Recent large acquisitions in the autism services space have shifted the industry’s landscape. This is a continuation of a trend that has seen many of the large providers across the nation acquired by private equity in the past five years. As the market consolidates and these national players emerge and compete, how will it affect the industry?
The Autism Industry: Where We Are Today
New data released from the CDC in April suggests that the prevalence of autism continues to climb. The data show a prevalence of 1 in 59 children, up from 1 in 68 just two years ago. This increase in prevalence will fuel an already growing demand for autism services. As the demand and market grow, investors will undoubtedly take notice.
Autism services has already been an attractive industry for investors, particularly those looking to make a positive social impact. For such investors, the industry provides a very favorable opportunity for financial gains with the added benefit of empowering a growing segment of the population in need of support.
In the past five years, the market has become increasingly consolidated. As private equity eyes the increase in demand along with a more favorable climate for funding and reimbursement, we can expect to see even more consolidation in the future. As investors build national platforms by acquiring providers, these new national platforms are competing for dominance, and making it more difficult for privately owned companies to compete.
A benefit of this new landscape is that competition can raise the bar of service for any market. However, in healthcare especially, consolidation often stymies competition. By buying up a significant share of the market, larger players are able to effectively increase their bargaining power with insurers and suppliers. This gives them an outsized advantage over their competitors. That kind of market dominance prevents real competition and thus fails to improve quality. This is also why research shows that consolidation in healthcare typically leads to higher prices.
Paul Ginsburg, Ph.D., Director of the Leonard D. Schaeffer Initiative for Innovation in Health Policy, says that healthcare markets need to use alternate tools to increase competition and not rely on government legislation or regulation:
“Network strategies, such as narrow networks, tiered networks and reference pricing, are more potent approaches enabling patients and payers to get lower prices than high deductibles with transparency tools.”
As Erin Trish, Ph.D., Assistant Research Professor at USC Price School of Public Policy, correctly notes, the complexity of healthcare markets means that any impact from consolidation is likely to be complex and vary widely by geography. That impact will also be different for consumers, providers, and insurers.
Where We’re Headed & Why It Matters
The market demand for autism services will continue to grow, not only from increased prevalence but also due to the vast number of autistic adults who will need services in the future. The majority of autistic adults do not live independently, with many residing with an older family member. As their family members age, there will be an increased demand for adult autism services. This increased demand will attract more private equity and undoubtedly result in further consolidation.
There are many companies in this space providing services of mediocre quality, without generalized skills that translate into meaningful long-term outcomes for autistic individuals. If we fail to ask the right questions and make the right choices as an industry, we could see subpar models elevated to national platforms, while quality providers struggle to compete.
Dr. Ronit Molko, BCBA-D is leading the movement. to innovate, improve and advance current models of autism services, and author of Autism Matters: Empowering Investors, Providers, and the Autism Community to Advance Autism Services with ForbesBooks. Learn more at RonitMolko.com.