Community and partnerships are key to many of the fastest growing behavioral health companies in the US.
Four of the thriving mental health companies, such as identified by the Inc. 5000, have experienced growth that is often the competition of young technology and startup companies. These companies have taken advantage of the huge imbalance between supply and demand present at the national level and in individual markets.
In addition to partnerships, each has proactively created an infrastructure that can handle and enable rapid growth.
“There are probably more downsides to growing too fast than there are upsides,” Brian Wheelan, CEO of Transformations Care Network, an Inc. 5000 grantee, told BHB.
A platform company backed by Chicago-based private equity firm Shore Capital Partners, Transformations Care Network was formed in August 2021 through consolidation of four Outpatient mental health practices. Shore Capital Partners invested for the first time in Transformations in October 2020. The company’s annual revenue grew 125% between 2018 and 2021, according to the Inc. 5000 list.
Transformations Care Network seeks outpatient mental health practices with leaders who are dedicated to making their practices the leading practice in the state, Wheelan said.
“That’s my No. 1 goal, which is to help someone make their brand a leader in that state in an all-paying online business,” Wheelan said.
Transformations Care Network then acquires controlling stakes in these companies, helps them grow with new capital, and supplies centralized back-office and administrative systems. It also provides continuing education and training.
“You will meet very few founders, no matter how incredibly clinically motivated they are, who are excited about payroll,” Wheelan said. “We allow them to go back to what they originally did in the business, which is to be a clinical leader, to be a supervisor, to be a coach, to be a member of their human services community, not to be payroll hockey. .”
Centralizing vital business functions has another added benefit as the business grows.
“The downside is if you’re moving so fast that you don’t really have the infrastructure, systems and processes to ensure consistency,” Wheelan said, adding that the constant intake of patients “confuses mental health. … Those are actually complicated processes.”
Insurance associations are vital to the growth of behavioral health businesses
Going in-network with health plans for growth was another trend among health companies on the Inc. 5000 list that responded to BHB’s request for comment. This also requires large investments in community and infrastructure.
Headquartered in Mendota Heights, Minnesota, Ellie Mental Health owns and operates practices in Minnesota and sells franchise locations to local physician and investor teams. Its revenue from 2018 to 2021 grew by 544%.
Ellie Mental Health seeks to achieve a “trifecta” through its franchise model, co-founder and CEO Erin Pash told BHB in a previous interview.
The trifecta calls for building bargaining power and respect with payers through strong national systems, best clinical practices, and clinical outcomes; give therapists the feeling of a small local practice while being supported by a large system; and bringing in local investors and entrepreneurs to help the therapists with the business aspects.
“The macrosystem of mental health care involves working with…insurance companies,” Pash said. “Insurance companies don’t want to hire independent practices without standard operating procedures that best support what’s best for insurance companies.”
In 2020, about 64.3% of all health care spending in the US was paid for by private health insurance, Medicare, and Medicaid, according to a report by the American Medical Association.
In a previous interview, Carrie Singer, owner and founder of Quince Orchard Psychotherapy, told BHB that being in-network with payers brings patients into her practice with little need for marketing. This is combined with a community approach to generate a strong word-of-mouth referral pipeline.
Fifteen Orchard Psychotherapy increased revenue by 87% between 2018 and 2021.
The downside is that if you’re moving so fast you don’t really have the infrastructure, systems and processes to ensure consistency.
Brian Wheelan, CEO of Transformations Care Network
meet multiple needs
Focusing on community and infrastructure allows behavioral operators to accomplish several things at once.
Scott Snider, CEO of Proven Behavior Solutions LLC, started his autism treatment center in November 2015 after his wife, a Board Certified Behavior Analyst (BCBA), contracted with a company that discovered she likely was committing insurance fraud.
“We were looking at the landscape and how, to start with, there weren’t enough providers that were providing this type of service, but then the ones that were here weren’t providing the level of quality that we knew was possible based on our own experience. ”, Snider said in an interview.
Norwell, Massachusetts-based Proven Behavior Solutions, whose revenue grew 170% between 2018 and 2021, focused on opening locations in southeast Boston, where there was a much lower density of autism care providers.
“The lack of supplier density helped us to begin with because once you started, it wasn’t too hard to raise our flag and say ‘Hey, we’re open,’” Snider said.
While a lack of geographic competition helped launch the company, establishing trust through “a really high bar for clinical quality became a huge differentiator for us.”
“That’s what really drove the growth,” Snider said.
The company offers Applied Behavior Analysis (ABA) therapy, speech therapy, occupational therapy, special education advocacy support for parents of students with special needs, and assistive technology services at each of its centers.
Meanwhile, the company sought to build a corporate structure similar to that of multi-state providers even though it currently only operates in one area of one state.
“First you have to put the scaffolding together to allow faster growth,” Snider said. “While you’re moving, you don’t necessarily have time to hit the brakes and stop and think. [about] what we lack… Being proactive is number 1 for us.”
The combination of smart community navigation and infrastructure development was validated, according to Snider, by New York City-based Health Enterprise Partners. investment in Proven Behavioral Solutions. The goal is for Proven Behavior Solutions to grow as a southern New England behavioral health platform company, Snider said.
challenges abound
Despite rapid growth and investment, a core challenge of being a fast-growing company is responsibly managing spending rates, Snider said.
“We have to make sure we’re looking at that burn rate and not running to a point where we can’t keep the doors open,” Snider said. “Sometimes we cross that line.”
Earlier this year, the BHB reported that outpatient mental health operator Foresight Mental Health almost bent due to excessive spending.
You need to put up the scaffolding first to allow for faster growth.
Scott Snider, CEO of Proven Behavior Solutions LLC
Staffing challenges are magnified when a company’s need for staff increases while labor supply challenges persist. This allows employees, especially doctors like therapists, to be picky about jobs and the kinds of patients they’re willing to see, Singer said.
“Honestly, clients are not hard to come by,” Fisher said, adding that when it comes to finding staff. “It’s an employee market.”
At Quince Orchard Psychotherapy, Fisher needs to find therapists who want to treat children under the age of 10. But many therapists don’t want to because of the additional and unique duties of caring for young children, even if they are trained to do so.
“Finding the staff who want to care for patients who need the most help and who are really challenging patients … is a tough sell,” Fisher said.
Wheeler echoed a similar sentiment. But the challenge for an outpatient mental health provider in expansion mode is finding therapists willing to collaborate with insurers.
“Our biggest competitor is not another well-capitalized company, it’s the feasibility of not participating in a network,” Wheeler said. “What is so critical for us is delivering on the promise of being a great place to work because that keeps [clinicians] on your journey and with us.
“Then we can deliver on that promise of payer access. When we do that, taxpayers are willing to pay us more because we are an alternative to emergency rooms.”
