‘It’s a Question of Diversification’: ABA Providers May Need to Become More Risk-Averse

Applied behavioral analysis (ABA) therapy has become one of the most notable behavioral approaches to autism treatment, offering different locations of care to fit the specific needs of patients. Capitalizing on ABA’s versatile modalities may be the safest bet when creating a sustainable business model.

Patients with autism can receive ABA therapy at a clinic, inside patients’ homes, within communities and, in some cases, via telehealth. Different modalities may offer different benefits, and clinicians determine what method is most appropriate for a given patient.

Some providers offer one setting for ABA while others diversify their offerings, sometimes even requiring patients to receive the therapy in multiple settings to ensure generalization of skills. Offering multiple modalities may, in addition to providing more options to better suit patients, reduce risk if one modality gets jeopardized by changing regulations.


The field of autism treatment is maturing, according to Jonathan Bluth, a managing director at Brown Gibbons Lang & Company, an investment bank that covers the health care industry.

That maturation is following patterns seen in other industries, Bluth told Behavioral Health Business.

“In the radiation oncology sector, for many years, reimbursement was particularly strong in outpatient freestanding centers in many states while it was weak in hospital-based radiation oncology programs,” he said. “But reimbursement shifted over time in certain states so that it was better, with higher reimbursement [rates], to provide those exact same services within a hospital-based facility.”


The autism treatment industry may experience a similar shift with payers strategically reducing reimbursement for specific services.

“A nationally broad platform that has the ability to provide services in multiple modalities may not have as much upside in the years when one specific modality in one specific state is better than another but they will also have better protection against significant decreases in any particular modality or a particular state,” Bluth said. “It’s a question about diversification. We’ve seen this play out in several industries and it’s coming into focus now here in autism services.”

ABA has been threatened by changing policies in the past. An update to state Medicaid policies forced ABA provider Hopebridge out of Colorado in July. But having a mixed-payer strategy could be another form of diversification to give providers more options for facing changing legislation.

ABA diversification could also mean offering different locations of care. The therapy can be offered in-home, in-center, community-based or via telehealth.

The cost of these different locations of care is not much of a concern for major providers in the field.

“There’s really no financial difference,” Neil Hattangadi, CEO of Cortica, told Behavioral Health Business. “That’s not a consideration at all for us around which site of service we deliver ABA in. It’s completely a clinical decision based on what’s appropriate.”

Diversification may also help maintain patients, according to Kathleen Stengel, CEO of NeurAbilities Healthcare, told Behavioral Health Business.

“It’s cheaper probably to do only center-based, but you end up having a higher turnover of patients,” Stengel said. “You also end up having reduced hours later on when they get alternative services. From a financial perspective, having the hybrid actually helps us with being able to cross-collaborate across different environments to be able to fully utilize the services to remediate some of the deficits.”

Vasanta Pundarika, head of health care investment banking at Matrix Capital Markets Group, echoes Stengel’s thoughts: In-center therapy may be the most efficient but may lose out on opportunities in the long run.

“[Investors] can probably build a more efficient, more scalable business if it’s in-center versus in-home, but there are certain types of patients who would get better care if it was provided in the home for them,” she said. “When there are patients like that, probably the ultimate mix of what you’re looking for is a combination of both.”

ABA has received increased interest from investors over the past few years, according to Pundarika. She predicts some investors may step back from ABA because of the Center for Autism and Related Disorders’ (CARD) bankruptcy. 

“But others are going to use that opportunity to forge ahead,” Pundarika said.

These investors do not seem to prefer one location of care over the other, according to Bluth.

But they may be increasingly interested in broadening offerings across modalities, Pundarika said. 

“I have heard multiple different investors talk about buying a business that [offers either in-home or in-center ABA] and then diversifying across both of them,” Pundarika told BHB.

For Pundarika, the most risk-averse business will take diversification one step further.

“[If] you are trying to create diversification so that you can weather those risks, you have diversification across where you’re providing care, like on-site versus at home, and across multiple different states, so you’re not exposed to all the regulatory risk of [just] one state right,” she said.

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