Legislative Updates & ABA M&A: What’s In Store For 2022, With Debbie Napolitano And Jon Krieger

Feb 13, 2021

What are the legislative updates for Delaware, Georgia, New York, North Carolina, Oregon, and Texas? What are the major acquisitions that happened in ABA in 2021? What are the patterns we’re noticing and how did Elemy get a $1B dollar valuation? Join Sara Litvak and Anna Bullard as they get more of these updates from Debbie Napolitano from New York State ABA. Plus get some updates on acquisitions form Jon Krieger from The Calex Group. Tune in to learn more!

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Legislative Updates & ABA M&A: What’s In Store For 2022? With Debbie Napolitano And Jon Krieger

Anna, we’re doing a show.

I’m so excited.

I am excited to chat about all things about ABA, what’s going on in the industry, what are some exciting BHCOE and policy updates. We have so much to cover. Since we have you here, I wanted to talk to you a little bit about any of the updates you have for us legislatively and advocacy-related coming into the New Year 2022. I have a couple of states that hopefully we can talk about. We’ve got Texas, Georgia, North Carolina. We have some changes happening at the Federal level. Why don’t we just dive in? Tell us about what’s going on in Texas.

So much has been happening in Texas over the last few years. Everyone has been waiting on the Medicaid benefit to rollout. There’s finally money in the budget, but then the fee schedule came out and was basically not sustainable. A $30 an hour RBT rate, as everyone knows, is not something providers can do, especially in the market that we’re seeing now. We released a report about that. In Texas, we have seen a lot of advocacies, and the efforts that have paid off resulted in a rate increase of $45. That’s for the RBT.

That puts Texas in line with some other states. Florida is a good comparison. They’re at $47 and some change for an RBT. There are some exciting movements. I did hear a rumor that there’s an additional dollar increase on that RBT. I can’t say that I know it for sure, but it is a rumor that seems like it may come to fruition, which would be incredible. I know for a fact that the MCOs are pushing back hard just because they don’t have the network adequacy. We’re excited about all the providers that are fighting for families there.

What’s going on in Georgia?

That’s my home state.

For those of you who don’t know Anna, there’s a law that’s called Ava’s Law, that’s named after her daughter, Ava. Anna is a proud mom of a daughter with autism and she fiercely advocated for the autism mandate in Georgia. That’s the namesake Ava is known for.

It’s hard sometimes for me. I know providers who come into the state have problems, issues, there are things that happen, and they get frustrated very quickly. For me, working for the Medicaid benefit for many years, I take a step back every time and I’m still like, “We have the benefit,” which I know is not good enough.

Not only do you have the benefits, but some of the best rates.

It’s some of the highest rates in the nation comparable to Massachusetts and North Carolina. I feel like we have a lot to lean into, but we’ve had a lot of influx of providers, which has been incredible to see access tick up. We were seeing some providers face denials, some consistency in the diagnostic criteria, but thankfully, the work that I’m doing with government relations at BHCOE allows us to be able to really aggregate the information and see the trends across hundreds of providers. We’re not just talking about an isolated incident. That’s one of the benefits we have to what we do, is we can start to look at, “Is this a one provider issue or truly a trend across the state?”

We’ve got some of that happening as what I would consider a trend with those denials, and we are working with Medicaid on that. I think it’s like anything. We’ve only had this benefit for a couple of years and then COVID hit. It’s in the beginning phases of working out the kinks of a benefit. I think Georgia has a lot going for it. I still think it’s a very exciting state to come into and there are still a lot of kids who need services.

Is there anything related to licensure we should be aware of?

Licensure is interesting in Georgia because BCBAs across the state want licensure, and I certainly understand that. One of my dear friends, Dr. Michael Morrier at Emory, feels like it’s important. He’s been working in the field for a very long time. I do understand the value in it. My concern is other licensures that we’ve seen passed, whether they were BCBA licensures or maybe licensures like in Pennsylvania, where it has a broader stroke and it doesn’t just include BCBAs.

There is always a risk. In Georgia, I did voice that concern. Sure enough, we faced one of those risks head-on and it’s an issue now, not just a risk. It was a recommendation. My understanding through psychologists is that RBT is to be included in that licensure. The committee accepted the recommendation, which again was very abnormal in that process. We have to get that removed. The bill will go, and we haven’t even started the session yet, but there are definite concerns with that. RBTs don’t need to be licensed. You don’t bill under the RBT and the BCBAs.

Both are a barrier to access to care too because it’s already so burdensome to get folks in the door and then you have to wait for them to get licensed. It’s another delay. The RBT, as we all know, is a fleeting role. The turnover rate is quite high, so it seems like it’s an undue burden on the provider to try and get care provided.

I know you’re very familiar with the data that we’ve seen, probably much more than me as far as that turnover goes, but it’s hot. You’re talking about licensing in an entry-level position and it’s very burdensome. It can be resolved, but I do think there’s a concern. The primary issue was when I spoke to Representative Dempsey, who ironically was one of the first representatives to sign on to Ava’s Law.

She and I have known each other for many years. I met with her, went up to see her in her office and she said, “I don’t want this for the RBTs either, but the BCBA licensure is because we have some concerns about some of the providers delivering care. We want to make sure we know who’s here and what’s going on.

I understand that. There’s always importance in consumer protection, but I think we have to be very careful. We know about the issue in Arizona from our accredited providers. It is taking six months to get licensed there. I think we have to be careful with licensure. The intent is good, but I think it can very adversely affect access to care, which is already one of our primary issues in the field.

[bctt tweet=”We need to ensure that parents are educated on what Medicaid should look like.” username=”bh_coe”]

North Carolina has been an interesting one for us to watch. Also, for those of you who are familiar with North Carolina, they’ve historically required a licensed clinical psychologist to oversee or go over the BCBA for them to be able to provide care. Tell us a little bit about some of the evolution we’ve seen in North Carolina and some of the movement that’s happening there.

It’s interesting in North Carolina because, as you know, there are not a lot of providers like we see in neighboring states like Georgia, South Carolina, even Kentucky. There are so few providers in comparison to the number of children with autism, and that’s primarily been to the Practice Act. BCBA is not being able to practice.

You and I have talked to some of these larger providers looking at expansion, and that practice has deterred them in a lot of ways. The legislation that was passed would allow a board to be created and licensure for BCBA so that they can practice independently. I spoke to a practitioner in North Carolina where you and I were at a conference. His thoughts to me were, “It’s a very slow process,” in them putting together the board.

The legislation does take effect in January 2022. However, there hasn’t been a lot of movement to date. It’s going to be interesting. I think providers are treading very carefully because if the board has not formed and they actually can’t get a license, they still have to abide under that Practice Act. That’s what we’re trying to convey to our accredited providers who are asking questions. Technically, you would still need to abide by that until you can become licensed yourself. It is a slow-moving process.

We’ll definitely keep monitoring that for all of you concerned. We’ve already seen some movement into the state because of this pending movement. The good news is that more providers will enter the state once this is in line, but for those who’ve moved in and hope of this, it may take a little longer than we hoped.

I want to talk about some of the changes at the Federal level, but I’m laughing only because, by the time anyone reads this, it likely won’t be correct anymore. The changes seem like they’re happening so quickly, especially with COVID and all the different updates happening on the Omicron level. Do you want to give us an update Federally about the state of emergency and understanding what that means, and continued coverage of telehealth? Where are we at? My disclaimer is none of this will probably be accurate.

We had our second webinar. We had experts and attorneys that were brought in. It was fantastic. Their focus was on looking at the halt on what the Department Of Labor mandate was about, like if you have more than 100 employees, but still, the CMS mandate was in place. No states from the courtside had put any action into play. Literally, it felt like we blinked and then there were all the rulings from different courts that halted the CMS mandate. It’s challenging. I get text messages all the time from providers asking, “Do we have to comply or do we not?”

I’m certainly no attorney, so I’m not going to say yes or no. That’s a very tough decision that, thankfully, I’m not making. There are many moving pieces to this. I know a lot of providers who have decided that they’re moving forward with the original legislation just because it’s too difficult to ebb and flow through the, “Yes, you do. No, you don’t,” type of stuff. It is so challenging. What’s your perspective, Sara, from what you’re hearing from everyone trying to maneuver through the, “You do have to comply, you don’t?”

It’s such a personal decision because on the one hand, Federally, there’s certain guidance. What we found throughout the entire pandemic is states have taken to their own in terms of their own interpretations. Part of that is what makes this country great. You have these Federal mandates or ideas that come down and then states can do what they want with it. Each presidency has treated the state’s autonomy very differently. It’s been interesting to see how the states have been responding. There have been a couple of states who say, “We’re not worrying too much about COVID safety. We’re not worrying as much about vaccine requirements.” There are some where telehealth was pretty widely used even before the pandemic.

On the provider end, I say that more to say that it comes down to risk tolerance on both ends. This is the decision I’m sure every CEO is having to make is what level of risk tolerance are they comfortable with. I know if you’re taking Medicaid dollars, you don’t have a choice. You have to follow some of those conditions to receive those Medicaid funds. If you’re not, that’s where you get to be a little bit more flexible.

We can’t talk about all this without talking about the extreme labor shortage that everyone is experiencing and understanding that if you are in a state where people are more hesitant to follow some of those safety measures, what are the implications on your ability to have a workforce to service your patients? There’s no clear and easy answer. It’s something that I think every business is trying to navigate.

That’s the perfect way to put it, “What is your risk tolerance?” I asked one of the larger providers that is accredited. I said, “Is this wavering on the vaccine mandate? Is that causing issues for you from state to state?” Their feedback was, “It is,” but they’re just having to make decisions for their company. It’s too difficult to try to do one thing in this state and another thing in this state. That becomes very challenging in and of itself to maintain all that. I don’t know that providers have experienced this type of labor shortage.

It’s always been difficult on the BCBA side in certain areas obviously more than others, but the RBT challenge is impacting access to care, which is very sad because what we know is that based on the data, we hear that there is such an increase in need of behavioral health on a national level. I think about all our families with children with autism and how much more they need stability in their life now more than ever.

To close the loop on some of this, I would say if you’re reading this and you’re trying to figure out what to do, everyone is with you. There are a lot of moving parts to consider. Ultimately, we’ve been trying to provide as much information as possible to organizations. You can make the best choice for your business, employees, team, and go from there.

Everyone’s favorite state, The Big Apple, and the city that doesn’t sleep, New York, I want to talk about it only because I feel like every time I bring up New York, everyone shutters because we all know New York has had one of the most challenging laws when it comes to licensure. That’s on a larger scale and inhibited the ability for behavior analysts to practice. It also slowed the ability for ABA providers to enter into the state. The state is dominated by a couple of large providers that have been able to make it work over the years.

I do have Debbi Napolitano from New York State ABA here with us.

How are you?

Thank you so much for joining us. I’m excited to chat with you because you guys have had such an amazing win in New York. Anna and I were chatting about all things legislation and we just thought if you were available, you could come in and tell us in your own words a little bit of the win that you experienced in New York.

It’s surreal. We spent five years on this bill. As most people know who have experience in New York and many others also know, we were restricted to only practicing with individuals with autism in New York. It has caused a lot of expected problems, but they’ve gotten pretty bad over the years in terms of making it difficult for people to move to New York because their experience hours might not be only with persons with autism. Their hours weren’t counted towards getting their license and they may have to start over. There are many other things I could go on all day about some of the issues that it caused, but we wanted to try and get our license closer to the rest of the country. It’s not perfect, but after five years, we were successful.

The New York governor had threatened to veto the bill. Tell us what happened there because it’s been a few years struggle, then you got there and you were very optimistic. Anna and I were sending a letter. Everyone was rallying behind this. What happened?

None of this happened in a vacuum. I could go through hundreds of things, including some of what you described people sending letters and all of the support that we got that are the reasons why it crossed the finish line. Back in May 2021, when we finally got the word that it was going to going to go up for a vote on the professions committees, which was our biggest hurdle for most of those that time. We were elated because that’s a very difficult thing to do in New York. When other professions found out, they hadn’t been paying attention because there was a high likelihood that it was never going to make it to the committee. It was a very last-minute thing, but there was a very strong effort to stop the bill right before it was voted on the Senate floor, which was our last hurdle to get it passed.

TSR 1 | Legislative Updates

Legislative Updates: Any time you open up the gates there’s always the concern that other things can be thrown in.


Those same groups throughout the period of time between the time it was passed and the time the governor signed it had mounted a pretty similar campaign towards trying to get the bill vetoed. The biggest reason that was cited ultimately was that it was going to cost Medicaid $82 million to sign the bill. Given all of the various ways, we were able to make the case for this bill and have support coming from many different directions to convince the governor why this was important. In the face of that, we were able to debunk the $82 million issue with some pretty good data analysis of capacity in New York.

Ultimately, when they couldn’t stand that one up anymore and with every way, we were able to get support from a lot of unlikely places and some likely, it finally got to the point where the governor realized it was needing to be signed. We couldn’t have been luckier with our sponsors. Their efforts at the very end are sausage making, and I don’t even know what they probably gave up to get this. It was pretty amazing.

Thank you so much for jumping on and chatting with us. I know that we’ve all been following with bated breath and it’s such great news. I’m very hopeful that this will increase coverage and access for a lot of the kids and adults with autism in New York.

What’s important to note is that the bill says, “Any diagnosis in the DSM.” It’s not an equivalent bill to the rest of the country. There still will be some quirks to it. You still need a prescription and we have eighteen months of rulemaking. I’ve heard from a lot of people, “Can I use my BCBA now and get my license?” That’s never going to happen in New York. It’s important to note that we have some time that it’s going to take for the rules to be developed, but it’s done. We are able to work on that.

Congratulations, Debbi.

Thank you. We appreciate it and I appreciate all of your support.

Thanks, Debbi.

Sara, a couple of things I learned from advocacy for so many years is you have to have a champion, which is what she was saying. You have to have that person that usually is connected to leadership or in leadership themselves and you have to persevere even until the bottom of the night or last up to that. You can’t give up, which they didn’t and which is how they got it across the finish line, but the sausage-making is true. When we passed Ava’s Law, it was amazing to me all of the trades and deal-makings that had to occur behind closed doors to get us to where we needed to be. It’s a real thing. Congratulations to them for not giving up and getting it across the finish line.

There’s so much that still needs to be done in the state and across the US, but it was a very good non-example of what we don’t want to see happen across a lot of the states that we work in. Let’s talk a little bit about North Carolina, going down a little South. I know this is another one when we talk about ease of doing business like we were talking about with Georgia. For those of you who aren’t familiar, North Carolina largely had some limiting requirements in the sense that they required that BCBAs were supervised by a licensed clinical psychologist at one point. Some of that has been repealed. Tell us what’s going on in North Carolina.

It’s been such an interesting state to watch because they were working on coverage the same time I was working in Georgia. I met a lot of families. They were able to get their insurance mandate passed and they have a Medicaid benefit, but that benefit has been restricted through the Practice Act, which is that a BCBA has to be supervised by a licensed psychologist. The bill that was passed would allow BCBAs to practice on their own, and a board has yet to be formed.

That bill is a law now in January 2022. You need to know that BCBA technically can’t practice independently because they can’t yet be licensed. Similar to what Debbi’s talking about in New York, the other piece that is important to advocacy is when you get your bill passed, the hard work begins because the implementation of legislation is hard. That’s why in many cases, things don’t come to fruition in ways that they should because you’ve got to have people behind that implementation.

I know there are a lot of people working in North Carolina and understand that some members of the board, hopefully, all of them have been appointed. I also talked to a provider there that said that it’s going to be very costly and there has to be an organization that is footing that bill and the costs that it’s going to take. They don’t have the money yet for that and they’re working on that. It’s a work in progress, but I know there are a lot of providers who are waiting to serve kids there.

They have surprisingly such a low number of BCBAs in that state in comparison to their neighboring states strictly because of this Practice Act issue, but I feel hopeful that the needle is moving there and that BCBAs will be able to practice independently soon. It doesn’t look like it’s going to be within the next few months, realistically. We certainly want people to know, just because it’s January, you can’t just practice.

[bctt tweet=”You have to persevere even until the bottom of the night.” username=”bh_coe”]

We’ll continue monitoring this and we’ll share updates as they come up. Definitely, stay tuned for any changes to that but that’s a good thing for BCBAs to be aware of. We’re in Oregon and Texas and then we’re going to do an international update. The Oregon Health Plan Medicaid Department is requesting CMS renew their waiver. Tell us a little bit about the demonstration that the waiver covers and how that applies to the EPSDT benefit.

It’s so bizarre. I was not aware that you could receive an exemption from EPSDT benefits. In technicality, I don’t think you can, but Oregon did. It’s called The 1115 Demonstration. It was for them to be exempt from EPSDT benefits, which autism is included in that, but that’s Early Periodic Screening Diagnostic Treatment. It is what that stands for. That includes all medically necessary treatment that kids are receiving through Medicaid.

They received that exemption and it was renewed. Now, it’s up for renewal again. It’s shocking to me. Honestly, I’m surprised and thinking that I want to go with the microphone that all of the citizens of Oregon can hear. I’m sure a lot of people do and be like, “What is going on?” It’s so discriminatory in many ways. That’s why the Disability Rights Organization is taking this up. There’s a letter that we signed that other people could sign and respond to this request to be exempt. The worst part is it’s asking to be exempt for cost-effective purposes.

I feel like it’s a consistent battle between Federal requirements and state requirements for a lot of these as well. That’s one of the things that is unique about the United States, but also poses some challenges is that there are these Federal mandates that come about, but then states want to do their own things. It will be interesting to monitor this and it always comes down to budgeting everything else in these decisions.

It is why EPSDT benefits are in place because those benefits are in place to say to every single state, “Whatever your budget looks like, at a minimum, you have to be covering EPSDT. You can cut other things, but you can’t cut EPSDT benefits.” That’s the purpose of EPSDT. They can’t do this. I was so shocked when I was reading some of the documents on this. The other issue is they do use a quality-adjusted life-year, which is another huge way to discriminate individuals with disabilities. There is also some work being done to eliminate or to remove that quality-adjusted life-year discrimination.

I don’t understand that completely, to be honest, but in a nutshell, what I do understand is that for someone like me who has a child with autism, they’re taking into account disabilities and using that to make determinations of who get services longer. It would be interesting to have somebody explain that, but I’ve never heard of such a discriminatory metric as long as I’ve been doing this. I didn’t realize that Oregon was still using that. There are some other things related to suicide prevention that is in there too. I think there’s a lot going on in Oregon. I feel that they have a long way to go, but hopefully, CMS will deny their request.

I’m not a betting woman, but I would guess that will likely be the case. Let’s all cross our fingers on that. Texas has been a huge topic nationally. A lot of organizations are looking at where they want to expand into, and Texas seems like a good place to go, mostly because it’s a high population. There are a lot of BCBAs there. There are a lot of individuals who have not been served. Not only that, there’s a number of individuals who haven’t been served because the ABA benefit has never been rolled out.

If you have been following this very closely, we do have a lot of movement on it. From what I understand, the Medicaid benefit is scheduled to roll out. There has been a lot of pushing back as to when that’s happening, and it is going to be a managed care benefit. The MCOs are going to be overseeing the benefits. Talk to us a little bit about where we’re at in the Medicaid rollout in Texas and then what we’re seeing across with the rates as well.

You bring up such all the right points. It’s about network adequacy, and that is obviously tied to rights. I know providers get frustrated because when they have to talk about rates all the time, it starts to feel like a bad look for them. At the end of the day, the issue is if you have a commercial benefit, and Texas has had a commercial benefit since either ‘08 or ‘09. It’s a very long time and robust benefit. All the providers obviously have been building their network adequacy with RBTs and BCBAs based on those rates. Not that anyone expects Medicaid to be awesome, but it has to come in line close to your commercial rates because otherwise, you’re not going to be able to hire any staff.

You certainly can’t bring staff in and say, “We’re going to pay you a lower rate to work with Medicaid kids.” You can’t do that. They set the rate at $30 an hour, and there was thankfully this huge push same as in New York, a couple of strong champions, and they raised the rate to $45 an hour. I did hear that there is a discussion of another rate increase, but I haven’t had confirmation on that. That hasn’t been released publicly or no one has said that. This other rate increase came pretty quickly in response to no network adequacy from the MCOs.

I think the MCOs are key in getting this right where it needs to be. I don’t feel like providers are wrong in pushing on this to say, “We’ve got to be able to hire staff and pay staff.” It goes back to exactly what we keep talking about. The market shortage is certainly not helping. The benefit rollout technically is February 2022, but the MCOs are saying, “We don’t have providers in our network to serve kids.” That’s where we are.

That pushed that rate increase, to begin with, is no one was enrolling to be a provider. Experiencing that same thing will hopefully help push those rates up to touch as well. In BHC, we’ve been working closely with HHSC and the MCOs. They are very responsive and want to do the right thing, and make sure that the kids have the care that’s needed. It’s been nice to see how responsive they’ve been to these things. We’ll certainly keep everyone up-to-date if we hear anything change from what we know about the current rates.

Bring it home with Canada. What’s going on in Canada? I’ll caveat by saying, Canada has been an interesting case study in terms of Applied Behavior Analysis, our neighbors in the North. I know that Ontario ABA has been very active and advocating for the need for Applied Behavior Analysis, but the different provinces have limited coverage across how much care children can receive. Fill us in about any updates that Canada has had.

We have a couple of accredited providers who came to us to say, “We could use some help with research and anything that we could offer them from BHCOE on the efficacy of Applied Behavior Analysis, then also on who should be delivering that service, who is qualified to deliver ABA to children with autism.” I was able to get some education from those providers and understanding what the benefit looked like there. Surprisingly, Canada is a place where they have a state-funded healthcare system. That ABA and coverage for autism is not a covered benefit, which I don’t know why I’m shocked many years later. I’m just like, “What?”

TSR 1 | Legislative Updates

Legislative Updates: Using a quality-adjusted life year is a huge way to discriminate against individuals with disabilities.


In some ways, I’ve always thought of Canada as having a more progressive healthcare system. I don’t live there, so I guess maybe they do in some ways. It would be interesting to hear from someone who does live there. They don’t include autism coverage for ABA in their general healthcare benefits. It’s done through separate funding and it’s only through the age of six. When we think about the average age of diagnosis here from the CDC, it’s usually 4.3 or either 4 years. That’s the scientific average when you go look at the CDC numbers.

Some states are doing better than that. It’s interesting when you think about kids being diagnosed later, accessing that service, and only being available through the age of six, and then there is a cap of $22,000 a year. When I think about a child who does need early intervention services, $22,000 a year is not going to go that far. The system seems to be, it has something there, but certainly not what I would consider a benefit that could be effective for kids with autism, and then I think about all those kids that are diagnosed after six.

The other issue is they’re looking to change the benefit. The existing benefit that they have is looking to be changed in a way that many of the providers feel could create issues for children with autism accessing the care that they are currently getting. They also do allow others beyond BCBAs to practice Applied Behavior Analysis. We see that in many states where obviously a BCBA or licensed psychologist, but there is some concern when you have a broader stroke and it’s not specified that they need training in the field of Applied Behavior Analysis and be a licensed physician or BCBA.

There are a couple of other states that that’s the way their license is written. Pennsylvania is a great example. You can be a licensed behavior specialist for Medicaid and it delivers ABA without being a BCBA. It’s an interesting opportunity for us to provide support and expertise with Dr. Kazemi and her team to try to help kids access care. They’re at the very beginning of treading through the mire and the muck here of figuring out what to do, how to do it, how to work collaboratively together. There’s a lot to do there and a lot of support that we all need to give to Canada.

Did you have anything else you want to add about Georgia?

The little nugget that I have for everyone for Georgia is that they are updating the manual. It’s going to be updated. It will come out with real clear guidance on what diagnosticians need in order to comply with the Medicaid manual. That is an assessment tool that is conducted by them. It’s their choice what they use. They do provide a list, but that is just a list and then there has to be a parent-reported measure.

Those two things have to exist. What Medicaid is saying is if you get a denial because one of those two things are not present, you can and should request back to your reviewer an extension to say, “These things don’t exist. They were not done by the diagnosing physician, and request that your authorization be approved for the next six months and that you will work with the family and the diagnostician to get those things done by the next authorization period.” The issue is that the diagnostician is not complying with the requirements that the Department of Medicaid has put in place for ABA.

The other little nugget that is important is Medicaid did say that there are some providers in trying to compensate or doing things where they’re saying that the ADOS Score is zero, or I think they mean to say that the assessment wasn’t done. The diagnostician didn’t use this assessment, but that is causing confusion with the reviewers and them thinking that this assessment was done, but the score is missing.

The clarity that is important is to say, whatever the diagnostician did, just put that, be very clear about where the scores are in that. If there’s not a parent-reported assessment done, then you need to tell them that you will do that by the next auth period. I’m hoping that’s going to fix some of these issues. We’re seeing hundreds of denials at this point. I hope for anyone reading, that’s going to help you out. Give us a call if you need help with that. At the core of what we’re dealing with is this is something that I feel like has to be worked out with those diagnosing physicians that ABA providers can’t do anything.

Thank you so much, Anna. This was so insightful. We are going to be covering legislative topics like these as they come up. Check back weekly for new episodes. We’re so excited to continue to update you as things come along.

Thank you.

Up next, we have Jon Krieger with Calex, who’s going to be talking to us a little bit about mergers and acquisitions in behavioral health. Calex is an M&A advisory firm located in New York City. They’re exclusively focused on healthcare services with a strong focus on behavioral health. Jon and his team have advised clients in over $2.5 billion worth of transaction value over the last several years in the autism behavioral health space alone, including the Ontario Teacher’s Union acquisition of Acorn, Blackstone’s acquisition of CARD, General Atlantic acquisition of ACES, Griffin acquisition of Learn, Audax acquisition of Proud Moments, and FFL’s acquisition of Autism Learning Partners. Without further ado, I am here to bring you Jon Krieger from Calex Partners.

Thanks for having me and for those kind words.

[bctt tweet=”When you get your bill passed, the hard work begins because the implementation of legislation is difficult.” username=”bh_coe”]

The reason that I asked to chat with you is because when anyone thinks about transactions in the ABA space, your name comes up most notably because you advised one of the largest deals in Applied Behavior Analysis, was the CARD-Blackstone deal. I wanted to ask you, and that was a couple of years back, what have we seen in 2021? What happened? What are some of the notable transactions that happened? How did they fare with COVID? What are you seeing in the market?

There were some notable transactions in 2021. Most businesses in the economy, multisite businesses, in particular, were heavily impacted by COVID and later in the year, with labor and supply issues, but nonetheless, there were still some notable transactions that happened in 2021. The pipeline for 2022 is strong, and we expect more consolidation to happen in 2022 and in the foreseeable future. I’m happy to walk through some of the transactions from a high level if that would be helpful.

A few notable transactions were Ontario Teachers’ acquisition of Acorn. Ontario Teachers is a Canadian pension fund with over $220 billion of assets under management. It has had a ton of success in the healthcare services space and multisite consumer space as well. They partnered with Acorn in the summer of 2021, a great partner for that business and a great investor to have in the space.

Vicki Kroviak, the CEO, is fantastic. She is an incredible leader there at BHC that we accredited. We know them pretty well. That’s the third Canadian investment group that’s come down to the US because I know Imperial Capital is Canada-based. We have DHW Partners. Is there anyone else that’s Canada-based that’s investing in the US market?

Those are the three within this space, but you have others such as OMERS that have a strong thesis within the behavioral space and autism in particular, and are very interested in the space. There is a lot of interest coming from the North of the border, making good partners and favorably impacting the industry for sure.

What else did we see?

Another transaction that was noteworthy was LME. You had another example of a very large, smart investor betting on the space and that being SoftBank. With a little different approach, their thesis for this acquisition was to address the supply and demand inbounds through a tech-enabled platform, which is somewhat unique. They paid a big number for that business and have strong confidence in their ability to help affect change largely through technology-driven care.

Everyone is talking about the first unicorn valuation in the industry. For those of you who aren’t familiar, unicorn valuation means valued at $1 billion. Everyone is scratching their heads and wondering what goes into a valuation of that type, especially considering the fact that you have the larger organizations who’ve sold in the past are well below those $1 billion valuations, even though they’ve been in the market for decades and then you have LME, who’s a couple of years in is getting this crazy valuation. What goes into that?

If you look at the type of investors that sponsored that deal, they’re not your traditional private equity firms. They’re more of the venture capitalists that underwrite technology-driven businesses primarily. It got a lot of press because of that, and their approach is somewhat differentiated to try to take the services that you could address through technology and deliver them virtually, whether it’s parent training or child monitoring.

Most people would agree that most of the services within autism in the provision of ABA are delivered in-person, whether it’s working with skills acquisition, data collection and others. Their blended approach is something that they think is a little bit differentiated. When you look at the waitlist, the supply and demand imbalance in the space, they’re thinking that they can address that through technologies and virtual care, as opposed to delivering in-person care. The results for their ability to do that and the resulting impact on clinical outcomes will remain to be seen.

TSR 1 | Legislative Updates

Legislative Updates: Medicaid has to come in line close to commercial rates otherwise you won’t be able to hire any staff.


That’s a huge impact for organizations who are thinking about how heavily to invest in telehealth. Is that something that you’re noticing as we go into 2022 as companies prepare to go on the market, whether they have to showcase the viability of care they’re providing via telehealth?

One of the positives to come out of the pandemic is that commercial insurers, all of the providers have been for years trying to get insurance companies to reimburse for telehealth and hadn’t had much success until the pandemic materialized in 2020. It’s a good way to address that supply and demand imbalance, treat children in areas, such as rural places that otherwise wouldn’t be able to be seen in person, train parents and do parts of the care that you can through virtual care.

I still think that most people will agree that in-person direct care is something that’s needed for this patient population. To your point, most providers now have those telehealth competencies and capabilities and are providing them to get through COVID but also to help address patients that otherwise couldn’t be seen in person.

I can completely agree with all of that. I was thinking in 2018 or 2019, even beginning of 2020, you had Florida Autism Center, which is 100% center-based and you have these other platforms that are fully center-based that are thriving. That FAC acquisition happened right before COVID hit and was greatly impacted like everyone else was.

Fast forward to 2021 and 2022, there’s that movement to no center base at all in telehealth and then an additional component that everyone is looking at what is the technology behind what you’re using to not just the actual humans as the conduit to therapy. Are you seeing that more ABA organizations going on the market are also not just investing in the telehealth and people side, but also some type of technology infrastructure that can serve as a differentiator?

Technology infrastructure is important, whether that’s a proprietary or third party. I’m not sure if that matters that much. A lot of the platforms, given the attractiveness of the market being the size and the levels of white space and fragmentation overall tailwinds are focusing their resources on the provision of care as opposed to being technology companies. The ability to manage organizations through data analytics and KPIs, and be able to support clinical excellence standardization and operational efficiencies throughout the organization is something that you need a good technology infrastructure. I think it’s important.

The other thing I would say is a deal that closed right before COVID and another one that closed in February of 2020 was the General Atlantic acquisition of ACES. That business has done extremely well throughout the pandemic. You had mentioned earlier about center-based models and home-based models, but those businesses that are more versatile, that have competencies both in the community, with center-based care and home-based care, are showing a lot of traction.

It will become more valuable as you emerge from the pandemic to treat children in the best care settings possible, whether that’s in the center, home or school. When you have that level of versatility, those models are proving to be highly resilient throughout challenges that you’re facing now, not just through COVID but also through the labor supply issues.

A big part of investment capital coming into the space is how do we increase access to those who typically wouldn’t be able to get care because it may not be as lucrative to be in certain areas. On the other side too is how do we make sure that we create a clinic environment or a therapeutic environment where based on the child’s needs, we can service them in whichever way is best for that child?

I agree that limiting to just center, home or whatever it might be may not be the best approach from a clinical perspective. Ultimately, standards and quality assurance is going to make sure that these organizations continue to thrive, not just from the P&L perspective. What else did we see in 2021? There was one other transaction that was quite notable. Do you want to tell us a little bit about that one?

[bctt tweet=”Georgia is coming out with real clear guidance on what diagnosticians need to comply with the Medicaid manual.” username=”bh_coe”]

Maybe you’re referring to the Lighthouse Transaction, or the one in where you have another leading investor, being ServeRest, a large one with over $55 billion in assets that entered the space. If you look at ServeRest, they pride themselves in their operating capabilities to improve performance and drive long-term value. With those operational competencies and rigor, they’re a great investor to have within this space. If you look at the capital that’s coming to this space, that’s noteworthy, but I think who it’s coming from is equally important. If you look at investors like ServeRest, SoftBank, Blackstone, GA, Ontario Teachers, Audax, Golden Gate, Griff and FFL, these are all thematic investors with a ton of success in healthcare services and multisite consumer businesses.

While the industry is still nascent, you can see the positive changes that are starting to materialize throughout the market by them helping professionalize the industry through infrastructure investment to increase access to care and to improve clinical outcomes. Alongside that, you have accrediting organizations like BHCOE, which are focused on clinical excellence and standardization to help improve outcomes and clinical results. That’s also tremendously benefiting the market.

There are a lot of things going on. When you have a space like the autism space that’s big and has so many different tailwinds, white space and fragmentation, there’s room for multiple winners within the space. This is a space where there’s a strong correlation between clinical and financial outcomes. You have full alignment between the industry and the investors. It’s a space that’s big enough for multiple parties to benefit both the industry and the LPs that are backing the sponsors that are entering the space.

The other piece on it is I think about all the lobbying that’s going on, all those backers that you mentioned. I think about how much money is going towards lobbying for better rates, better care and better legislation that increases access. Those are things that oftentimes are out of reach for smaller providers unless they’ve scaled significantly. It’s great to see how much effort is being put into some of these legislative and policy-related issues on the Federal and state level.

Just because we did talk about Lighthouse, and the question is burning on everyone’s mind is leading into the pandemic that the multiples were quite high in the sense that you had some PE firms that were just walking away saying, “I can’t stomach this. The multiples are too crazy.” How have we seen that balanced out during COVID and are those multiple still where they were pre-pandemic?

It’s a good question that a lot of people ask. The multiples through the pandemic have been supportive and will likely be supported throughout the foreseeable future. There are a couple of reasons why. One, everyone talks about the supply and demand imbalance of capital and dry powder that private equity has and a scarcity value of assets to deploy that capital into.

Going back to the market characteristics that we’ve discussed a few times, you have probably North of $100 billion total adjustable markets with highly differentiated levels of whitespace, fragmentation and tailwinds that we discussed, which are unique, not just domestically but throughout the world. You have the ability to deploy capital in space and with the right focus and operational rigor, it favorably impacts the business and earns a good return in doing so.

If you look at all of those investors that we touched on earlier, they’re all growth investors looking to the future. Their ability and confidence in taking that operational expertise and infrastructure investment that they’ve demonstrated in the past to bring to this industry enable them to pay a multiple that you traditionally don’t see another more mature markets. In 2021, the multiples were supported from where they were previously, and going into 2022, we have a high level of confidence that will continue to happen going forward.

Would you say that the higher valuations from years past were based on an organization’s ability to open up new clinics and onboard new patients, opening up new locations or expanding, and getting those clinics or sites up and running? Whereas nowadays, valuation is based on my ability to recruit and onboard staff at a certain frequency or speed considering some of the supply and demand constraints. Are investors focused more on one versus the other? Are they looking at both of them? How do those both play into an organization’s ability to scale?

They always have been important to the latter point on the ability to recruit and retain professionals in an industry where there is a significant supply and demand imbalance. While it was always important, it’s probably more so important now, given some of the labor supply issues that you’re seeing across the economy. It’s a sector where there are multiple attractive growth levers, whether it’s on the de novo side and building out a business organically or through an M&A into supplementing your organic growth and integrating add-on acquisitions to gain provider census, patient census and commercial insurance relationships. All of those things still matter.

In the past, while there was a supply and demand imbalance, but not the labor issues that you’re having across the markets now, that’s probably more of a focus on meeting the demand for care. It’s the same type of thing that investors have been focused on historically. Great leadership teams focus on clinical excellence, a broad provider base and the demonstrated ability to grow. What you’ve seen with the right partnerships, you see the acceleration of that growth through limited operational infrastructure investment and focus on managing a business to relevant KPIs in order to scale.

TSR 1 | Legislative Updates

Legislative Updates: For a child who needs early intervention services, $22,000 a year will not go that far.


We’re going to be talking about this and so much more at the Autism Investor Summit. I can’t wait to continue the discussion. Thank you so much for your time, for coming on and sharing your knowledge and expertise with us. I hope to have you back for our next show.

Thank you, Sara.


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