Community and partnerships are key to many of the fastest-growing behavioral health companies in the U.S.
Four of the burgeoning mental health companies, as identified by the Inc. 5000, have seen growth that’s typically the purview of young startups and tech companies. These companies have taken advantage of the massive supply-demand imbalance present nationally and in individual markets.
In addition to partnerships, each has proactively built infrastructure that can handle and enables rapid growth.
“There are probably more disadvantages to growing too quickly than there are advantages,” Brian Wheelan, CEO of Inc. 5000 recipient Transformations Care Network, told BHB.
A platform company backed by Chicago-based private equity firm Shore Capital Partners, Transformations Care Network formed in August 2021 through the consolidation of four outpatient mental health practices. Shore Capital Partners first invested in Transformations in October 2020. The company’s annual revenue grew by 125% from 2018 to 2021, according to the Inc. 5000 list.
Transformations Care Network seeks outpatient mental health practices with leaders who are dedicated to making their practices the leading practice in the state, Wheelan said.
“That’s my No. 1 goal, which is to help somebody make their brand the leader in that state on an in-network, all-payer business,” Wheelan said.
Transformations Care Network then acquires controlling stakes in these firms, helps them grow with new capital and supplies centralized back-office and administrative systems. It also provides continuing education and training.
“You will meet very few founders, no matter how unbelievably clinically motivated they are, that are excited about doing payroll,” Wheelan said. “We allow them to go back to what they got into the business for originally — which is to be a clinical leader, to be a supervisor, to be a trainer, to be a member of their human services community, not to be payroll hockey.”
Centralizing vital business functions has another added benefit as the company grows.
“The disadvantage is if you’re moving so quickly that you don’t actually have the infrastructure, the systems and the processes to ensure consistency,” Wheelan said, adding that patient intake consistently “befuddles mental health. … Those are actually complicated processes.”
Insurance partnerships vital to growing behavioral health companies
Operating on an in-network basis with health plans to grow was another trend among health companies on the Inc. 5000 list that responded to BHB’s request to comment. This too requires deep investments in community and infrastructure.
Mendota Heights, Minnesota-based Ellie Mental Health owns and operates practices in Minnesota and sells franchise locations to teams of local investors and clinicians. Its revenue from 2018 to 2021 grew 544%.
Ellie Mental Health seeks to achieve a “trifecta” through its franchise model, co-founder and CEO Erin Pash told BHB in a previous interview.
The trifecta calls for generating bargaining power and respect with payers through strong national systems, best clinical practices and clinical outcomes; giving therapists the feel of a small local practice while having the support of a large system; and bringing in local investors and entrepreneurs to help therapists with business aspects.
“The macro mental health care system involves working with … insurance companies,” Pash said. “Insurance companies don’t want to contract with independent practices without standard operating procedures that best support what’s best for insurance companies.”
In 2020, about 64.3% of all health care spending in the U.S. were paid for by private health insurance, Medicare and Medicaid, according to a report by the American Medical Association.
In a previous interview, Carrie Singer, the owner and founder of Quince Orchard Psychotherapy, told BHB that being in-network with payers drives patients to her practice with little need for marketing. This couples with a community focus to generate a strong pipeline of word-of-mouth referrals.
Quince Orchard Psychotherapy grew revenue by 87% from 2018 to 2021.
The disadvantage is if you’re moving so quickly that you don’t actually have the infrastructure, the systems and the processes to ensure consistency.Brian Wheelan, CEO of Transformations Care Network
Meeting multiple needs
Focusing on community and infrastructure allows behavioral operators to accomplish several things at once.
Scott Snider, CEO of Proven Behavior Solutions LLC, started his autism treatment center in November 2015 after his wife, a board-certified behavior analyst (BCBA), did contract work with a firm that she discovered was likely committing insurance fraud.
“We were seeing the landscape and how there were not enough providers that provided this type of service, to begin with, but then the ones that were here weren’t providing it the level of quality that we knew was possible based on our own experience,” Snider said in an interview.
Norwell, Massachusetts-based Proven Behavior Solutions, whose revenue grew 170% from 2018 to 2021, focused on opening locations Southeast of Boston where there was a much lower density of autism care providers.
“A lack of provider density to begin with helped us because once you got started it wasn’t too difficult to put our flag up and say ‘Hey, we’re open,” Snider said.
While the lack of geographic competition aided the company’s launch, establishing trust via “a really high bar for clinical quality became a huge differentiation for us.”
“That’s what really fueled the growth,” Snider said.
The company offers Applied Behavioral Analysis (ABA) therapy, speech therapy, occupational therapy, special education advocacy support for parents of students with special needs and assistive technology services in each of its centers.
All the while, the company sought to build out a corporate structure similar to that of multi-state providers despite only presently operating in one area of one state.
“You have to get the scaffolding put together first to enable more rapid growth,” Snider said. “As you’re moving, you don’t necessarily have time to hit the brakes and stop and think [about] what we’re missing. … Being proactive is No. 1 for us.”
The combination of savvy community navigation and infrastructure development was validated, according to Snider, by New York City-based Health Enterprise Partners’ investment in Proven Behavior Solutions. The goal is for Proven Behavior Solutions to grow as a Southern New England behavioral health platform company, Snider said.
Despite the swift growth and investment, a core challenge of being a fast-growing company is responsibly managing spending rates, Snider said.
“We have to make sure that we’re watching that burn rate and not running ourselves to a point where we can’t keep the doors open,” Snider said. “We’re straddling that line sometimes.”
Earlier in the year, BHB reported that the outpatient mental health operator Foresight Mental Health very nearly folded due to overspending.
You have to get the scaffolding put together first to enable more rapid growth.Scott Snider, CEO of Proven Behavior Solutions LLC
Staffing challenges get magnified when a company’s need for staff increases while workforce supply challenges persist. This allows employees, especially clinicians such as therapists, to be picky with jobs and with the types of patients they are willing to see, Singer said.
“Honestly, clients are not hard to come by,” Fisher said, adding that when it comes to finding staff. “It’s an employee’s market.”
At Quince Orchard Psychotherapy, Fisher needs to find therapists that want to treat children aged 10 and under. But many therapists don’t want to because of the extra and unique duties of caring for young kids even if they are trained to do so.
“Finding the staff who want to serve the patients that need the most help and are really challenging patients … is a tough sell,” Fisher said.
Wheeler echoed a similar sentiment. But the challenge for an outpatient mental health provider that’s in expansion mode is finding therapists that are willing to engage with insurers.
“Our biggest competitor is not some other well-capitalized firm, it’s the viability of not participating in a network,” Wheeler said. “What is so critical for us is to deliver on the promise of being a good place to work because that keeps [clinicians] on their journey and with us.
“Then we can kind of deliver on that access promise to payers. When we do that, the payers are willing to pay us more because we’re an alternative to emergency rooms.”