Private equity firms are increasingly investing in services for young people with autism, intellectual and developmental disabilities with potentially troubling consequences, a new report warns.

The firms, which aim to maximize profits quickly, are buying up companies in all types of behavioral services, a field that has traditionally been left to nonprofits.

In addition to disability services, private equity is taking over programs catering to youth in foster care, the juvenile justice system and troubled teen programs, according to an analysis by the Private Equity Stakeholder Project, a nonprofit that works to shine a light on the industry.

The report includes a listing of more than 60 service providers — many of which operate in multiple states — that have been purchased by private equity firms since 2006.

Private equity has a track record of reducing staff, using unlicensed staff, providing inadequate training, low pay, overlooking maintenance and other cost-cutting measures that can lead to abuse and unsafe conditions, the report says, citing cases where youth were left in “horrific conditions” while private equity owners raked in profits.

For example, the Private Equity Stakeholder Project notes that Centerbridge Capital and the Vistria Group have taken in nearly $500 million in debt-funded dividends in just two years of owning The Mentor Network, which provides foster care as well as residential and community services to children and adults with intellectual and developmental disabilities. This comes even as the company — which as of September is now called Sevita — has faced “numerous allegations of widespread abuse, neglect, and deaths” over the last two decades.

“Private equity firms often aim to double or triple their investment over 4-7 years. The pursuit of these outsized return expectations over relatively short time horizons can lead to cost-cutting that hurts care,” the report states. “Limited regulation of youth behavioral services coupled with the private equity playbook of maximizing profit over short time horizons raises profound concerns about the increasing investment by private equity firms in the sector.”

Similar trends are now underway in the field of autism services, which has seen an uptick in private equity investing especially in applied behavior analysis providers since 2017, according to the report. In what’s believed to be the largest such sale, The Blackstone Group bought the Center for Autism and Related Disorders in 2018 for a reported $700 million.

“Because private equity investment in autism services is relatively new, little is known about what it means for quality of care,” the Private Equity Stakeholder Project found. “However, the profit-seeking tactics seen in private equity’s ownership of other behavioral health services, particularly in intellectual and developmental disability services, raises concern for how the business model will impact autism services.”

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