CEO Lani Fritts: ‘We’re Building Kadiant 2.0’

It’s been an eventful couple years for Kadiant, a private equity-backed applied behavior analysis (ABA) provider composed of nine legacy autism services companies.

CEO Lani Fritts partnered with TPG Capital and Vida Ventures to launch the Oakland, California-based company in February of last year. Together, the PE partners contributed more than $300 million in equity capital to get Kadiant off the ground.

In the months that followed, the company announced more than half a dozen deals. As a result, Fritts and his team spent much of the past year and half working on cultural and operational integration — as well as navigating a global pandemic for the last eight months.

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Behavioral Health Business recently connected with Fritts to discuss Kadiant’s evolution so far, as well as his outlook for the future, which includes building “Kadiant 2.0,” a bigger, better version of the company, more equipped to meet the high demand for various autism services.

To make it happen, the company is looking to strengthen and grow its workforce, improve its clinical offerings and develop standardized quality measurement systems for the industry as a whole. 

You can read about all that and more in the conversation below, which has been edited for length and clarity.

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BHB: What do you bill as the biggest differentiators for Kadiant?

It’s the history of the legacy companies and leadership that came together as part Kadiant.

The companies and the individuals that are part of Kadiant have been in the field for 20 to 30 years. Central Valley Autism Project was one of the very first replication sites from the original research on the efficacy of ABA in autism.

That history translates in the way our teams think about clinical intervention and quality. 

It’s a systematic approach, which has resulted in some innovation. We have a program quality system that we use to track initial assessments all the way through outcomes, which we call the program quality indicator system. It’s an innovation and something that is systematically used throughout the company.

That drives our decision making about where we need to do more training or how we need to intervene in operational areas or other improvement opportunities.

While the companies that make up Kadiant have a lot of history, the organization itself is less than two years old. How has the company evolved so far?

We’re really only about 18 months old. While we started the formation and announced the launch in February of last year, we closed the first acquisition in April 2019.

Most of the work so far has been to integrate the companies and build what I would call Kadiant 1.0.

Then, in the middle of that hard cultural and operational work, COVID blew a hole in everybody’s 2020 plans. In certain ways that accelerated collaboration, leadership and problem solving, but it created new challenges and barriers we weren’t anticipating.

Now, we’re building Kadiant 2.0. We’ve got the baseline in place, but we have a lot of opportunity to improve both operationally and clinically. There’s a real opportunity to extend the service impact and the coordination of care impact that we have and get better at use of technology.

What do you see as the main priorities for Kadiant 2.0?

The core will be to become more efficient and effective at every aspect of hiring, training and retaining team members.

Demand is so huge. The real imperative is that we have a high degree of fitness in efficiently sourcing the right people, treating them well and giving them professional development and tools to do their jobs so they can be as effective as they can in serving that demand.

That’s a combination of process improvements and use of basic operating systems like CRM systems and practice management systems — plus innovation in the way we use technology for engagement with team members and interventions.

We’re experimenting with virtual reality in some of our training programs and even in some client programs, and we’re thinking about ways to collaborate on things like diagnostics.

I’ve heard a lot of folks in the behavioral space talk about VR lately. Can you provide more color on how you’re using it at Kadiant?

It’s really experimentation on a couple of different fronts.

One side of it is using virtual reality to train our team members and enhance their clinical repertoires. We’ve specifically focused on functional analysis.

The other side of it is thinking about whether there’s opportunities to use virtual reality for enhancing teaching scenarios for high functioning kids.

It’s early days, but there’s a lot of promise for the technology.

I wanna revisit COVID-19’s impact on Kadiant. When you say it accelerated some aspects of the company, I assume that includes technology initiatives. Is that accurate?

It certainly accelerated the use of telehealth.

Within a two-week period of time, most of our supervision for our behavior analysts shifted to telehealth models, which was very rapidly accelerated. 

Then, use of technology for communication and data visualization also became more important, as there’s less direct personal interaction.

How is that telehealth aspect working out? It seems more logistically complicated in the autism space than in other areas of behavioral health.

That’s true. ABA is typically delivered in a two-tier model, where a technician is mostly working one-on-one or in dyads and triads in implementation of programs. And that’s pretty hard to do through telehealth with most kids.

However, those programs are typically designed and supervised by a behavior analyst, and a lot of that work can be very effectively delivered via telehealth.

It has morphed the model into a hybrid service delivery model in a lot of ways, and enhanced the ability for behavior analysts to be in many places virtually at the same time, when historically they might be driving from location to location.

That’s a really, really effective use of the technology in the autism space.

What do you see as the biggest opportunities and challenges for Kadiant going forward?

There’s still a large supply and demand imbalance in our field. We have many more clients and families looking for services than we’re able to serve.

But we’re substantially increasing capacity. The field in general is a substantially increasing line item on health plan utilization models and things like that.

The biggest opportunity — and challenge — is going to be continuing to build the capacity to serve the demand. At the same time, we need to build objective quality measurement systems.

We’ve got to continue to improve and increase the field’s professionalism and the objectivity of the results that we produce.

In addition to leading to better treatment and outcomes, I imagine developing improved quality measures will be beneficial on the payer side, too. 

Without a doubt, there’s this need and desire for the funders of these services to know where the dollars are going and know that they’re going to good effect.

It’s incumbent on all of us to be prudent stewards of those dollars. At the end of the day, these are finite resources that need to be spent well. The more we can demonstrate the effectiveness of an intervention and its near- and long-term outcomes, the more comfort everyone has on the dollars being spent.

Let’s switch gears a little bit and talk about growth. Back in 2019, Kadiant announced several deals, but things have slowed down this year. Was that always the plan or is that COVID-19-related?

A little bit of both. We definitely slowed the pace of M&A this year to focus on integration, team members, culture, problem-solving and those kinds of things.

We have evaluated several additional potential acquisitions this year, but the COVID-19 impact certainly raises the bar of what we would try to execute on. So far this year, there have been a couple very good, wonderful companies, but it has been difficult for us to pull the trigger, given the priorities we have, both in our integration and in managing through COVID.

We will rethink that in the future, but for right now we’re really focused internally.

Generally, though, what are you looking for in an acquisition target?

I look at their history of quality of care and cultural alignment.

We are an integrated model, so we don’t acquire and then operate as a portfolio of independent companies. We have a specific perspective of how programs should be run, so that quality and cultural alignment is really important.

The leadership team is a big part of that. Usually, smaller organizations are reflections of the values of the leaders.

Then, of course, we look at the market dynamics of the geographies in which they operate.

When it comes to Kadiant’s overall growth strategy, what’s that look like?

The very near term is based on known demand.

We have waitlists in several regions. We have to be able to hire, train and retain at level to meet basic organic demand. 

From there, we will open — and we have opened — some de novo locations. We’ve done that even through COVID, and we expect we will have a handful of additional clinical locations opening in existing geographies over the next 12 to 18 months. That’ll continue to expand our impact area.

Within those areas, as well, we are extending services.

We recently added speech, occupational therapy and diagnostic services in a handful of regions. We expect to extend that to enhance the long-term coordination of care. That’s a big part of how we think we’re going to have a positive effect on long-term outcomes — by thinking about that coordination of services across disciplines other than just ABA.

What other services are you interested in adding?

We need to be more tightly integrated in communicating with primary care physicians. We need to understand what’s happening with nutrition and other areas of physical health. Also, we need to think about how we extend our collaboration in the education world.

All of those things coexist today, but oftentimes, they coexist in siloed ways.

For us, we will either strongly partner with providers of those services or eventually extend our services into those areas.

Even bigger picture, what are your goals for Kadiant, both short- and long-term?

In the next year, a lot of our goals are around continuing to improve the effectiveness and efficiency of our services. That’s aligned around operating processes to respond to the demand for services.

We want to extend analytical capabilities and tracking of our quality indicator system by incorporating some data from other disciplines — speech, OT and even medical history. Putting those into analytical frameworks will have a substantial impact on our clinical insight and the effectiveness of coordinated care. 

One of the key things, in the more medium-term, will be to establish more sophisticated long-term outcome measurement frameworks, with a broader view of stakeholders. There’s the individual themselves, but then there are families and communities around the individuals we impact.

Ultimately, it’s about tracking independence, physical health and life fulfillment measures, as well as long-term happiness. 

Establishing really systematic ways to use and present data for data-informed intervention is an important medium- and long-term goal for us.

Is there anything else you’d like to add?

These past 18 months — and especially these past six or seven months — have been extremely hard for a lot of people, and exponentially harder for families in the autism community.

But it’s been really inspiring to be part of building Kadiant. So if any members of the Kadiant community read this, thank you for the opportunity to be here and for your effort. We’re only going to get better from here, all of us collectively.

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