Fact Versus Fiction: Autism Providers Share the Reality of Working with PE Partners

Private equity (PE) firms continue to play a crucial role in helping grow the autism industry through consolidation and strategic investments. And that trend is likely to continue in the months and years to come, experts say.

Nonetheless, for some in the industry, a rather sensitive dilemma persists: How can PE firms — which largely and primarily focus on the bottom line — truly understand the needs of providers whose chief mission is caring for children with special needs?

Panelists tackled the issue during a recent discussion at the Autism Investor Summit, a three-day online event that brought together various industry leaders, investors, providers, advocates, legislators, payers, patients and researchers.


The third-annual summit was put on by Sara Litvak and Ronit Molko, who are the respective CEOs of the Behavioral Health Center of Excellence and Empowering Synergy, both of which are based in the Los Angeles area.

Along with helping put together this year’s summit, Molko also spoke during the discussion.

Throughout the discussion, panelists — who were autism providers and clinicians — talked about the benefits of partnering with PE, which has helped a number of applied behavior analysis (ABA) providers grow in recent years.


Panelists said that PE funding can not only help providers expand their operations, but also allow them to better scale resources and services for the benefit of children.

Kathleen Stengel — the CEO of Voorhees, New Jersey-based NeurAbilities Healthcare, and a panelist on the discussion — described PE partners as “thought partners.” She said making sure those partners respect the mission of organizations and the industry is critical to an effective relationship.

“A thought partner whose mission is to drive toward quality [is] going to make a big difference,” Stengel said during the discussion. “[Thought partners] are working towards quality, thinking about quality, thinking how to make the organization better [and] scalable to achieve not only the mission [of a provider], but also to serve the most amount of kids … [with] the highest quality possible. That’s been my experiences with the PE firms.”

Molko, who is a board certified behavior analyst (BCBA), believes that PE funding can play an important role in bringing more BCBAs into the industry by way of educational assistance. During the panel, she said she is encouraged to see many PE-backed providers using their funding to make that happen.

“Certainly … we’re seeing support around going to school, we’re seeing companies … providing monetary support to get [a] master’s degree, and we’re seeing companies providing education and support for studying for the BCBA [exam],” said Molko.

Despite those opportunities, ideological differences between BCBAs and financiers may persist. Stengel told event attendees that such differences might not necessarily ever be resolved, but that they shouldn’t become a dealbreaker in the two sides working together.

“You don’t have to understand the BCBAs culture, but you do have to understand that they don’t understand yours,” she said. “Financial people [are] coming in [and] they’re looking at different sets of data. Communication is key, … [and] the PE side has to understand the culture of the organization they’re pushing into.”

Dispelling doubt

Panelists also talked about negative perceptions some autism providers have toward PE during the discussion.

Molko previously addressed some of those issues in a 2018 article she wrote for Forbes. She also shared advice with would-be PE funders contemplating investments in the space for a 2019 story for Behavioral Health Business.

During the panel, Molko mentioned how some PE funders have previously made the mistake of buying into the autism space and hiring management ill-equipped to guide care.

“What I have seen is private equity come in, buy a business and then put in a management team where nobody on the … team has anything to do with autism,” she said. “They’ll pull from the hospital industry, they’ll pull from the medical industry [and] they’ll pull from other areas around medical care. I have seen organizations where … there’s no licensed clinical psychologist who’s sitting on that management team, and I think that’s where investors can go wrong.”

However, Molko said the idea that PE is a means to perpetuate fraud within the autism industry is a widely-held misconception. She cited industry compliance standards put in place over time, as well as her own business experiences dealing with PE firms.

“There is this notion of private equity coming in … to support companies … committing fraud to hit their numbers,” she said. “Everything I’ve seen is the complete opposite. There is going to be one bad apple in everything.”

In fact, panelists said the presence of PE can keep ABA providers honest by helping them show positive outcomes are delivered by the services they render.

“There’s … a new generation of private equity folks who … have moved into the space,” said Stephen Wood, a Lexington, Kentucky-based BCBA who is the director of special projects for ABA therapy provider Cultivate Behavioral Health & Education. “They are … [helping] … in hiring industry leaders. [These] industry leaders who are attaching their names and their credentials with private equity-backed companies aren’t, frankly, … going to settle for being a part of something that isn’t putting clinical excellence at the forefront. So I’m excited to see private equity invest in the right people.”

Companies featured in this article:

, , ,