Richard Chaifetz, chairman and CEO, ComPsych Corp.
ComPsych CEO a psychologist by training who has listened to his head
Richard Chaifetz is CEO of ComPsych Corp., one of the largest providers of employee assistance programs, serving more than 13,000 organizations. (Alex Garcia / June 13, 2012)
ComPsych Corp., the company Chaifetz started in 1984, grew into a worldwide provider of employee assistance programs to corporations, governments and unions. But its founder kept a fairly low profile -- until Feb. 28, 2007.
That day, Chaifetz and his wife, Jill, announced they would make a $12 million donation toward a new basketball arena at Saint Louis University, his alma mater. The gift, one of the largest in the Catholic university's 194-year history, bought naming rights to the stadium.
Because of Chaifetz Arena, he's a more well-known name in St. Louis than in Chicago, his home for decades.
"Everybody knows me in St. Louis," Chaifetz, 58, said with a laugh in his office in the NBC Tower off Michigan Avenue.
Now, the trim, gray-haired Lake Forest resident has an ambition that's likely to vault him into an even wider spotlight: "My goal is to own a professional sports team over the next few years," he said.
It's not an empty boast. Chaifetz has been involved in at least one bid for an NBA team, according to people familiar with the deal. He also has set up an investment firm to help him explore ownership opportunities. Recent sale prices for NBA teams range from $275 million to $450 million.
"He's done a thorough job of understanding what it would take," said Mark Santacrose, a Chicago executive who Chaifetz recently hired to help manage his investment firm. "He's been involved in meetings at the (NBA) league level. We believe that he would be sought after as an owner."
Chaifetz is the classic example of an entrepreneurial success story. Self-reliant and competitive, he was motivated to better himself after watching his mother struggle to raise four children after a divorce. He grew ComPsych from a startup into an operation with an estimated $300 million in revenue.
The psychologist by training had no long-term inclination to treat patients.
"I always had business ambitions," said Chaifetz, the firm's chairman and chief executive. "I didn't just want to be a practitioner."
He also saw opportunity in the inefficiencies he noticed in the medical field. "Doctors, for the most part, have no business acumen at all," he said.
Chaifetz first opened outpatient centers where people could walk in and receive treatment for a variety of mental illnesses, such as anxiety and depression. He advertised on television to attract customers. His centers expanded to treat substance abuse problems, and provided drug and alcohol evaluations required for motorists to regain driving privileges after DUI convictions.
He hoped to franchise his centers nationally, but the rise of health maintenance organizations, or HMOs, and cuts in reimbursement rates starting in the late 1980s changed his mind.
"I saw the handwriting on the wall," he said. "Reimbursements were changing, and someone else was going to control where patients went."
Like any smart entrepreneur, Chaifetz adapted.
He started selling psychological services directly to employers, pitching his network of professional counselors to help treat mental health concerns and substance abuse problems. He charged a per-employee fee based on the size of the company's workforce.
ComPsych controlled costs by employing social workers, psychologists and other licensed counselors whose rates were much lower than psychiatrists'. Counseling also was available via phone, a lower-cost option than an in-person visit.
He won some large clients, including Chicago-based American National Can, which resulted in a regular revenue stream. ComPsych also received a boost from traditional insurance companies that might otherwise have been competitors. As costs rose, insurers saw savings in outsourcing mental health care. The phenomenon became known as "carving out" mental health care, and companies like ComPsych became known as managed behavioral health care organizations, or MBHOs.