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Posted: Mar 17, 2006 10:33

ELLIOT SAINER
Evolution Of Aspen & Parent-Choice Industry

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EVOLUTION OF ASPEN & PARENT-CHOICE INDUSTRY
Second Of A Two Part Series On Aspen Education Group

By: Lon Woodbury & Kathy Nussberger

In the final segment of this interview with Woodbury Reports, Inc. President, Lon Woodbury and Co-Editor, Kathy Nussberger, Elliot Sainer, CEO, Aspen Education Group, Cerritos, CA, discussed Aspen's strengths, management style, rapid growth, response and interpretation of threats to the industry, the future of educational consultants and the possibility of Aspen becoming a publicly traded company.

"First, I would say that our strength is our people which translates into good programs," Sainer said. "Second, we have fostered and maintained a culture of local management control, and at the same time provide our schools and programs with access to a lot of corporate resources that no single program could possibly provide. When you look at any one of our programs, you are not looking at a corporate entity where all look and feel the same; you are looking at an individual program." Sainer added that all of Aspen's programs are different physically, culturally and in some of the services they provide.

"Aspen's third strength is our financial stability. Not only are we able to purchase programs, but we are also able to put money back into our existing programs. We have never closed a program, but like everyone else in the industry we have experienced the natural ups and downs that occur within the life cycle of all programs. Aspen's financial structure allows us to withstand these downturns and support our programs through the occasional tough times. Single programs can and often do provide ongoing professional training for their staff, but I believe our resources allow us to provide this training more frequently and for larger numbers of staff. This allows us to learn from each other more than any single program could do on its own."

Aspen's management style is based on four guiding principles. "Those principles are service, youth and family, teamwork and growth. Everything we do, and how we operate our programs is centered on those four principles. Again, our programs are operated by local management. We emphasize customer service, not only for our referral sources and families but also our internal customers and our employees. We are dedicated to improving our customer service capabilities, which allows our families and referral sources to feel comfortable with the knowledge that they are getting a quality service and value from us."

As far as change in Aspen's management style, Sainer said he does not believe Aspen has changed that much except maybe to implement more program support systems. "I would say our management style has been fairly consistent over the years."

He added that he does not believe Aspen's growth has reduced the quality of services the company provides to children and families. "In some ways that's old news. People have been talking about Aspen's growth for years, but I do not put a lot of stock in it because at the end of the day, the real question is, are we helping families? Over the past three years, we've taken care of over 10,000 kids from every US state and 16 foreign countries, which would not have happened if people felt we were doing a lousy job. As most people in the industry know, our business is centered on helping one family at a time, as opposed to those programs operating under a public sector contract such as a juvenile justice contract. Parents have said that our size offers them a level of stability and comfort. Our size also permits us to improve our safety standards because we spend a lot of time, energy and resources on risk management, which is a tremendous asset to families and referral sources. Aspen's size allows us to spend time on important initiatives like best practices in the clinical and educational areas which only companies of scale can do."

As for the 15 programs Aspen has acquired since 2000, Sainer said all have benefited, some significantly, some subtly. "Stone Mountain and Copper Canyon for example, have undergone several significant physical improvements, while Island View and Oakley will benefit more subtly this year through improved information technology. We provide several benefits to the schools and programs within our direct network, including the availability of financial resources, human resource support, marketing, best practices, physical improvement, etc. If you get away from the generalities and look at the specific programs Aspen has purchased, every one has improved in some way. And many of these programs are continuing with the same leadership they had in place before they were purchased by Aspen. Of course, there are some programs that required a new leadership structure, but those decisions are solely based on what is best for the program. Another benefit to Aspen's growth is that it allows our staff a much greater opportunity for career mobility, both geographically and upwardly, which in turn allows us to retain our most important asset, our staff."

In respect to the major threats to the private, parent-choice industry of residential schools and programs, Lon Woodbury pointed out that he sees two main ones: "First, we have disgruntled ex-students who are trying to tear everyone down, and second, I see the possibility of state and federal regulations becoming oppressive or draconian."

Sainer agreed with Woodbury's assessment, but added that he sees a third threat to the industry. "You mentioned two of the three I was going to mention; however, I also believe there is a third, which is negative media attention. In response to these threats, Aspen is taking an active role with organizations like NATSAP and working with lobbying organizations in Washington DC, not only those with influence on the federal level, but also on the state level. Idaho is one example where we provided a lot of input on the establishment of regulations over outdoor programs because we would like to raise the bar, providing as you (Woodbury) say, it doesn't become draconian. Personally, I am not opposed to regulations. Aspen has also addressed the threat of negative media attention by attempting to increase our media presence over the past year. We feel it is important to provide accurate information to help shape a more positive story in the media, which also promotes a better understanding of the industry."

Sainer emphatically denied the rumors that Aspen is developing its own internal team of educational consultants and refers only to Aspen programs. "Aspen is not developing its own consultants internally, nor are we referring to only Aspen programs. We do provide some staff at several of our outdoor programs to help families with the next step, but those are families who come to us without a referral source and in many cases, do not want to use a third party referral source. We often refer families directly to members of the Independent Educational Consultants Association (IECA) because we recognize that some families require assistance that surpasses our capabilities and knowledge. Yes, some cases are referred to Aspen programs, but some are also referred to non-Aspen programs, and this will continue."

Sainer added that educational consultants have been and still are the largest single referral source at Aspen. "However, we also recognize that it is important to have other referral sources in place because consultants see only a fraction of the number of kids who need help. The demand far out strips what the current numbers of educational consultants who work with special needs students nationwide can handle, and some families do not want to use an outside source."

Woodbury asked whether Aspen is planning to become a publicly traded company in the near future, and Sainer said the company has no short-term plans to go public. "But even if we did become publicly traded, this is a non issue for two reasons: First, since incorporating as Aspen Education Group in 1998, we are used to operating in an environment of financially sophisticated investors who are very similar to those who would own public stock. Second, I see no inherent correlation that would indicate Aspen going public would translate into a reduced quality of services. Regardless of whether a program is publicly or privately owned; if you short change families on the quality of services you provide, you won't be in business for long. And we intend to continue well into the future."


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