A joint venture between two Missouri-based health care nonprofits resulted in a new parent company that officials call a “juggernaut of an organization.”
The board of directors for Burrell Behavioral Health and Preferred Family Healthcare Inc. in December finalized documents establishing Brightli as the parent company. Burrell officials said no money changed hands as part of the partnership deal, which went into effect Jan. 1.
Burrell and Kirksville-based PFH employ roughly 4,600 people combined, providing behavioral and primary health, substance-use treatment and dental assistance, among other services. Fiscal 2021 revenue for Burrell was $167 million, while PFH’s total was $137 million, according to officials.
“We’ll identify as one of, if not the largest, nonprofit behavioral health centers in the country, spanning five states,” said Burrell President and CEO C.J. Davis. “Combining the organizations gave us a geographic footprint that really allows for flexibility and agility.”
Both Burrell and PFH continue to operate under their existing names and structures. Davis serves as CEO of Brightli, with PFH President and CEO Mike Schwend as the parent organization’s president.
Officials say the Brightli name will only be used in advocacy and business endeavors affecting both systems, not in existing brand marketing. It will operate under a combined board of directors, with Springfield Police Chief Paul Williams serving as the first chair of the board.
“The parent company is not going to be a service provider, although down the road it could be. Maybe with some collaborative endeavors that we have together, we may post the Brightli name on the outside,” Davis said, adding some Burrell or PFH clinics might eventually take on the name. “We’re just organically and naturally letting those things happen as we encounter the opportunity.”
Schwend said clients of Burrell and PFH won’t see anything different in the services they receive.
“We’re hopeful that in those communities where we’re co-located that Burrell clients will get the benefit of having PFH services that Burrell doesn’t already provide and vice versa,” he said.
According to a service provider map, Bolivar and Springfield are the only areas currently served by both organizations.
Both Schwend and Davis believe their organizations can better serve clients together by offering a more comprehensive group of services. For example, Schwend points to Burrell partnering last year with PFH on a Columbia clinic, which operates as a federally qualified health center. PFH provides primary care services to Burrell clients. Davis said the partnership filled a gap in services.
Davis said discussions with PFH and Schwend, who he’s known professionally for most of his over 20-year career, began around 18 months ago.
“I knew he was innovative and creative and kind of a trailblazer, so I called him out of the blue, basically, and said, ‘Hey, what do you think about the possibility of us talking partnership and collaborating on some opportunities?’” Davis said.
The due diligence period began in March 2021. Part of that review involved Burrell looking into PFH’s past, which included firings of executives and criminal convictions of a former Arkansas state representative and Philadelphia political consultant in 2017 and 2018. The actions stemmed from a $4 million embezzlement scheme related to illegal political kickbacks involving the nonprofit in Arkansas. Several PFH executives, including former CEO Marilyn Nolan, Chief Operating Officer Bontiea Goss and her husband and Chief Financial Officer Tom Goss, were fired after they were implicated in the scheme. By October 2018, PFH ceased operations in Arkansas, and its assets and property in the state were acquired for an undisclosed amount by Hot Springs, Arkansas-based substance-abuse rehabilitation and behavioral health company Quapaw House Inc., according to past Springfield Business Journal reporting.
“That was certainly something from Burrell’s perspective that we wanted to ask the right questions and get a comfort level with. That didn’t add to the delay or the longer time period of due diligence,” Davis said. “At the end of the day, we had thousands and thousands of documents to review. We felt very comfortable with the leadership that was there.”
He added, “We really felt like this was a scenario where it was in the past and we felt comfortable with that staying in the past.”
Selecting Brightli as the name came from a process that had around 250 options, Davis said. The nonprofits wanted to capture what they were about collectively. Terms such as innovative, fearless and mission-committed came to mind.
“We really started to decide that what we’re about is ensuring that every human that we interact with and serve, we help them live their brightest life,” he said.
Burrell and PFH’s partnership add to a robust merger and acquisition market in the mental wellness landscape over the past several years, according to Pittsburgh-based advisory firm The Braff Group. The firm reported over 170 deals each year from 2018-2020. There were already 119 deals in the market by mid-2021, putting it on pace to surpass the 179 recorded in 2020, the most since the firm began tracking data in 2012.
“Behavioral health care is going through merger and acquisition opportunities as a pretty significant driver of strategy, especially when you look at ways to find like entities that can scale up together and win the recruiting war because recruiting is so difficult,” Davis said.
The partnership with PFH is the second transaction for Burrell to close in as many months.
The 45-year-old nonprofit finalized a merger in December with Independence-based Comprehensive Mental Health Services, founded in 1977. Terms were undisclosed of the agreement, for which CMHS kept its name and serves its existing eastern Jackson County territory as Burrell’s fourth regional service hub, according to past SBJ reporting.
PFH also was the result of a combination between two companies. The nonprofit was formed via a 2015 merger of Alternative Opportunities in Springfield and Preferred Family Healthcare in Kirksville.
Schwend said discussions to expand Brightli are already ongoing. Other unnamed providers and organizations intrigued by the partnership have approached them to see if a merger makes sense.
“The two organizations historically are always looking for ways to expand our mission,” Davis said, noting there’s room for growth in Illinois, Kansas and Oklahoma, which along with Missouri and Arkansas, comprise Brightli’s footprint. “That will be one of the byproducts and benefits of this joint venture.”
However, Schwend said the company is focused on the region it currently serves.
“Right now, we are not looking beyond the five states,” he said. “However, if an opportunity should arise, we would investigate it.”
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