“Pocketing Money Meant for Special Needs Kids: Private Equity in Autism Services”

The new report titled “Pocketing Money Meant for Special Needs Kids: Private Equity in Autism Services” by Cornell University’s Rosemary Batt and the Center for Economic and Policy Research’s Eileen Appelbaum is re-released today.

Just last week on June 11, private equity firm Blackstone announced the bankruptcy of its national autism services chain, the Center for Autism and Related Disorders (CARD). When Blackstone bought out CARD in 2018, it was the largest chain of autism services in the U.S., with 250 locations. Within five years, Blackstone loaded CARD with unsustainable debt and closed over 100 CARD locations, leading to its bankruptcy.

Autism services became a ‘hot market’ for private equity buyouts only in recent years, when health insurance for autism became widespread due to a decade-long fight by parents and autism advocates for mandated coverage. But the flood of money pouring into the ‘market for autism services’ has quickly flowed into the pockets of private equity firms, which until then, had shown little or no interest in people with autism.

The 12 PE-owned autism service chains in this study employ at least 30,000 people at 1,300 locations. Almost all PE owners are large generalist firms investing in anything from fossil fuels to retail stores, with little or no experience in autism services. They drive rapid consolidation of small providers into large national chains – and in most cases, load providers with substantial debt that they previously did not have.

“Parents who fought for health insurance coverage for their autistic kids expected the funds to be used to expand access to high quality treatment. They didn’t expect firms to move in, skim reimbursements to pay high salaries to executives, and deliver millions to private equity partners,” said Rosemary Batt, the Alice Hanson Cook Professor of Women and Work at Cornell University.

With 1 in 36 children aged eight now diagnosed with autism, the need for services is great. But in their new study, Batt and Appelbaum show why private equity buyouts are not the answer.

Key findings include:

• Between 2017 and 2022, private equity firms completed 85 percent of all buyouts of autism service providers – a rate not found in any other industry. PE firms now dominate this market.
• On average, the 12 firms in this study sold their autism service chains to other PE firms every four years.
• Post-buyout, PE-owned autism service chains have lower levels of staffing, training, and supervision, all of which undermine both job quality and care quality. Some PE owners prioritize patients who can garner higher billing rates or states with higher reimbursement rates, worsening inequality in access to care.

“Using private equity funds to simply buy and sell autism service organizations is akin to buying, selling, and speculating on real estate to make money. Under these conditions, finance capital is used for market transactions, not productive investments,” said Eileen Appelbaum, co-director of the Center for Economic and Policy Research.

The autism community has developed strong advocacy organizations that successfully passed state commercial health insurance coverage. Now, they need to push for legislation to set minimum care standards, transparency, and regulatory oversight to protect patients – not profits.

“Pocketing Money Meant for Special Needs Kids: Private Equity in Autism Services” can be read here.