Anthony DeSena is a physical therapist by training. After transitioning into a leadership role at a PT company and helping it grow, he leveraged that experience to help other health care organizations do the same.
Now, he and his team are building a new company from the ground: PAX Health.
Unveiled earlier this year, PAX Health provides in-person and telehealth services for mental health conditions. The company is backed by HCAP Partners and Hamilton Lane, and it has big goals over the next several months.
To learn about those goals, Behavioral Health Business sat down with DeSena, PAX Health’s CEO, for our latest episode of BHB+ TALKS. During the conversation, DeSena spoke about PAX’s origin story, the challenges associated with merging three providers together, the integration process that followed and more.
A replay of that TALKS episode is below for BHB+ members. A transcript from BHB’s conversation with DeSena is also below. The transcript is lightly edited for style, length and clarity.
Holly: All right, welcome everybody to this episode of BHB+ TALKS. I am Behavioral Health Business executive editor, Bob Holly. I work with the very talented team of Laura Lovett, Morgan Gonzales and Chris Larson, who you’re probably more familiar with. Today, I’m going to be moderating this TALKS conversation, and I’m joined by Anthony DeSena, CEO of PAX Health. Anthony, thank you so much for being here today.
DeSena: Thank you. Thanks for having me on.
Holly: I’m sure I’ll plug this a couple of different times, but Anthony will be joining us at our INVEST Conference in October in Dallas. Thanks for talking with BHB a couple of different times this year.
DeSena: Yes, my pleasure. It’s exciting stuff, and you guys are doing a great job, so excited to be part of it.
Holly: Awesome. A couple of quick housekeeping items before we get going. This conversation is part of our new monthly executive interview series that comes with BHB+. If you’re joining live, I encourage you to send questions and comments my
way using the Q&A function in Zoom. I’m going to be keeping an eye on all of those, and if we can get to one or two, we’ll definitely try to.
If you’re not joining live, well, thank you for watching this conversation on demand. I know a lot of folks do consume this on demand, so I appreciate you doing so.
…
Okay, that’s enough for me, Anthony. Let’s dive in. You’re a pioneer – TALKS guest No. 2. Anthony, just to start, can you tell our audience a little bit about yourself?
DeSena: I’m Anthony DeSena, co-founder and CEO of PAX Health. I am a clinician by trade, so a little bit of a funny journey to get here to be CEO of a behavioral health company. I’m a physical therapist by trade, actually, so I had the pleasure of treating patients for 17 years. Had a pretty cool business in the boroughs of New York City that we scaled to a nice size, had some good partnerships and investments along the way. Eventually, we joint ventured with a hospital system here in New Jersey.
I was able to bring that into multiple states. We had a lot of really good employees. We were able to help a lot of people along the way, which was the exciting part. During all of that, really, as a clinician, you’re there to help – you want to help [as part of your calling]. Eventually, that wanting to help shifts to wanting to help a company grow. Even if you’re not directly involved in patient care anymore, you’re affecting the way that patient care is delivered. It was super fulfilling, even though I wasn’t exactly patient-facing towards the end of that career.
I did a lot of development and growth for that company, and some strategic partnerships and M&A – things of that nature. I always just had an affinity for growth. I played with a lot of Legos as a kid, right? When I see things that should be put together, I like to do that.
PAX was the culmination of three amazing companies coming together. They were awesome on their own, but they were better together. Luckily, I was able to be part of that, putting them together, forming PAX, and now sitting in the CEO seat. A lot of gratitude there.
Holly: … It’s interesting to me that you went from PT to mental health. Before we dig into PAX more, what intrigued you about this space?
DeSena: Look, there’s been a lot more awareness of mental health in recent years. People are going through their own struggles, people you think that may not and may never have to. People are talking about it more.
[On a personal level], I have three unbelievable children, and we live in a different world. We live in a very different world right now. You see what they’re going through and what their teachers are going through, and life’s just very different. I felt a call-to-action to fix it, right? I’m not a provider of mental health, so I can’t help people that way, but I think the ability to help build something that can help more people was really exciting to me.
Holly: Yes. You brought up your children, and then on the other end of that, this is timely, the U.S. surgeon general just came out and said that parents are in a state of mental health crisis as well. Youth and adolescents need mental health services now more than ever, and it’s true for parents as well.
DeSena: I agree. Parents and children are overscheduled and over-regimented in a way that we’ve never seen before. How much you’re running around, and how much pressure that puts on people – and social media on top of all that.
…
Holly: PAX Health was formed in March, or unveiled in March. Could you walk me through the origin story a little bit, how these three separate organizations came together to ultimately form the business as we know it today?
DeSena: Sure, yes. It was an idea that came about last May, actually, so May of 2023. And it took a while to get here, but the reality was in between PT and PAX, I had done a lot of consulting work, opened a consulting company, and worked with a lot of health care businesses. I was just helping folks get better, taking some of the stuff that I learned along the way in PT and in deals and all that, and trying to help folks that way, right?
Through that, I started working with a few behavioral health companies, really systematizing them and getting operational. Doing all that, I really fell in love with the business. I really did. I fell in love with the business side of it, but I also fell in love with the mission. Through that, I met my co-founder and the president of PAX Health, Roy Leitstein. He’s been in the behavioral health field for two decades. He ran a giant non-for-profit in the state of New Jersey – the largest, in fact. He also had ties into some private for-profit companies.
Really, I was thinking about building PAX from the ground up. Then I met Roy and some of the other folks, who were also looking to do something.
…
We were able to meet some unique companies here that were, like I said, all amazing in their own right, but the synergies between them, if somebody actually put them together, were unbelievable. And that’s what we did.
That was May – the idea of doing a brand-new startup called PAX. June became the idea of, “Well, we should just go take things that already exist and put them together.” We found said things, and then the three amazing founders that we had agreed to sell to PAX.
We then had to [go get the money], so we went out looking for investors and spoke with a lot of private equity groups, family offices, venture funds, etc. We were lucky enough to find our current partner, HCAP Partners. They’re out of San Diego. They’ve been unbelievable partners.
From that idea, to talking to folks, to engaging with HCAP was about only four months. We were engaged with HCAP in about September, and then we had to go through the whole process. We officially became a thing on Jan. 2 of 2024, and then it was a lot of integration, right?
You had three legacy companies that, on paper, made a lot of sense in terms of putting them together. But somebody had to actually do that – put them together.
Luckily, I had done that in the PT world. We went through a bunch of mergers and acquisitions. I was able to have some of my old team come and help with these things, people who’ve lived through it before. In May when there was the press release, we were probably, at that point, 40% integrated. I’m happy to say that now we’re fully integrated as one company.
Holly: Two follow-up questions.
DeSena: Yes, sure.
Holly: One: HCAP Partners has experience in the behavioral health space. You are coming from the PT world, though you mentioned doing consulting for health care providers, including behavioral health companies.
Did you meet HCAP Partners along the way as you were looking to build this business? Did you have a previous relationship? What made them a good partner?
That’s one question. The other question is: Integrating companies is really difficult. What were maybe the top two factors that you really looked at in considering, “OK, these three do make a lot of sense to bring together.”?
DeSens: Sure, yes, makes a lot of sense. I’ll answer the first question. We had no previous relationship with HCAP, but I’ve worked a lot with private equity in my life as an operator, as a buyer, as every which way you could do it. I think … of all the groups that were interested, HCAP seemed to just get it.
Everyone says, “We’re not going to come in there and try to change the business.” They just struck us as really good partners that were going to let us operate the business the way we did. They knew what they were good at. They’re obviously very keen investors. Towards the end of the deal, they were actually kind enough to bring in a co-investor in Hamilton Lane to support HCAP. Now, it’s like, wow, we have these two juggernauts that are supporting us, which is really exciting.
HCAP had a really unique model compared to everybody else that was really interesting.
They have an operating-advisor model, and we have someone who I talk to every single day, who is really the conduit between us and HCAP. For daily operations, I’m able to reach out to somebody and talk to them all the time. This person was the CEO of a company that HCAP invested in and exited. This person not only understands health care operations, but they also understand the HCAP way when it comes down to that.
…
Holly: Then when you brought the three companies together, was it the right cultural alignment? Was it going to be the leadership wanted to stay on board, and there wouldn’t be a huge transition? What were some of the big reasons why these three companies, in particular, made sense to combine and build this new platform that you’re looking to grow?
DeSena: Look, they all had very unique cultures to their own legacy companies. However, those cultures, albeit different, were really focused around patient care and provider engagement, right? They really cared about their patients and their staff. I thought that was very important.
There was also just a really smart network of care that could happen from an internal referral basis, right? Now with bringing these three together, patients were able to stay under one umbrella for all their services and not have to go to multiple folks for that. I thought that was really unique – that everybody did what they did really well on their own and then referred out for other things, which is nice, right? A lot of people try to do it all and they do nothing great. We were able to combine different service lines, a different insurance payer mix, where we can really serve everybody under one umbrella. That was the driver of these three companies coming together.
Holly: Let’s get into the nuts and bolts of the business itself. Can you tell me about the business model? What services does PAX Health provide? Who are your patients? What markets are you currently in?
DeSena: Yes, absolutely. The best way we can say it is this: PAX Health is an outpatient provider of mental health services. We provide services via telehealth and in-person. We provide psychiatric care, medication management, psychological care, neuropsychological care, return-to-work assessment, things of that nature. Common diagnoses that everybody’s familiar with – ADHD, anxiety, depression, PTSD, which is really interesting. We’re in-network with all major payers.
…
We really believe in working with the underserved population. We believe that Medicaid and work comp folks who didn’t historically get the best behavioral health care that they could – we’re trying to change that.
…
Holly: Then on the other side of the coin, you spoke about the patients you serve, the services you provided. What about the people providing those services? What does the employment model look like?
DeSena: Yes, no, it’s a great question. We have a really robust mix of patient care providers here. We employ medical doctors, psychiatric nurse practitioners, social workers, LCSWs – there’s a range of folks providing care. Most of our psychiatric care is done through nurse practitioners with MD oversight.
Holly: In behavioral health, in particular, I think there’s been so many new companies emerging, so much activity in this space from 2020 to now, where you always see these examples of a company entering a space saying it’s going to do X, Y, Z, and then very quickly it changes its model a little bit. … Has the PAX model, the mission behind PAX changed at all from when the company was unveiled until now?
DeSena: The mission hasn’t changed at all. We want to serve patients, their families and their communities. I think what has changed is the glaring issue of, well, how much we’re needed. We every day realize how much more we’re needed. We just want to go do more of it in more places, if that makes sense. That’s what we’re thinking about.
What drives us is still the same, but how much of it we want to do, we realize that there’s more of it that we have to do. We often say here, people ask, “Well, who are your competitors?” Our answer is really nobody, because if you combine all of our providers and all those that are joining us and all the other companies out there, we still together couldn’t serve all the people who need help, right? That’s a true statement, and it’s a scary statement to some degree, because there’s just so many people who need help out there. How do you touch as many lives as you can?
Holly: What have been some of the biggest challenges that you’ve faced since announcing PAX and growing PAX in the early days? Is it capacity constraints – that there’s just so much demand for services, and a limited amount of clinicians and people to deliver those services? Was it the integration process itself? That’s obviously very challenging. Was it something else entirely?
DeSena: Yes, I think it’s a great question. I’ll answer it in a few different points. Integration was challenging, but I luckily have done enough of these in my life to have had some structure behind it, and folks that came along and helped us here that have run point at times. No integration is perfect, but I think it went as smoothly as we could have expected – probably smoother, which is really good.
Something we spoke about pre-investment quite a bit was exactly what you said: capacity. How do you bring enough people on and how do you serve all these people? Luckily, our capacity for hiring and our ability to hire and onboard has not been an issue. I think what we’re doing a really good job of, and this was part of my mission from Day 1 or probably even Day 0, was to create a company … that not only patients want to come to and people want to recommend, but people want to work for.
We really believe that everybody who works for PAX, from someone answering the phone to the chief medical officer, are all proud to wear the logo, proud to fly the flag. When you do that, you can create an unbelievable culture that gets people excited to come to work every day. Luckily we’ve been able to recruit and attract and onboard really, really good talent in that sense.
And it is difficult to take three legacy cultures and make them one, right? Typically when this stuff happens, there’s somebody who’s been around a really long time and everybody joins them. Here we were, we put three organizations together, and these folks only knew me for a couple of months. It wasn’t like somebody was here for a while, here for decades, and then acquired companies. We just sort of meshed it all together with a new leader.
…
In the beginning, it’s always, “Well, this is the way we did it. This is the way we used to do it.” You need to help people realize the “why” behind it all. I think as time went on and we instituted some good structure, trust was built, sort of structure was built, and people realized that some aspects of their job were getting easier, or we were just getting smarter about things and we were very inclusive to folks on ideas of growth and how we do it. I think that that’s really important.
Holly: Yes, well, let’s talk about growth a little bit. One of the reasons why I wanted to connect with you on episode No. 2 of TALKS is because you’ll be speaking at our INVEST Conference, and you’re going to actually be speaking on a panel titled “Scaling Fast: Outpatient Mental Health Trends and Investment Outlook.” How do you plan to do that at PAX? How do you plan on growing the company? What’s the growth playbook look like, so to speak?
DeSena: Yes, I can’t tell you the whole playbook but I could summarize it. We’re going to do it through three channels.
Organic growth, just marketing and outreach in the communities we serve right now. We’re currently operating in three states, but seeing patients from about 15 states. We’ll look to ultimately grow the footprint into different regions, looking at what areas, what communities we’re already serving, then trying to grow those.
We’re also looking at where we have a lot of white space and trying to fill that in and have a presence. There’s your organic growth, driven by marketing outreach and community partnership.
Mergers and acquisitions. We have some really cool partners that are going to be joining us relatively soon – just working through that process.
…
And then strategic partnerships. We’re working with some pretty big names that you’ve probably heard of that I can’t mention here, but we’re working with them to be the behavioral health partner for their patients and also their staff.
Big companies have a lot of people, and we want to be able to help as many as we can. Other health care companies, they’re some of the largest employers in the country. Being able to serve their patients and their staff is a really unique part of our partnership model.
Holly: Let’s talk about barriers to growth, and I want to approach this question maybe from two different sides. There’s the de novo side and then the M&A side. Let me start with M&A. What are some of the biggest barriers to growth and getting deals done? Is it, in the past, there’s still been a pretty hefty valuation gap between buyers and sellers. Processes have been fairly competitive. Access to capital and financing is a little bit tricky right now, though I think the overall macroeconomic environment is improving. What are some of the challenges on that front? Then on the de novo side, what are some of the biggest challenges that you have to think through as you’re looking to grow organically?
DeSena: Sure, yes. On the M&A side and the partnership side, you mentioned it before – that the industry as a whole has grown quite a bit over the last four years, right? We’ll talk to some really amazing groups that would be a great addition to the PAX family, but it’s sort of, for them, “why now.” They think: “We’re growing year over year. We’re getting bigger. Maybe I just hold on and do this in a couple of years from now.” There’s getting over the hurdles of that, and really explaining to them why do this now? What is the partnership case? It is partnership in some cases; it’s not always an acquisition.
Sure, there are instances where it’s somebody who’s looking for their [exit]. For the newer groups that have a lot of innovation and technology, and rapid growth, that we’re really interested in there’s the “why now” question, though.
…
Holly: Yes, and then on the de novo side, what are some of the challenges?
DeSena: It’s just tricky, right? Getting your name out there into different markets when you’re a new company. We’re relatively new.
We’re, to some degree, building the [de novo] playbook as we’re executing it, which is good. That’s how you learn, and that’s how you make it better to the point where this is the playbook and this is how we do it.
…
Holly: What about just industry challenges generally? What do you see as some of the biggest industry challenges standing in the way of your vision for PAX?
DeSena: I think I have two answers to that question.
One is, I think awareness around mental health is starting to get there and catch wind, but some payers and insurance companies are still a little bit behind the times. It takes a lot of negotiation to get them to where we think [we’re at what] we consider to be fair compensation.
I think, on the flip side of that, bigger health organizations are trying to, for lack of a better words, capitalize on mental health. It’s a really hard thing to do if it’s not the only thing you do, right? I say that all the time. I think that too many people, for the wrong reasons, are trying to build a behavioral health company within their organization. That makes it tricky. Patients are being held back sometimes, being part of these bigger health systems. We can get somebody in within 24 hours, but the health system or the bigger organization doesn’t want them to leave their system.
These folks will wait six, eight weeks for an appointment, because they’re so backlogged, they can’t hire the right staff. I think that’s been a real challenge in the industry.
…
That’s partly why we’re trying to work on these strategic partnerships – to support those organizations, all for the good of the patient so they get their care.
Companies featured in this article:
