Tom's Blog -- June, 2010
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An open letter to the executives of Bain Capital
 
 
 

This letter is being mailed to selected executives at Bain Capital as identified on the website of Bain Capital. It is simultaneously being published on our website at http://bit.ly/djLAul.  The text is identical in these locations. (Differences occur only in entry of links to various web pages, heading, salutation, closing and signature.)

Several years ago your company purchased the Aspen Education Group and placed it under the management of your subsidiary, CRC Health Group. In the interest of full disclosure of my bias, I acknowledge that I was surprised by the decision to place it under CRC Health management, as Aspen, at the time, appeared to have a better reputation among its potential constituencies than CRC Health. It seemed to me that move alone lessened the value of your newly purchased asset. You can learn my general views about Aspen and CRC Health Group by reading http://bit.ly/b7zJ9U, http://bit.ly/deFN66 , and http://bit.ly/an6qMa . Some of the criticisms of Aspen apply to events and conditions that were in place prior to the purchase. Some were created by CRC Health management.

Notwithstanding any intrinsic value of the real estate involved, the value of the asset you purchased depends upon the goodwill and consequential earning power of the asset. To damage the good will associated with the Aspen name is to damage the value of your investment.

In May 2010, Aspen/CRC abruptly announced that it would close the New Leaf of North Carolina School to replace it with a new Talisman School. See http://bit.ly/crhSqC What this announcement glosses over is that in taking this action CRC Health Group is walking out on the commitments made to the girls at New Leaf of North Carolina, their parents, and their referral sources. The apparent motivation was to expect Talisman to increase profits over what New Leaf of North Carolina was able to produce. It certainly could not have been out of concern for the children whose chance for a successful outcome was, at best, being seriously disrupted, the children to whom they had committed themselves to a year or more of service. If that were the intention, it was certainly shortsighted.

We understand closures when there are truly unsustainable losses, bankruptcies, natural disasters making buildings unusable, and the like. None of that applied here. When a company makes widgets and there are draconian cutbacks in staff and budget, people may get hurt but customers to whom the company made commitments are not being targeted for adverse consequences. People are not interchangeable commodities. This is a business where research tells us that quality and continuity of personal relationships are directly tied to results.

When a company serves emotionally fragile child clients and they suddenly close the program that is the lifeline for those clients, this is a totally different thing. That damages children, their families, and, consequently, the company’s reputation and good will.  

It is not obvious to me that Bain Capital is concerned about people. It does appear to be concerned about profits. The Aspen brand within CRC Health has long relied upon educational consultants as one key element of referral to keep these programs profitable. What competent, ethical educational consultant or other competent, ethical referring professional would take responsibility for referring to a company that would conduct itself as CRC Health has in this instance? The Aspen brand also relies upon parents doing web searches for keeping these programs profitable. What parent who truly understands what happened here would entrust a child to a program under control of CRC Health management?

If you think I am exaggerating or making this up, just watch your numbers on those programs over the next few months. I doubt that I have credibility with you currently. We both know that the numbers won’t lie, unless the books are cooked.  In particular, watch the numbers on the new Talisman School opening on the site of the corpse of New Leaf of North Carolina.  You might also look at the numbers on the remaining New Leaf school in Oregon that were expected to rise as a result of this action. We’ll see what happens.

One sad aspect of this is that some Aspen programs have very good teams in place. There is no guarantee here, but maybe Bain Capital could yet salvage its investment in the Aspen brand by removing them from CRC Health Group management, and going on record that Bain Capital will never permit future decisions of this kind to occur. That could be the beginning of the road back.

As a final word, I am not your enemy. My colleagues who are educational consultants are not your enemy. The Internet is not your enemy.  People such as myself and my colleagues, not to mention thousands of parents and children, will benefit from organizations like Bain Capital investing in responsibly run programming. I have seen evidence over a 40-year career that quality services delivered ethically will provide an investment return worthy of Bain Capital.  

                Tom Croke 

Review of Aspen Education Group

Aspen Marketing

Opening of Lake House Academy, serving population that was served by New Leaf of North Carolina

Return to Tom's Blog Index

Aspen's announcement about the closing of New Leaf of North Carolina

Feedback is invited. We will publish feedback in good taste, consistent with our standards.  Email FamilyLightResponse@yahoo.com

Disclaimer: No  program review, no matter how positive, is a blanket endorsement. No criticism is a blanket condemnation.  When we express our level of confidence in a school or program, that is our subjective opinion with which others might reasonably disagree.  When we assert something as fact, we have done our best to be accurate, but we cannot guarantee that all of our information is accurate and up to date. When we address compliance with our guidelines, you need to remember that these are only OUR guidelines -- not guidelines from an official source.  We have also set the bar very high, and do not expect any school or program to be in total compliance.  It is not appropriate to draw a conclusion of impropriety (or even failure to live up to conventional wisdom) from our lack of confidence in a school or program or from less than perfect conformity to our guidelines.  Some will say we expect too much. Readers are responsible for verifying accuracy of information supplied here prior to acting upon it. We are not responsible for inaccuracies.

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Last updated  June 19, 2010

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