Newport Healthcare Reinstates Former CEO as Layoffs and Closures Mount

Newport Healthcare, which runs residential and outpatient programs for adolescents and young adults with mental health and substance use disorders, brought back its former chief executive this week and eliminated 104 administrative positions, the third round of leadership turnover and downsizing at the company in roughly a year.

Brian Setzer, who took over as CEO on December 9, 2024, is being replaced by the man he succeeded, Joe Procopio, who first became CEO in June 2019. Employees were told of the change on Wednesday, according to Behavioral Health Business, which reported the moves on October 16. Procopio will run the company alongside Brian Heinrichs, the former chief financial officer who became president in August.

The same week, 104 administrative staff members were told they would be laid off. The reductions reached human resources, talent acquisition, outreach and community relations, and revenue cycle, and some clinical roles were affected as locations closed or trimmed staff.

Where the footprint is shrinking

The company confirmed the CEO transition and said it is closing outpatient and residential locations and thinning its administrative workforce, but declined to say which sites or how many employees in total would be affected.

Public documents reviewed by Behavioral Health Business put at least 100 additional roles in play over the previous few weeks. Forty staff were laid off across five home-based residential treatment facilities in Ventura County, California. In Waukesha, Wisconsin, the company shut down its intensive outpatient and partial hospitalization programs. Earlier in October, 68 roles were eliminated at a residential facility in St. Cloud, Minnesota.

Newport is not alone in contracting. Clarvida and Comprehensive Life Resources announced layoffs and facility closures in the same period. In February, Newport closed four residential facilities and offices in the San Francisco market, citing operating costs and what it described as complex local dynamics. The company began repositioning toward outpatient care in October 2025.

Why adolescent residential care is under strain

The pressures the company cites are the ones that define the youth behavioral health business right now: reimbursement pressure, the operating costs of running 24-hour facilities, and changing referral patterns.

Newport was acquired a little over five years ago by Onex Corp. through its Onex Partners V fund, which took a 60 percent stake. The Carlyle Group had invested previously. The company was founded in 2008 and built its reputation on high-end residential programs, including the home-based facilities in Southern California that are now being trimmed.

Its own statement to Behavioral Health Business was blunt about the mismatch. "These changes reflect a challenge facing many behavioral health providers: the need for care does not always translate into consistent demand for every program in every community," the company said.

That sentence describes a structural problem in residential treatment for adolescents. Demand for a bed exists, but it arrives unevenly across geography and payer mix, and a facility that cannot fill beds at the rate its cost structure requires will close regardless of how long the waitlist is elsewhere.

What closures mean for families looking for a bed

For families, the practical effect of consolidation is distance. When a residential program closes, the adolescents it served do not stop needing care; they are absorbed by programs further from home, or they wait. For adolescent addiction treatment, where continuity after discharge matters as much as the episode itself, geography becomes a clinical variable.

The pattern also concentrates ownership. As independent providers close, a larger share of adolescent substance use disorder treatment sits with a smaller number of chains — the same consolidation that has drawn scrutiny across the sector as private equity has moved into addiction treatment.

Newport says the current restructuring is aimed at long-term sustainability rather than exit. Whether the outpatient pivot works will depend on whether the company can hold referral relationships in markets where it no longer operates a residential bed — and on whether the families who need residential care can still find one within reach.