Hi, everyone. This is Brian Zimmerman with Becker's
Healthcare. Thank you so much for tuning in
to the Becker's Healthcare podcast.
Today, we're on-site at Becker's thirty first annual
meeting, the business and operations of ASCs, and
and we're going to talk about strategic partnerships
in health care and what every private practice
leader should know. Joining me for this conversation
is Andy Colbert, senior managing director at Ziegler.
Andy, thank you for being here. Thanks, Brian.
Really appreciate it.
So, to kick us off, why don't you
just tell folks a bit about yourself, your
work in health care, anything you think would
be helpful for people to know? Sure. So
I grew up in a family of physicians.
My dad is a retired primary care physician,
grew up in Western Massachusetts
where he ran
a couple of primary care offices.
My brother followed in his footsteps, also went
to medical school.
So I've always been around the the the
business of health care and really seeing some
of the challenges that private practice physicians have
around growing and scaling
and really thinking more like business people.
You know, they they really go to school
to become clinicians but never really learn the
business side.
And so
I wanted to make it my mission
to work as an advocate and an ally
for independent physician groups and really helping them
grow and scale
and and ultimately really achieve value for what
they've built.
And so cut my teeth at some of
the Wall Street firms, Morgan Stanley, UBS, FBR,
and then in 2006
was offered an opportunity to come over to
Ziegler and help build out the m and
a practice here.
And so I'm going on my twentieth year
here, and and my focus is really leading
our physician practice enterprise.
And so that's a team of about 10
folks that that I lead that service independent
physician groups.
Our role is serving as their strategic and
financial advisor,
helping them navigate
all kinds of different growth initiatives, be it
mergers, partnerships, joint ventures,
long range strategic planning, and then ultimately helping
them think through potential exit opportunities,
sale transactions,
as well as, you know, potential opportunities for
for scale and and and growth. Yeah. And
to your point too, you know, the physicians
spend a lot of time in medical school
learning a awful lot of important stuff, and
then they walk out. And especially for those
going into private practice, they're walking into a
particularly challenging business environment.
So so the question I'll put to you
is how should
practice leaders really
be evaluating
partnerships? What advice would you give them? Ensure
they're they're making the right call for them.
Because as it's come up in this conference
a few times, there's a whole slate,
like, a a wide menu of different types
of partnerships people could explore. So can you
give some folks, I guess, some advice as
you see it?
Yeah. So
number one advice is
really think through what your goals and objectives
are and do a formal SWOT analysis
of what your strengths, weaknesses, opportunities, and threats
are
well before you start the process of thinking
externally.
I think the the the biggest mistake a
lot of groups make is
someone approaches them
and they see a big number or they
see a big valuation or they see an
option,
and they just all of a sudden start
racing in that direction
without really spending the time upfront
to be thoughtful about what do we need,
where do we wanna go, how do we
double or triple the organization,
is it do we need help with
m and a? Right? Do we need help
merging and bringing more groups together? Do we
need help with billing or collections? Do we
need help with,
payer contracting? Do we need help with leadership?
Do we need help with technology? Right? These
are all different attributes of a practice, and
you you really gotta first start by thinking
about what
what the gaps are
and where the opportunities are to help you
define
what might be the best serving partner.
I think
that's really first. And then secondly
is
really investing in the leadership team and making
sure you've got the right team of leaders
to shepherd you through that process.
One of the biggest mistakes I see a
lot of groups make is really underinvesting in
leadership
and and really trying to wear too many
hats
and then
getting
frustrated or or or struggling with the fact
that they're not growing or they're not scaling
or they're not making enough progress. And, you
know, one one of the unfortunate things is
a lot of physician groups
really underinvest in full time administrative leaders
and
kind of undervalue
the business side. And and that really takes
a full commitment
from someone that's really gonna make that a
a priority and and a day job.
So the right leadership team,
the right strategic plan. And then I'd say
lastly
is
thinking through
what the growth opportunities are and really modeling
out
what it will take to to really accomplish
those growth levers.
And it could be building a new service
line. Right? It could be starting a physical
therapy arm. It could be opening an ASC.
It could be,
bringing in, you know, an orthopedic group that
wants to bring in rheumatology.
It could be
joint venturing with a health system. Right? But
you really gotta have a framework of what
those options are and
how much capital it'll take
to really be in a position to understand
what partner is gonna bring that
capital,
the strategy,
and then the right components from a leadership
standpoint to help you fill those gaps. Yeah.
A lot to consider here. You can't just
get dollar signs in your eyes, so to
speak, and to make sure you've got the
right people to execute on the partnership,
assessment of the growth opportunities. And I think
you laid out
the these potential scenarios where you're not ready
and you're moving into a a partnership that's
that's not going to be beneficial for you.
I I think you laid out some scenarios
where people can really think about how things
could go sideways if you don't have those
things in place. What does it look like
when it goes well? What does it look
like when somebody is set up and gets
into the right partnership
and is able to sort of run after
those growth opportunities?
Yeah. Yeah. Well said. So, you know, I
I I always think about it as really
three key attributes
that make
a successful partnership.
First is
aligned
culture.
You've gotta have a really strong alignment of
culture, and that means
everything from
the physician culture of
what the autonomy looks like, what the physician
governance model looks like,
what the
division of of responsibilities
are between local
and and and regional or MSO. Right? And,
you know, do you control billing and practice
management at the local level? Do you control
it at the national level? Right? Those are
all things you really need to be aligned
on.
Secondly is joint venture compensation model.
You know, I'm a firm believer that
any professional service
organization, whether it's attorneys, whether it's bankers, whether
it's accountants, whether it's physicians,
we're all in fields of really high stress
and high
levels of of work ethic, but we also
wanna get paid
more if we do more work. Right? And
we want upside
if we're more successful.
And so any model that's gonna be successful
needs to be some sort of
joint venture as
compensation model where
the the profits of the enterprise
have a correlation with the take home of
the producers.
Right? And that's that's just absolutely mission critical.
And then the the the last piece is
equity ownership. Right? I'm I'm a I'm a
big proponent
of physicians need to have retained ownership in
the enterprise
for it to be successful.
Right? You've gotta have your culture, you've gotta
have your compensation,
and you've gotta have
some sort of equity ownership. And that's valuable
not just
from a cash and an economic perspective, but
it's also valuable from a governance
and and and really a control perspective.
Yeah. I wanna zero in on on the
culture component here for for a bit because
I think that's
clearly very important. But I think sometimes,
and there might be, like, certain things that
are very obvious when something's not a culture
fit That's a red flag. Okay. This isn't
gonna work. But other times, I feel like
culture is such a a a thing that
is,
more nuanced, and you have to really spend
some time
evaluating to figure out what's what. Can you
talk a little bit about unpacking how people
can do that work in terms of determining
or looking out for,
areas where, hey. This isn't gonna work out
for us, or light bulb goes off. This
is the right fit for us. Great great
question. I mean, you really need to think
about these partnerships as marriages. They they they
are not
meant to be entered in and exited quickly
or,
you know, transitory
or transactional.
You know? You you need to think about
it just as you would choosing a partner.
Right? You need to think about
what's their family like. Right? And and how
are they gonna raise your your family. Right?
And all the things you would ask yourself
before going into a partnership
in a personal life is how you need
to think about it from a professional standpoint.
Right? So
talking to other clinicians and other
entrepreneurs and founders that have partnered with them
in the past,
and not just a casual conversation, but an
in-depth conversation where you ask tough questions
and ask them, you know, what it's been
like two, three, four, five years down the
line.
That is just mission critical, and and I
and I see a lot of folks
kinda skip that step and just kinda wanna
rush right into it. Right? So
doing the reference calls,
understanding
how things are gonna go
when there's hiccups or when there's challenges because,
inevitably, there's always gonna be issues. There's always
gonna be bumps in the road. There's gonna
be rate cuts. There's gonna be,
you know, challenges in staffing models. There's gonna
be employment issues.
So really trying to figure out, okay, when
something did hit the fan, how did they
react? How did it get solved?
What was the temperament like, right, is super
important.
And then, you know, lastly is
I always find talking to the most junior
level staff in the organization. Right? So literally
interviewing
the assistants
and the front desk staff,
what's the culture of this organization? Do people
greet you when they walk in and out
of the door? Does the CEO know your
name?
Are you invited to the holiday parties?
Does your family
encourage you to show up to work? Right?
Do you look forward to a Monday?
You know, usually, you can tell a good
organization from a bad one
the respect
that those most junior individuals have in the
organization.
And, honestly, I spend more time there
than I do talking to the most senior
folks in the organization.
I I think that's a really good piece
of advice. And I think the the marriage
metaphor is truly apt. And I think this
will resonate with listeners as well. It's like
even folks in really successful
marriages that go long term, it would tell
you it wasn't always easy. Not not always
easy. Yeah. And so I imagine it's the
same here as you mentioned. It's like even
when you find a partner that's a culture
fit, well, guess what? You know, your stuff
is gonna get hard. You're gonna go through
challenges. Things are gonna go up and down,
and you're gonna have to ride that with
them. So I think to to your point,
you take that culture very seriously. Well and
and I think you do have to go
into these with a thick skin. You you
you know, I I get calls off in
two, three years in, and folks are ready
to kind of throw up the towel. And
like a marriage, you gotta go into it
knowing that there's gonna be bumps. There's gonna
be challenges. It's not always gonna be straight
sailing,
but that's to be expected with any partnership.
And anytime you're going from a model where
you're
a 100%
running the ship, controlling the decisions to a
model where
you're part of a larger umbrella,
yeah, there there's gonna be some differences of
opinion, but you've gotta be able to step
back and say, in balance, in totality,
are there certain attributes here that
are beneficial
and better, and why and and am I
happy that I did this? Yeah. Some some
wonderful points. Some some great stuff, Andy, for
for our listeners to to to take. Is
there anything we didn't touch on or any
thoughts you'd like to share to leave listeners
with before we sign off? Yeah. The last
piece I would mention is just
really
emphasizing the importance of preparation and having your
house in order. You know, the analogy I
would make here would be,
you know, putting your house up for market
if you didn't do the fresh coat of
paint, if you didn't
take care of the yard and, you know,
you didn't do the landscaping.
Right? First look means a lot. And, you
know, I think in in a lot of
these physician groups and physician enterprises,
they're they're they're kinda quick to just
someone shows up with interest and they kinda
spray information out, don't really think through positioning,
don't always think
through how it gets packaged up. And, you
know, from from our experience,
20 to 30% of the value of any
organization
is tied to the professionalism
of how that organization
is perceived
and the, quote, unquote, window dressing.
And so I really can't sell enough the
importance of really getting that house in order,
having a five year budget, having accrual based
accounting,
having all your contracts and everything organized in
an online data site. Right? All that stuff,
compliance clean bill of health, legal clean bill
of health, right, ten ninety nine verse w
two.
So I think that is critical. And then
and then the last piece I would say
is
creating a competitive process with optionality.
I often hear of groups that
kinda pursue situations on a one off basis.
Right?
They they they evaluate one thing for six
months, and then they switch to another, and
they switch to a third. And
you really can't
run an efficient decision process when you're doing
things
in a haphazard
one off basis.
Our recommendation
is always
create organization
and evaluate if it's three or four or
five options, evaluate them all at the same
time,
all with the same set of information, all
with the same set of data. And then
what you have is apples to apples that
you can actually compare,
put them side by side, and actually lay
them out because they're all based on the
same set of information, the same time period.
Plus, the partners on the other end,
they're not gonna react well to a situation
where they don't think you're a decision maker
that's serious and ready to move. Mhmm. But
if you can set the table for
this is the process we're gonna run, These
are the timelines. These are the deadlines.
You're likely gonna get more value out of
it because they're gonna be receptive to the
fact that there's likely gonna be a decision
made at the end. Excellent. Well, Andy, it's
been it's been a pleasure having you on
the podcast. I think,
we got we got some wonderful insights out
to folks. So appreciate you taking time. Thanks
for having me. It was great.
We also wanna thank our podcast sponsor, Ziegler.
You can tune into more podcasts from Becker's
HealthCare by visiting our podcast page at beckershospitalreview.com.