Hello, everyone. My name is Brian Zimmerman with
Becker's Healthcare. Thank you so much for tuning
into the Becker's Healthcare podcast.
Today, we're on-site at Becker's twenty second annual
spine orthopedic and pain management driven ASC in
the future of spine conference.
And I'm gonna turn things over here to
Jason Ficken, managing partner, Quadriga Partners, and Levi
Shepherds,
CEO, SQL Ortho. Levi and Jason, I'll leave
it to you.
Levi, I wanna begin by thanking you for
carving out some time from the Becker's Healthcare
Orthopedic Conference to memorialize what I know are
really unique insights that emanate from your experience
leading OrthoNebraska,
or now SQL Ortho, for almost a decade.
Given the friendship you and I forged in
the crucible of the deal process that led
to OrthoNebraska's
partnership with Intandem Capital,
I'm eager to just jump into a litany
of questions around the process, motivations for pursuing
a partnership with a private equity group, and
how your experience has been having lived this
for the past two years post close. But
maybe we start with a quick introduction on
yourself as well as what you've
been building with your physician partners and in
tandem at Sequel Ortho.
Yeah. Thanks, Jason. So I've been with OrthoNebraska,
for ten years.
OrthoNebraska
really was an idea when I started ten
years ago. Fortunate enough that gotta join a
physician owned hospital
that was really run by physicians. We had
a health system partner, but those physicians were
incredibly engaged in how we delivered care in
in that hospital.
But we were missing
was the full integration
across the musculoskeletal
continuum.
And so over the past ten years, we
turned Ortho Nebraska into a living, breathing thing
that was once an idea.
And so we integrated across the clinic. We
integrated with physical therapy. We integrated with imaging.
We had an emergency department. We established
urgent care. We have DME. We have the
continuum
parts,
but what we are seeking
is ensuring that we had the right alignment
model.
And when we had a health system partner,
that alignment just didn't fully cement. And so
what we decided to do ultimately was find
the right partner, find the right capital structure,
find the right compensation model to ensure alignment
over the long run. And so those ten
years have been incredibly fun,
but your help,
I think, is is what we're now trying
to do, which is take those last ten
years of of learnings
and apply that
to a whole
host of additional geographies and markets.
The way we think about it is there's
there's a lot of MSK groups that have
partners
that maybe don't have the alignment model, or
maybe they have the alignment model without the
capital and the strategies to grow and really
take care of patients in their their communities.
And so what we wanna do is
mesh these ten years of learnings to those
opportunities
in other markets under now the the SQL
Ortho
holding company.
Terrific. Well, I can anticipate that
not just the physicians, you know, pre transaction
at at SQL, but, you know, any physician
or maybe even practice leader that's listening to
this discussion
will already have his or her own preconceived
notions of what partnering with private equity is
really like.
Just given you've lived it for the past
twenty four months, can you elaborate on or
or maybe even dispel some of the myths
surrounding these types of partnerships?
Yeah. I I think there are so many
unfortunate
stories, so many unfortunate myths around this concept.
I wanna go back to this whole concept
of of alignment.
To get very precise, essentially, there's a lot
of, musculoskeletal groups. There's a lot of orthopedic
groups. They already have existing partners.
But I think the the question is is
when, you know, we earn dollars, are those
dollars then retained and reinvested
in order to deliver care, in order to
build access points, in order to recruit physicians
either
in the market or that are coming out
of fellowship?
Are they being used to
build new surgery centers? Whatever the case may
be, are are those dollars retained? And that
to me is the alignment model. And I
think that's the the number one myth
is this is really still a partnership
just like most orthopedic groups have, but it's
a better aligned model where it's really a
retained earnings model to continue
to invest back into
the the continuum or the orthopedic system that
groups are trying to build in their respective
communities.
And so to me, that's that's really important,
and that has then facilitated
a lot of great things then post transaction
with with, OrthoNebraska
under Sequo Ortho as a holding company.
I think we've recruited around six new physicians,
a couple of those that are in market
that see what we're we're building and wanna
be part of what what we have going
on.
We're building an additional clinic. We're actually building
a a surgery center. We are building an
analytics platform. We're hiring incredible talent to run,
different administrative functions that keep us moving faster
than what we think our our competition is
doing.
And so to me, it just goes back
to that whole concept of alignment and then
reinvesting
back into the business as opposed to, you
know, your current joint venture partners where those
earnings are escaping the system that you're trying
to build. Yeah. That makes a ton of
sense, and there's so many different ways to
kinda go from that answer, but I'm gonna
I'm gonna focus on physician recruitment. Because as
you and I talked about throughout our process,
and as we've continued to, you know, deepen
our relationship over the last couple of years,
One of the secret sauces that I think
is critical, not just to
SQL Ortho success, but any physician practice management
opportunity
is that physician retention
and recruitment.
And I know you'd lamented at times being
in the Omaha market, although it's a wonderful
community,
sometimes it's harder to recruit people there than
a Denver or a Dallas or whatever it
may be. So can you unpack a little
bit more about
what you guys have been able to do
emerging from the transaction to retain and continue
to motivate through alignment,
your existing physicians, and then how you've been
able to recruit
another six plus docs post close? Because a
lot of people are really scared of those
components.
Yeah. I think first and foremost,
you know, our our recruiting philosophy
hasn't changed Mhmm. Announced. Right. And our recruiting
philosophy really starts with, let's make sure that
we have a good plan to
replace physicians as they move towards the end
of the career. Let's make sure that we're
building the the subspecialties
that really are demanded in our market. Let's
make sure that we're making sure that we're
using, we'll call it, advanced practice providers in
order to fill in service gaps. That that's,
I would say, our strategy, but our our
philosophy is we're only gonna hire people that
really fit our culture, that are motivated by
what we're trying to deliver, which is an
extraordinary experience for patients,
an incredible focus on the outcomes we create
for our patients, and then making sure that
we're taking care of of all of our
people, our nurses, our techs, our MAS, our
billing office individuals.
If we focus on those three things and
we find the right surgeons that believe in
taking care of those three things, everything will
work out from there.
But going back to then, you know, how
we execute, so if that's,
you know, how we think about our strategy
and then what our philosophy is executing on
on recruitment
in a way, it it has gotten so
much easier.
Because what we can do now is we
can think about a larger pool of dollars
in order to make sure that, you know,
how they step into a new practice, if
they're coming out of fellowship is well supported,
and then it's competitive within the market as
well. And what we can also do is
we can make sure that they have a
long term incentive through
through grants, through equity that that,
is afforded to them the second they start.
They're creating value for the company we're trying
to build. We want to make sure that
they're aligned with
with the the growth of the company. And
so we can give them,
a lot of great tools
right out of fellowship.
And I just wanna hit on one one
of the most important tools is
is if you start thinking about a group
practice as a system across all of those
environments of care from in the in the
ORs, in physical therapy,
in imaging.
When you think about how all of that
works as a system and you manage it
as a a singular system,
the opportunity for them to ramp up
dramatically faster than the alternative
is is really what they're looking for at
the end of the day.
Every physician that we're recruiting wants to have
a busy practice right away. And so if
we have created the system where we're attracting
patients and we're reinvesting back into access points,
it gives them the opportunity to see more
of the patients that they wanna see quicker.
And I think that's the attractive part. The
rest are purely just tools to compete with,
you know, call it health systems or other
employed types of models. We want them fully
engaged in the practice in what we consider
this private practice two point o model.
We want them to be very rewarded, but
what they want is is a way to
ramp up quickly, and the system based approach
is the way to do it. I think
it's really powerful because, you know, having been
at the Becker's conference now and just knowing
some of
the perceived headwinds that exist within the industry,
there's a lot of folks that are like,
how do you
appropriately incent someone
who didn't participate in that initial liquidity event
and come on board potentially taking comparable to
less compensation that they might get at another
true private practice,
and they're not thinking about it in the
way that you're talking. So I I loved
some of those levers that you have
to actually pull upon. And and and the
ramp is something that wasn't even on my
radar screen, so I think that makes a
ton of sense. Yeah. I I really think
that's what surgeons, what physicians went to
went down this long path of of medical
school, and then the residency and then fellowship
is what they wanna do is they wanna
have an impact in in their patients' lives,
and then they wanna take care of a
lot of patients. And so what we're trying
to do is afford
them that opportunity and then make sure that
they're rewarded for it. And and, Jason, you
just kinda you you talked about kind of
misnomers or maybe trepidation around some of these
models.
And,
you know, I wanna add two elements here.
The first is
the the physicians determine who they wanna work
with. Our existing physicians determine if a new
recruit is going to fit in that culture
in is gonna fit in what we're trying
to accomplish
in in our mission and in our purpose.
So they have the absolute say in in
their partner physicians.
And the other thing is
they also these physicians, they're the newly recruited
physicians, they're the ones that decide which patients
they want to take care of, what they
want to focus on if that's a certain
subspecialty, if that's a couple different subspecialties.
They are the ones that dictate the types
of patients that they take care of, the
the pace at which they want to,
take care of those patients. What we're trying
to do is just create a system where
they can be incredibly successful.
And building that system takes a lot of
smarts, and it takes frankly, in today's world,
it takes a lot of dollars. And so
what we're trying to do under SQL or
Ortho
is make it very systematic so then a
physician,
a new surgeon
that elects their practice would be successful
in that endeavor. Well, it's it's a powerful
statement. And I think
for anyone that's listening to this, they probably
have not just that trepidation, but this fundamental
flawed belief that
if they were to partner with private equity
or a group like Sequel, that they lose
all kinds of autonomy. Now we can talk
about you're not gonna lose clinical autonomy because
it's illegal in many situations.
But this thought that
everything is going to be outside of their
control, and what I've heard you say just
in the last four or five minutes is
repeatedly the importance
of cultural alignment,
maintaining
true autonomy with
physician partners
decision
rights, not just with regard to the the
clinical side of things, but but also operationally
and the like. But that leads me to
believe, how do we dispel some of the
concerns that people have around
finding that right partner,
selecting the right partner? What I what I
know having walked beside you through this process
is there was,
at every juncture,
decision rights emanating from the physician partners about
who they were going to partner with from
a capital perspective,
you know, on a going forward basis. Just
like you alluded to when they hire someone
in or the types of patients that they're
talking taking on, but can you unpack that
a little bit more? How are you able
to find
the right partner? Yeah. I think it's it's
two things. It's designing it
from the very beginning and not wavering. Mhmm.
Right? Yep. So when I talk about design,
we had a a very distinct point of
view on what we were accomplishing in our
own community and then what we wanted to
ultimately accomplish in in additional communities.
And so, therefore, we made sure that when
we talked to any potential partner
that they believed in the exact same thing.
Frankly, the very first conversation that I had
with Elliot Cooperstone, the founder of Intandem Capital,
who we ultimately did a deal with, is
he he asked me
Jason, he asked me. He's like, Levi, how
do you accomplish the triple aim? Now the
quadruple aim or the quintuple aim, but how
exactly are you accomplishing the triple aim? And
we ask that question, that is something that
we actually have
on on our dashboards, on our KPIs. We
are monitoring how we're accomplishing that goal. I
could be lining up when he asked that
question. Yeah. And so I I think that's
when
when we knew that what we had designed
on the type of partner
was was truly feasible. We eliminated a lot
of partners, potential partners, because they didn't see
it the exact same way. So I think
it's designing that from the very beginning on
on the type of individuals you want to
partner with. And I think maybe for a
lot of musculoskeletal groups, they've inherited a lot
of partners, but maybe they won't design it
from the beginning. We were so fortunate to
get to design it and then select and
then grow as a result. The other key
part of design is even designing
those control mechanisms.
So we had before we did the transaction,
we had heard a lot of, I would
consider them now misnomers going through the transaction
around,
autonomy and control. And so we sat down
as a group, and we defined exactly what
decisions
we make now
and decisions that would need to be made
if we had a different partner. We listed
them out. I think it was, like, 50
different decisions.
And then we organized around how decisions should
be made as we continue to grow, first
and foremost.
And and I think that's where people
mostly get stuck is most of the evolution
of of large groups is is really how
do you make sure that everybody wins in
larger and larger enterprises.
And so we first started with what are
the decisions we need to make and who
makes those decisions as we grow, and then
who makes those decisions if we have a
a potential partner.
And as a follow-up to the maybe the
the second conversation that I had with Elliot,
I asked him how he was gonna address
that, and he sent me a document
on how they thought about partnering with physician
led organizations,
physician practice management platforms,
and our analysis,
our decision making process, and their thoughts on
decision making
process mirrored almost entirely. Wow. And so that's
when we knew we had the right partner.
And that's what I just I really think
this is all about is designing how you
want to grow, designing on what you want
to achieve, and then making sure any selection
of a partner
is is fully aligned with with what you
have designed.
Well, I know that any partner, be it
a physician partner, your patients, which I know
you treat as partners,
or a capital partner,
there's always this
thought around
growth. Right? And almost a dictatorial growth. Like,
you have to achieve certain metrics and those
types of things. I do know that you
guys have been incredibly successful
in growing,
subsequent to consummating the transaction, but would love
to get
just some more insight into what have been
those growth levers
that you've pursued. And although I know it
was very design centric, have there been any
of those that have emanated
from the partnership with Intandem that maybe were
unanticipated. So maybe start with, okay, these are
the things that you thought prescriptively were gonna
come to fruition.
And, wow, these are some of the unintended
unintended
consequences or benefits that emanated from the partnership.
Yeah. I I think the
the number one thing that has emanated from
our partnership
post transaction
is
really the thought of
not fearful
growth, but really responsible growth all centered around
the idea of there's so much demand
for our services.
And it it's almost shame on us if
we're not meeting that demand Yes. On on
what it is demanded by the patients.
Do we have the access points in the
right locations? Do we have technology
based,
access points?
Can we get essentially patients through our system
from initial diagnosis, through imaging, through potentially OR
into therapy, and even then
we'll call it return to sport, which is,
an acquisition we did post transaction. We
bought a company that was really focused on
what what happens after physical therapy. So it's
just building out that that entire continuum
and and meeting the demand.
But I think, you know, the challenge with
that is
you typically in in a group practice, you
have maybe one way of thinking about how
you're accomplishing those goals. When you have people
that have built and scaled businesses in
similar or adjacent
related
specialties within health care or with in other
health care domains,
you start to think about things a little
differently, and you start to measure things a
little differently.
And and you move it maybe a a
pace that is all anchored around how do
we meet the demand that the patients have.
And so I think the gist is our
our approach
is is slightly tweaked more around how do
we bring new thoughts to the table on
how do we accomplish
that goal that has not changed. And I
think, again, that's somewhat of a
a myth is
is forced growth. That's not it at all.
It's how do we meet the demand of
the patients.
And then what has been enhanced is let's
think about meeting that demand a couple different
ways that maybe we haven't because,
you know, we've done it that way forever.
And that's a challenge when you're trying to
grow and you're trying to meet patient's expectations.
Yeah. That makes a ton of sense.
So you've you've given a a a great
list, a comprehensive list of
some really compelling
organic growth
pathways that you can pursue.
Being an m and a quant geek junkie
myself, I'm I'm always thinking about the acquisitive
side of the business, and I know that
was a a big part of the message
that we that the capabilities that we knew
you and your team could deliver
to the marketplace. But can you unpack a
little bit how how that side of the
process is going? What do you see going
on in the market? How receptive have people
been? Are you been able to generate things
on a proprietary basis? Just unpack some of
the potential acquisitive or inorganic,
pathways that exist to you guys from a
growth perspective.
Yeah. I I think it just goes back
to what we talked about briefly earlier
is as we've developed this system thinking and
we've been doing it for ten years,
our singular hope is that we can help
others do that in their own markets, how
they can take care of more patients, do
it slightly better to have the capital in
order to grow and
and essentially
invest in their wish list.
And so we have been very selective on
who really sees the opportunity around growing their
individual practices,
really thinking about it comprehensively across the continuum,
operating and managing across the continuum. So we've
been very selective because,
you know, ultimately, what what this is all
about is alignment. And if we're not aligned
in how we think about delivering musculoskeletal
care or orthopedic care, you know, partnerships
won't work. And so we're gonna be selective
first,
but we do have what we consider our
our comprehensive playbooks. So all of those things
that we've learned around
building this in Omaha over the past ten
years, we have codified that. We've put it
on paper.
And it's really exciting, frankly, to share that
with other groups to say, this is what
we did. Here's how we think this applies
potentially in in your geography, for your community.
That's really exciting, but the best part that
really gets me excited is is the fact
that there's also a whole host of things
that we don't know, that we could learn
from other groups. And when you start sharing
those ideas, those best practices across multiple different
markets,
that is the enhancement. And then when you're
sharing the rewards
through a holding company and everybody's invested in
that holding company, everybody wins. Everybody wins in
this model when you share those those things
that are might be unique by community, might
be unique by market, might be unique because
of experiences.
When you start sharing those things and everybody
is winning and everybody is rewarded,
that is pretty amazing. But it's gonna be
selective. We are gonna make sure that, you
know, we're gonna partner with the groups that
that see delivering Musculoskeletal Care the way we
do. I love that. It makes a ton
of sense.
It may take a minute just to throw
you a quick curve ball.
And and ingratiation aside, I know the caliber
of leader you are. I know
how difficult it is to manage
a group of orthopedic surgeons that that pride
themselves on their independent thought process.
I think you'd once told me it's almost
like not just herding cats, herding crickets,
but you are great at galvanizing
all of
these independent thought leaders, these type a personalities
into a unified
vision.
What I've haven't unpacked with you yet is
if we had one of your physician partners
sitting here at answering some of these questions,
how similar or disparate might their answers
be? Are are they
are they as enthusiastic
two years into this process
as you? Maybe more, maybe less. We just
love to get your assessment on that. What
I sincerely
feel is
how many CEOs of health care companies
would love to have the type of engagement
that we have in a physician owned musculoskeletal
company.
They are providers of care. They are incredibly
important, almost
customers within the OR, within the hospital, within
the surgery center. They are right next to
our team when they're delivering care.
That insight that they have and and their
aspirations of how to make it better, I
mean, I feel like I'm incredibly lucky. And
so,
essentially, the the summation of all of these
ideas is working side by side with our
physicians
to articulate this physician, to craft this vision,
to design what we were trying to accomplish.
It is truly a team effort, and I
feel like I'm incredibly lucky. I think most
organizations don't necessarily get that type of engagement
in people they work with or that they
serve, and we have it inherently built into
our model. And so I just look at
it as I'm incredibly fortunate, and I'm pretty
confident
that they would say the exact same things
that that I'm saying. They couldn't be more
excited about what we're trying to build. They
couldn't be be more excited about our future.
They love telling our story. They love,
recruiting physicians into our model. I think that
is the reason why we've been successful in
recruiting post transaction
is because they were so excited about it.
I don't think that there is an ounce
of of difference in in the way we
think about what we're trying to build. Yeah.
And I I know that to be true.
I just wanted the the listeners to also
hear that directly, and just how earnestly and
genuinely you guys have worked to kind of
achieve that. So, you know, last question. And
I think everyone's keenly interested
in what's the next next? What is
your vision three years from now, five years
from now? Where do you see
SQL Ortho at that juncture?
Yeah. I I I think that
it gets very simple. There there's a whole
lot of things that we can control, and
there's a whole lot of things that we
can't control.
The thing that we can control is building
a really great
operation,
a really great way to take care of
orthopedic
patients.
If if we do that,
then
simply the sky's the limit. We don't we
don't necessarily have to nail exactly what the
five year plan looks like. We just continuously
pursue,
perfecting how we take care of patients,
and and things will occur. And when it
comes down to, frankly, the the the private
equity model and and the growth that comes
along with it, what we think is if
we nail that operation,
if if our patients have an incredible experience,
if they have better outcomes than any of
our competitors,
if our team is totally aligned with what
we're trying to accomplish,
that there's gonna be a whole lot of
people that would want to invest in a
business that that accomplishes those types of goals.
And so what we're doing is we're just
heads down trying to figure out how we
we take what we've learned and do that
in additional communities,
help other surgeons and other physicians do the
exact same type of things, learn from them,
and and we think that the future is
incredibly bright.
Fantastic. Well, thank you again for
not just your time and insights, but but
for your friendship. I know this has been
a a wonderful dynamic from my vantage point,
and I appreciate you continue to let me
be a part of the journey. So thanks
so much, Levi. Thanks, Jason.
Thank you, Jason and Levi, for an excellent
conversation.
We also wanna thank our podcast sponsor, Quadriga
Partners. You can tune in to more podcasts
from Becker's Healthcare by visiting our podcast page
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