Your Primer to Healthcare Mergers and Acquisitions

7 Forces Are The Law Of The Land For I/DD Services

Mar 28, 2017

by Tom Schramski

By Tom Schramski, PhD, CM&AA

Volume 4 Issue 7, March 28, 2017

Last Friday, the first edition of Trumpcare bit the dust and Speaker of the House Paul Ryan called Obamacare the “law of the land.” The truth is that neither Obamacare nor Trumpcare rule the landscape of intellectual/development disabilities (I/DD). There are several unique factors in play that will shape the future and these forces will be critical in the new I/DD marketplace:

  1. Managed care organizations (MCOs) will continue to shape the I/DD marketplace. For the last two decades, I/DD providers have largely resisted efforts to bring their services under managed care administration. Recent mandated managed care coverage in multiple states means that it is only a matter of time before most states will have their services contracted in this manner. The impact on existing providers, especially smaller organizations, will be profound.
  2. Payers will require significant IT upgrades and adoption. I/DD providers are generally behind other healthcare providers in their technology infrastructure. This means that increased demands will be placed on I/DD organizations to upgrade their operational IT, as well as their technology interface with funding agencies that are expanding their data requirements.
  3. Providers will need to measure value-based outcomes. Over the past four decades there has been provider resistance to embracing a quantifiable measurement of outcomes in the I/DD population. There is increasing evidence that this will not be acceptable, especially in an MCO environment. Successful providers will define their own outcomes as a step toward anticipating that outcomes will be tied to reimbursement.
  4. Service innovation will accelerate. Many I/DD services are provided much as they were 30-40 years ago, especially in the residential support area. A younger, entrepreneurial generation of providers will offer more self-directed variations on the theme, such as host homes, and creative options to agency-focused in-home care.
  5. Service marketing will be transformed. Today, providers rarely market directly to individuals and families, because of Medicaid restrictions. The Trumpcare era will likely lead to a relaxing of these rules and allow providers to creatively market to their potential customers. Provider websites will facilitate more direct consumer-provider interaction.
  6. Consolidation will increase. Consolidation in the form of mergers and acquisitions will increase, especially in the nonprofit area. The evolution and requirements cited previously require that providers become more sophisticated in their operation, which means scale and financial agility, especially involving technology.
  7. I/DD executives will surf the new normal. Successful I/DD leaders will jump in the water, explore new possibilities and convert their learning into new service opportunities. We can expect more significant change than many I/DD leaders have seen in the past half century.

In his excellent blog Digital Tonto, Greg Satell recently wrote that “innovation seldom arises from what we already know, but is driven by discovering what we still need to learn.” The market turbulence is continuing with many new opportunities. Those willing to get on their boards and explore the waves will be the winners in a $100 billion market.

Tom Schramski

Tom Schramski PhD, CM&AA


Tom was the Founder and Managing Partner of VERTESS. He was a Certified Merger & Acquisition Advisor (CM&AA), consultant, and Licensed Psychologist with over 35 years of very successful national experience in the healthcare marketplace, including co-founding and building a $25 million behavioral health/disabilities services company. Tom represented sellers and investors across the healthcare spectrum and was recognized for his executive leadership in the 2005 Entrepreneur of the Year issue of Inc. Tom passed away in December 2018.

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