(FORTUNE Magazine) – New York psychiatrist Mitch Rosenthal, 54, has spent his career disproving what he was taught in medical school about drug abusers: ''Once an addict, always an addict.'' Of the roughly 100 private, nonprofit agencies that offer residential and outpatient treatment programs in the U.S., his Phoenix House is the largest, with six sites in New York and four in California. In the view of many experts, including drug czar William Bennett, it also may be the best. Rosenthal's guiding principle is that addicts must take responsibility for their actions. In his main program adult abusers voluntarily live together in a drug-free residential community for 18 to 24 months. From 6 A.M. until 10:30 P.M., they are kept on a regimented schedule, ranging from household chores to group therapy sessions. Every privilege, from wearing a tie to making a phone call, must be earned. Punishment for breaking house rules is swift. Even Phoenix House's biggest fans admit it won't work for everyone. Indeed, half who start quit within the first year. But most of the 30,000 who have stuck with the residential program since its beginning in 1967 have turned their lives around. They remain off drugs, hold down jobs, and stay out of jail. Salvation doesn't come cheap. Treating adults at Phoenix House costs about $40 a day; $60 for adolescents. That's considerably more than outpatient programs. But compared with the alternatives -- treating an addict in federal prison ($68 a day) or in profit-making clinics ($175 to $1,000 a day for 30 days) -- taxpayers, who pick up one-third of the tab, are getting a good deal. Rosenthal's most innovative venture is Phoenix Academy, a residential high school. Some 225 adolescents have earned diplomas since it opened a New York campus in 1981 and a San Diego site in 1986. The students are the kind of troublemakers most principals brag about expelling. Arturo Wong, 18, an ex- angel dust user who was caught driving a stolen car, came to the academy to beat jail time. Says Wong: ''In the long run I know it's helping me out.'' Wong is among a privileged lot: New York State has only 500 beds for adolescents needing long-term residential care; San Diego County has just 40. Phoenix Academy accounts for about half the slots in New York -- and all of them in San Diego. Before opening, each academy, like other such centers, had to overcome protests from people living nearby. But if Americans are serious about getting kids off drugs, they will have to see such programs not as evidence of the disease but as part of its cure.