Sector Report

Four (4) Take-Aways on the Autism Therapy Space

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We expect to see significant consolidation in the autism therapy space over the next decade as providers and private equity investors consider how to deal with a potentially more challenging fee-for-service reimbursement environment in 2025 and beyond. In our view, this will likely include mergers and acquisitions to build patient populations and economies of scale in order to more meaningfully participate in value-based contracting arrangements with payers.

Key Takeaways

1. Our conversations with provider organizations and private equity investors in the autism therapy space suggest that there is a growing interest in value-based reimbursement as a strategy to competitively differentiate and avoid the otherwise inevitable pressures of fee-for-service payment rates. In particular, the funding of Medicaid and other public health programs has been a topic of concern in recent months given the Trump administration’s focus on reducing federal government deficits. Today, we estimate autism providers, in aggregate, generate over half of their revenues from Medicaid and public health programs.
2. Value-based reimbursement, in turn, requires access to sufficient patient lives to be able to demonstrate differentiated quality and outcomes — as well as to spread-out/diversify performance risk and take-on performance risk incrementally. Yet, today, the autism therapy space is highly fragmented with no single provider accounting for more than 5% market share. Thus, in our view, for many small/mid-sized providers of autism therapy, the transition from fee-for-service to value-based reimbursement models may not be possible — absent a merger or an acquisition to access a broader and more diverse patient population.
3. Value-based reimbursement requires sufficient economies of scale to invest in modern information technology (IT) infrastructure that can track, store, and report data to third-parties (and patients). We think that there is a strong preference for enterprise (i.e., “one-stop-shop”) strategies with respect to IT adoption. With an enterprise IT strategy, data is captured and updated in one place, improving data consistency and creating a single source of truth across various activities. This allows for improved collaboration and a more holistic view of patients. Moreover, a unified technology stack can facilitate the use of artificial intelligence (AI) applications and innovative care models, such as telehealth and parent-mediated therapy.
4. Autism therapy providers with “whole-person” care models can sometimes generate better clinical results in value-based arrangements. For years, managed care organizations have emphasized the importance of “whole-person care” to population health management. We are increasingly hearing the same argument for autism since individuals with autism often have co-occurring behavioral and medical conditions that, if not addressed, can lead to sub-optimal outcomes.

Bourne Partners is a leading healthcare-focused investment bank, with deep transaction experience and knowledge in healthcare services. Please contact our research team at research@bourne-partners.com or our healthcare services investment banking team’s Managing Director Aaron Olson at aolson@bourne-partners.com for more information.