A new investigation from my colleague Erika Fry raises disturbing allegations against private equity-backed autism services facilities. The piece raises the question of whether these chains of clinics have placed growth and their bottom lines above the populations they are ultimately trying to help.

Fry’s investigation revolves around one private equity-backed clinic in particular: Hopebridge, which has scaled from just two locations in central Indiana a decade ago to 100+ locations employing nearly 5,000 people. Fry reviewed internal communication and spoke with 10 people—a mix of parents, employees, and former employees—in four different states who shared accounts of unethical and sometimes abusive behavior at Hopebridge centers. They allege undertrained staff and high turnover, a lack of transparency and accountability, and practices that prioritize profit over the needs and safety of young people with autism. “In all cases, they felt incidents were not properly addressed or investigated and were instead ignored or hidden by the company,” Fry writes in her piece. 

Hopebridge founder Kim Strunk told Fortune in a statement that “we take all reports seriously and have zero tolerance for any abuse.” She continued, “We understand that every question and concern comes from a place of deep caring. However, we were unable to substantiate any of the [claims] through two independent investigations into the allegations in Athens, Georgia.”

While Hopebridge is the focus of Fry’s piece, the grievances and allegations within the autism services industry span well beyond one company and raise questions over what is being sacrificed for the sake of scaling quickly. Relatively new state laws that mandate insurance coverage for treatment have made certain kinds of autism therapy more accessible—and profitable. There have been more than 200 deals in this sector since 2012, and private equity firms like Blackstone, KKR, TPG, and Cerberus have rushed into the space to capitalize on its potential for revenue, consolidating the landscape of fragmented providers and securing a major foothold in the industry. (Hopebridge is backed by a less well-known PE firm, Arsenal Capital Partners, which did not respond to requests for comment for the story.) One industry publication even likened the newfound interest ​​to that of “fan boys to the latest Star Wars release.” 

To be sure, some see this as a positive thing. Some therapists credit the influx of private capital with professionalizing what has long been a mom-and-pop industry, as well as making treatment available to more autistic patients. “It’s easier to start an ABA therapy clinic in most states than a nail salon,” says Sara Gershfeld Litvak, a veteran provider who founded the Behavioral Health Center of Excellence seven years ago to try to raise the bar on quality in the field. 

But critics detail pervasive profit-maximization. Here is an excerpt from the story:

“Jon Bailey, a professor of psychology at Florida State University who has written multiple ABA ethics textbooks, initially thought the influx of investment into his field was a good thing. But Bailey also runs a free ABA ethics hotline, and he says he now gets 10 to 20 questions a day, most of them from worried professionals asking about some concerning practice at an ABA company that’s been bought up by private equity—billing fraud, cuts to training and supervision, requiring therapists to provide more ABA than clinically necessary. In recent weeks, he’s heard from staffers working at investor-backed companies that have shut down services practically overnight, giving no warning to families. “It’s not a good situation,” he says, adding that what employees are being asked to do isn’t to improve quality but to boost “the bottom line.” 

To enhance profits, Bailey says, clinics are taking on too many clients, doubling up children on therapists, and overloading supervisors with cases. Lorri Unumb, the parent advocate who now serves as CEO of the Council of Autism Service Providers (CASP), remembers being dumbfounded when an industry investor boasted that his company hired a supervising therapist for every 40-50 patients (10-15 is the industry standard). Having been so involved in the advocacy that created the industry’s funding stream, Unumb now feels responsible to ensure quality in the industry. “These kids don’t get a do over,” she says. “You can’t just put a shoddy program out there and waste these children’s most important window to change the trajectory of their lives.” 

The varied readiness and competence of this workforce worries Erick Dubuque, director of the Autism Commission on Quality, a non-profit accreditation body for organizations offering ABA services. “We have a real serious issue with our training programs,” he told me, explaining that many programs get away with offering the “bare minimum,” despite the vulnerability of the population workers will be serving, because of high demand in the field. In a 2020 study, Dubuque and colleagues identified more than 20,000 additional providers that claim a BCBA credential but don’t actually have one. Individuals who work in the field and spoke with Fortune shared concerns about feeling ill-equipped for the job, which sometimes involves managing difficult situations where they might be kicked, hit, or bitten by a combative child. Others commented on a lack of professionalism among their colleagues, sharing stories in which therapists made fun of their clients’ autistic behaviors.”

Nearly all of the private equity activity in this space is focused on companies that specialize in Applied Behavior Analysis (ABA), a time-intensive therapy that teaches behaviors and skills, often through repetition and a system of reinforcements. It’s a profitable and popular therapy, yet a controversial intervention method, as some people say it can be ineffective and even harmful to autistic people. Many people in the autism treatment community question whether ABA has earned the industry’s embrace, writes Fry, when there are a whole array of other therapies and services to support autistic individuals and there is limited research on what is actually most effective.

“To think that one intervention is going to be best for everyone is insane,” Connie Kasari, a professor of education and psychology at UCLA who developed a play-based intervention called JASPER, and who serves as president of the International Society of Autism Research, told Fry. She is among those in the industry who question whether the industry’s current direction is being more “driven by money” than evidence.

You can read Erika Fry’s full investigation here.

A big shakeup at Carlyle… Late Sunday evening, Carlyle Group said that its CEO, Kewsong Lee, was suddenly stepping down from the company—effective immediately—ahead of his five-year contract expiring at the end of this year. Carlyle co-founder and former co-CEO Bill Conway, will serve as the interim CEO as a search committee looks for a permanent replacement. In an SEC filing from early this morning, Carlyle also said that Christopher Finn, the COO, has agreed to defer his retirement, which had previously been slated for the end of this year.

Please take note… Friday’s newsletter misstated the number of employees at autonomous building technology startup PassiveLogic. The correct number is 90.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Afresh, a San Francisco-based fresh food technology provider, raised $115 million in Series B funding. Spark Capital led the round and was joined by investors including Insight Partners, VMG Partners, Bright Pixel Capital, S2G Ventures senior executive partner Walter Robb, Maersk Growth, High Sage, and Innovation Endeavors. 

- Geopagos, a Montevideo, Uruguay-based payment acceptance infrastructure, raised $35 million in funding. Riverwood Capital led the round and was joined by Endeavor Catalyst. 

PRIVATE EQUITY

- Warburg Pincus agreed to invest $250 million in Montana Renewables, a Great Falls, Mont.-based renewable fuel business. 

- Affiliates of Antarctica Capital acquired a majority stake in Descartes Labs, a Santa Fe, N.M.-based geospatial analytics platform. Financial terms were not disclosed. 

- Convenient Brands, backed by Beekman Group, acquired Dealer Pay, a St. Louis, Mo.-based payment solutions provider. Financial terms were not disclosed. 

- Franklin Madison, backed by Mill Point, acquired SeQuel Response, an Eden Prairie, Minn.-based direct marketing agency. Financial terms were not disclosed.

- OMERS Private Equity agreed to acquire Pueblo Mechanical & Controls, a Phoenix-based mechanical services provider, from Huron Capital Partners. Financial terms were not disclosed.

EXITS

- MRI Software acquired ApartmentData.com, a Houston-based apartment market research and data surveys provider, from Salt Creek Capital. Financial terms were not disclosed.  

OTHER

- Amazon agreed to acquire iRobot, the Bedford, Mass.-based maker of the Roomba vacuum, for $1.65 billion. 

- Maersk agreed to acquire Martin Bencher, a Copenhagen-based project logistics company, for $61 million.

- Cryoport Systems acquired Cell Matters, a Liege, Belgium-based cell therapy company. Financial terms were not disclosed. 

- Employ acquired Lever, a San Francisco-based recruiting software company. Financial terms were not disclosed. 

FUNDS + FUNDS OF FUNDS

- Siguler Guff, a New York-based private markets investment firm, raised $1.97 billion for a fund focused on founder-led small businesses.