New survey questions the entrenchment of private equity in the autism services industry

Too many customers. Constant turnover of staff. Pot brownies on the heap. A girl was pulled from the ground.

A new investigation by my colleague Erika Fry raises disturbing allegations against private equity-backed autism service establishments. The article raises the question of whether these clinic chains have put growth and their results above the populations they are ultimately trying to help.

Fry’s investigation revolves around one private equity-backed clinic in particular: Hopebridge, which has grown from just two sites in central Indiana a decade ago to more than 100 sites employing nearly 5 000 people. Fry reviewed internal communication and spoke with 10 people – a mix of parents, employees and former employees – in four different states who shared stories of unethical and sometimes abusive behavior in workplaces. Hopebridge centers. They allege under-trained staff and high turnover, a lack of transparency and accountability, and practices that prioritize profit over the needs and safety of autistic young people. “In all cases, they felt that the incidents were not properly addressed or investigated and were instead ignored or hidden by the company,” Fry wrote in his post.

Hopebridge founder Kim Strunk said Fortune in a statement that “we take all reports seriously and have zero tolerance for any abuse”. She continued, “We understand that every question and concern comes from a place of deep caring. However, we were unable to substantiate any of the [claims] through two independent investigations into the allegations in Athens, Georgia.

While Hopebridge is the focus of Fry’s article, grievances and allegations within the autism services industry extend far beyond a single company and raise questions about what is being sacrificed. to evolve rapidly. Relatively new state laws that mandate insurance coverage for treatment have made certain types of autism therapy more accessible and cost-effective. There have been over 200 deals in this sector since 2012, and private equity firms such as Blackstone, KKR, TPG and Cerberus have rushed into the space to capitalize on its revenue potential, consolidating the landscape of fragmented suppliers and ensuring a major presence. in industry. (Hopebridge is backed by a lesser-known private equity firm, Arsenal Capital Partners, which did not respond to requests for comment on the story.) One industry publication even compared the new interest to that of ” fan boys to the last Star”. Liberation from wars.

Certainly, some see this as a positive thing. Some therapists credit the influx of private capital with professionalizing what has long been a cottage industry, as well as making treatments available to more autistic patients. “It’s easier to start an ABA therapy clinic in most states than a nail salon,” says Sara Gershfeld Litvak, a seasoned provider who founded the Behavioral Health Center of Excellence seven years ago to try to raise the bar for quality in the field.

But critics detail widespread profit maximization. Here is an excerpt from the story:

“Jon Bailey, a psychology professor at Florida State University who has written several ABA ethics textbooks, initially thought the influx of investment in his field was a good thing. But Bailey also runs a free ABA ethics hotline, and he says he now receives 10 to 20 questions a day, most of them from concerned professionals asking about certain concerning practices. in an ABA company that was bought out by private equity – billing fraud, cuts to training and supervision, forcing therapists to provide more ABA than clinically needed. In recent weeks he has heard from staff working at investor-backed companies that have shut down their services almost overnight, without giving any warning to the families. “It’s not a good situation,” he says, adding that what employees are being asked to do is not to improve quality but to increase “the bottom line.”

To increase profits, Bailey says, clinics take on too many clients, double the number of children on therapists and overload case supervisors. Lorri Unumb, the parents’ advocate who is now CEO of the Council of Autism Service Providers (CASP), recalls being stunned when an industry investor bragged that his company had hired a supervising therapist for 40 to 50 patients (10 to 15 is the industry standard). Having been so involved in the advocacy that created the funding stream for the industry, Unumb now feels responsible for ensuring quality in the industry. “These kids don’t bother,” she says. “You can’t just put together a shoddy program and squander these kids’ most important window to change the trajectory of their lives.”

The varied preparation and skills of this workforce worries Erick Dubuque, director of the Autism Commission on Quality, a nonprofit accrediting body for organizations providing ABA services. “We have a real serious problem with our training programs,” he told me, explaining that many programs get away with offering the “minimum”, despite the vulnerability of the population that the workers will serve. , due to high demand in the field. In a 2020 study, Dubuque and colleagues identified more than 20,000 additional vendors who claim a BCBA credential but don’t actually have one. People who work in the field and spoke with Fortune shared their concerns about feeling ill-equipped for the job, which sometimes involves dealing with difficult situations where they could be punched, punched or bitten by a combative child. . Others commented on the lack of professionalism of their colleagues, sharing stories in which therapists made fun of their clients’ autistic behaviors.

Almost all of the private equity activity in this space is focused on companies that specialize in Applied Behavior Analysis (ABA), a time-consuming therapy that teaches behaviors and skills, often through repetition and a system of reinforcements. It is a cost-effective and popular therapy, but a controversial method of intervention, as some say it may be ineffective and even harmful for autistic people. Many people in the autism treatment community wonder if ABA has gained industry buy-in, writes Fry, when there are a whole range of other therapies and services to support people with autism. and that there is little research on what is actually most effective.

“To think that one intervention will be best for everyone is foolish,” Connie Kasari, professor of education and psychology at UCLA, who developed a game-based intervention called JASPER, and who serves as president of the International Society of Autism Research. , said Fry. She is among those in the industry who question whether the current industry direction is more “money driven” than evidence driven.

You can read Erika Fry’s full investigation here.

A big shake-up at Carlyle… Late Sunday evening, Carlyle Group said its CEO, Kewsong Lee, was suddenly leaving the company – effective immediately – ahead of his five-year contract expiring at the end of this year. Carlyle co-founder and former co-CEO Bill Conway, will act as interim CEO as a search committee searches for a permanent replacement. In a filing with the SEC early this morning, Carlyle also said that Christopher Finn, the chief operating officer, had agreed to postpone his retirement, which was previously scheduled for later this year.

Take notes please… Friday’s newsletter misrepresented the number of employees at self-driving technology startup PassiveLogic. The correct number is 90.

Until tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
E-mail: [email protected]
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Jackson Fordyce curated the deals section of today’s newsletter.

CORPORATE OFFERS

Againa San Francisco-based fresh food technology provider, raised $115m in Series B funding. Spark Capital led the round and was joined by investors including Insight Partners, VMG Partners, Capital of bright pixelssenior executive partner of S2G Ventures Walter Robb, Maersk Growth, High Sageand Innovation efforts.

Geopagosa Montevideo, Uruguay-based payment acceptance infrastructure raised $35 million in funding. Riverwood Capital led the round and was joined by Effort catalyst.

PRIVATE CAPITAL

Pincus de Warburg agreed to invest $250 million in Montana Renewable Energya renewable fuels company based in Great Falls, Montana.

– Affiliates of Capital of Antarctica acquired a majority stake in Descartes Laboratories, a geospatial analytics platform based in Santa Fe, NM. Financial terms were not disclosed.

Practical brandssupported by Beckman Groupacquired Dealer payment, a payment solutions provider based in St. Louis, Missouri. Financial terms were not disclosed.

franklin madisonsupported by Point of the Millacquired Answer SeQuel, a direct marketing agency based in Eden Prairie, Minnesota. Financial terms were not disclosed.

OMERS Private Equity agreed to acquire Pueblo Mechanics and Controlsa Phoenix-based mechanical service provider, Huron Capital Partners. Financial terms were not disclosed.

EXITS

MRI software acquired ApartmentData.coma Houston-based market research and apartment survey provider, Capital of Salt Creek. Financial terms were not disclosed.

OTHER

Amazon agreed to acquire i robotthe Bedford, Mass.-based Roomba vacuum cleaner maker for $1.65 billion.

Maersk agreed to acquire Martin Benchera Copenhagen-based project logistics company for $61 million.

Cryoport systems acquired The cell counts, a cell therapy company based in Liège, Belgium. Financial terms were not disclosed.

To employ acquired The sink, a San Francisco-based recruiting software company. Financial terms were not disclosed.

FUNDS + FUNDS OF FUNDS

Sign Guffa New York-based private markets investment firm, raised $1.97 billion for a fund focused on founder-led small businesses.

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