Autism Matters and ABA Insights from a Senior Executive, Entrepreneur, and Author

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Dr. Ronit Molko is the author of Autism Matters: Empowering Investors, Providers, And The Autism Community To Advance Autism Services

Jarbly University · Episode #14 With Dr. Molko (1)

 

Summary: Do you want to take part in a nationwide movement towards improving long-term outcomes for people with autism and behavioral disorder’s. Join Dr. Ronit Molko, a licensed clinical psychologist and cofounder of one of the largest autism service providers in the nation, who will share some of her 3image of a boy sitting and looking up, smiling around puzzle pieces0 years of experience to innovate the current model of service delivery, forge new programs and create opportunities that will better equip individuals on the spectrum with the skills they need to build quality, self-determined, independent lives.

What You Will Learn in this Interview:

1:49 – Background on Autism and how individuals and caretakers can help those with autism live a fulfilling life

13:56 – Studying and looking to establish purpose and path forward to have a career path like Dr. Molko (supervising, clinical psychology, behavioral analysis, investing)

19:28 – Current support systems that are in place and preparations to handle and support with proper treatments during Coronavirus.

24:08 – Core traits and characteristics that have led to entrepreneurship and investment leadership, advancing behavioral healthcare across verticals.  (Environment for high quality intervention)

30:06 – Keen insights on evolving relationship between technologies and the broader population who have disabilities and diseases (IoT, apps, connected devices)

36:34 – Trend to reduce overall healthcare costs (advice to help families dealing with autism diagnosis)

41:00 – Personal thoughts on Senior Care, especially in assisted living communities which are in full focus right now and desperately need an overhaul

Dr. Ronit Molko Executive Profile

Dr. Ronit Molko is a dynamic senior executive and entrepreneur recognized for combining strategic vision and technical expertise to drive business initiatives. In 2001, Dr. Molko co founded Autism Spectrum Therapies Inc. (AST), which grew into a highly respected, multi-state provider of services for individuals on the autism spectrum. In 2014, she sold her company to Learn It Systems, a private equity backed strategic buyer, and then she served as President of Autism Services for the combined family of companies until early 2016.

Today, as CEO and Principal of Empowering Synergy, Dr. Molko conducts due diligence for investors. She also consults as an expert in the field of service delivery for healthcare, with a special focus on behavioral healthcare and companies that provide services to families affected by autism and developmental disabilities.

In 2018, she released her latest work, “Autism Matters: Empowering Investors, Providers and the Autism Community to Advance Autism Services,” published by ForbesBooks.

Dr. Molko is currently a board member of the Los Angeles Chapter of the Autism Society of America and the Galt Foundation, which places individuals with disabilities in the workforce. She has been actively involved in many healthcare-based committees and organizations throughout her career and has received multiple awards in recognition of her business prowess and leadership abilities. She is a licensed clinical psychologist in California and Washington states, and a Board-Certified Behavior Analyst.

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Six Ways Technology Due Diligence Failure Can Kill Your Private Equity Investment

Six Ways Technology Due Diligence Failure Can Kill Your Private Equity Investment

No matter what market you’re in, technology is a significant element of your business. Taxi companies learned this when Uber and Lyft employed sophisticated apps to topple their industry. Prior to the emergence of those two frame-breaking enterprises, few in the taxi industry would have considered themselves in the technology business.

Even a high-touch industry, like autism services, invests significant intellectual and monetary resources into computers, databases, practice management, and other critical technology.

These systems and the people who run them are often overlooked when investors conduct due diligence before acquiring autism businesses. But they do so at considerable risk.

A 2007 study at the University of Virginia found that two-thirds of mergers and acquisitions fail to deliver their expected returns. More recent research (2016, 2017) shows this number as ranging between 50 and 85 percent. Much of this is due to poor integration of cultures and business practices. A significant piece of this is systems and technology.

In my work with private equity firms, I frequently encounter this problem. Investors acquire platform companies comprising multiple businesses that have been acquired and consolidated in a relatively short period of time. Frequently, each of the businesses within this platform is using different software for data collection, analytics and practice management. Often, it’s chaos for the employees who are charged with integrating new acquisitions into the company. Combine that with the growing failure to conduct substantial technology due diligence and what we’re left with are investors putting their investments at needless risk.

Compromised Systems

No investor wants to purchase a company whose data has already been stolen. Consequently, it is critical to investigate the security of a target company’s data before investing. Due diligence investigations of Yahoo’s data systems saved Verizon $350 million. After discovering all three billion Yahoo email accounts had been hacked, Verizon slashed its $4.48 billion offer to cover the cost of remediation. Absent due diligence, Verizon would have paid for the email accounts and then found itself liable for the problem. Conversely, Marriott purchased Starwood and discovered a massive data breach in the reservation system that resulted in the hacking of personal data, including passport numbers, for millions of customers. Marriott failed to conduct proper due diligence during the transaction and has since incurred many millions of dollars in expenses to remedy these issues.

IT Integration

When two enterprises merge, the major concern is the integration of two distinct organizations. Most merging entities recognize the challenge of combining physical, cultural and operational systems, but often neglect or miscalculate the complexity of the required integration of IT. In my experience, the reliance on synergies and applicability of existing systems is generally overestimated; as a consequence, the cost to merge IT systems is generally underestimated. Most organizations are struggling just to integrate and optimize their own systems and would be severely challenged to assimilate a new one or to migrate the entire company to the best option available.

IT Staff Considerations

Put yourself in the shoes of your employees. An imminent merger or acquisition threatens their continued employment. Destroying documentation; changing protocols, passwords, etc.; and installing obsolescence into IT systems are just three strategies to create a level of indispensability that would protect their job or cause damage to the business once they are let go.

It’s important to remember that the overwhelming majority of people would never consider such actions. But it only takes one bad actor to wreak havoc for a company. Those closest to and with the deepest knowledge of the technology, software, systems, and processes that keep the company running smoothly are the ones with the greatest potential to do major damage. There are numerous accounts of these events in mergers and acquisitions. Companies can protect themselves: there are defense mechanisms against this kind of behavior that are the purview of IT experts.

The Leakage of Intellectual Property

Bearing in mind the same caveats about human nature, employees have been known to steal information. Not just a priority when selling the business, protecting intellectual property must be a core due diligence practice at all times. In one of my own businesses, an employee downloaded critical business information and intellectual property and used it to establish their own company, now worth a significant amount of money. During acquisition discussions, determining who is most likely to feel their job is in jeopardy can lead to defensive measures that protect intellectual property prior to completion of the purchase as well as throughout the lifespan of the business.

Social Engineering Hacks

While these sorts of attacks are an ever-present threat to businesses, smart criminals know that companies are especially vulnerable at times of sales or acquisitions and can exploit the situation to steal money. In a growing wave of cyber theft, we are seeing increasing incidents of thieves hacking into company email and sending requests for payments that go directly to an offshore account. Staff, aware that a transaction is imminent, comply with the request and suddenly large sums of money are gone. A client of mine avoided this scam only because the accounting employee questioned the CEO in person about transferring funds by wire. This is the exception that proves the rule. Oftentimes, transactions like this, that get easily flagged in the normal course of business are processed without hesitation during a sale because atypical financial transactions are commonplace during these periods.

Email Trading

The final vulnerability to look for is relevant to publicly traded companies. Before a deal is ever announced, there will be rumors circulating about the sale. More dangerously, there will be ongoing chatter between business leaders that reveals sensitive information, most especially a possible sell date.

While rare, it’s not unheard of for opportunistic employees who know their way around the company’s systems to gain access to email communications and begin monitoring leadership’s emails throughout the ensuing weeks and months to parse them for valuable details that they then use to make personally advantageous stock trades with should-be confidential insider information. Many young IT professionals have been arrested for this kind of breach.

The positive thing to keep in mind here is that these attacks are avoidable. Managers that get caught in this trap are usually using an unsecured email server like Gmail, to which some employees have full admin access. Companies in the midst of a sale or acquisition cannot afford to be naive about access to information. An added emphasis on private communication and enhanced security provisions around sale preparations can easily remedy this kind of vulnerability.

Understanding these six elements of due diligence facilitates a process of digital risk mitigation that can save investors millions of dollars and secure the viability of entities, in our industry, that provide critical services to a population in serious need.

The Opportunities for Investors in Autism Services

The Opportunities for Investors in Autism Services

By Ronit Molko, Ph.D., BCBA-D

The landscape for investment opportunities in autism services is growing and changing at a dizzying pace. As the diagnosis rate of children identified with autism spectrum disorder approaches 2.5 percent—nearly tripling since 2002—the demand for services is mushrooming.

The marketplace is also beginning to demand more sophisticated models of care and opportunities for autistic individuals. There have been multiple recent acquisitions of autism service providers and the land grab continues.

Considered the gold standard for autism treatment modalities, reimbursement for ABA is now mandated in 46 states, twice as many as in 2010. ABA is a scientifically-validated approach that encourages family involvement in treatment. ABA focuses on techniques that bring about positive changes in behavior, particularly in improving individuals’ abilities to care for themselves.

Recent acquisitions—including FFL’s investment in ALP, Blackstone’s investment in CARD, TA’s investment in BHW, and many others—illustrate the intense, continued interest in this sector. Although valuations are high and questions persist about the quality of management at many providers, other large investors are reported to be shaking the trees, searching for the best point of entry into the industry.

The investment space is not yet mature, making this the time to get in. Industry leaders are just now beginning to recognize the need for standardized outcome measurements that reflect the actual experiences of autistic children as they grow into adults.

Autism services offer investors interested in social impact a financially profitable opportunity. The autism services industry is badly fragmented, typically characterized by well-intentioned, clinically-focused, but inefficient businesses lacking the ability to attract top staff or scale and manage growth. It is primed for savvy-but-conscientious investors who can improve outcomes while generating a financial return on investment.

The combination of good business practices, shrewd servant leadership and focus on clinical outcomes can improve both the bottom line and the lives of people with autism spectrum disorder.

The autism services industry is ready to reward investors who bring those three together, which is why we’re already seeing the leading edge develop in a big way.

5 Factors Investors Should Consider When Exploring Autism Services Companies

5 Factors Investors Should Consider When Exploring Autism Services Companies

By Ronit Molko, Ph.D., BCBA-D

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 Servicesand follow my blog for more news and insights.

 

autistic adults

Autistic Adults and a New Market of Demands

Adoption of Applied Behavioral Analysis (ABA) for children with autism spectrum disorders was a remarkable breakthrough in treatment that has changed the lives of people on the spectrum and those around them. It has helped countless individuals learn new skills and increase their ability to communicate and socialize. And while ABA among children can make a difference in adulthood, services for autistic adults need to improve and adapt. 

The larger question, though, is not whether children in therapy learn specific skills, but whether they acquire the ability to care for themselves and navigate the world in which they live. On this count, our satisfaction with the success of the autism services industry must be tempered. As much as it has progressed in the past 50 years, even the last 20 years, we cannot accept the state of autism services today. We must push ever forward to develop new innovations in the care and treatment of autistic adults so that they can create self-determined and fulfilled lives.

Autism treatment does a remarkable job of teaching children how to indicate what they want, reduce their meltdowns, identify colors, and even accomplish practical tasks like tying their shoelaces. But research shows it has largely stopped at those kinds of discrete skills.

The result is that autistic adults, even those who have enjoyed successful intervention until age 18, often cannot live independently or secure employment, struggle to develop long-term friendships and often are not making choices about their own lives.

A Drexel University study found that autistic adults are only somewhat better off than they were back in the days when they were permanently institutionalized. It found that only one in seven people with autism is employed in the community (rather than in a program for people with disabilities) and fewer than half choose their own schedules. Other studies have revealed that most people with autism don’t have a single friend who is not a relative or caregiver.

For all the advances in treatment, this is an unhealthy state of affairs. Not surprisingly, the Drexel research found that adults with autism suffer a plethora of physical and emotional issues like anxiety, depression, and obesity. They are often lonely and their lives are dictated by others.

A big part of the problem is the lack of commitment in the industry to measuring consistent and relevant long-term outcomes of intervention. This provides a real opportunity to investors and entrepreneurs who seek to enter an industry for social as well as financial gain. A few large providers committed to long-horizon outcomes standardized across the field could alter the delivery of services for the benefit of over three million people with autism currently receiving services.

The revolution I am suggesting will take the expertise of many; a willingness to hold ourselves accountable and be held accountable by payers; dedication to a long, arduous process of developing and sharing relevant measures; and, frankly the clout that major investors and large service providers can bring. But the rewards would be immense. Better service and meaningful long-term outcomes yield lower costs ultimately,  growth and higher return on investment, as well as improved lives for people with autism and their caregivers.

The opportunity exists right now for service providers to differentiate themselves by attending to understanding the long-term outcomes and utility of today’s services. With the current frenzy of investment activity, the landscape is changing faster than ever. We risk having our mission and service delivery commitment dictated by individuals outside the service provider community if we do not pay attention the our science, our practice and how we are impacting the lives of these autistic individuals and their families.

For further reading on how you can make an impact and change lives, check out my book, Autism Matters.

A Call to Investors Why Autism Services Needs Investment

A Call to Investors: Why Autism Services Needs Investment

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?

Prevalence

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.

Adult Services

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.

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[1]. 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.

Social Impact

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.

[1] Roux, Anne M., Rast, Jessica E., Anderson, Kristy A., and Shattuck, Paul T. National Autism Indicators Report: Developmental Disability Services and Outcomes in Adulthood. Philadelphia, PA: Life Course Outcomes Program, A.J. Drexel Autism Institute, Drexel University, 2017.
investors

A Call to Investors: Why Autism Services Needs Investment

Several factors make autism services not just a favorable investment, but one with significant social impact.

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?

 

Prevalence

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. 

 

Adult Services

Currently, the majority of autism services are aimed at children. This is because early intervention is crucial when it comes 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[1]. 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.

 

Social Impact

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. A more conscious capital investment mentality looks to produce economic growth and foster social progress. 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.

 

 

 

 

[1] Roux, Anne M., Rast, Jessica E., Anderson, Kristy A., and Shattuck, Paul T. National Autism Indicators Report: Developmental Disability Services and Outcomes in Adulthood. Philadelphia, PA: Life Course Outcomes Program, A.J. Drexel Autism Institute, Drexel University, 2017.

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