USDA B&I Feasibility Study Case Study: A 32-Bed Residential Substance Use Disorder Facility in Adena, Ohio, Conditionally Feasible

A former skilled nursing facility of more than 22,000 square feet on 5.96 acres at 213 US Route 250 in Adena, Jefferson County, Ohio, renovated in 2015, configured with 26 private-bath rooms and marketed as approved for drug and alcohol rehabilitation and medical detox, is listed at $4,000,000. The proposal is a 32-bed residential substance use disorder program across ASAM levels 3.5, 3.7 and 3.7-WM, financed with a $4,720,000 USDA Business and Industry guaranteed loan at the 85 percent guarantee available to loans under $5,000,000, on a $5,900,000 total project cost with 20 percent equity. Ohio was selected over Kentucky on one decisive fact: Ohio requires no certificate of need for residential SUD beds, while Kentucky's exemption stops at 16 beds. Ohio Medicaid pays per diems of $240.95 at 3.5, $342.18 at 3.7 and $442.95 at 3.7-WM, room and board excluded, and Jefferson County's 2023 overdose death rate of 53.4 per 100,000 ran 37 percent above the state's. The facility reaches a census of 27 in Year 3 and covers at 1.25x, rising to 1.45x in Year 5, with break-even at 1.00x at a census of 25.8, and the first two years draw $563,018 from a $589,600 reserve. The revenue model rests on Ohio's SUD demonstration authority for facilities above 16 beds, listed as pending with a December 31, 2026 expiration at the study date. Determination: conditionally feasible, conditioned on confirmation of the waiver authority, the census covenant and the licensure file.

Model study prepared by MMCG Invest | Michal Mohelsky, J.D., FMVA | October 4, 2026

MMCG concludes that the 32-bed residential substance use disorder facility at 213 US Route 250 is conditionally feasible, and the study is precise about what the condition is, because it is not the usual one. The demand is documented at the county level: Jefferson County's unintentional overdose death rate of 53.4 per 100,000 in 2023 ran 37 percent above Ohio's 39.0, its four-year average ran 45 percent above the state, and the only comparable facility in the county, Milton Jefferson Recovery in Steubenville, opened around November 2025 as the first facility of its kind in the area in more than 20 years and fills from the same county the subject would serve. The building is the strongest fit on the listed market: a 2015-renovated former skilled nursing facility already configured with 26 private-bath rooms and marketed for exactly this use, which keeps conversion scope far below a raw nursing home or hotel conversion. The state selection is itself a finding: Kentucky pays higher per diems at 3.5 and 3.7, and the study still selects Ohio, because Kentucky's certificate of need exemption stops at 16 beds and a 32-bed Kentucky program would be underwriting a CON award, which a lender should not do as a base case.

The condition that governs the determination is regulatory continuity. A residential facility above 16 beds is an institution for mental diseases under federal Medicaid law, and Medicaid pays it for adults aged 21 to 64 only through Ohio's section 1115 SUD demonstration, which at the study date sat in temporary extension with a listed expiration of December 31, 2026 and a pending status while CMS processes the April 2024 extension request. Every state's SUD demonstration has been renewed since the framework began, a September 3, 2026 technical-corrections approval was posted, and the 2027 work requirement exempts people in SUD treatment; none of that converts pending into approved, so the study carries waiver continuity as a named condition with a downside case, prices the census covenant at the break-even table's 25.8, and sizes the reserve to carry the first two years' measured gap of $563,018. On those terms the facility covers at 1.25x in Year 3 and 1.45x in Year 5, financed at 80 percent of cost with an 85 percent federal guarantee, which is what the B&I program exists to do in a village of 664 people that the private credit market would not otherwise reach.

This is an MMCG model study: a complete feasibility analysis performed on a real, publicly listed facility using public data, prepared to show USDA Business and Industry lenders and behavioral health sponsors how MMCG tests a residential SUD conversion against the licensure rules, the per diem architecture and the demonstration authority before a purchase agreement is signed. It is not a client engagement, MMCG has no relationship with the seller, the listing brokers or any prospective operator, and the analysis is not an offer, an appraisal or a recommendation. Figures drawn from the listing portals, the Ohio Department of Medicaid behavioral health provider manual, the Ohio Department of Health overdose data, Medicaid.gov demonstration records, USDA program pages and the Federal Register are identified as such. Figures labeled MMCG assumption are underwriting inputs set by MMCG, including the acquisition basis, the entire conversion, FF&E and working capital budget, the staffing model, the commercial payer uplift and the county board revenue line. The bed-count conflict between portals, the unconfirmed listing status behind a blocked page, and the unverified sprinkler and fire alarm status are each carried into Conditions and Limitations rather than resolved silently.

The Project will acquire the former Altercare Adena campus, complete a focused conversion and life safety scope, obtain Ohio Department of Mental Health and Addiction Services licensure as a class one residential facility and certification for SUD residential and withdrawal management services, enroll with Ohio Medicaid as provider type 95, specialty 954, and operate a 32-bed residential program: 16 beds at ASAM level 3.5 clinically managed high-intensity residential, 8 beds at level 3.7 medically monitored intensive inpatient, and 8 beds at level 3.7-WM medically monitored withdrawal management, with the surplus rooms in the 52-bed layout held for isolation, flex and a future 3.1 step-down wing. Clinical operations follow the Ohio architecture: ASAM criteria applied under the state's rules, at least one documented face-to-face clinical service on site each billed day, withdrawal management under medical direction with 24-hour nursing, lengths of stay shaped by the 30-day no-prior-authorization window for the first two stays each year, and medication-assisted treatment prescribed through separately billable medical services, which the per diem does not bundle. The sponsor is a for-profit operator borrowing under the B&I program with personal and corporate guarantees; room and board, which Ohio's per diems exclude, is carried as unreimbursed cost offset in part by a modeled $150,000 of county board and grant funding, stated as an MMCG assumption.

Referral and Outreach Strategy

Residential SUD census is built from institutional referral channels, not consumer marketing, and the plan names them. The first channel is the hospital systems and emergency departments of the Steubenville and Wheeling corridor, where withdrawal management demand presents first and where an open 3.7-WM bed is the scarcest resource. The second is the county and regional ADAMH board network, drug courts and probation, which control placement funding and refer predictably against available beds. The third is the managed care organizations, whose care managers place members from waiting lists and whose contracts follow licensure. The fourth is the treatment ecosystem itself: outpatient providers, recovery housing and the Milton Jefferson facility's own overflow, in a county whose single comparable program fills from local demand. Admissions operate seven days with same-day withdrawal management intake, because in this business the census strategy is the answering of the phone.

Facility Program

The subject sits at 213 US Route 250 in Adena, a village of 664 residents at the 2020 Census spanning Jefferson and Harrison counties, about 30 miles from Steubenville on the Ohio side of the Wheeling-Pittsburgh corridor. The listing (LoopNet 21351465, CityFeet cs41773278) offers more than 22,000 SF on 5.96 acres at $4,000,000, fully renovated in 2015, with 26 private-bath rooms, a 52-bed configuration against a 96-bed figure on one portal that the study treats as the former skilled nursing licensed count, no zoning per the listing, and marketing language stating approval for drug and alcohol rehabilitation, behavioral health, inpatient care and medical detox, a claim the study verifies against OhioMHAS licensure history rather than relies on. The acquisition is modeled at $3,400,000, an MMCG assumption reflecting the asset's marketing duration and single-use profile, and the sensitivity grid does not depend on the discount.

Two alternates were screened and set aside: the former Stewart Lodge in Madison, Ohio, whose building area is reported at both 25,000 and 12,236 SF and whose Cleveland-market location puts B&I rural eligibility in question, and an operating Wellington assisted living asset priced at going-concern value, where conversion would mean buying and closing a functioning senior housing business. The subject's advantage over both is the one that matters in this asset class: it has already been configured and marketed for the intended use.

The regulatory path runs through the Ohio Department of Mental Health and Addiction Services: class one residential facility licensure, with inspection required for initial licensure and renewal on a three-year cycle, and certification for SUD residential and withdrawal management services, with staffing rules under the OhioMHAS administrative code carried as an open rule-review item. Medicaid enrollment follows through the Provider Network Management module as provider type 95 with specialty 954, with every rendering practitioner holding an NPI and enrolled and affiliated. Ohio applies the ASAM criteria under its Medicaid rules, and accreditation by CARF or the Joint Commission supports deemed status and commercial contracting without being a Medicaid prerequisite in the sources reviewed. The absence of village zoning removes the entitlement fight that kills many behavioral projects, and the study still conditions on written confirmation from the village and Jefferson County that no zoning approval is required. The life safety file, sprinkler and fire alarm status unstated in the listing, is a physical inspection condition with $230,000 budgeted against it.

The campus operated as a licensed skilled nursing facility and its utility services are carried as adequate for residential treatment use, subject to inspection. Property tax is modeled at $55,000 per year on a for-profit operation at the county's commercial rates, an MMCG assumption pending the auditor's record, and the original construction year, unstated in the listing, is flagged for the same pull. No impact fees are expected for continuation of an institutional use.

The service area is a 90-mile referral region centered on the Steubenville-Weirton corridor, reaching east into the West Virginia panhandle and the Pittsburgh exurbs and west toward Harrison and Belmont counties, because residential SUD placement follows bed availability across county and state lines. The demand geography is documented in the state's own mortality series: Jefferson County recorded 28, 35, 43 and 29 unintentional overdose deaths from 2020 through 2023, a 2023 age-adjusted rate of 53.4 per 100,000 against Ohio's 39.0, and a four-year average of 63.0, 45 percent above the state; Belmont County ran 40.5 in 2023. Ohio's statewide deaths fell 34 percent in 2024 to 2,931, with fentanyl in 69 percent of deaths, a genuine structural improvement the study treats as a headwind instruction: volume is modeled on treatment need and the regional bed shortage, not extrapolated from peak-era mortality. Medicaid expansion covers the target population, with 690,034 Group VIII enrollees statewide as of June 2026, and the January 2027 work requirement exempts people receiving substance use treatment, which protects admitted patients and leaves pre-admission and post-discharge churn as the exposure, priced in the sensitivity grid.

The census model is built from the referral architecture against a region whose residential supply was flat for two decades. Milton Jefferson Recovery, the county's only comparable program, opened around November 2025 at about 50 detox and residential clients, describes itself as the first facility of its kind in the area in more than 20 years, draws 60 to 75 percent of its clients from Jefferson County, and runs Medicaid-first, which is the market confirming both the demand and the payer mix the subject targets. The subject's 32 beds against that backdrop are an addition to a corridor, not a county, and the ramp reflects licensure timing and referral-network maturation rather than demand doubt.

The level mix holds the withdrawal management wing near 70 percent occupancy at stabilization, reflecting its short-stay turnover, and the ramp is an MMCG assumption benchmarked against the referral channels named above.

MMCG identified two operating programs with usable detail and a named-but-unverified cluster, flagged accordingly.

Competitor Number 1 Milton Jefferson Recovery This detox, residential and outpatient program is located at 1852 Sinclair Ave, Steubenville, OH, about 30 miles from the subject, with about 50 detox and residential clients and sober living of 25 male and 20 female beds, detox stays of 3 to 10 days, residential stays of about 30 days, and outpatient added March 2026. It opened around November 2025, describes itself as primarily a Medicaid facility, and is carried from July 2026 news reporting rather than its own website. It is the direct competitor, and its census is the subject's strongest demand evidence.

Competitor Number 2 Greenbriar Treatment Center (Gateway) This program is located at 800 Manor Dr, Washington, PA, with 14 detox and 62 residential beds across short- and long-term residential levels, accepting Medicaid, carried from aggregators only. It serves the Pennsylvania side of the referral region.

Named but unverified programs in the 90-mile region include Healthways Miracles Happen, Serenity Hills Life Center, Northwood Health Systems detox, Findlay Recovery Center and Hope Center Ministries in Wheeling, Gateway sites in Aliquippa and Westmoreland, and UPMC Mercy detox in Pittsburgh; each requires a SAMHSA FindTreatment pull and a facility-website check, listed as a condition. The 90-mile census is not complete, and the determination does not require it to be, because the binding constraint in this market is licensed beds, not patients.

Ohio Medicaid's fee-for-service per diems, effective January 1, 2024 under the behavioral health provider manual, are the rate card: $240.95 at level 3.5, $342.18 at 3.7 and $442.95 at 3.7-WM, with managed care organizations following the state's ASAM framework and no MCO schedule above fee-for-service identified, so the model uses the FFS rates for the Medicaid managed care book. Three structural rules shape the model. Room and board is excluded from the per diem and is carried as unreimbursed cost, offset by a modeled $150,000 of county board and grant funding stated as an MMCG assumption. Same-day psychotherapy and counseling are bundled into the per diem, while psychiatry, medication-assisted treatment and other medical services remain separately billable and are conservatively excluded from revenue. Utilization management allows 30 consecutive days without prior authorization for the first two stays per calendar year, with withdrawal management requiring authorization after the seventh consecutive day, which sets the practical length-of-stay architecture. The payer mix is modeled at 75 percent Medicaid at the FFS rates, 15 percent commercial at 1.35 times FFS, an MMCG assumption with no primary commercial source found, and 10 percent county board and self-pay at 0.9 times FFS, with a 97 percent realization factor, producing a blended realized rate of about $310 per patient day at the Year 3 mix. The entire Medicaid line above 16 beds rests on the IMD authority of Ohio's SUD demonstration, which is the study's governing condition.

Location: 213 US Route 250, Adena, OH 43901 Units: 32 beds (22,000 SF)

Source: Marshall & Swift CoreLogic, MMCG

At $184,375 per bed all-in, the budget reflects what the 2015 renovation and the existing SUD configuration are worth: a conversion scope of $35,000 per bed that a raw nursing home or hotel conversion would multiply several times over. Every hard cost, FF&E and working capital line is an MMCG assumption, because no primary conversion benchmark was obtained for this asset class in this pass, and the property condition assessment is the document that converts the budget from assumption to estimate.

Loan Assumptions

The guaranteed amount is $4,012,000, the 3 percent initial fee is $120,360, carried at $120,400, and the annual renewal fee of 0.55 percent of the guaranteed outstanding principal, with the rate locked at obligation, sits inside the lender's pricing. Keeping the loan under $5,000,000 is a deliberate structuring decision worth five points of guarantee: at $5,000,000 or more the FY2026 guarantee drops to 80 percent.

The borrower is an eligible for-profit entity, Adena at 664 residents sits far inside rural eligibility, the project is real estate acquisition, improvement, equipment and working capital, and the 20 percent tangible equity satisfies the new-business standard. The OneRD framework requires a feasibility study by an independent consultant for a startup enterprise, which is the engagement this model study illustrates, covering economic, market, technical, financial and management feasibility. The loan's position under the $5,000,000 threshold secures the 85 percent guarantee, the 3 percent fee is budgeted, and the maximum B&I exposure rules are not implicated at this size. The compliance file should also carry the regulatory continuity analysis as its own exhibit: the demonstration status, the September 3, 2026 technical-corrections posting, and the operator's contingency plan for a lapse, because a B&I lender's collateral is a single-purpose building whose value is its license and its payer.

The Year 3 operating budget at a census of 27 is built for a 24-hour clinically staffed residential program with a medical withdrawal management wing.

The payroll line carries the program's clinical spine: counselors at the regional benchmark of a $27.32 median hourly wage for substance abuse counselors in eastern Ohio, with the Weirton-Steubenville metropolitan area flagged as the technically correct OEWS benchmark for Jefferson County, 24-hour nursing for the withdrawal management wing, a contracted medical director and advanced practice coverage, behavioral health technicians around the clock, and the intake and billing office. An 18.6 percent margin at an 84 percent census is the honest center of this asset class: residential SUD economics are fixed-cost economics, and the break-even table below is where that sentence becomes a number.

The Year 1 gap of $493,286 and the Year 2 gap of $69,732 total $563,018 against the $589,600 reserve, leaving $26,582 of margin, and the study states the thinness rather than rounding it away. Year 3 coverage of 1.25x sits exactly at the conventional lender threshold, which is the determination expressed as a single number: the base case works, and it works without slack, so the covenants do the work the margin cannot.

At Year 3 rates and mix, with dietary and supplies varying by patient day and the remaining budget effectively fixed, census is the governing variable.

The 1.25x line and the forecast are the same number, and the 1.00x line sits 1.2 patients below it. That is the credit in two rows: a program that holds 26 patients covers its debt, a program that holds 27 satisfies its lender, and the gap between those states is one admission per week not converted. The census covenant at 26, monthly reported, is the control the structure needs.

The grid is asymmetric by design, and the study says so plainly: this is a thin-margin, fixed-cost credit whose downside cases land in the 0.6x to 0.9x band rather than near coverage, and whose tail case, a lapse of the IMD authority, is not a stress but a stop. The mitigations are structural rather than cosmetic: the census covenant, the reserve, a payer-diversification plan that builds the commercial and county board book, and a documented contingency to operate a 16-bed Medicaid-compliant configuration with commercial and grant-funded beds above it if the authority ever lapses, a configuration the 26-room layout physically supports.

The determination of conditionally feasible is subject to the following conditions precedent:

The following items could not be verified from a primary source at the study date and are disclosed: the listing's active status behind a blocked page; the original construction year; the sprinkler and fire alarm status; commercial per diem levels, carried as an MMCG assumption at 1.35 times the Medicaid rates; the county board funding line; the conversion, FF&E and working capital budgets; the Weirton-Steubenville OEWS wage set, in place of which the eastern Ohio nonmetropolitan counselor median is carried; the complete 90-mile competitive census; and county-level 2024 overdose data and treatment admissions.

This model study applies the methodology described on MMCG's behavioral health feasibility study and medical feasibility study pages. MMCG prepares behavioral health and medical facility feasibility studies for USDA Business and Industry lenders, SBA lenders and conventional lenders nationwide, with fixed-fee engagements quoted by facility type and delivery in 9 to 16 business days.