Merakey USA, a large Montco-based human services provider, is expanding with Ohio acquisition

Merakey USA, based in Lafayette Hill, is acquiring Boundless, an Ohio nonprofit that provides services for people with intellectual and developmental disabilities and behavioral health needs, in a deal that leaders of both organizations described this week as a model for their industry.

“It’s the marriage of two financially stable organizations” that are preparing for turbulence in the human services sector, said Merakey CEO Joseph S. Martz. More typically human services deals happen because one nonprofit needs a financial rescue, as happened with Philadelphia’s Resources for Human Development in 2024.

Merakey and Boundless planned to announce the news Thursday.

Martz and the CEO of Boundless, Patrick Maynard, both said the size of the combined organization — more than $1 billion in revenue — would enable it to invest in the systems, technology, training, and workforce development needed to be financially sustainable.

The deal, expected to close in July, will create an organization that supports 50,000 individuals and families annually in 12 states and employs 11,000 people.

The executives cited pressures from an expected change in how their organizations get paid. A shift is underway to payment for results rather than for straight volumes of services. Looming cuts to Medicaid over the next decade are also forcing human services providers to rethink how they operate.

“We’re entering a time when resources are going to be a lot tighter, and I think organizations need to be thinking differently about how they approach that. We’re seeing some other pretty large consolidations,” said Chuck Ingoglia, CEO of the National Council for Mental Wellbeing, a Washington nonprofit advocacy group.

Stacy DiStefano, CEO of Consulting for Human Services, a Philadelphia-based adviser firm, introduced Martz and Maynard to each other in July 2024.

That led to a series of conversations about issues the two organizations were spending money to solve and the realization: “Why don’t we just come together and use the combined resources of our organizations to solve that problem,” Martz said.

Merakey and Boundless had already been growing through acquisitions, though Boundless has grown more dramatically. In the last seven years, the nonprofit made five acquisitions that helped increase its annual revenue to an expected $200 million this year from $20 million, Maynard said.

“My goal was to create sustainability in a broken system where most of us are living off of Medicaid, which comes nowhere close to providing the resources that cover the costs,” Maynard said.

The added scale enabled Boundless to add healthcare and dentistry for its clients, but the Medicaid shortfall for those dental services is $75,000 a month, Maynard said. That kept Maynard looking for even bigger partners, like Merakey.

Maynard cited Merakey’s expenditure of $18 million for Workday software, a system for human resources and financial management as an example of something Boundless could never afford. At $200 million in annual revenue, Boundless struggled to spend $2 million on a system for electronic health records, he said.

Merakey, which started as the Northwest Center in the Mount Airy section of Philadelphia in 1969, remains firmly rooted in Pennsylvania. The state is expected to account for more than half its $850 million in revenue for the fiscal year that ends this month, Martz said.

In 2023, Merakey and Elwyn, a similar nonprofit based in Delaware County, announced a preliminary merger agreement, but a final deal did not happen.

States where Merakey operates include Indiana, Kentucky, Ohio, Michigan, and Wisconsin. A new division called Boundless Midwest, led by Maynard, will assume responsibility for Merakey’s operations in that region when the deal is done.

Both boards have approved the transaction, which remains under review by the Ohio Attorney General.

Martz said he expect Boundless to continue growing though acquisitions and the development of new programs with the support of Merakey.

“We are going to be a big organization, but it’s really about being a better organization, about the quality of care that we provide,” Martz said. “If you’re not culturally aligned, bigger for bigger sake, just doesn’t make any sense to me.”