How serial dealmaker Jon Moulton reached the point of no return with his £12 million investment in Winthrop Hall, by M&A’s Mark Dunne.

Jon Moulton specialises in making money. The founding partner of private equity firm Alchemy Partners has amassed a personal fortune of £172 million through buying and selling troubled companies.

While he has become one of the UK’s most prominent business figures with deals such as AG Stanley, a home decorating business where he made a £430 million return from a £2 investment, he has also been labelled a ruthless asset-stripper.

Two years ago, Moulton silenced his critics when he made his most personal investment to date – a £12 million investment from his own pocket to establish Winthrop Hall, a purpose-built residential alcohol and drug treatment centre. The centre, located in Kent, offers a discreet proven treatment involving detox, 12 step and cognitive behavioural therapies, family and systemic work and a wealth of complementary and physical therapies to help addicts into recovery.

“There should be no higher priority in a user’s life than to kick the habit,” Moulton says, adding that “we understand the 24-hour illness that is addiction and Winthrop Hall is committed to getting clients well.”

Genesis

Moulton’s backing didn’t come from reading a business plan from an entrepreneur or an approach for funding from a healthcare company, but through personal experience. He needed to find treatment for a family member and was not satisfied with the services available in the UK.

“I saw what was on offer here and was unimpressed,” he says. “Most places operate unproven, untested and unrecorded methods of treatment. Richer patients end up in the more well known places where the consultants are being paid daily rates to keep people in hospital.”

Moulton explains what he perceives to be the problem with rehab centres in this country. “Fundamentally, none of the UK clinics appear to keep any statistics on their success rates, preferring a repeat patient who comes back regularly because he can’t kick the habit – which is pretty unattractive,” he adds.

“If you look at the stats in the States, some of the clinics have quite high success rates as they look after patients far better.”

Moulton decided to create a centre on this side of the Atlantic that would follow a proven approach to alcohol and drug addiction. “It would help people to recover, which isn’t necessarily the objective of other clinics. This was the driver, and I was intrigued at the possibility of doing it.”

Follow the leader

Once he had the motivation and had allocated the finance to build the centre, Moulton’s first move was to find a project leader. His search was brief. One of his previous investments was nursing home group Four Seasons, the managing director of which recommended Lesley Reardon.

Reardon, a former nurse who has 20 years experience of management in the healthcare sector, said she accepted the role because there was a need for Winthrop Hall.

“Drug and alcohol addiction is growing,” she adds. “It affects the workplace and individual performance, and there are very few resources spent on looking at the world of addiction.”

Official figures support her claims with a report released by the Greater London Alcohol and Drug Alliance stating that 23 per cent of adults in London abuse alcohol and 1 per cent of the capital’s 7.5 million people are drug users.

The American way

One of Reardon’s first moves was to appoint London addiction specialist and psychiatrist Dr David Bremner as clinical director. Once the core management team was in place, it had to decide how the centre should operate and headed off on a fact-finding tour of addiction centres in the US, which included analysing the Betty

Ford Clinic.

On returning from the US, Reardon and Bremner decided the model that would help clients make a lifelong recovery would include a six-week tailored programme, involving 60 hours a week of planned therapeutic activities, encompassing the 12- step approach to achieving recovery, cognitive behavioural therapy, and systems or family approaches all delivered through daily one-to-one therapy and group work.

“We offer everything from the initial assessment to therapy for the family that might be concerned about a family member, as well as detox and rehab for the individual,” Bremner says. “Our 60 hours a week of planned structured activities is different from other service providers that might only manage 18 hours a week.”

In addition to the clinical treatment programme, they decided to provide an exercise regime, a balanced diet and complementary therapies. These extra activities are designed to encourage clients to lead a healthier lifestyle, which our research shows can contribute to a higher recovery rate.

The treatment costs £4,500 a week, all inclusive, which, according to Reardon, is good value for money and once the six-week programme is complete Winthrop’s specialists provide recovery care support for 12 months and beyond, if needed.

“Our research tells us that if abstinence is maintained for more than 12 months after the residential programme, long-term success is more likely,” she claims.

“The aftercare is called Recoverycare, where people who leave us are supported with texts, emails and phone calls. We also provide ongoing therapeutic sessions with a Recoverycare partner because we believe individuals who give themselves up to this treatment are courageous – it isn’t just about six weeks of their life, it is a lifestyle change.”

She added that after two years of hard work, they are starting to see the results of their efforts. “The project started in 2005 and is a huge piece of work that is coming to fruition. We opened our doors to clients in November and we have had a good take-up.”

At full capacity the centre can accommodate 25 clients.

No return

The most intriguing part of the deal is that Moulton won’t be expecting a return on his investment. He claims: “If Winthrop was a commercial investment then I’m afraid the behaviour of the business would be much the same as many other clinics where patients don’t get better and keep coming back. We are trying to cure users and this is commercially less attractive because we only want to see the patient once.”

“We will try and run it on the basis that funds collected will fund a number of bursary places. The intent is to do good rather than to make profit.”

Reardon confirms that Winthrop was funded as part of Moulton’s philanthropic portfolio. “The Moulton Foundation is a charity and Winthrop is very much part of that. However, the property is owned by the charity, but the operational side of the centre is managed along commercial disciplines.”

Moulton’s £12 million investment is not the end of his financial support for the centre as he is already making further investments to support the project. “We will not break even on a cash flow basis for a year, probably two.”

It’s early days, but Winthrop Hall is already a success in terms of retention and treatment completion rates. Bremner says: “Yes it is early, but every client has completed their programme and that’s statistically significant.”

To ensure this continues, Winthrop Hall’s management and clinical team will evaluate their service. “If we do something and it doesn’t stand up then we will have to change the service. This can’t be done overnight, so in the next couple of years we intend to produce research papers on evidence-based services and the best providers of care.”

Bremner hopes Winthrop’s services will not only help its clients, but those attending other centres.

“The example I like to use is Volvo and how it developed seat-belts and airbags that now dictate the industry standard. Like Volvo, we are not looking to patent anything that we pioneer, but we hope our work filters down through the industry and sets the standard.”

Early research certainly indicates that this process has started already.”