Fifteen years ago, Justin Funches left private equity firm Ironwood Capital to become president of LEARN Behavioral, a Baltimore-based business that treats people diagnosed with autism.
In the ensuing decade, Learn Behavioral experienced three changes in ownership, each involving a different private equity company. Milestone Partners bought LEARN Behavioral in 2010, followed by LLR Partners acquiring a majority stake in 2016. In 2019, San Francisco-based Gryphon Investors became the majority owner, with New York City-based LLR Partners retaining a minority stake.
At first glance, these shifts could increase the chances of instability or open LEARN Behavioral up to industry watchdog criticisms that private equity, almost inherently, prioritizes big returns over a short-time span than fostering a long-term care and business strategy.
However, LEARN Behavioral’s management structure has stayed in place over the company’s lifespan, calling the shots on treatment and acquisition strategy.
“Ownership hasn’t really changed the way that we have operated,” Funches told Autism Business News. “More important than your investor is your management team, and our management team has remained consistent.”
The bulk of the company’s leadership team has remained in place for nearly a decade. LEARN Behavioral’s CEO is its founder, Michael Maloney, who started the company in 2007. Hanna Rue has helmed clinical development since 2015, and Rob Haupt has been executive vice president since 2010. Rue and Haupt are each certified behavior analysts by the nationally accredited Behavior Analyst Certification Board.
Also, Funches said that LEARN Behavioral is profitable, adding, “We’re a business that wants to be sustainable.”
LEARN Behavioral is a private company and declined to provide specific revenue and cost numbers. The provider has made a number of acquisitions and embraced applied behavioral analysis, or ABA. The majority of its client base is the parents of preschool-age children, Funches said.
LEARN Behavioral operates in 18 states following several acquisitions in the last three years, including the Behavioral Analysis Center for Autism, which has locations across Indiana; Priorities ABA in North Carolina; Tandem Therapy in Nevada; Novel Responses in Michigan; and Total Spectrum ABA in Illinois. The company’s geographic coverage area is mainly the Mid-Atlantic, Great Lakes and Pacific Coast regions, with clinicians also in New England and the South.
“Because we have grown through acquisitions,” Funches said, “LEARN Behavioral is able to work with companies and clinicians already known in communities, as opposed to bringing in new personnel. The approach also means a quick understanding of the licensing, regulation and patient reimbursement process, all of which vary state-by-state.”
Over 80% of LEARN Behavioral’s revenue is from the health insurers of parents who enroll children diagnosed with autism into ABA programs. Much of this money is from commercial insurers, though Funches did say the company works with Medicaid patients. He declined to provide a breakdown of private versus public insurers.
LEARN Behavioral has about 6,000 ABA patients, Funches said.
An individualized, time-intensive process of socializing autistic patients on matters from manners to hygiene through positive reinforcement, ABA has taken off in the past two decades. This is partly due to the increasing number of children diagnosed with autism, and largely because of laws in all 50 states that require insurers to cover ABA.
Funches acknowledged the tension between LEARN Behavioral racking up as many ABA hours as possible that insurers can reimburse and providing proper individualized care for patients, primarily young children, ranging from 18 months to adulthood.
“Our targets for billable hours are significantly less than many other companies,” Funches claimed.
He added that LEARN Behavioral measures clinical outcomes not by billable hours but by other methods, including how promptly prescriptions are filled and if patients can graduate from certain services.
A smaller company revenue source is contracts with school districts to provide classroom help for children diagnosed with autism, Funches said.
LEARN Behavioral’s biggest cost is labor, Funches said. The company employs 7,000 clinicians, diagnosticians, administrators and other support staff.
“The biggest challenge is labor,” Funches said, noting that the supply of board-licensed clinicians does not meet patient demand.
Artificial intelligence can improve back-office efficiency, Funches said. But he’s skeptical that AI, such as lessons through virtual reality headsets, can substitute for the clinician labor shortage.
“There are no magic pills or magic robots,” he said. “It will continue to remain a therapy that requires humans to deliver care.”
As for the future, Funches said LEARN Behavioral would continue to be acquisitive. He predicted that in the autism care industry, there “will be consolidation over the next decade.”
Editor’s note: A previous version of this story misstated that KKR is an investor in LEARN Behavioral. The story has been updated to accurately reflect LLR Partners is the majority investor.
