The field of autism services is experiencing considerable growth; a trend that looks to continue for some time. An increase in diagnostic prevalence, as well as an aging population of adults living with autism, will continue to increase the demand for services for the foreseeable future. As the demand for autism services continues to grow, the field has become even more attractive for investors. In my book, Autism Matters: Empowering Investors, Providers, and the Autism Community to Advance Autism Services, I discuss how investors can play a vital role in advancing the autism services industry.
But with so many providers, how do investors know which are strong investments? Through my diligence work with investors, I have determined five of the major factors investors should consider before investing in an autism services company:
#1. Payer Concentration/Diversity
Autism services providers are typically paid by third parties, whether they be insurance companies, governments, or school districts. Many providers, but mostly smaller providers, experience payer concentration lending risk to future growth and revenue prediction. Just recently a prominent commercial payer handed down a significant rate cut to their ABA providers.
It’s also important to look at the state and federal laws surrounding funding. Is funding relatively secure or is it vulnerable to political change? If funding laws did change, how much funding could be at risk?
#2. Fraud and Legal Compliance
There are several things to consider in regard to compliance. Each area deserves due diligence when investing:
- Is the company in compliance with payer contracting requirements? Every insurance company and government agency will have their own requirements regarding credentialing of staff, billing requirements, medical necessity criteria and service delivery, to name a few.
- Is the company billing in a manner which prevents fraud? Fraud is prevalent in the autism services industry, occurring both intentionally, through billing and credentialing fraud, as well as unintentionally, due to lack of understanding of billing regulations and requirements.
- Is the company compliant with state licensing laws, state psychology board regulations, and any other legal, operational requirements?
- Is the company abiding by HIPAA and taking steps to protect consumer information?
#3. Revenue Model
Autism services are offered in different settings to serve different needs, and to meet varying funding compliance regulations. Some services are center-based, where individuals come into an office or facility. Other service providers offer in-home or in-school services models where the provider travels to the home or school for service delivery. And other companies offer hybrid approaches combining both in-home and center-based services. It serves investors well to understand what services a company offers and in what settings, so they may better understand the revenue model and the regulations that guide service delivery.
#4. Clinical Model and Outcomes
On a more personal and socially-focused level, in my book, I also stress the need for long-term, quality of life outcome measures in autism intervention therapy. The goal of intervention is to provide the skills necessary for successful adult lives and many programs fail to focus on this long-term outcome of service delivery.
#5. Workforce Classification
As the industry grows, some providers have taken to building staffs of independent contractors rather than hiring actual employees. While this provides lower overhead and prevents a provider from dealing with employee benefits, it also presents a risk to the investor on two levels. From a legal perspective, treating staff as independent contractors often violates the legal requirements for workforce classification. On a service delivery and clinical level, independent contractors are scrutinized less, undergo less training, and have no vested interest in the company they are contracted by. To ensure the integrity of service and quality outcomes, only the best suited should be employed, and companies should be accountable for training and quality assurance. While many contractors are skilled and knowledgeable, companies that rely on them to comprise their workforce are putting too much distance between themselves and their consumers.
While there are many important factors to look at, these five key areas will allow investors to quickly and critically assess some of the most vital aspects of an autism services company before committing to investing. For further information on these topics and others related to autism services, please read my book, Autism Matters: Empowering Investors, Providers, and the Autism Community to Advance Autism Services, and follow my blog for more news and insights.