By Dr. Ronit Molko
In the past five years, private equity investors have been taking a particularly strong interest in the field of autism services. That has led to many autism services companies being acquired or receiving capital from investors.
But what exactly makes the autism services field so attractive to investors?
The CDC estimates that 1 in 59 children born in the United States will be diagnosed with autism spectrum disorder. That’s an increase from 1 in 88 as of 2010, and 1 in 68 as of 2014. When I first entered the field, that number was significantly lower, with only 4.5 of every 10,000 children diagnosed with autism.
The cause of that rise in prevalence is still undetermined, however, many researchers suspect that a portion of the increase is due to a broader definition of autism spectrum disorder (ASD) and better efforts at diagnosis. In addition, minority groups have historically had significantly less access to resources and therefore the prevalence in those groups remains under-identified and as a result, we will likely see changes in prevalence in the future. Regardless of the cause, the rapidly growing population of children diagnosed with autism will drive a sharp increase in demand for autism services for the foreseeable future.
Currently, the majority of autism services are aimed at children. This is because early intervention is crucial when it comes to developing skills autistic individuals need to navigate the world and take care of themselves. It is also imperative to start intervention early, as therapy is most effective when the brain is still in development.
A study from the International Society of Autism Research recently demonstrated that 80% of autistic individuals continue to require support, services, and supervision into adulthood. Adults with autism have challenges and roadblocks when it comes to finding employment, living independently, and forming interpersonal relationships.
Currently, only 10% of adults with autism live in independent homes. Nearly half (49%) live with a parent or relative. That means there is a large segment of the autistic population who are adults living under the care and supervision of their elders. Someday, the family members caring for these individuals will no longer be there. This means there will be a considerable demand for adult services in the near future. Something the market is currently not adequately providing.
A Fragmented Market
The autism services landscape is highly fragmented. The market is mostly comprised of small providers that are founder operated and cover limited geographic locations. There exists a great potential for consolidation. With investors leading the way, service providers can be scaled, and more national players can emerge, especially now that legislation has created more readily available funding for autism services.
Trends in Reimbursement and Funding
Autism services is an industry dependent on third-party funding: individuals with autism are typically not the parties responsible for primary payment. Thankfully, 46 states at D.C. now have legislation requiring insurers to cover autism services. That’s up from 32 states just five years ago!
The Affordable Care Act (which remains law despite political posturing) also makes it illegal for insurance companies to deny, limit, exclude or charge more for coverage for individuals with pre-existing conditions. That means individuals with autism cannot be denied coverage for services.
While securing a strong return on investment has to be a priority for any investor, today many investors are also considering the social impact of their investment choices. For such individuals, autism services provide a very favorable opportunity for financial gains with the added benefit of empowering a disadvantaged segment of the population in need of significant support and opportunity.