Richard Chaifetz built his company and career in Chicago, but it's 300 miles southwest of here where he's a household name.
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.
But the proliferation of for-profit companies like ComPsych became a concern among psychiatrists and consumer advocates. They said the MBHO's cost-containment strategies and financial incentives to providers lowered access and quality of care for treatment of mental health issues and chemical dependency.
The American Medical Association has adopted policies since the mid-1990s to discourage mental health carve-outs.
As sentiment turned against managed mental health care, Chaifetz again was planning ahead. Substance abuse wasn't the only issue that interfered with workplace productivity. Employees needed child care, elder care, financial and legal advice. Businesses had a vested interest in providing programs that addressed these personal concerns that would otherwise distract employees, Chaifetz said.
And so his company morphed again.
Today, ComPsych is one of the largest providers of employee assistance programs, serving more than 13,000 organizations, from small businesses to Fortune 500 clients with thousands of employees. It has call centers around the world, including in China and England, staffed with lawyers, financial advisers and child care experts, as well as mental health professionals.
The centers field 8,000 to 10,000 calls a day, Chaifetz said. Fewer than 30 percent of the calls deal with depression and other serious mental health issues.
"We want to help people solve any kind of problem," Chaifetz said. "You need a plumber at 2 o'clock in the morning, we can find one. We help people plan funerals. We plan weddings. The services are pretty broad."
If an employee needs to see someone, ComPsych has a network of professionals who contract with the company to provide services. Some clients, such as Target Corp., have on-site professionals employed by ComPsych. It also has branched into providing human resources administration to companies.
ComPsych remains privately held, and it's unclear how much of the company Chaifetz owns. Public documents and media reports indicate he sold the company, or much of it, in 2006 to Summit Partners, a Boston-based private equity firm.
The Daily Deal, a mergers and acquisitions publication, reported March 8, 2006, that UBS investment bank was providing $110 million in financing to back Summit's acquisition. U.S. securities filings show several funds purchased ComPsych debt starting in 2006.
Chaifetz declined to discuss any transaction. Summit Partners did not return phone calls.
Chaifetz, born in 1953 in Brooklyn, N.Y., is the oldest of four children. His parents divorced when he was 13, and he didn't see much of his father. The family lived on Long Island, N.Y., on his mother's schoolteacher salary.
"They definitely had some struggles," said his wife, Jill. "I think he feels there was a lot lacking (in his childhood) and some pretty tough situations at times."
His mother sending him to the now-defunct Eastern Military Academy in Long Island "was probably one of the best things that ever happened to me," said Chaifetz, who has a slight New York accent.
He became more focused in school, he said, was a star lacrosse player and was one of two cadets from his class to receive appointments to the U.S. Military Academy at West Point, N.Y. But he had no interest in continuing his military education, especially during the Vietnam War, and declined the appointment. It turned out, he said, that because of a bad back, he would not have been able to go to West Point.
On the advice of his headmaster, he instead chose Saint Louis University, a Jesuit school. He majored in psychology and graduated in 1975. But Chaifetz said he was lucky to have finished; during his freshman year he didn't have enough money to pay tuition.
As a last resort, he went to visit the university's president, the Rev. Paul Reinert, and made a plea to stay.
Chaifetz promised that if Reinert allowed him to remain in school, he would not only repay his tuition but also give even more back to the university once he had established himself.
"Father Reinert told me he believed in me and allowed me to stay," he said.
Chaifetz told the story at the 2007 news conference announcing his $12 million gift. Reinert had died six years earlier.
"It just gave you goose bumps when you heard the story," said Jeff Fowler, a vice president at the university.
Chaifetz's generosity came as a surprise to the university; often, officials cultivate potential donors for years before receiving such a large gift. But Chaifetz had not made any previous donations there, nor had he visited the campus in years, he said.
After he told university officials in 2006 that he was interested in contributing to the new stadium, the university's president, the Rev. Lawrence Biondi, and another official came to Chicago to meet Chaifetz for lunch at the Capital Grille steakhouse downtown, where he dines regularly. They offered lower-level donation opportunities, but Chaifetz raised the stakes until he was in the $10 million to $12 million naming range.
"I think they thought we were kidding," Jill Chaifetz said. "Rich wanted to do something lasting, and the timing was right."
The spirit of giving
Chaifetz's largesse did not stop with Saint Louis University. That 2007 donation was the start of a very public philanthropy spree for the couple.
They donated $3 million in November 2007 to her alma mater, Miami University, in Ohio. The gift established a trading center at the business school, with computer terminals and stock market tickers that allow students to simulate financial trades. Their son, Ross, is a freshman at Miami.
In 2008, the couple endowed a curatorship at the Field Museum of Natural History. The amount of the endowment is not public, but in the museum's 2008 annual report the couple is listed among donors giving $1 million to $2 million.
Chaifetz had joined the museum's board of trustees in 2006 at the invitation of friend and fellow Lake Forest resident David Tolmie, who also is a trustee. He rubs shoulders on the board with high-profile business leaders such as John Rowe of Exelon Corp. and John Canning, co-founder of private equity firm Madison Dearborn Partners.
In making the endowment, Chaifetz also wanted to be involved in selecting the staff member who would benefit from it, said John McCarter, Field Museum president.
After several interviews, the Chaifetzes chose Shannon Hackett, head of the museum's bird division. Hackett was struck by how warm and casual the couple were during the interview in Chaifetz's office, which is decorated with Chinese art and a treadmill that, he said, he doesn't use as much as he once did.
"They were interested in what I did and why I did it," Hackett said. Rather than merely writing a check, "he wants to know what the things he's involved with are. I think it gives you a lot of insight about him."
He also has joined the boards at Miami's business school and at Saint Louis University, where he's a regular at Billikens games at Chaifetz Arena. On display is a bust of him made by a St. Louis artist. From his courtside seats, he sometimes paces the sidelines like a coach. After victories, he sprints across the court to shake players' hands.
"He walks in as if he's the owner," said Santacrose, who has attended a game with him. "He's slapping hands with security guards and talking to band members and cheerleaders."
Chaifetz relishes the recognition on the campus, where, as a student, he attended games for the free entertainment.
"The appreciation from the community has far exceeded my expectations," Chaifetz said. "It's gratifying."
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Richard Chaifetz, Chairman and CEO, ComPsych Corp.
Family: Lives in Lake Forest with his wife, Jill, who once worked for ComPsych. They have two children.
Education: Bachelor's degree in psychology from Saint Louis University; doctorate of psychology from the Illinois School of Professional Psychology.
Pastimes: Sports, movies, stock market.
Why he wants to own a pro sports franchise: "What makes life exciting is to do different things. I get bored easily."
On starting from scratch: "I always had to fend for myself. I knew when I started my business I had to make money. It made me stronger. I see what it's like when you have a fail-safe. I had none. It makes you a better person."
Jill on Richard: "He's got this energy, it's like contagious enthusiasm, that inspires people to work for him."
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