Hi everyone,
and thank you for tuning in to the Becker's Healthcare podcast series.
I am Mariah Moham, writer for events and custom content for Becker's Healthcare,
and I'm absolutely pleased to be joined by Andrew Ur,
senior managing director at Zigler,
and a founding member of Ziglar's corporate Finance healthcare Practice. Andrew,
thank you so much for being here today. How are you?
I'm doing great. Really appreciate you having me on the show.
Yeah, of course. So glad to have you today,
and I know we're gonna have an excellent discussion. So with that,
we could jump right into the first topic of our conversation today.
To get us started,
would you mind introducing yourself and sharing a bit about your role and
organization?
Absolutely. So I'm one of the partners here at zeer,
one of the owners of the firm. Been with the firm going on 17 years.
I have a 20 year career in healthcare investment banking.
I actually grew up in a family of physicians, my dad and brother, both doctors,
and really soft firsthand the challenges with physicians on growing the
business side of their practice. And it drove me to want to get into healthcare,
particularly on the business side,
really helping physicians grow and build their practices and, and,
and build equity value.
And so I had a chance to cut my teeth across a number of larger
advisory firms on Wall Street,
and then had an opportunity in 2006 to come over to Ziegler and help build the
advisory practice here and have now built the team from just two of us at,
at the onset to now about 50 m and a professionals and, uh,
servicing really all across the us.
And I lead our efforts based out of our New York office,
all of our physician advisory efforts.
And we've had the privilege of working with,
with nearly 60 private practice physician groups across the country on
all kinds of different partnership options. Everything ranging from mergers,
PSSAs, joint ventures, sale transactions,
private equity transactions, investment transactions. You know, we,
we get engaged as the advocate of the private practice to help them
understand what they're worth, understand their options,
and really be their advocate,
making sure they get fair value for what they bring to the table,
and obviously negotiating on their behalf to get the bo best possible terms.
And it's, it's really been a privilege getting to,
to work with so many entrepreneurs and, and, and really exciting,
uh,
opportunities across the US and getting to meet and work with physicians really
across all different specialties, you know,
ranging from primary care to radiology,
to orthopedics to cardiology to urgent care
and, and telemedicine businesses. But obviously a a lot of focus in,
in recent months and years on, on cardiology,
which is why we're here today and a and a particular focus of ours as we think
about strategic initiatives going forward and where we plan to invest a lot of
our time and resources.
Yeah, absolutely.
Thank you so much for giving us all that background that will be useful for this
conversation. Surely.
And you kind of already looped us into the first topic I wanted to discuss
today. Cardiac procedures are continuing to migrate to outpatient settings,
succinctly opportunities here.
Can you share the key trends and challenges you're seeing in the market right
now?
Yeah, absolutely. I'm gonna kind of start us more at the macro level,
which is record amounts of consolidation going on in healthcare.
In 22 alone,
there were over 550 physician m and a transactions over
$300 billion in, in total value. And,
and the landscape is just really changing very rapidly around us. You know,
we've got a bunch of new entrants coming into this space. You know, Optum,
which is the United subsidiary, it's a $460 billion enterprise,
you know,
they're now the largest physician employer in the country with over 70,000
physicians. They've spent over $20 billion on un aggregating physician
practices. Uh, you've got C V S Health now with their purchase of Oak Street,
over $10 billion in signify of 8 billion. Um,
they're certainly building a formidable empire across their primary
care and obviously with their integration with Aetna really have the payer
provider angle as well, similar to Optum and United. Uh, you've got Village md,
which is now partnered with Walgreens, and they recently bought Summit Health,
which is a multi-specialty model all across the New York City market.
And they just invested about $9 billion into that summit investment. Um,
they, they're obviously gonna be leveraging about 9,000 Walgreens locations.
And then most recently is, you know,
really interesting is the Amazon purchase of one medical for almost $4 billion.
And, you know,
Amazon touches about 60% of all US households call it
200 million Americans. Um,
so it'll be really fascinating to see how that changes the prevalence of,
of telemedicine and, and really the, the access to care. And so, you know,
with that backdrop, I just think it's, it's,
it's relevant as to why we're here today,
which is there's just so much new investment and activity going into healthcare,
really changing some of the core, uh, stakeholders, right,
beyond just the traditional local health system relationships and payer
relationships to now some of these really large strategics that are moving into
the space. You know, that coupled with the fact that, you know,
C M S and Medicare is continuing to enable more and
more reimbursement of these procedures to be done in an outpatient setting. Uh,
you know, cardiology in in particular was, was a big, uh,
re recipient of that as, as you saw a lot of that initiatives, you know,
over the last couple years. And, you know,
certainly a big driver I think in 2018 was about 23 codes
that are, are gonna be, you know,
reimbursed in an outpatient setting over about a billion dollars in savings that
that's estimated for moving those procedures into an outpatient setting. And so,
you know, that's been a real big catalyst behind why private equity has
targeted cardiology is the prevalence of these procedures that can now be done
in an outpatient setting a specialty that historically was pretty
tied into the acute care hospital world.
Most 70% of cardiology groups have,
have historically been more hospital oriented or p s AED with hospitals.
And so there's now this big opportunity for them to, to really, you know,
build more independent ancillary initiatives, uh,
build out ASCs or OBLs and cath labs and,
and private equity is,
is really helping fuel a lot of those initiatives and it's kind of a win-win
for, for both sides,
enables the cardiologist to build a sense of independence and drive some
ancillary income and, and patients prefer it 'cause it's a more efficient,
higher quality, uh, more convenient and, and obviously lower cost of,
of care. So, um, that,
that's what we're seeing is really the big driver for a lot of this new newfound
investment interest in the cardiology space.
Yeah, absolutely. Thank you so much for all of that insight,
the telemedicine and the impressive growth and Amazon and Walmart and,
you know,
those alike are definitely making a difference in this space rather quickly.
Also,
how do you recommend practices approach growth and scale strategies as well as
staying resilient in a dynamic market like you are?
What KPIs should they focus on and why? Yeah.
So the first place we recommend starting is doing a,
a real thoughtful SWOT analysis. And, you know,
typically we will start with that, you know, at no cost to,
to practices that that come to us and just do an initial assessment and,
and do a, you know, a benchmarking review and look at, you know,
where their rates are relative to the market,
what their overhead is as a percentage of revenue,
what their physician productivity is relative to market from an R V U
perspective and dollar per R V U as well as, you know,
how efficient they are at leveraging extenders and, and mid-levels.
What their opportunity is for passive income and, and driving, you know,
ancillary income growth and how much are they taking advantage of
opportunities to gain ownership in,
in technical earnings that they may not be benefiting from versus, you know,
a pure professionally oriented group. Uh, and,
and helping them evaluate that, um,
helping them think about market demand in their area for, uh,
some of these outpatient cardiology services,
even some of the cardiovascular opportunities is, is, is a big opportunity.
And then doing, you know,
somewhat of a market heat map where we look at kind of what capabilities they
have, what capabilities competitors have,
and then thinking about what are some logical additions that that might
make sense from a capability perspective,
and are there local providers or other independent groups that may be
interesting, uh, targets to, to merge or add together with what they're doing.
And so, you know,
looking at that all together and then really putting it into ideally a five-year
growth plan. You know, I'm,
I'm often surprised when I meet with most practices that they really only
have, you know, a one year budget at most. And,
and most groups that I meet with don't even have a budget. And you know,
I think for any business of these size and scale of of these practices,
it really is prudent to have a longer term strategy.
The other piece that I often see is just an underinvestment in
infrastructure and resources. You know, there's, there's often this tug of war,
if you will, between kind of taking capital out of the business and really
maximizing distributions versus making investments in the practice. And,
you know, often I see there, there,
there is somewhat of an underinvestment in in the practice and I think that can
be detrimental to the long-term growth of the practice.
And that's something where we tend to be pretty upfront when we,
when we meet with groups and,
and give them an evaluation is where there areas that,
that we think there might be room for investment, be it technology,
be it artificial intelligence or AI capabilities,
be it even just administrative, uh, personnel. You know,
often we see there being, you know, an underinvestment in leadership and,
and and senior management across these organizations. And you know,
a lot of times the difference between a really successful practice and one
that's maybe more mediocre is one that really has a full-time
c e o or administrative lead that that can really wake up every day thinking
about how the practice is gonna keep growing, how to forge new relationships.
And then lastly is really what's the strategy for value-based care?
It's one thing to be successful in today's fee for service environment
where you're just billing per procedure.
It's another to be thinking about how,
how do you fare in an environment where you're moving into more either capitated
payments or uh, bundled payments. And then, you know,
is there a strategy for more of a multi-specialty play?
How do you think about the interplay with primary care in the market? You know,
we're seeing a lot more move towards these large primary and multi-specialty
groups going to plans and, and structuring contracts where, you know,
they get a, a, a capitation or a premium uh, dollar,
and then they're kind of sub aggregating it from there. Um, and so, you know,
as a specialist, I think it's really important to be thinking about how,
how do you fare in those, in those discussions and,
and how do you really set yourself up to be able to help
manage the, the largest possible pool of funding dollars.
And obviously cardiology is, is one of the areas where there's, you know,
a a very significant, uh, need just given our, our, our population and the,
and the demographics and you know,
really an under underinvestment in providing some of those longer term
care management initiatives. And quite candidly, the,
the compensation just isn't always where it should be, which is, you know,
helping ensure some of the medication, uh,
adherence and best practices around follow-up and care management and
things like that. Uh, and that's where a value-based model obviously, you know,
effectively pays to,
to manage a population and keep patients out of a hospital as opposed to paying
for, for procedures and services provided. And that's where I, I I see the,
the opportunity going forward is, you know,
'cause unfortunately I think there's gonna be call close to 80 million patients
with some sort of cardiology or cardiovascular disease, um, that, you know,
that that, that are at risk of, of that, you know, by, by 2050, which is,
you know, the number of Americans that are gonna be over the age of 65, right?
And so it's just a, it's just a massive number and a huge,
I think it's about $215 billion a year that the US health
system spends on, on cardiology care. And so there's obviously, you know,
most of that going to the hospitals and health systems,
but really the opportunity is for cardiology groups to start taking more of
those dollars and managing that spend themselves as opposed to just
getting the 20 or 30% that they get for providing the professional services.
Yeah, that's really interesting.
When you speak about budget and having a long-term strategy,
I know a lot of people say, you know, one day at a time, but you know,
when you're talking about growing a company or a health system,
looking ahead five years sounds extremely important and logical. Um,
and also speaking on technology for you,
what role does technology play in helping practices grow and enhance care
delivery? Are there any examples that you can share?
Absolutely. I mean, I, I see technology really as, you know,
a huge opportunity for innovation in healthcare. I mean, think about, you know,
banking for example, right? It, it,
it wasn't long ago that we all literally went to
the bank every time we got a check. And now, you know,
a physical brick and mortar bank is almost becoming obsolete where you can,
you know, literally do all your banking on your phone. You know,
I see healthcare moving in that same direction where, you know,
with your phone and other devices and wearables, uh, you know, you're,
you're gonna really be only stepping foot in a clinic when you absolutely need
to. Um, you're gonna be engaging, interacting with clinicians,
you know, virtually.
You're gonna have a care team that's gonna be able to talk to each other. But,
you know, obviously one of the biggest challenges, interoperability, right?
There's no common standard language or system.
And so all these systems are disparate. So, you know,
investing in tools that can pull data from these disparate systems,
uh, investing in, in, in,
in tools that can provide that really seamless interface
with the consumers. Um, and, and really, you know, most importantly, you know,
developing that relationship with the patient, right? I mean, I,
I think at the end of the day,
when you think about who's gonna be the most valuable group of
physicians over the next 10 years,
it's gonna be whatever specialty really owns that patient relationship,
they're gonna be the ones that are gonna be kind of sitting at the center of the
circle. And so if I, if I'm a physician group right now,
I want to be thinking about how do I make sure that I have this real
captive, you know,
engagement with my patients such that they'll follow me
if I move between health plans, if I move between contract models.
Um, and, and obviously I think technology is a critical piece of that,
which is really tying the link between the patient and the provider.
Absolutely. Thank you so much for all of that insight. Before we wrap up,
there's a couple things I wanted to ask you.
Where do you see cardiology headed in the next five years? Um,
I know we just talked about technology and how it can really grow so many
practices. Um, is there anything that's exciting you right now?
Yeah, so, you know, it's,
it's been amazing to watch just how much investment has gone into cardiology,
just literally in the last three years. I, I count,
I think seven large private equity backed platforms in
the cardiology space since 2020. And, you know,
these are platforms that have invested hundreds of millions of dollars into the
sector. And I, I,
I see this continuing to advance the aggregation of
cardiologists into these larger aggregated models.
It doesn't mean this is necessarily the right play for every group,
but I do think it's an interesting option. Uh,
my biggest advice for a cardiologist that might be out there listening is,
you know,
have someone that's your advisor that guides you through this process and
gives you the really the full spectrum of options and, and is really,
you know,
advocating on your behalf as opposed to just evaluating one
potential option in a vacuum. I've seen that to be really detrimental. Uh,
the other advice I would give is just you've got one shot when you go through
this process. Um, you know,
you've got one opportunity to really maximize your pro your practice
and really present yourself in the best possible light. And, you know,
you don't want to, you don't want to really miss that opportunity or, or,
or stub a toe, if you will,
by sharing the wrong set of data or not presenting your practice in the
best possible light because that first impression really does carry the day.
And so making sure you're really thoughtful with how you approach
these parties,
how you package yourself up and having a sense of what you think you're really
worth before you go into those discussions is, is, is really,
really important. Um,
while also thinking through a broader strategy of are there other local
groups that you can merge with? Does it make sense to consider hospital PSSAs?
Does it make sense to consider joint ventures? Um, and,
and all of the other spectrum so you can look at it holistically,
would be my advice.
Great, great, great advice. Thank you so much for sharing that.
I know that's probably gonna help, um,
some of our listeners listening in right now. Before I let you go, Andrew,
is there anything else that you'd like to share?
Just that it's gonna be a really dynamic next couple years and my,
my biggest advice would be don't sit back and just,
you know, let the next couple years go by,
by kind of assuming things are good and, and kind of,
you know, enjoying the status quo.
I think that's the single biggest mistake a group can make is, you know,
rates or reimbursement is favorable in just riding that out.
Uh, you know, when, when, when, when things are good,
that's the exact time you want to be thinking about investing in the
operations and,
and building that strategy plan so that you've got a real defensible
long-term plan as opposed to until you hit that
precipice. And at that point, unfortunately, it's,
it's really too late to position yourself from, from, from a stage of,
of leverage. And so, you know,
we just look forward to having conversations with groups that are, uh,
curious about the options and interested in,
in learning about the market and learning about what,
what potential options might be and what the values, uh, could be.
And, uh, look,
looking forward to just being a sounding board and an educational resource.
Yes, absolutely. Thank you so much, Andrew,
for your time and a great discussion today. We really do appreciate it.
Likewise. Thanks for having me on the show and,
and looking forward to the follow ups.
Yeah, of course.
And I also like to thank Ziglar as well for sponsoring today's episode.
You can tune into more podcasts from Becker's Healthcare by Visitor,
our podcastPage@beckerhospitalreview.com.