Driving the Deal | Sector Spotlight: Transforming Autism Care with Dan Beuerlein & Kyle West

Welcome back, everybody. It's another edition of Driving the Deal. I'm Brian Fores, I have the Fager Square Group, and we're doing our second episode focused on behavioral, because that's been very busy. We have some really special guests today talking about autism care, and particularly our title will be transforming autism care. Our guests are Kyle West, CEO of Behavioral Framework, and also our recurring good friend Dan Berline. He's the managing director at Brentwood Capital Advisor's base in Nashville. All right, let's just jump in. So let's start off with the market. We've been talking about the market a lot, but what's going on, and is there any big changes you guys have been seeing? Sure, from a market standpoint, we still see an incredibly active and engaged investor base. Over the last five to ten years, it's been a bit of a roller coaster with ebbs and flows in the market. Obviously, ABA 1.0, ABA 2.0, and I think we're now itering that two and a half, if you will. But as far as the market, 25 was active, and 26 is certainly shaping up to be one of the more active years, I think, in recent history. We see it here at Brentwood. We obviously see it with our colleagues at other firms. The sizes and scale of opportunities that are coming to market are fairly varied. On the one end, you're now starting to see platforms that were early vintage ABA investments, some of which from 2019 and 2020 are starting to look for an opportunity to exit. And then you have a new cohort of providers that some of which didn't even exist in 2020-21 that were started during the pandemic that are now reaching scale that are attracting the attention of private equity investors. All right, so every time we do this day, we always kind of break it down some of the fun market dynamics. So let's start off with kind of demand side and access. So what have you all been seeing on the ground? I think behavioral frameworks are a really interesting place on the access side. We run a ABA side of our business, but we also run a diagnostic side of our business. So on access, we really went out to the market and started solving the access issue in the communities that we serve. That said, I hear from my colleagues in areas that don't have a pathways, don't have a behavioral framework, don't have a dedicated autism evaluation service that access the care is increasingly an issue with wait times starting at 18 months up to three years. And that's for a young child, typically the older children are completely left out. Yeah, and I think from the demand standpoint, the demand has never been the issue. Unfortunately, the demand is still there and the prevalence continues to increase from the investor's perspective. That hasn't changed from even the early days to today. I think when you talk about access as well, you've seen what used to be kind of an arms race for acquiring BCBAs through an acquisition model or poaching BCBAs from provider A into your network. Now what you see is what really enables scale is the ability for an organization to really home grow their BCBAs. Not only giving a career path for RBTs that want to expand their clinical capabilities, but that's where the investors are focused today is how do you supply the demand that's currently out there and how do you recruit and retain good talent. That's a great point. We certainly home grow a lot of our BCBAs. We also have a very active program of hiring first-time BCBAs or just pass the test BCBAs and integrating them into the organization and allowing them to start managing case loads, getting them trained out, getting them up to speed as well. That's great because that's been kind of a big evolution. I remember when we first started talking about this few years ago, obviously the labor pipe on flow rate was an issue and I keep hearing a lot of this new home grown plays and just really trying to bring up a generation therapist. Anything special that you guys are seeing in terms of addressing the next part of the labor issue is like, how do you solve for attrition? Is there a way to kind of lead people in early so that people who come their second year and they're like, "You know what? I can't do this." Second year would be great. I would love to have people coming after it's the second year. It's a lot of time. Six months. Just second month or maybe the second month. One of the things that we've done really successful is we've acknowledged that pretensions and issue in the industry and while we certainly do our best to improve it, it is what it is and you have to develop your organization and develop your labor strategies in a way that addresses the issue. Like I said, we have a great training program for BCBAs that are just out of school that maybe don't have that hands-on experience. We have career progressions for BTs to get them into the organization and hopefully get them into seeing your RBT type of position interested in becoming a BCBA. If you get a RBT straight out of high school or with a little bit of college, it's six years before they can even sit for the test. So the population needs access to care now and it's on us to provide that access to care. Care model evolution. ADA's obviously been the standard of care in the space and I think that's probably still true. But what are you seeing in terms of treatment models? I mean, is there some evolutions that are happening? I think a fairly new kind of evolution that you're starting to see is some focus on what the lower intensity care delivery models are out there. So you have DRBI, you have floor time and others that I think are starting to get some traction. I think the industry has certainly learned that we need to get better at identifying the unique dosage needs of each individual client versus using it. So you know, some of the one-size-fits-all approach. But I think over time that evolution is going to carry a theme of how do we get consistent quality outcomes in a quicker cadence with potentially lower intensity of hours? I mean, I'm going to say, I've been any more like a specific delineations along because you know, now obviously that kind of reclast AST to kind of tears on the continuum and you think that has affected the kind of clinical past a little bit? You know, I would say as investors, you know, as we represent clients or as investors are looking at opportunities, you wouldn't have seen this maybe three, four years ago. But now you're seeing where through the diligence process, the, you know, the acquires want to know how your acuity kind of stratifies itself within the patient population. So what's your percentage of level one, level two and level three, diagnosis, clients? If you're, if you're running a model or you're 90% level one, but yet you're still 30 to 40 hours of treatment, that is going to raise a red flag with a pair. And, but I think more importantly, and we talked about this on the panel today, is that every treatment plan is individualized for the client and clinic setting might not be the best for that client. Home base may be the best based on their individual needs. Intensity is going to vary based on their age and their acuity. So I think that is certainly there's been progress made in how we stratify the acuity level of the clients. And I think the payers are going to get more and more involved as we move forward. Good change up on that is, well, we see talk about the payer environment. You know, what we've seen, I think what we've talked about in the past is, you know, we'll get to a couple exceptions, but obviously payers in general haven't been focused on in terms of cutting rates, but they've definitely been thinking about it in terms of you am a lot. How's that, how's that conversation evolving? I mean, it sounds like, you know, you're talking about obvious red flags, but, you know, where, where are we in kind of the payer relationship dynamic? I think payers, particularly the utilization management teams at the payers are getting a lot more sophisticated and understanding what quality autism care looks like. And while we haven't standardized on, on outcomes globally, we've certainly standardized on treatment plans are actually reviewed now. And if you're at scale autism service provider and you don't have a strategy to deliver, you know, clinically excellent care and be able to document that in the way that the payers can understand and under feel like they're getting a good value for their investment in the claims that they were submitting. It's a big issue. So we see, or we have seen shorter authorization periods, more requests for documentation. And you just have to, as an organization, operationally be set up to deal with those sorts of constraints from the payers. And you've seen specific states come out with a, a particular rubric, you know, Indiana is one of the best case, you know, example, whether or where we're going, that's right. A lifetime max or, you know, a guideline of, you know, 30 hours per week, kind of as a general of thumb. A lot of that, and we talked about on the panel, a lot of that quote regulation is reactionary to a system that was completely allowed to run amok. But I think they're, you know, that's one of the initial states that have kind of set what we've made to consider a baseline. North Carolina has certainly followed up some recent legislation that'll also put some guardrails around it. Georgia is kind of leaning that direction as well. So, you know, I think a combination between the payers themselves, the commercial plans and the state Medicaid programs, depending on which is the dominant force in, in a particular state, you're going to see these guardrails put in place. At the end of the day, though, I think it's all still going to be driven toward the ultimate goal of ensuring that a treatment plan is individualized for an individual client. And as long as you as a provider are showing that you're doing that, I don't think you have anything to be worried about. That's right. I agree with you. I see a lot of these changes happening at the state level and the payer level as an opportunity for the providers that are doing things the right way. It's difficult to do things the right way. It's expensive to do things the right way. But for those of us that are set up to do things the right way and happen for a long time, it's a lot of business as usual. with a couple more check boxes to check. - Well, we talked about Indiana. So, perfect segue into kind of the regulatory and reimbursement environment. So, you know, Indiana's actually case, 'cause we dug out, and obviously we know that there was a big disparity compared to surrounding geography, so they were essentially gonna right size it for that. And we see that, you know, Medicaid. As soon as the Medicaid budget comes down to pressure, the Medicaid office is often like, okay, well, is there anything, and then the outlier payments out there, we can look at, you know, I'll pick up the phone and call it and Medicaid directors to be like, "Hey, what are you paying for X?" And then you're like, "What? 20% less, okay." - I think, you know, I think states like in a, like in a call in Nebraska and in Colorado, right? Let's put them out there. They, because of challenges recruiting providers to the state, either because of the Nebraska, there were just no providers, right? And in Colorado, the rate was too low, so providers weren't going there, or large platforms weren't going there. They incentivized the supply by providing an attractive rate. And of course, you know, market will follow the incentive, market did follow the incentive. And then once the supply is there, they then adjusted the rate. So I kind of call it the whipsaw effect, but you know, they adjust it too much and now the supply is retreating. - Well, and, you know, you're starting to see, you know, the whipsaw part is where, you know, Colorado cut rates folks left, and now they started raising it back again. So, yeah, but I think the main theme here, and I've used this term a little bit the last, you know, several months, median is now cooling average is good. You know, the initial thesis in 2018 through 22, you know, - Oh, yeah. - Go to those two C-rate states, you know, you can go down the list of providers that have done it. And if the incentive is set up that way, you cannot blame them for doing that. Now, you have to just understand that they're, that eventually the musical stop, and your model has to be built on, quote, a median rate. So, I think, I think looking forward, median is cool. That's a, I'll trademark that and just say, now median is cool. So, there we go. - Kyle is an executive. He knows how to kind of step through that, but as advisors, you and I often, when people are like, oh, yeah, we found this geography, it pays really well, you're like, we'll understand that, you know, for how long? - Yeah. - You got a model that Clifa, I want to go back to the workforce thing, you know, obviously it's evolved a lot, and I think that that's been positive. Are we getting to a good spot nationwide, or are we getting, are we solving kind of for workforce more in pockets based on, you know, like you said, some of the companies just focusing more on home growing talent. - The BCBA labor throughout the country is not adequate for the supply, it can current delivery methods. And I think as an industry, we have to get together and we need to look at the current delivery methods. Let me give you an example. When ABA started, and maybe 10 years ago, with larger providers, it would be, they would have a bunch of BCBAs basically working as independent contractors. And, you know, even if they were W2, they were managing a caseload, they were doing everything related to servicing those 10 children. As the industry is matured, we've put more supports around the BCBAs, we've put more structure in the organizations, we've invested in technology. But the BCBAs are still managing 10 clients. We have to get somewhere in the industry, either to double, triple, quadruple the supply of BCBAs, or what I think is more likely to happen, make the existing BCBAs more productive. And I think what's happening with technology, with AI, with co-pilots, with the ability to increase the productivity of the current workforce, will be in a better place to meet the demand without having to resort to something continuous, like printing war crimes in the BCBAs every year for the next two decades. - One of the areas that I'd be interested in, understand what you see in your markets, but in a lot of states, there's a requirement for caregiving or training as well. For every certain number of hours, provided for direct therapy, need to be educating the parents on how to implement that in the home. Some states have implemented minimum thresholds there, but I think there's, you're starting to see some markets actually incentivize and come up with codes to pay for a parent supervision in a group setting. When you have drop off and pick up times, that's about the only time you can get a parent to come into a clinic per se. And if you were able to do those trainings, where the BCBA didn't have to be one-on-one with parent and maybe do it in a group setting, that's an example of how the existing models, I think, can be tweaked and get creative around those to address what should be a pretty simple way to address a supply constrained delivery mark. - I can just about the evolution in the industry too. Like we're getting so much better at knowing and the therapy that we're delivering is effective that we're at a great point that we can do this without sacrificing the clinical quality. Because nobody wants to sacrifice the clinical quality as we start doing these sorts of things. - Perfect segue into kind of growth outlook. We always talk about that. So learn a lot of lessons along the way. When we talk about things like scalability and long-term growth, what do you think we are on this curve? We've talked about in the past, obviously finding a billion good organizations and then adding to that. We've talked about the challenges of, because in the entire behavioral universe, ABA and others, like a lot of them, it's almost like a religion, right? Everybody's, they're very much into the culture of their organization. So if you have a wealth of culture and you have another one and you try to smush them together, it's like if they're not completely aligned on the same religion, like look out, it's a bit of an integration challenge. But what else have we learned? Where do you think we are on kind of the scale question? We can probably as a better global market outlook on this. I can just speak from our personal experience and my personal experience with the acquisitions and integrations that we've done. We've set taking great care of our clients and our employees as the North Star. And then, surprisingly, like people are pretty adaptive if you're hitting those two things. Of course, there's things that we have to get aligned, KTO, payrolls, benefits, things like that, and it's never fun to do. But as long as you're taking care of your clients and your employees, this is an industry that attracts people who have devoted their life to helping other people. It's the greatest people I've ever worked with in my career. And they respond overwhelmingly positively to investing in the business and investing in the employees, investing in the clients to see that everyone's outcomes are better. Where the BCBAs are trained has a lot to do with the way they deliver care. And it's usually driven by, this is how I was taught to do it, not because I learned this through an evidence-based course. And the industry has coalesced that this is the way it should be done. It's usually based on, well, this is how we've always done it. And that's how my supervisor taught me to do it. Or I've found this style works well for me. So I'm gonna, as Mandy said, rinse and repeat client by client. To your point about the market consolidation is coming. It will come slowly as the market has matured. And again, this is still an immature market. But as it has evolved and has developed, you've had providers alongside their investors or even without outside capital, mom and pop providers that gravitate toward one type of the care delivery model. We're gonna be a clinic-based provider. Or we're gonna be an in-home provider. Or we're gonna provide care into the school systems. I think the consolidation is gonna be, sure you're gonna have some, some attrition of smaller sub-scale providers that A, can't keep up with the upcoming regulation or B, can't compete with the larger scale providers in their market. Those will be absorbed into existing providers. But I think where you're gonna see the biggest impact consolidation is the move toward a full continuum provider model that the payers would say they're demanding, but they have certainly prioritized it. And we'll show that, I think, over time. But they want a one-stop shop for their families. The families already want the one-stop shop for their kids. - But what does a full continuum provider look like? - You know, it's a combination of not just ABA. Can I, if my child needs PT or speech or OT, can they get that service in the same location? Or their internal diagnostic capabilities? Or what is the model of transitioning my child from the clinic setting into the school setting? And in some markets and some providers, you have overlap between that clinic-based provider that also provides coverage in the school, once they graduate toward a typical school setting. So I think the consolidation is likely gonna take the form of smaller, you know, regional players building out their care continuum organically through some of the organics. - Some of the agencies. - Some through some M&A. And then I think you'll start to see some pureplay providers. And you're already seeing it in some markets. Pureplay speech providers or OT providers being acquired by ABA providers. And then they add ABA on top of those existing service lines. So I think you're gonna see a general theme of broader, breath of services, full continuum providers, to build scale versus simply the old model was stamped out as many to know those as you can. Or, you know, enter as many news dates as you possibly can and crush the competition. That model just does not work. - That a lot of success of leading with the clinic and then building a home-based organization around the clinic, especially in our new markets. Both of our acquisitions were clinic-based providers that did very little or no home-based care. And for the families, it's great to have the option, you know, that they can transition out of the clinic when children have to go to school and they can still have the heavy therapy support in the evening. Some of our locations that we're able to do it, we also offer school-based services. So I agree with you down like being able to meet families where they are, how they want to receive the therapy has been incredibly useful for us as we continue to grow our business. All right, any final thoughts? All right, well, this has been fantastic. We have to see cover a lot of ground and market has been pretty busy. What do we think for the outlook? I think that's probably going to continue. What do you think? Yeah, we touched on it briefly at the start here, but 26 is active already. I think 27 is also going to be active, a combination of large strategics that are long in their whole period from their initial investors transitioning to a new equity fund. There's also a really interesting cohort of new providers that didn't exist until really after the pandemic and that were formed through some of that disruption. If you think back to 2023, that was a very disruptive period for the industry. You had three major bankruptcies, but then there were a lot of lessons learned from that period. There's a whole new generation of providers that have started up and have built their organizations using AI. They've built their organizations understanding what KPIs they need to be measuring themselves to. They've built their organizations to be able to scale in a lean way versus overburdening the company with too much either corporate overhead or too much technology spend or whatever it may be. The future is bright for the industry. The future is really bright for the younger providers, I think, that have had the privilege and the leisure of seeing some of the lessons learned from the past, taking those lessons and then making the industry better kind of one organization at a time. I agree and I'm incredibly optimistic about the future of both the favorite framework, but just the industry in general. I think you know to add on to your point, everyone is matured. It's become more sophisticated. Really in the past couple of years, I've noticed it in my organization and the other organizations that I talked to, really understanding what it means to be a quality provider, what it means to be operationally excellent, what it means to be successful in this industry. So I see a very, very optimistic 26-27 in bond for both the Hago framework and the industry overall. Thank you for that. Thank you both for joining us. Again, you've been listening to Kyle West, who's the CEO of Hago Framework and Dan Berline from Brentwood Capital Advisors. Thank you all for listening and look forward to hearing from you all. As usual, if you got this forwarded to you by somebody else, the best way to get on all the podcast train is subscribe to our LinkedIn page if you're not on our email distribution list. But thank you all for listening. We'll be back at you even listening to Drive in the Deal. Thanks. Copyright 2025 Farragut Sway Group all rights reserved. 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