a large financial incentive to help callers go into rehabilitation.
Gerrard said his phone operators never reveal the size of Addiction Helper’s cut of a patient’s fees. If asked directly, the operators are told to admit that money is paid by the clinics. But Gerrard told the reporters: “We don’t feel it’s appropriate and we’re not required to tell them how much that is . . . these are highly, highly stressed people in really stressed situations.”
There are cheaper options for treatment that the helpline staff could explore with callers, such as non-residential counselling from a therapist. But Gerrard admitted: “It’s minimal money on counselling, so we try not to overpromote it.”
The key to the business is Google, because that is where the potential leads come from. Studies have shown that the majority of people find treatment clinics through internet searches, and Gerrard makes sure they see his site first.
Anyone keying in a range of terms associated with “addiction” and “treatment” was likely to find an advert for Addiction Helper’s website at the very top of the first Google search page. “[We are] number one because we sit down with Google every three months. I think we . . . beat our competitors by something like 35% coverage,” he said.
He explained that Addiction Helper also operates or uses more than 300 websites to attract people to its call lines.
Using a computer screen on the wall of the glass room, he demonstrated his helpline’s domination of Google by doing a simple search for “alcohol, rehab, Gloucestershire” — the latter chosen because it was the county where the reporters’ fictional company was based.
The results were astonishing. His websites occupied five different positions on the first Google page, including the top advertising slot. Gerrard proudly counted each one.
The reason companies such as Addiction Helper can do this is because Google set up a bartering war for the top advertising slots on its pages. Gerrard said he secured the top slot by giving Google double the amount paid by any competitor.
This, he said, has meant that at certain times his helpline has been forced to pay Google an extraordinary £200 each time a person clicked to access the website. The company paid Google £350,000 for advertising in an average month, which works out as £4.2m a year.
“We are the biggest spender in the business,” said Gerrard. “So if there’s people out there looking for treatment, they’re going to come to us.”
The aggressive spending has proved effective. Gerrard says his helpline is contacted by 6,000 to 7,000 people a month. He said 95% of callers “haven’t got a penny” and he provided them with free service.
But he has become the market leader in referrals by turning the remaining 5% of callers into money. If a caller is interested in private rehabilitation, they are sent a number of options tailored to their needs taken from a set of clinics that Addiction Helper has arrangements with.
Last October his business made 295 referrals, a record month. A “f*** load”, was how Gerrard’s partner Alexander described it, when he joined the meeting with the reporters for a short while.
The percentage cut taken by Addiction Helper depends on how much the clinic charges. Gerrard said his agency worked with an array of clinics which charged from as little as £4,000 a month to as much as £44,000 a week for the luxury Kusnacht clinic in Zürich. Since the Kusnacht’s fees are so high, Addiction Helper charges only a 10% or 12% fee, which still brings in £21,000 for just one referral if the patient stays for a month, as is usual.
Some critics suggest the combination of the millions paid to Google and the profits made by Gerrard’s business add an unnecessary extra tier to what is already a very expensive service for addicts. And Addiction Helper is not the only one.
Three weeks earlier, the undercover reporters met Oliver Clark, the director of ADT Healthcare, for lunch in the City of London. Clark operates a two-person referral business that profits from sufferers of addiction. He told the reporters he spends about £60,000 a month on Google advertising, and at prime times he has to pay the internet company up to £150 for a click on his website.
He refers about 50 people to clinics each month, and one of his main customers is the upmarket Life Works clinic in Woking, Surrey, owned by the Priory Group. At Life Works he claims to take a 25% cut of the patients’ monthly fees of more than £20,000 a month.
But he told the reporters he would “definitely” not tell the patients about such financial arrangements. He said that families “don’t like the idea of paying brokering fees”, and he pretends he is on an annual retainer from the clinics if anyone asks him directly.
When callers come to him, he says he gives impartial advice in their best interest. “We advertise our service as an independent information service for anybody looking for private addiction treatment either in the UK or abroad.”
Clark said he made recommendations matched to people’s needs and based on his industry knowledge, and helped those who could not afford residential care. But he was willing to give preference to the reporters’ fictional clinic if they paid a higher cut than the competitors. “I’m a very straight talker,” he said, “that’s the bottom line. If it is at that [30%] fee then you are much more likely to be getting referrals from us.”
Clark admitted the fees were “very high” but blamed it on the “cost of acquisition” — by which he meant Google. He said he needed to make one referral a day to cover his Google spending. Google’s annual advertising revenue has more than doubled to £59bn since Gerrard first set up Addiction Helper in 2010. While Google had been content to make money from referral agencies in the UK, last September it barred adverts triggered by search terms such as “addiction and “rehab” in America because of concerns that sufferers were being exploited.
It is illegal to make money from referring patients in several states, and Florida has a law that makes “patient brokering” a specific offence.
Today, as a result of the Sunday Times investigation, Google removed all advertising related to the addiction industry from its UK platforms.
Gerrard founded an addiction clinic in Delray, Florida, called the Amy Winehouse Project. He and his partner Alexander acquired the rights to use the late singer’s name in America and Canada from Amy Winehouse’s family. They passed the proceeds onto the Amy Winehouse Foundation.
He told the reporters he would never charge or pay referral fees in America. “We are not allowed to take a fee in America,” he said. “I know the laws and I’ll respect those laws.”
Last week, Gerrard’s lawyers said that the fees he takes remain the same across the board.
Last November, the Care Quality Commission wrote a damning report finding that 72% of English rehab clinics were failing. Experts believe the referral agents’ fees have contributed to this decline in standards.
One of the sternest industry critics of the referral system has been Dominic McCann, a director of the Castle Craig drug and alcohol rehab clinic in Scotland.
McCann said his clinic had once paid Clark’s ADT Healthcare a referral fee but decided never to do so again because he felt the lack of transparency was dishonest. “The patients were unaware what was going on. They thought they had been consulting a helpline with no money involved,” he said.
He believes that referral agents are “parasites targeting sick people at the most desperate time of their lives”.
McCann said Google was “devoid of ethics” for allowing the referral agents to advertise. “Google is allowing these referral agents to pay vast sums in order to dominate the online advertising space. People are turning to a Google search for advice and guidance, but are being lured to referral agent websites.
“Google may be complicit by pocketing millions of pounds from exorbitant advertising fees, which pushes up the price of rehab for patients and families and contributes to a deterioration in the quality of clinical standards.” The referral agents, however, claim they are saving clinics advertising costs.
Commenting on the Sunday Times investigation, the Department of Health issued a statement last week saying: “It’s disheartening that those seeking privately funded help for their addiction are potentially being exploited.”
There is widespread concern about the state’s financing of drug and alcohol treatment facilities, which lost its ring-fencing when the responsibility for addiction was taken away from the NHS and given to local authorities in 2013.
Deaths involving heroin and morphine have doubled since 2012, and the number of drug fatalities overall is at an all-time high.
The Department of Health urges addicts to seek help from state providers. “Patients are able to access local authority funded services free of charge — waiting times are minimal. We strongly encourage people to access these services and get the help they need.”
Fees ‘let us help most needy’ — what the agencies say
Daniel Gerrard, founder of Addiction Helper, said: “For all inquiries to our specialist helpline, statutory government-funded drug and alcohol services and self- support groups are always recommended, with referrals to private rehab clinics as a last resort for those desperately in need of residential treatment representing a small amount of work that the helpline does to provide support and advice around the clock to those in need.
“Since the Care Quality Commission decided to regulate smaller, independent rehab clinics in order to ensure safe, high-quality care, these clinics have faced increased operating costs in order to meet new and improved standards which ultimately has led to increased treatment costs, whereas treatment costs at larger clinics already regulated have stayed constant. The reality is those providers of care who have chosen to no longer work with helplines have not reduced treatment costs but . . . chosen to invest into their own marketing budgets and paid online advertising.”
Lawyers for Oliver Clark, director of ADT Healthcare, said: “The only payments received by ADT are the referral fees paid by rehabilitation clinics. Those arrangements are entirely lawful and proper and enable organisations such as ADT to continue to provide [free] services to some of the most needy people in society.”
They said ADT works hard to match carefullythe right level of care for people who are suffering and in need of rehabilitation services. They added that vulnerable service users benefited from advice because it can be difficult to find the best service.
The lawyers denied that the percentage of fees would dictate where a prospective patient was referred to: “[ADT] would only ever send individuals to the best and most suitable facility to meet their specific needs.”
Google said: “We work to help healthcare providers – from doctors to hospitals and treatment centres – get online and connect with people who need their help. Substance abuse is a growing crisis and has led to deceptive practices by intermediaries that we need to better understand. In the US, we restricted ads entirely in this category and we have decided to extend this to the UK as we consult with local experts to update our policy and find a better way to connect those that need help with the treatment they need.”
The Priory Group and Gladstones failed to respond to questions. Charterhouse, Bayberry and the Kusnacht Practice declined to comment. Shane Creedon, chief executive of Regain Recovery, said he viewed referral agents’ fees as a legitimate marketing cost.
Insight: Jonathan Calvert, George Arbuthnott, Paola Tamma, Michael Selby Green, Tom Wills
January 7 2018, 12:00pm, The Sunday Times
Referral centres and the ‘unethical’ search giant earn millions by exploiting the desperately ill