<aside> 💡 Last updated: August 2020

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Here are some potential moats that have come up in conversation, roughly ordered by their promise.

• Local network effects. With client and therapist density in a region, RBT matching can be more perfect (less drive time; more hours per therapist; lower wait-time for family).

  

• Power over insurers. As you get bigger, you have more power over insurers and can negotiate better rates. (For example, we’ve negotiated 40% higher rates with Cigna.)

• Switching costs. There are very high switching costs after your child has bonded with an RBT, you've gone through all the paperwork, done the assessments and treatment planning, had the BCBA team build trust with you and learn the nuances of your child's situation. You don't want to switch to a new provider and start everything over again.

• [...]

• Data and clinical rigor flywheel. Differentiated clinical outcomes → preferred payer distribution and relationships → more patients → more data to improve care and ops → Differentiated clinical outcomes [...]

  

• Monopolize supply of clinicians. If you corner market of best BCBAs, then you've aggregated a scarce supply source. This is a long-term defensibility.

• Operational complexity. New entrants face a barrier to entry from the difficulty of hiring and scaling a clinical operation of 1000's of RBTs/BCBAs and working with insurance.

  • Regulation. Regulation makes it difficult to start an insurance-credentialed ABA provider, and seems like it will increase over time as providers look to partner with more outcomes-driven providers.

• Brand. If you're known and trusted, it's hard for new entrants to unseat you.

• Payer, health system, and other relationships. If you're contracting directly with insurers or MCOs, that's hard to replicate.

  • Outcomes data. If you have strong RCTs showing better outcomes, that's costly and complicated for others to reproduce.
  • Provider referral relationships. When providers are referring to you, it's difficult to convince them to start referring to another organization.
  • School sales. If you do contract with schools, there's generally lock-in that prevents other solutions from getting in.

• Differentiated tech takes time to replicate. Software for ****internal ****operations ****and parents wraparound support takes time to replicate. Over time, you can invest in differentiated tech like interactive digital therapeutics (e.g. VR, apps) that are hard for others to provide.

  • Treatment data collection. With more data collected, you can design more effective treatment plans, including model-based suggestions.
  • Economies of scale. Creating software and business processes generally have good economies of scale — there's more impact-per-effort when you're big.

• Comprehensive care. If you pass a threshold in size, you can offer comprehensive ASD care, which is too complex for smaller providers.

• Community as a moat. With more community (local meetups, social skills groups, in-app community) and relationships, there are higher switching costs to abandoning those relationships.