Collaboration with Private Equity Firms ... Walk Toward the Light.

‘The only time you let the fox guard the hen house is when the hens have very long fangs and razor sharp talons.”

Steven Dunn

Readers of past articles may have noticed a “slight” disinclination to recognize any positive contributions of private equity firms in the eating disorder industry. Investigation revealed that PE Firms infiltrated the largest residential treatment centers, ignored the academic and not-for-profit foundations, created a financial rift within the industry, and are dictating policymaking and legislative aspects of the eating disorder industry exclusively for their financial benefit and to the detriment of others.

The problems and issues within the eating disorder industry and particularly, with the cabal of residential treatment centers which comprise the Residential Eating Disorder Consortium (“Consortium”) are substantive and run deep. Prior articles disclosed the less than stellar capacity for transparency and integrity exhibited by the Consortium. But even at this juncture, solutions and the ability to collaborate within the eating disorder industry and with the private equity firms are still possible and can be implemented for the purpose of saving lives.

Saving lives. Saving precious lives. Sometimes in the hustle of private equity firms taking over residential treatment centers, of seeking the greatest amount of profits, of taking advantage of incredibly intelligent yet naïve doctors, of building an empire of treatment centers, the harsh reality of this insidious disease is forgotten. Parents … mothers, fathers, gripped by the greatest fear a parent can possibly face, parents who would readily give up their own life to save the life of their beloved child, parents who live in a state of constant desperation turn to those residential treatment centers for even the smallest glimmer of … hope. Parents relying, praying, that the  representations made on slick websites translate into real life progress and defeating the monster which is trying to claim the life of their child. They entrust the most precious thing in the world to these treatment centers. As such, there is imposed upon those treatment centers, and those who own them, the highest duty of transparency, integrity, and honesty.

The slightest prevarication, exaggeration or withholding of information should be considered nothing more than an unconscionable taking advantage of those parents … and should be met with the highest degree of draconian retribution. And yet, even still there are solutions. And these solutions must be explored.

A Four Step Blueprint for Collaboration

Step One: Disclosure and Transparency

Eating disorders, as a disease are terrifying in part because so much of it is unknown. It lives in the murky shadows into which it drags our loved ones. It isolates our loved ones and takes them away from the love, the support, the light that could save their life. If faced with the certainty of illumination, of better understanding, we are better equipped to fight this disease.

For the vast majority of people, the only time they would hear about or even have knowledge of the existence of private equity firms in the eating disorder industry is if they could locate a very obscure, limited press release announcing the acquisition of a residential treatment center (“RTC”) by that firm. The websites of the RTCs do not mention the PE firm which owns them, in whole or in part. We are unaware of the influx of capital, or the inevitable, future financial burden placed upon those RTCs by PE firms… burdens which may dictate treatment decisions and protocol.

We are entrusting the lives of our children to you. Again, and read it slowly so there is no mistaking the message … We Are Entrusting The Lives of Our Children To You.

We have a right to know everything. You have a duty to disclose everything.

Thus, the first step of collaboration involves complete disclosure. Each RTC owned by a PE Firm should first be required to disclose the identity of the PE Firm, that PE Firm’s percentage ownership and the manner in which it is involved in the operations of the RTC. Does the PE Firm hold positions on the board of directors? How much capital was raised and dedicated to the RTC? What are the repayment obligations?

PE Firms may ask the reasons they should disclose this information. The response is … money drives treatment decisions. Whether it is our insurance benefit providers stopping or continuing payment for treatment, or our ability to private pay or a treatment center’s ability to train and employ counselors, dieticians or doctors, money drives treatment. If large bridge loans come due, or revolving credit lines, or senior secured first lien loans or delayed draw term loans, each loan in the tens or hundreds of millions of dollars, if sufficient capital is not raised or does not exist, patients will have to be cut loose, treatment centers could be forced to close, hundreds if not thousands of RTC employees will lose their jobs, bankruptcy could result … and our children could pay the ultimate price.

Step Two: Organization

The implementation of an organized system to permit this transparency is relatively simple to accomplish. The Consortium has been in existence since December 2011. Of their 26 members, 18 are owned in whole or in part, by PE Firms.

Accordingly, those 18 members organize a PE Firm Collaboration Committee as a subcommittee under the auspices of the Consortium. The Consortium already lists the following committees: Research Committee, Ethics Committee, Standards Committee, Policy Committee.

A Collaboration Committee would be a logical extension of one of its self-proclaimed missions, that is: “Collaborates across programs to support access to residential care.”

Each PE Firm would name one person to act as a liaison and serve on the Collaboration Committee. Their identities would be disclosed on the Consortium’s website.

Every year, in conjunction with the iaedp national conference, or the AED Conference, representatives from the Collaboration Committee agree to appear to discuss the industry. They are amenable to questions from attendees.

This type of participation and transparency brings the PE firms out of the shadows where they currently exist, and brings them into the clear light of day. Parents who entrust their children’s lives to the RTCs are able to obtain all material information they need in order to make the best decision regarding the care and treatment for their loved ones.

  

Step Three: The Consortium’s Participation

Naturally, this type of participation and involvement depends upon the approval of the Consortium. The Consortium as a group, presumably would have to agree to this type of collaboration.

They then would have to not only approach their respective PE Firms but then convince them that a Collaboration Committee is a viable, productive asset. The PE Firms would need to be convinced that this type of collaboration would not only benefit the PE firms and RTCs, but the parents and their children as well, both short term and long term.

In a telephonic communication with Jillian Lampert, the President of the Consortium, the initial idea of a collaboration with PE firms was broached. The specifics set forth in this article were not discussed. But, the idea of a collaboration was addressed. In response, Ms. Lampert stated that she would “bring it up at the next board meeting.” Parents, doctors, counselors, persons who are suffering from this insidious disease await the Consortium’s response or counter-ideas to implement a system of true, open, honest communication and greater awareness and involvement.

With the type of transparency a Collaboration Committee could bring to the eating disorder industry, to parents, to their children, and with so little demanded in terms of participation, the reasons why this type of interaction should not be implemented and embraced are mystifying.

Step Four: Financial Participation

Many people believe the most stirring line of John F. Kennedy’s inaugural address was, "Ask not what your country can do for you, ask what you can do for your country." The inspiration for Kennedy's famous observation can be found in Luke 12:48: "For unto whomsoever much is given, of him shall be much required."

So too, should we demand much from those who possess much especially if there is a way to address inequities in the eating disorder industry. The industry has turned its back on those living near the poverty line. No Consortium member accepts Medicare or Medicaid for full time residential treatment. At daily costs exceeding $1,000 per day, private pay for the vast majority of citizens is unreachable. There is an ever evolving system of “separate but equal” occurring in the eating disorder industry today. If you can afford health insurance whose policies contains sufficient provisions  providing payment at RTCs, and you can afford the co-pay requirements in most policies, then you can receive treatment in an RTC. If you cannot and since RTCs do not accept Medicaid, you must languish receiving no treatment and therefore increase the likelihood of dying.

To alleviate this gross disparity afflicting the eating disorder industry, and as part of being a responsible member and participant in the eating disorder industry, PE Firms could be required to donate one percent (1%) of the acquisition amount they pay for RTCs into a tax-exempt trust or 501(c)(3) foundation. The purpose of this contribution would be to help pay for treatment for those critically ill people who cannot afford treatment. A certain percentage of the contribution could be assigned to expand research into the biological causes of this insidious disease. A certain percentage of the contribution could be assigned to pursue progressive legislation designed to expand the scope of mental health treatment to all persons, not just those privileged enough to be able to afford it.

By way of example, CCMP Capital Advisors is on record paying $550 million to acquire the Eating Recovery Center in September 2017. One percent (1%) of this acquisition price would be $5,500,000. One can only imagine the incredible good for the public trust that could be accomplished with a monetary contribution not only from CCMP, but the other PE firms who have invested in the 18 members of the Consortium. Millions of dollars going to research, payment for treatment for the poor and disenfranchised, millions of dollars providing hope. One percent.

Conclusions

We are entrusting the lives of our children to RTCs. Again and again, read it slowly so there is no mistaking the message … We Are Entrusting The Lives of Our Children To You.

Collaboration of the kind set forth in this article results in transparency, honesty and integrity for the eating disorder industry. It results in improved public relations. It has the potential to bring together all parties, PE Firms, RTCs, doctors, counselors, parents and patients as one strong ally. It increases the likelihood of obtaining funding, grants, donations, gifts and bequests not only from federal and state parties.

Collaboration of the kind set forth in this article is also necessary since there is no federal legislation or regulations in place overseeing the eating disorder industry. State’s laws are inconsistent or non-existent. Collaboration of this type would result in greater assurance that corporate practice of medicine doctrines are being respected and complied with. Collaboration would also insure that consumer rights laws are being complied with so that the more outrageous promises and representations being made today become a tactic of by-gone days. Further, collaboration could result in greater consistency with insurance providers so that benefits become more uniform and predictable.

Are there any compelling reasons not to seek collaboration such as that presented herein? A need to have 100% instead of 99%? What substantive reasons exist for allowing the PE Firms to remain in the shadows, where only they and this insidious demon, eating disorders reside side by side?

We entrust the lives of our children to you.

And for those of us parents whose beloved children were ripped from this life as sacrifices at the altar of the wealth accumulated by the PE Firms and their RTCs, we have the absolute right to demand answers for the questions set forth in this article.

Collaboration … For the reason that we entrust the lives of our children to you.

Parting The Red Sea

At God's command, Moses held his staff out over the Red Sea, and throughout the night a strong east wind divided the sea, and the Israelites passed through with a wall of water on either side.

Exodus, 13:17 – 14:29 

In December 2011, The Residential Eating Disorder Consortium was formed ostensibly to serve as a professional association for residential eating disorder programs. This organization is now generally known as  REDC (pronounced, “Red Sea”). Since I generally do not speak, nor even like acronyms or initials substituting for words, I will refer to them simply as the “Consortium.”

The Consortium markets itself with: “Membership in REDC is reserved for residential eating disorder treatment programs offering residential eating disorders treatment that meets REDC established standards.”

Amongst other goals, the Consortium represents that it “Promotes quality standards for residential eating disorder care.” It further represents that it “Conducts research regarding the effectiveness of residential eating disorder treatment,” and that it “Collaborates across programs to support access to residential care.” All noble and yet very subjective. So let's examine the manner in which the Consortium accomplishes these noble goals.

There are 23 members listed as part of the Consortium. (26 if you include the three entities listed under the Monte Nido affiliated families.)

The Consortium’s officers are:

Officer	Name	Treatment Center	PE Firm
President	Jillian Lampert	The Emily Program	TT Capital Partners
Vice-President	Jen Gorman	Discovery Behavioral Healthcare	Webster Capital
Secretary	Lee Neagle	Aloria Health	ED Management, LLC
Treasurer	Hassan El-Yousef	Carolina House	CRC Health Group -Bain   Capital

As one can readily determine, all officers of the Consortium are employed by Residential Treatment Centers (“RTC”) owned by Private Equity Firms.

The Directors of the Consortium are:

Position	Name	Treatment Center	PE Firm
Director	Kim Dennis	Suncloud Health	?
Director	Chris Diamond	Sunspire Health	Kohlberg & Company
Director	Vicki Kroviak	None	Tresoro Group
Director	Sam Menaged	The Renfrew Center	None
Director	Dirk Miller	The Emily Program	TT Capital Partners
Director	Ken Weiner	ERC	CCMP Capital Partners

When one remembers the Red Sea's membership requirements, it is curious that Dr. Kim Dennis of Suncloud Health is included as part of the Consortium. Suncloud Health is a private, outpatient treatment program for men and women located in Northbrook, Illinois. What makes Dr. Dennis’ inclusion in the Consortium of curiosity is the fact that Suncloud Health advertises that it provides private outpatient treatment alone.

Another curiosity is that Ms. Vicki Kroviak of the Tresoro Group is listed as a Director. On its website, the Tresoro Group represents, “Tresoro Group serves a range of clients, including founder-owned companies seeking advice on the strategic, infrastructure, and personnel transformations they must make to scale their business or secure additional investment; larger health care companies who are considering strategic acquisitions; and investors looking for guidance as they explore investment in the behavioral health care space.” It would appear as if the Tresoro Group is not even in the eating disorder industry but instead, focuses on private equity investments.

The Tresoro Group lists three (3) peer reviews on its website. One is from Jeffrey Bartoli, Managing Director of Centre Partners, a private equity firm. The second review is from Dan Davidson, a Managing Director at Coker Capital Group, another private equity firm. The third peer review … is from the President of the Consortium, Ms. Jillian Lampert. Ms. Lampert’s review in part read as follows: “Vicki emboldens and empowers people to make the right decision. She also has a keen ability to see a path through a messy, complicated situation. Then she builds buy-in, anticipates pitfalls, navigates through any resistance, and keeps the ship sailing on the right course.”

Still another curiosity is that Mr. Chase Bannister of Bannister Consultancy is listed on the Consortium's Ethics Committee. On the Bannister Consultancy website, it represents that,  “Bannister Consultancy, LLC is an independent consulting practice, providing thought-leadership for healthcare strategy & civic engagement. The primary mission of Bannister Consultancy is to catalyze advancement in healthcare policy, legislation, research funding and advocacy efforts in order to maximize access-to-care.” Mr. Bannister has been a tireless champion in the eating disorder industry for a number of years. Mr. Bannister is also not a residential treatment center.

A very nice photograph of Mr. Bannister and Ms. Lampert, the President of the Consortium appears on the front page of the Bannister Consultancy website.

They are also both listed as officers of the Eating Disorder Coalition. The significance of the Eating Disorders Coalition is addressed further in this article.

Ms. Lampert and Mr. Bannister are also both members of, and are pictured standing side-by-side at the first meeting of the Weight Stigma Stakeholders Group in 2013. 

In March 2018, they co-presented at the Binge Eating Disorder Conference on weight bias and stigma and the impact on public policy and clinical care. 

In November of 2017, they made the presentation, “Gathering for Good: A Town Hall Event with the Eating Disorders Coalition for Research, Policy & Action” at the Binge Eating Disorder National Conference. 

In April 2018, they conducted a town hall meeting in Chicago at the Annual International Conference on Eating Disorders hosted by the Academy for Eating Disorders. 

In 2015, at the Iaedep Symposium, they presented, “The Bold & the Beneficent: Integrity of Care for Young People with Eating Disorders and its Intersection with Obesity.

Nonetheless, Mr. Bannister does not meet the Consortium’s membership guidelines. And yet, he is on the Consortium’s Ethics Committee. According to the Consortium’s own guidelines, its membership is limited to residential treatment programs. Perhaps exceptions are made for those who work with its president on many different presentations or work in private equity.

Misrepresentations regarding the Consortium’s “partnerships”

Of even greater concern is another misrepresentation, and ramifications of that misrepresentation, made by the Consortium on its website. The Consortium states:

The REDC Standards Committee has also been working with the AED Credentialing Task Force  to partner with an accreditation agency to implement the AED Credentialing Task Force CLINICAL PRACTICE RECOMMENDATIONS FOR RESIDENTIAL AND INPATIENT EATING DISORDER TREATMENT.

[emphasis added] The issue? When you click on the hyperlink for the AED Credentialing Task Force on the Consortium's website, it takes you to the AED website and a specific page which states, “Page Not Found.” When asked, a high-ranking official at AED stated that the AED Credentialing Task Force is no longer in existence and was not doing any work with the Consortium.

And yet, the arrogance of the misrepresentation goes far deeper. The overwhelming majority of the research into the “Working Draft of the Clinical Practice Recommendations for Residential and Inpatient Eating Disorder Programs” (“Working Draft”) was performed between 2004 and 2011. Those dates are significant because the Consortium was not even in existence during that time! The Working Draft was issued in early 2012. The Consortium was not even organized until December 2011.

The Working Draft mentions collaborating with the National Eating Disorder Association (NEDA) in 2004 and later with the International Association of Eating Disorder Professionals (IAEDP). Nowhere does the Working Draft even mention the Consortium. The Working Draft also states, “The clinical practice recommendations are the product of a 2006 stakeholders meeting and three work groups that met from 2005-2006.” The Consortium is comprised of clinical practice treatment centers. And yet, the recommendations were made five (5) years before the Consortium came into existence and well before any of the Consortium members were acquired by their PE Firm Overlords and Masters.

The Consortium had nothing to do with the Working Draft. But, the final arrogant “piece de resistance,”  is that the Consortium took the Working Draft, embedded it on their website and labeled it not as a draft but as a final product when the document on its face states it is a “working draft.” Further, the Consortium uploaded it to their website in 2016, long after the AED Credential Task Force had disbanded.

There is no credible spinning of this insidious and reprehensible misrepresentation that could bring enlightenment and integrity to the Consortium. However, let’s pursue other instances of their unethical or amoral conduct.

Other Questionable Representations

Investigation into other representations made by the Consortium raise additional questions and concerns.

In representations to various agencies of the federal government, the Consortium represents that they have more than a monopolistic control over the eating disorder industry.

In an August 10, 2017 letter addressed to the Office of the Assistant Secretary for Planning  and Evaluation (“APSE”), the principal advisor to the Secretary of the U.S. Department of Health and Human Services, Ms. Lampert stated, “The REDC is a consortium of providers of eating disorder treatment, representing approximately 90% of the residential eating disorder treatment provided in the United States.”

In a March 6, 2018 letter addressed to the Office of Regulations and Interpretations of the Employee Benefits Security Administration, Ms. Lampert represented, “The REDC is a national trade association of eating disorder treatment centers, representing approximately 80 percent of the intermediate levels of care for eating disorders provided in the United States including residential, partial hospitalization, day program and intensive outpatient treatment.”

Prior thereto, in a March 6, 2016 press release issued on behalf of The Emily Program, Ms. Lampert represented, “One such group is the Residential Eating Disorders Consortium (REDC), which represents 85 percent of the centers and is proud to be leading the way in raising the bar for quality residential eating disorder treatment..”

The Inaccuracy of the Representations

With repeated representations of such a very high percentage, and the power that comes with it, one would understandably be inclined to review the raw data to determine if the numbers are remotely accurate.

When one considers the number of Consortium treatment centers listed as 26, using this number would translate to there are only approximately 6 other RTCs in the United States which are not members of the Consortium. And yet, we know this number, 6, is not remotely accurate.

If the representations made by the Consortium are meant to pertain to each individual outpost owned by the 26 members (a representation that may be regarded as deceptive since not every outpost includes residential treatment, nor are all outposts certified) that would mean of the approximate 75 treatment centers, using the lowest percentage represented by the Consortium would translate to 60 centers as belonging to the Consortium and only 15 which are not. And yet, we know this number to also be grossly inaccurate.

There are a number of residential treatment programs which accept federally funded payment programs and yet, are not welcomed as members of the Consortium. In fact, this “non-journalist” readily discovered 14 residential treatment centers which are not members of the Consortium. Other entities not listed and which are not included as part of the Consortium include:

1.           Children’s Medical Center of Texas (Plano);

2.           Stanford University Medical Center;

3.           University of Chicago Eating Disorder Program;

4.           UC at San Francisco Eating Disorder Program;

5.            Selah House at Indiana University;

6.            Avalon Hills;

7.            University of California at San Diego

If you include outpatient treatment programs such as Shoreline Eating Disorder Program and the Duke University Eating Disorder Program as well as all university related programs treating eating disorders on an outpatient basis, all of whom are not members of the Consortium, the integrity of the Consortium's represented numbers is exposed as being highly questionable. 

In fact, one can rightly question why no academic or university based residential treatment centers are included as members of the Consortium. Membership in the Consortium has already been exposed as being flexible. And yet, the most brilliant minds in the medical industry toil at these centers but are not welcome by the Consortium?

In short, even the most cursory research indicates the numbers represented by the Consortium are grossly inflated. When these grossly inflated numbers are presented to federal agencies, the ramifications of such false representations are potentially draconian and damaging to not just the eating disorder industry, but to all who suffer from this disease.

Further, if representations regarding the participation percentage in the eating disorder industry are grossly inflated, the alleged affiliation with an entity that does not exist, and membership requirements in the Consortium are routinely ignored, one can rightfully speculate as to what other representations are grossly inaccurate and the purposes behind such misrepresentations.

Even still, the Consortium’s influence and infiltration into the eating disorder industry extends further.

Eating Disorders Coalition

Founded in 2000, the Eating Disorders Coalition was formed to advance the recognition of eating disorders as a public health priority by purportedly building relationships with Congress, federal agencies as well as national and local organizations dedicated to health issues. It is the liaison with state and federal agencies, administrators, lobbyists and legislators

Its 2017 – 2018 officers are :

President – Bryn Austin – President-Elect, Academy for Eating Disorders

Vice President – Chase Bannister – Bannister Consultancy

Treasurer – Jillian Lampert – The Emily Program

Secretary – Millie Plotkin – Eating Recovery Center

Two of the four positions are held by RTCs owned in whole or in part by PE owned RTCs, The Emily Program and the Eating Recovery Center. The other position is not surprisingly held by Mr. Bannister, the confidante and close ally of Ms. Lampert.

With PE owned RTCs having control over the ED Coalition, one cannot help but speculate as to which entities set the agenda and legislative priorities for the ED Coalition and the eating disorder industry in general. One can also speculate that legislation which could help the eating disorder industry, the academic community and the disenfranchised as a whole is not being pursued since it would have the potential to financially harm the PE firms. If their past history is any indication, we also know that whatever representations the Consortium makes concerning legislative agendas can and should be met with a great deal of skepticism

Ramifications

The Consortium has taken over and is monopolizing the eating disorder industry. Private equity owned RTCs have proliferated and are now deeply imbedded in every aspect of the eating disorder industry save and except for the academic and research entities.

The Consortium currently has the ability to dictate the types of legislation proposed, the number of patients seen and treated (through expansion of treatment centers or abandoning patients in IOP programs) the non-enforcement of corporate practice of medicine doctrines, the exclusion of all government funded payment plans and the direction and course of the industry. There is little to no federal oversight and state-by-state involvement is sporadic, inconsistent or non-existent. The Consortium has the liberty, or arrogance, of believing it can make any representations and statements without fear of exposure.

The Consortium does not even reference the objective, third party research studies indicating family based, outpatient therapy as being the most effective treatment module for treating this insidious disease. These scientific based studies would drown the Consortium and those PE owned RTCs  in the Consortium much as the pursuing Pharaoh and his charioteers were drowned when God withheld his mighty hand and the Red Sea swallowed them whole.

The problems and issues within the Consortium are substantive and run deep. But even now, solutions and the ability to work with the eating disorder industry and private equity firms are still possible and can be implemented for the purpose of saving lives … and these proposals will be presented in the next article.