Residential Intellectual and Developmental Disability Facilities (NAICS 623210)

A Histometrics industry primer for public- and private-market investors

1. Overview

This industry houses and supports adults and children with intellectual and developmental disabilities (IDD) — conditions such as autism, Down syndrome, cerebral palsy, and other cognitive or developmental impairments — in staffed residential settings rather than in their own family homes. The typical setting is a small group home of a handful of residents with round-the-clock direct-support staff; a shrinking minority live in larger, more medical Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IID). The U.S. Census Bureau counted roughly 35,600 such establishments employing about 546,000 people in 2023.[1]

Why it matters: this is a large, non-cyclical, government-funded human-services sector with structurally rising demand and a chronic supply shortage. Almost all revenue comes from Medicaid, the joint federal-state health program for low-income and disabled Americans.[8] That makes cash flows unusually stable and recession-resistant — but it also caps pricing, ties fortunes to state budgets, and invites political and regulatory risk. Demand vastly exceeds funded supply: more than half a million people with IDD sit on state waiting lists for community services, with average waits measured in years.[3]

Ways in. The public-market menu is thin and getting thinner — the one large listed proxy exited the business in 2026 (see Section 4). Real ownership is overwhelmingly private: private-equity-backed national operators, large regional nonprofits, and thousands of small owner-operated group homes, plus a declining number of state-run facilities. Private investors can also reach the theme through operating platforms, local providers, group-home real estate, private credit, or staffing and technology vendors.

2. What it is and how it is structured

Scope. NAICS (North American Industry Classification System) code 623210 covers establishments that provide residential care and habilitation for people with IDD — housing, room and board, protective supervision, help with daily living, counseling, and in some settings health care.[9] The two main formats:

• Community group homes / supported living — small homes (often 1–6 residents), plus host-home and shared-living arrangements, funded mostly through Medicaid Home- and Community-Based Services (HCBS) waivers. This is where the sector has moved.
• Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IID) — a federally defined, more institutional and medically staffed setting, paid a Medicaid per-diem. A legacy format in long-term decline.

What it excludes (adjacent NAICS codes). The classification is narrow. It does not include:

• 624120 — Services for the Elderly and Persons with Disabilities: non-residential supports such as day habilitation, vocational, and in-home personal care. A large share of IDD spending flows here, not into 623210.[9]
• 623220 — Residential Mental Health and Substance Abuse Facilities: psychiatric and addiction residential care.
• 623110 — Nursing (Skilled Nursing) Facilities and 623311 / 623312 — Continuing-Care Retirement Communities and Assisted-Living Facilities for the Elderly.
• 623990 — Other Residential Care Facilities and 621610 — Home Health Care Services (skilled care delivered in a person's own home).

The practical takeaway: 623210 captures only the residential-facility slice of a much larger IDD-services economy, and only the portion delivered by employer businesses (see Section 3).

Ownership mix. The ground-truth statistics do not provide a national ownership split, but three overlapping owner types dominate:

1. Nonprofits — the historical backbone. Bancroft, Benchmark Human Services, Hope Network, Mosaic, Resources for Human Development, and hundreds of local chapters of The Arc, Easterseals, and United Cerebral Palsy.[4][19][20]
2. For-profits, increasingly private-equity-backed — led by Sevita (the former MENTOR Network) and Dungarvin, alongside operators such as RHA Health Services, plus thousands of small owner-run homes.[5][6][18]
3. Government — state- and county-operated developmental centers and ICFs, a shrinking share as states deinstitutionalize.

3. How big it is

Federal statistics for NAICS 623210:

A few things stand out. Average payroll per employee works out to roughly $40,000 a year — low, and consistent with a workforce built on hourly direct-support staff (the Bureau of Labor Statistics, BLS, reports a median wage near $36,400 for aides in this setting, and frontline caregiver pay is often lower still; see Section 5).[1][17] The average firm runs about five establishments, and the average home has roughly 15 employees[1][2] — a fragmented cottage industry of small operators, confirmed by the concentration ratios: the four largest firms hold just 13.1% of revenue, and even the top 50 hold under 30%.[2] The federal Herfindahl-Hirschman Index (HHI), a standard concentration measure, is suppressed in the source data, so we do not report it.[2]

Note the vintage mismatch: receipts and concentration are 2022 (Economic Census), while payroll and employment are 2023 (County Business Patterns), so the two blocks are not perfectly comparable.

The undercount caveat (important here). The $37.8 billion receipts figure materially understates total public spending on residential IDD supports, for three reasons. First, County Business Patterns (CBP) and the Economic Census cover employer businesses (including nonprofits) but generally exclude government-operated establishments — so state-run developmental centers and county group homes are largely not in these totals.[5] Second, tiny family-care, adult-foster, and host-home arrangements with no paid employees fall outside employer statistics. Third, and largest, most IDD services are non-residential (day programs, in-home personal care) and sit in other NAICS codes. For scale: Medicaid provides long-term services to about 729,000 people with IDD, and Medicaid spending on a single working-age adult with IDD averaged roughly $50,000 a year in 2021 — implying total public IDD long-term-care spending well into the tens of billions, far above this one residential line item.[8] Treat these figures as an employer-business baseline, not a complete measure of care activity.

4. The investable universe

Direct public-market exposure is scarce, and 2026 made it scarcer. There is no clean U.S.-listed pure-play residential IDD operator today.

Public companies.

The key event: BrightSpring sold its ResCare Community Living division — the pure IDD residential business — to Sevita for $835 million, closing March 31, 2026.[11][12] With that sale, the public markets lost their one large, near-pure-play residential IDD operator. Listed exposure is now indirect — through diversified home- and community-based-services and pharmacy companies, or through the Medicaid payers.

Major private and other owners.

5. How the money works

Owners in this industry earn money in a way closer to a staffed-real-estate business than to a health-tech or consumer company, and the arithmetic is unforgiving.

Revenue = funded slots × occupancy × reimbursement rate. A home earns a Medicaid HCBS residential rate (per day or per service unit) for each authorized resident, or an ICF/IID collects a per-diem. ICF/IID payments are typically a bundled rate that can include room and board; HCBS waiver payments generally exclude room and board, which is handled separately under state rules.[14] Because rent, utilities, and minimum staffing are largely fixed, an empty bed is pure margin lost — occupancy (census) is the single most important operating lever, exactly as it is for a hotel or a nursing home.[2]

Labor is the business. Direct Support Professionals (DSPs) — the hourly caregivers who staff homes around the clock — are the dominant cost, and payroll runs at roughly 70%+ of revenue in a typical operator (the industry's $21.8 billion payroll against $37.8 billion of receipts illustrates the ratio).[1][2] Wages are low: BLS reported a May 2024 median annual wage near $36,400 for home-health and personal-care aides in residential IDD facilities, and frontline DSP pay is often lower — a median around $14.50 an hour per industry surveys.[16][17] The core economic tension is the rate-to-wage gap: states set reimbursement, but operators must pay a competitive wage in a tight labor market. When the state rate lags wage inflation, margins compress immediately, and understaffing forces expensive overtime or temporary-agency labor.

The metrics owners and buyers actually watch:

• Occupancy / average census — utilization of funded capacity.
• Authorized versus delivered service hours, and revenue per resident-day or service unit.
• Reimbursement-rate adequacy — the rate versus the fully loaded cost of a compliant, staffed bed.
• DSP turnover and vacancy — the binding constraint on capacity and quality (see Section 9).
• Labor cost as a share of revenue and reliance on overtime/agency staffing.
• Incident rates, deficiencies, and corrective-action costs; collections and payer-authorization delays.
• Referral acceptance vs. turn-aways — a full pipeline is worthless if you cannot staff the beds.

Where scale and profit come from. Margins are thin (low-to-mid single digits is typical, and many operators are nonprofits running near break-even). For-profit and private-equity owners chase returns through consolidation — spreading fixed compliance, billing, and management overhead across more homes — plus real-estate ownership and, in some cases, financial engineering. Moody's has noted that Sevita's owners extracted roughly half a billion dollars in dividends since 2019 partly by loading the company with debt, a reminder that leverage, not operations, can drive equity returns in this model.[5]

6. What drives demand

Demand is structurally rising and largely disconnected from the economic cycle:

• Unmet need is enormous. KFF (formerly the Kaiser Family Foundation) counted more than 710,000 people on Medicaid HCBS waiting or interest lists in 2024; about 73% — over half a million people — have IDD, and their average wait was roughly 50 months. The lists are incomplete because states use different eligibility and reporting rules.[3]
• Aging family caregivers. Most people with IDD live with family; CMS estimates nearly one million U.S. households include an adult with IDD supported by an aging caregiver. As parents age and can no longer provide care, their adult children "age into" the residential system — a slow, demographic-driven wave of demand.[8][23]
• Rising prevalence. Autism and other developmental-disability diagnoses have climbed for two decades, expanding the eligible population.[8]
• Longer lifespans and higher acuity. People with IDD are living longer, and more complex medical and behavioral needs lengthen and intensify the support each person requires.[8]
• Deinstitutionalization. Policy has shifted care out of large institutions into community homes, redirecting demand squarely into 623210's group-home format (see Section 7).
• Workforce pipeline. BLS projects employment of home-health and personal-care aides to grow 17% from 2024 to 2034, with roughly 765,800 openings a year — evidence of demand, but also a warning about the wage and staffing pressure that gates supply.[17]

The crucial nuance for investors: demand is not the constraint — funding and workforce are. Growth here is gated by how many waiver slots states fund and how many workers operators can hire, not by how many people need care.

7. Regulation

This is a heavily regulated, government-defined industry; the rules effectively create the market.

• Medicaid (CMS). The Centers for Medicare & Medicaid Services (CMS) and state Medicaid agencies fund and govern nearly the entire sector. States set reimbursement rates, license facilities, define provider qualifications and capacity, and run the Section 1915(c) HCBS waivers that pay for community residential care.[14]
• Olmstead v. L.C. (1999). This Supreme Court decision, applying the Americans with Disabilities Act (ADA), held that unnecessary institutionalization of people with disabilities is discrimination and requires states to serve people in the "most integrated setting" appropriate to their needs. It is the legal engine of the shift from institutions to community homes.[14]
• HCBS Settings Rule. Finalized by CMS in 2014 with a compliance deadline that arrived in March 2023, this rule requires HCBS-funded settings to be genuinely community-integrated — private-home-like, with resident choice, privacy, and autonomy — and disqualifies isolating, institution-like settings from HCBS funding. It remains an ongoing compliance and capital burden.[15]
• ICF/IID standards. Federally certified ICFs must meet conditions of participation covering governance, client protections, active treatment, staffing, safety, and physical environment (42 CFR Part 483, Subpart I). Deficiencies can trigger sanctions or decertification.[22]
• 2024 Medicaid Access Final Rule. CMS added state-reporting requirements on direct-care worker compensation, waiting lists, service timeliness, incidents, and quality — raising transparency and, over time, the compliance bar for operators.[21]
• Licensing and civil oversight. States license homes, run quality surveys, require background checks and change-of-control approvals, and mandate abuse/neglect incident reporting — all of which materially affect asset value.
• Antitrust. Federal enforcers now scrutinize consolidation. In January 2026 the Federal Trade Commission (FTC) required Sevita to divest 128 ICFs (to Dungarvin) and accept a 10-year notification requirement before it would allow the ResCare acquisition — the first major antitrust intervention in this sector.[11]
• Labor law. Federal and state minimum-wage and overtime rules, plus state-specific DSP wage floors, feed directly into the cost base.

8. Competitive dynamics and consolidation

A fragmented industry consolidating from the top. With 7,336 firms and the four largest holding only 13.1% of revenue, this remains a cottage industry of small nonprofits and owner-operators.[2] Competition is local and relationship-driven; durable advantages include the ability to recruit and retain DSPs, strong relationships with state agencies and case managers, clean licensing and compliance records, dense geographic coverage, centralized back-office systems, and the capacity to serve medically or behaviorally complex residents. On top of that base, a private-equity-led roll-up wave has been rolling up operators for a decade — classic economics: acquire sub-scale homes, centralize billing/compliance/HR overhead, and build regional density.

The Sevita–ResCare deal is the landmark. Combining the two largest national operators, it drew a year-plus of federal antitrust review and a California market-impact assessment before closing in March 2026 with FTC-mandated divestitures of 128 ICFs to Dungarvin.[11][12] It signals that the easy, unscrutinized roll-up era is over: future large deals will face concentration review in the specific state and local markets where operators overlap — on quality and choice, not just national revenue share.

Why scale helps — and where it stops. Scale lowers per-home overhead and eases access to capital and real estate. But reimbursement is a hard ceiling: operators cannot raise prices to a fixed government payer, they compete for the same scarce workers everyone else needs, and differentiation is limited. That combination keeps returns modest and makes operational execution — staffing and occupancy — the real battleground. Consolidation is likely to continue, but selectively; this is unlikely to become a simple national roll-up.

9. Risks

• Reimbursement and Medicaid-budget risk (the dominant risk). With revenue almost entirely from Medicaid, any tightening of federal or state funding hits the top line directly. Providers have publicly braced for potential federal Medicaid reductions, which could squeeze already-thin rates and shrink funded capacity. Rates that lag wage, insurance, housing, and transportation costs compress margins with no pricing offset.[16]
• Workforce shortage. The DSP labor crisis is chronic and structural: national turnover hovers near 40% (and has been reported above 44%), vacancy rates exceed one in eight positions, and median DSP wages sit around $14.50 an hour. More than three-quarters of providers report turning away referrals for lack of staff — capping capacity and revenue growth regardless of demand.[16]
• Quality, safety, and reputational/legal risk. Serving a vulnerable population means abuse-and-neglect incidents, medication errors, survey deficiencies, and litigation are ever-present, and can lead to sanctions, decertification, payer termination, or loss of licensure. Private-equity ownership has drawn intense press and policymaker scrutiny on quality-versus-profit grounds.[5]
• Single-payer / concentration risk. Near-total dependence on one government payer — and often on a single state, waiver, or managed-care organization — concentrates political and budget risk in a way few industries face.
• Occupancy and authorization. Licensed capacity generates no revenue without eligible residents, authorized services, and enough staff to serve them.
• Leverage and interest rates. Private-equity operators carry substantial debt (in some cases raised to fund owner dividends), plus rent obligations and deferred maintenance, leaving them exposed to refinancing and rate risk.[5]
• Antitrust ceiling on the growth playbook. The FTC's 2026 intervention limits the roll-up strategy that has driven for-profit growth, at least in overlapping markets.[11]
• Data quality. Federal employer statistics understate government, nonprofit, nonemployer, and very-small-provider activity — a caution for anyone sizing the market from these figures alone.

10. How to invest and the outlook

Public-market routes. Options are limited and none is a pure play. Separate direct operating exposure from payer exposure. BrightSpring (Nasdaq: BTSG) offers broad exposure to Medicaid-funded home- and community-based services and institutional pharmacy — but, having sold ResCare Community Living in 2026, it is no longer a meaningful residential-IDD operator.[11] Addus HomeCare (Nasdaq: ADUS) provides adjacent personal-care exposure but runs no residential facilities. Medicaid managed-care insurers — Centene (CNC), Molina (MOH), Elevance (ELV) — give payer-side exposure to Medicaid reimbursement and network economics, not to facility operations.[24][25][26] An investor wanting the residential-IDD theme specifically will not find a clean listed vehicle today.

Private-market routes — where the industry actually lives. The genuine exposure is private: acquiring or co-investing in operating platforms and regional providers, owning the group-home real estate, private-credit lending to operators, or backing staffing and technology vendors — often alongside the private-equity sponsors active in the space (for example, The Vistria Group and Centerbridge Partners, owners of Sevita, or Blue Wolf Capital, backer of RHA).[5][18] Underwrite each state and service line separately: review licenses, waiver authorizations, payer contracts, staffing coverage and wage rates, incident history and deficiencies, collections, real-estate obligations, debt, and change-of-control requirements. The most useful growth measure is usually same-site census or delivered service hours, supplemented by new homes and authorized capacity — center diligence on the two things that make or break returns here (the state rate environment and the ability to staff homes), not on demand, which is abundant.

Near-term drivers to watch (forward-looking).

• Federal Medicaid policy is the swing factor. Proposed federal reductions would pressure state rates and could shrink funded capacity; conversely, continued state rate increases and DSP wage investments would relieve the margin squeeze.[16]
• DSP wages and labor supply will determine how much of the vast unmet demand can actually be served. This is the binding constraint, and it is unlikely to ease quickly.[16][17]
• Consolidation under antitrust watch. Expect continued roll-up activity, but slower and more scrutinized after the FTC's Sevita–ResCare precedent.[11]

Bottom line (judgment). The long-run demand case is about as durable as any in health care — hundreds of thousands of people waiting, an aging pool of family caregivers, and rising diagnosis rates. But this is a government-rate-taking, labor-constrained, thin-margin business, and the cleanest public proxy just left the field. For most public investors the opportunity is indirect at best; the real returns — and the real risks — sit with private operators, their sponsors, and the state legislatures that set the rates. The ground-truth data contain no national industry growth forecast, so none is supplied here.

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Sources

1. U.S. Census Bureau. County Business Patterns, NAICS 623210 (Residential Intellectual and Developmental Disability Facilities), 2023. (Establishments 35,559; employees 545,820; annual payroll $21.76 billion; Q1 payroll $5.27 billion.) https://www.census.gov/programs-surveys/cbp.html
2. U.S. Census Bureau. 2022 Economic Census — Concentration by Largest Firms, NAICS 623210, 2022. (Firms 7,336; receipts $37.8 billion; CR4 13.1%, CR8 16.4%, CR20 21.9%, CR50 29.2%; HHI suppressed.) https://www.census.gov/programs-surveys/economic-census.html
3. KFF. A Look at Waiting Lists for Medicaid Home- and Community-Based Services from 2016 to 2024, 2024. (Over 710,000 on HCBS waiting/interest lists; ~73% have IDD; average wait ~50 months.) https://www.kff.org/medicaid/a-look-at-waiting-lists-for-medicaid-home-and-community-based-services-from-2016-to-2024/
4. PESP / Dignity Alliance. Private Equity in Intellectual and Developmental Disability Services, 2025. (Nonprofit and for-profit provider landscape.) https://pestakeholder.org/reports/private-equity-in-intellectual-and-developmental-disability-services/
5. Stateline / The American Prospect / S&P Global (via PESP). Private equity in disability services; Sevita ownership, revenue, and leverage, 2025. (Sevita ~$3B revenue, ~41,000 staff, ~50,000 served, 40 states; Centerbridge and Vistria ownership; dividend recapitalizations; CBP excludes government establishments.) https://stateline.org/2025/05/16/private-equity-snaps-up-disability-services-challenging-state-regulators/
6. Dungarvin. Company overview / About Us, 2026. (Founded 1976; ~$734 million revenue; ~120 locations.) https://www.dungarvin.com/about-us/
7. U.S. Small Business Administration. Table of Small Business Size Standards, NAICS 623210, 2023. ($19.0 million in average annual receipts.) https://www.sba.gov/document/support-table-size-standards
8. KFF. 5 Key Facts About Medicaid Coverage for People With Intellectual and Developmental Disabilities (IDD), 2024. (3.4 million Medicaid enrollees with IDD; ~729,000 use Medicaid long-term care; adult average ~$50,086/year (2021); ~521,000 with IDD on waiver waiting lists; near one million households with an adult with IDD and an aging caregiver.) https://www.kff.org/medicaid/5-key-facts-about-medicaid-coverage-for-people-with-intellectual-and-developmental-disabilities-idd/
9. U.S. Census Bureau. 2022 NAICS Definitions — 623210 and adjacent codes (623220, 623110, 623311/623312, 623990, 624120), 2022. https://www.census.gov/naics/?input=623210&year=2022&details=623210
10. BrightSpring Health Services. Initial Public Offering announcement (Nasdaq: BTSG), 2024; Q1 2026 results (continuing-operations revenue ~$3.6 billion). https://www.brightspringhealth.com/
11. U.S. Federal Trade Commission. FTC Takes Action to Prevent Anticompetitive Healthcare Services Merger (Sevita / ResCare), January 2026. (Consent order; divest 128 ICFs to Dungarvin; 10-year notification requirement.) https://www.ftc.gov/news-events/news/press-releases/2026/01/ftc-takes-action-prevent-anticompetitive-healthcare-services-merger
12. Home Health Care News / BrightSpring. BrightSpring Finalizes $835M Community Living Divestiture to Sevita, March 2026. https://homehealthcarenews.com/2026/03/brightspring-finalizes-835m-community-living-divestiture-to-sevita/
13. The Vistria Group. Portfolio: Sevita, 2025. https://vistria.com/portfolio-items/sevita/
14. Centers for Medicare & Medicaid Services (CMS). Home and Community-Based Services Authorities (Section 1915(c)); Institutional Long-Term Care / ICF-IID; Olmstead v. L.C. (1999), 2024. https://www.medicaid.gov/medicaid/home-community-based-services/home-community-based-services-authorities
15. KFF. How Are States Implementing New Requirements for Medicaid Home- and Community-Based Services? (HCBS Settings Rule, effective March 2023), 2024. https://www.kff.org/medicaid/how-are-states-implementing-new-requirements-for-medicaid-home-and-community-based-services/
16. ANCOR. The State of America's Direct Support Workforce Crisis (2024–2025). (Turnover near 40%, reported above 44%; vacancy above one in eight positions; median DSP wage ~$14.50/hour; 77% of providers turned away referrals; providers bracing for Medicaid funding reductions.) https://www.ancor.org/resources/the-state-of-americas-direct-support-workforce-crisis-2025/
17. U.S. Bureau of Labor Statistics. Home Health and Personal Care Aides — Occupational Outlook Handbook, May 2024 / 2025. (Median annual wage ~$36,400; employment projected +17% 2024–2034; ~765,800 openings/year.) https://www.bls.gov/ooh/healthcare/home-health-aides-and-personal-care-aides.htm
18. Blue Wolf Capital Partners. Blue Wolf Capital Acquires RHA Health Services, 2019. https://www.bluewolfcapital.com/wp-content/uploads/2019/08/08.05.19.RHA-Press-Release.pdf
19. Benchmark Human Services. About, 2026. https://benchmarkhs.com/about/
20. Mosaic. 24/7 Residential Supports, 2026. https://www.mosaicinfo.org/services/intellectual-and-developmental-disabilities/24-7-residential-supports/
21. Centers for Medicare & Medicaid Services. Ensuring Access to Medicaid Services / HCBS Provisions (2024 Access Final Rule), 2024. https://www.medicaid.gov/medicaid/access-care/home-and-community-based-services-provisions
22. Electronic Code of Federal Regulations. 42 CFR Part 483, Subpart I — Conditions of Participation for Intermediate Care Facilities for Individuals with Intellectual Disabilities, current. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-G/part-483/subpart-I
23. Centers for Medicare & Medicaid Services. Supporting Adults with Intellectual and Developmental Disabilities and Their Aging Caregivers, 2023. https://www.medicaid.gov/medicaid/home-community-based-services/home-community-based-services-guidance-additional-resources/supporting-adults-intellectual-and-developmental-disabilities-and-their-aging-caregivers
24. Centene Corporation. 2025 Form 10-K, 2026. https://www.sec.gov/Archives/edgar/data/1071739/000107173926000049/cnc-20251231.htm
25. Molina Healthcare. 2025 Form 10-K, 2026. https://www.sec.gov/Archives/edgar/data/1179929/000117992926000005/moh-20251231.htm
26. Elevance Health. 2025 Form 10-K, 2026. https://www.sec.gov/Archives/edgar/data/1156039/000115603926000013/elv-20251231.htm
27. Addus HomeCare Corporation. 2025 Form 10-K, 2026. https://www.sec.gov/Archives/edgar/data/1468328/000143774926005352/adus20251231_10k.htm