Behavioral health operators talk a lot about “going multi-state,” but very few actually do it. The licensing, payer contracting, and clinical infrastructure required to operate across multiple regulatory environments will break a weak operation long before it breaks even. Sandstone Care managed to scale from a single outpatient program in Colorado to a multi-state, full-continuum provider — and their path offers a useful playbook for anyone serious about building a regional or national behavioral health platform.
Starting in Colorado: The Foundation Before the Growth
Sandstone Care was founded in 2015 in Denver, Colorado by Rick McKenzie and Marcello La Rocca, starting with a single outpatient program focused on teens and young adults. That initial footprint grew into a full continuum of care — detox, residential, PHP, IOP, virtual IOP, general outpatient, and sober living — all in Colorado before the company crossed state lines.
That sequencing matters. Before expanding geographically, Sandstone built depth in its home state with multiple levels of care and multiple markets (Denver, Broomfield, Boulder, Colorado Springs), so expansion meant scaling a proven model rather than gambling on a single successful site. Treating Colorado as a laboratory for operations, clinical pathways, and payer relationships gave them a base they could actually replicate.
The clinical differentiator powering that growth was age-specific programming. Sandstone built separate tracks for teens (ages 13–17) and young adults (ages 18–30), treating each group as having distinct developmental, social, and clinical needs instead of lumping everyone into the same groups. That kind of age stratification is supported by a large body of research showing that adolescents and young adults have different risk profiles, treatment engagement patterns, and recovery trajectories than older adults, especially for substance use and co-occurring disorders. For example, national survey data show that adolescents and young adults experience high rates of mental illness and substance use but have unique barriers to accessing and engaging in care, which often calls for tailored interventions for these age bands. (SAMHSA NSDUH & young adult behavioral health data)samhsa+2
That positioning gave Sandstone a clear lane in crowded markets: “we treat teens and young adults, on purpose and by design.” It also made their referral story simple and consistent for schools, pediatricians, and mental health providers who were desperate for developmentally appropriate options for this population. Nationally, demand has been intense: recent federal data estimate that about 15.4% of adolescents aged 12–17 (roughly 3.8 million youth) experienced a major depressive episode in 2024, with many not getting timely, specialized care, underscoring why age-specific programs resonate with families and referrers. (SAMHSA NSDUH 2024 findings)samhsa+1
Why Maryland and Virginia Were the Right Second Markets
Sandstone’s East Coast push into Maryland and Virginia wasn’t random. The greater Washington, D.C. metro area — spanning Northern Virginia and suburban Maryland — is one of the highest-income, highest-insurance-coverage regions in the country, and it has long been viewed as a strong market for outpatient and residential behavioral health services because many families have commercial coverage and the clinician workforce is relatively deep. Federal and state data consistently show that higher-income regions often still have significant unmet behavioral health needs among adolescents and young adults, especially for intensive outpatient and residential levels of care, making these markets attractive for age-focused programs. (SAMHSA & HHS behavioral health needs data)samhsa+1
At the same time, the D.C. region has historically had fewer developmentally targeted options at the adolescent and young adult level of care relative to the volume of need — lots of adult-focused services, fewer teen-specific PHP/IOP and residential programs. National data show that only a minority of adolescents and young adults with substance use or co-occurring mental health conditions receive specialty treatment in a given year, despite high prevalence of symptoms such as major depression and anxiety. (SAMHSA NSDUH & behavioral health needs) Sandstone’s age-specific positioning slotted directly into that gap.naco+1
On the payer side, Sandstone made an explicit choice to be predominantly in-network in these new markets, leaning into commercial insurance instead of building a cash-pay model. That strategy aligns with how most families actually navigate care: SAMHSA and other federal surveys consistently find that cost and lack of coverage are among the top reasons people who feel they need behavioral health treatment don’t get it, and in-network status is a key lever to reduce those barriers. (SAMHSA access-to-care data) In practical terms, committing to in-network contracting across major payers (Aetna, Blue Cross Blue Shield plans, Cigna, United, and others) in a new state means months of upfront work before a single claim is paid.ncbi.nlm.nih+2
And that’s where many expansion stories die. Getting credentialed with large national and regional payers in a new state is slow, often taking 90–180 days per payer, and sometimes stretching closer to a year from initial outreach to effective date, especially for new facilities. Federal and payer guidance reinforce that provider enrollment is state-specific and that organizations generally can’t bill until the effective date on the contract or enrollment approval, not when they submit applications, which creates a delay between going “live” clinically and getting paid. (CMS & payer enrollment guidance) Sandstone effectively chose to build out payer relationships in Maryland and Virginia in parallel with standing up clinical programs, which only works if you either have real operating capital or a very disciplined, phased launch plan.aha+1
Their Maryland program was Joint Commission–accredited by 2016, which is an aggressive timeline for a young company. The Joint Commission’s behavioral health accreditation process requires a full application, an on-site survey, and demonstration of compliance with standards around safety, quality, and clinical care; adding a new site to an existing accreditation still requires survey activity specific to that location. (The Joint Commission behavioral health accreditation process) In other words, Sandstone wasn’t just “testing” Maryland — they were investing in infrastructure and external validation very early, while the Colorado base was still scaling.jointcommission+1
The Operational Mechanics of Multi-State Licensing
Here’s what many founders underestimate about multi-state behavioral health expansion: licensing is hard, but credentialing and ongoing compliance are usually harder.
Getting a facility license in states like Maryland or Virginia involves state-specific regulations, policy and procedure review, site inspections, and human rights or patient rights requirements. Those processes can be lengthy but are relatively linear and well-documented. For example, the Virginia Department of Behavioral Health and Developmental Services (DBHDS) explicitly notes that its licensing process for new applicants can take up to 12 months or longer, and outlines a multi-phase process that includes policy review and on-site inspections before a license is granted. (Virginia DBHDS Office of Licensing – licensing process)dbhds.virginia+2
By contrast, insurance contracting and credentialing are fragmented by payer and by state, which makes timelines less predictable. Each payer treats each state as its own network, meaning that being in-network with a commercial plan in Colorado has no automatic bearing on your status in Virginia or Maryland. National payers and CMS emphasize that provider enrollment is distinct for each state and program, and that organizations must complete state-specific enrollment or contracting before submitting claims, which can create material cash-flow gaps during expansion. (CMS enrollment and network participation basics)[aha]
The people side is just as challenging. Sandstone’s clinical model is built around master’s-level therapists and licensed clinicians, which is consistent with how most intensive outpatient and partial hospitalization programs staff their core services. Regulatory bodies and accreditation organizations expect programs at these levels to be staffed by appropriately licensed professionals and often require specific staff-to-patient ratios and supervision structures. (Joint Commission behavioral health standards overview) Recruiting, credentialing, and retaining that workforce in competitive markets like Northern Virginia and suburban Maryland requires a real HR and recruiting engine, not just a local job posting.jointcommission+1
On top of that, every state has its own compliance framework and oversight cadence. Sandstone holds licenses from agencies such as the Colorado Department of Human Services’ behavioral health authority, the Maryland Department of Health, the Virginia DBHDS, and the relevant Illinois licensing body, each with different documentation expectations, incident reporting rules, and survey cycles. State behavioral health authorities and health departments routinely conduct inspections, audits, or reviews, and may coordinate with or recognize accreditation by organizations like the Joint Commission as part of their oversight. (State behavioral health authority and Joint Commission roles)dbhds.virginia+2
Most single-site operators don’t have the bandwidth to run four different regulatory calendars plus multiple payer audits and accreditation surveys. Sandstone treated that as a core operational function early, rather than something to bolt onto a clinical director’s job description. If you’re thinking about going multi-state, you have to assume that compliance, credentialing, and billing operations will become standalone teams, not part-time responsibilities.
Building a Full Continuum as a Growth Strategy
One of the less obvious drivers behind Sandstone’s multi-state trajectory was its commitment to offering a full continuum of care in each market, not just one level of service. In Colorado and Virginia, Sandstone operates medically supervised detox centers that can also serve as short-term residential programs, stabilizing clients before they step down to lower levels of care. Teen residential programs — such as their long-stay campuses in Colorado and Maryland — run roughly 60–90 day lengths of stay, with PHP, IOP, virtual IOP, and sober living rounding out the continuum.
Clinically, that kind of continuum aligns with how many guidelines and best-practice frameworks describe treatment for moderate to severe substance use and co-occurring mental health conditions: stabilize at the appropriate intensity, then step down as symptoms, risk, and functional status improve, instead of discharging patients from high-intensity care directly back to the community with no structured follow-up. Federal agencies and professional organizations regularly emphasize that continuity of care and timely step-down between levels (for example, from residential to PHP to IOP) are key to improving outcomes and reducing relapse and readmission. (HHS/SAMHSA treatment continuum and continuity-of-care guidance)samhsa+2
But the continuum is also a business model. When you own multiple rungs of the care ladder, you own more of the referral pathway. Detox feeds residential. Residential steps down to PHP. PHP transitions to IOP and virtual services. Sober living wraps around outpatient. That doesn’t guarantee perfect census, but it does mean you’re less dependent on external partners to fill and step down your programs — and less exposed if a big referrer changes their network or referral habits.
Sandstone built internal referral pipelines across state lines as well. A family in Virginia whose teen needs residential level of care might be placed in a Maryland campus, then step back down into Virginia-based PHP or IOP closer to home. That regional footprint makes it easier to offer families continuity of care that’s both clinically coherent and geographically feasible, something single-state or single-site operators often struggle to provide at scale. National data on drop-off rates between levels of care highlight why this matters: many patients disengage during transitions, so having tightly coordinated internal pathways is a meaningful advantage for both outcomes and operations. (SAMHSA and HHS reports on care transitions and continuity)samhsa+1
The Capital Structure Behind the Growth
Sandstone Care didn’t build a multi-state, multi-level continuum purely on operating margins. The company raised outside capital, including early-stage funding reportedly totaling a few million dollars, and later growth investment from private equity firm The Vistria Group, which has an explicit focus on healthcare and education platforms. Public reporting on Vistria’s healthcare investments describes a strategy of backing organizations that can expand access and build scaled platforms, which aligns with Sandstone’s trajectory from a single-site provider to a regional network with multiple campuses and service lines. (Vistria Group healthcare investment strategy – news coverage)naco+1
Growth capital is what made it possible for Sandstone to carry the gap between “licensed and open” and “fully contracted and cash-flow positive” in new states. That gap is very real. Once you layer in state licensing timelines, build-out and staffing, payer credentialing, and the lag between first dates of service and claims actually paying, it’s not unusual for a new facility in a new state to operate at a loss for 12–18 months. Industry analyses and policy reports on behavioral health expansion repeatedly flag this capital gap as a key barrier to increasing capacity, especially at higher levels of care that have heavier infrastructure and staffing requirements. (HHS/SAMHSA behavioral health capacity and financing discussions)ncbi.nlm.nih+1
For operators planning multi-state growth, the takeaway is simple: unless you have unusually strong cash flow from existing operations, you will likely need some combination of equity, debt, or strategic capital to underwrite those early months in each new market. Expansion eats cash before it prints it.
What Sandstone Care’s Growth Model Actually Teaches Operators
The Sandstone story isn’t a one-size-fits-all template, but it does surface a handful of patterns that translate across markets and models.
Master your home market before expanding. Sandstone built a multi-level continuum in Colorado first, then replicated what worked. That aligns with what many health system and behavioral health expansion case studies show: geographic expansion tends to magnify existing operational strengths and weaknesses. If your home market operations are shaky, multi-state will expose that very quickly. (HHS and quality-improvement perspectives on scaling care models)jointcommission+1
Pick second markets strategically. Sandstone chose the D.C. metro area for its combination of high commercial insurance penetration, strong clinician workforce, and a mismatch between adolescent/young adult need and available services. National and state-level data from SAMHSA and HHS make it possible to identify similar pockets where youth mental health and substance use burdens are high and access is constrained — those are the places where specialized, age-focused operators can add disproportionate value. (SAMHSA NSDUH state and sub-state data)samhsa+2
Build the continuum from day one. A single IOP or PHP can be a solid business, but a full continuum is a platform. Federal best-practice guidance on behavioral health consistently emphasizes stepped care models and continuity between levels, and payers increasingly look for evidence that organizations can manage patients across a spectrum of intensity rather than just in one siloed program. (SAMHSA treatment and recovery guidance)samhsa+1
Treat in-network contracting as product design, not back-office. In a world where many families can’t afford extended out-of-pocket stays for PHP, IOP, or residential care, being in-network for key payers is functionally part of the value proposition, not a nice-to-have. Surveys of unmet behavioral health need routinely cite cost and lack of coverage as top barriers to care; designing your expansion plan around payer strategy from day one is one of the few levers you fully control. (SAMHSA and HHS access-to-care data)samhsa+2
Invest early in compliance and back-office infrastructure. Once you’re juggling multiple state licensing agencies, at least one major accreditation body (Joint Commission, CARF, or another), and a mix of Medicaid and commercial payers, a thin back office becomes a serious liability. Joint Commission and state regulators expect robust quality, risk, and compliance functions, and organizations that underbuild those areas often see an increase in denied claims, corrective action plans, or staff burnout tied to administrative chaos. (Joint Commission accreditation expectations; state licensing oversight)dbhds.virginia+2
FAQ: Multi-State Behavioral Health Expansion
How long does it take to get a behavioral health facility license in a new state?
Timelines vary by state and by service type, but a 6–12 month window from initial application to full approval is common for new providers. Virginia’s DBHDS, for example, notes that the licensing process for new applicants can take up to 12 months or longer, and that providers must complete multiple phases including policy review and on-site inspection before issuance. (Virginia DBHDS licensing resources)dbhds.virginia+2
Can I use my existing Joint Commission accreditation when opening in a new state?
Joint Commission accreditation is granted at the organizational level, but each new site must be added to your accreditation through a survey process. Your existing accreditation can accelerate payer conversations and signal quality to regulators, but you still need to prepare the new location for an on-site survey and demonstrate compliance with standards there. (The Joint Commission behavioral health accreditation program and process)jointcommission+1
How does insurance credentialing work when expanding to a new state?
Even for national payers, each state is treated as a separate network, with its own contracts and provider enrollment requirements. Credentialing new facilities typically takes around 90–180 days per payer, and most payers and public programs only allow billing from the effective date of enrollment or contract — not from the date you submitted applications — so operators should budget for a lag between opening and fully in-network status. (CMS and payer enrollment basics)[aha]
What’s the biggest operational mistake multi-site behavioral health companies make?
A common pattern is underbuilding back-office and compliance infrastructure relative to clinical growth. State regulators and accreditation bodies expect robust systems for billing, documentation, incident reporting, and quality improvement, and organizations that scale census without matching investments in these areas often run into a spike in denied claims, corrective actions, or staff turnover tied to administrative burden. (Joint Commission survey findings and safety/quality standards; state licensing oversight)dbhds.virginia+2
Do I need a separate NPI for each location?
In practice, each physical facility should have its own organizational (Type 2) NPI, while individual clinicians maintain their personal (Type 1) NPIs, and payers generally enroll both the facility and the clinicians. CMS guidance on NPIs and provider enrollment emphasizes using distinct Type 2 NPIs for separate organizational entities and locations to support accurate billing, audits, and claims tracking. (CMS NPI and enrollment guidance)[aha]
What’s the difference between a DSO/MSO structure and just hiring a multi-site management team?
A Management Services Organization (MSO) or similar structure creates a contract-based separation between the licensed clinical entity and the management company, which can help navigate corporate practice of medicine rules and isolate certain business risks from the clinical license. A simple holding company with centralized leadership can still coordinate multi-site operations, but it doesn’t offer the same formal separation between clinical and non-clinical functions that some regulators and investors prefer. This choice often comes down to state law, investor expectations, and risk tolerance, and should be guided by legal counsel familiar with healthcare entities. (State corporate practice of medicine discussions and health-law analyses)[jdsupra]
Ready to Expand — But Not Ready to Figure It All Out Alone?
ForwardCare is a behavioral health MSO that partners with clinicians, sober living operators, healthcare entrepreneurs, and investors to launch and scale behavioral health treatment centers. They handle the business side — licensing support, insurance credentialing, billing, compliance, and operational infrastructure — so partners can focus on growth and clinical quality.
If you're serious about opening or expanding a behavioral health treatment center and don't want to build the operational infrastructure from scratch, ForwardCare is worth a conversation.
