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Hi, everyone. This is Brian Zimmerman with Becker's

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Healthcare. Thank you so much for tuning in

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to the Becker's Healthcare podcast.

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Today, we're on-site at Becker's thirty first annual

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meeting, the business and operations of ASCs, and

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and we're going to talk about strategic partnerships

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in health care and what every private practice

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leader should know. Joining me for this conversation

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is Andy Colbert, senior managing director at Ziegler.

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Andy, thank you for being here. Thanks, Brian.

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Really appreciate it.

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So, to kick us off, why don't you

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just tell folks a bit about yourself, your

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work in health care, anything you think would

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be helpful for people to know? Sure. So

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I grew up in a family of physicians.

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My dad is a retired primary care physician,

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grew up in Western Massachusetts

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where he ran

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a couple of primary care offices.

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My brother followed in his footsteps, also went

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to medical school.

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So I've always been around the the the

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business of health care and really seeing some

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of the challenges that private practice physicians have

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around growing and scaling

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and really thinking more like business people.

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You know, they they really go to school

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to become clinicians but never really learn the

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business side.

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And so

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I wanted to make it my mission

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to work as an advocate and an ally

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for independent physician groups and really helping them

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grow and scale

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and and ultimately really achieve value for what

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they've built.

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And so cut my teeth at some of

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the Wall Street firms, Morgan Stanley, UBS, FBR,

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and then in 2006

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was offered an opportunity to come over to

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Ziegler and help build out the m and

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a practice here.

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And so I'm going on my twentieth year

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here, and and my focus is really leading

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our physician practice enterprise.

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And so that's a team of about 10

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folks that that I lead that service independent

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physician groups.

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Our role is serving as their strategic and

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financial advisor,

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helping them navigate

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all kinds of different growth initiatives, be it

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mergers, partnerships, joint ventures,

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long range strategic planning, and then ultimately helping

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them think through potential exit opportunities,

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sale transactions,

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as well as, you know, potential opportunities for

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for scale and and and growth. Yeah. And

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to your point too, you know, the physicians

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spend a lot of time in medical school

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learning a awful lot of important stuff, and

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then they walk out. And especially for those

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going into private practice, they're walking into a

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particularly challenging business environment.

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So so the question I'll put to you

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is how should

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practice leaders really

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be evaluating

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partnerships? What advice would you give them? Ensure

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they're they're making the right call for them.

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Because as it's come up in this conference

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a few times, there's a whole slate,

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like, a a wide menu of different types

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of partnerships people could explore. So can you

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give some folks, I guess, some advice as

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you see it?

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Yeah. So

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number one advice is

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really think through what your goals and objectives

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are and do a formal SWOT analysis

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of what your strengths, weaknesses, opportunities, and threats

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are

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well before you start the process of thinking

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externally.

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I think the the the biggest mistake a

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lot of groups make is

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someone approaches them

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and they see a big number or they

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see a big valuation or they see an

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option,

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and they just all of a sudden start

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racing in that direction

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without really spending the time upfront

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to be thoughtful about what do we need,

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where do we wanna go, how do we

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double or triple the organization,

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is it do we need help with

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m and a? Right? Do we need help

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merging and bringing more groups together? Do we

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need help with billing or collections? Do we

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need help with,

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payer contracting? Do we need help with leadership?

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Do we need help with technology? Right? These

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are all different attributes of a practice, and

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you you really gotta first start by thinking

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about what

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what the gaps are

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and where the opportunities are to help you

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define

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what might be the best serving partner.

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I think

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that's really first. And then secondly

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is

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really investing in the leadership team and making

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sure you've got the right team of leaders

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to shepherd you through that process.

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One of the biggest mistakes I see a

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lot of groups make is really underinvesting in

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leadership

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and and really trying to wear too many

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hats

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and then

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getting

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frustrated or or or struggling with the fact

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that they're not growing or they're not scaling

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or they're not making enough progress. And, you

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know, one one of the unfortunate things is

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a lot of physician groups

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really underinvest in full time administrative leaders

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and

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kind of undervalue

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the business side. And and that really takes

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a full commitment

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from someone that's really gonna make that a

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a priority and and a day job.

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So the right leadership team,

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the right strategic plan. And then I'd say

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lastly

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is

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thinking through

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what the growth opportunities are and really modeling

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out

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what it will take to to really accomplish

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those growth levers.

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And it could be building a new service

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line. Right? It could be starting a physical

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therapy arm. It could be opening an ASC.

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It could be,

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bringing in, you know, an orthopedic group that

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wants to bring in rheumatology.

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It could be

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joint venturing with a health system. Right? But

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you really gotta have a framework of what

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those options are and

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how much capital it'll take

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to really be in a position to understand

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what partner is gonna bring that

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capital,

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the strategy,

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and then the right components from a leadership

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standpoint to help you fill those gaps. Yeah.

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A lot to consider here. You can't just

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get dollar signs in your eyes, so to

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speak, and to make sure you've got the

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right people to execute on the partnership,

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assessment of the growth opportunities. And I think

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you laid out

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the these potential scenarios where you're not ready

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and you're moving into a a partnership that's

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that's not going to be beneficial for you.

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I I think you laid out some scenarios

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where people can really think about how things

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could go sideways if you don't have those

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things in place. What does it look like

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when it goes well? What does it look

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like when somebody is set up and gets

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into the right partnership

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and is able to sort of run after

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those growth opportunities?

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Yeah. Yeah. Well said. So, you know, I

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I I always think about it as really

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three key attributes

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that make

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a successful partnership.

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First is

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aligned

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culture.

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You've gotta have a really strong alignment of

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culture, and that means

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everything from

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the physician culture of

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what the autonomy looks like, what the physician

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governance model looks like,

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what the

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division of of responsibilities

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are between local

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and and and regional or MSO. Right? And,

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you know, do you control billing and practice

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management at the local level? Do you control

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it at the national level? Right? Those are

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all things you really need to be aligned

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on.

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Secondly is joint venture compensation model.

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You know, I'm a firm believer that

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any professional service

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organization, whether it's attorneys, whether it's bankers, whether

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it's accountants, whether it's physicians,

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we're all in fields of really high stress

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and high

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levels of of work ethic, but we also

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wanna get paid

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more if we do more work. Right? And

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we want upside

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if we're more successful.

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And so any model that's gonna be successful

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needs to be some sort of

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joint venture as

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compensation model where

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the the profits of the enterprise

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have a correlation with the take home of

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the producers.

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Right? And that's that's just absolutely mission critical.

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And then the the the last piece is

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equity ownership. Right? I'm I'm a I'm a

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big proponent

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of physicians need to have retained ownership in

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the enterprise

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for it to be successful.

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Right? You've gotta have your culture, you've gotta

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have your compensation,

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and you've gotta have

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some sort of equity ownership. And that's valuable

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not just

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from a cash and an economic perspective, but

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it's also valuable from a governance

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and and and really a control perspective.

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Yeah. I wanna zero in on on the

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culture component here for for a bit because

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I think that's

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clearly very important. But I think sometimes,

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and there might be, like, certain things that

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are very obvious when something's not a culture

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fit That's a red flag. Okay. This isn't

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gonna work. But other times, I feel like

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culture is such a a a thing that

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is,

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more nuanced, and you have to really spend

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some time

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evaluating to figure out what's what. Can you

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talk a little bit about unpacking how people

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can do that work in terms of determining

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or looking out for,

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areas where, hey. This isn't gonna work out

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for us, or light bulb goes off. This

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is the right fit for us. Great great

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question. I mean, you really need to think

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about these partnerships as marriages. They they they

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are not

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meant to be entered in and exited quickly

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or,

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you know, transitory

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or transactional.

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You know? You you need to think about

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it just as you would choosing a partner.

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Right? You need to think about

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what's their family like. Right? And and how

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are they gonna raise your your family. Right?

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And all the things you would ask yourself

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before going into a partnership

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in a personal life is how you need

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to think about it from a professional standpoint.

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Right? So

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talking to other clinicians and other

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entrepreneurs and founders that have partnered with them

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in the past,

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and not just a casual conversation, but an

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in-depth conversation where you ask tough questions

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and ask them, you know, what it's been

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like two, three, four, five years down the

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line.

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That is just mission critical, and and I

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and I see a lot of folks

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kinda skip that step and just kinda wanna

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rush right into it. Right? So

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doing the reference calls,

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understanding

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how things are gonna go

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when there's hiccups or when there's challenges because,

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inevitably, there's always gonna be issues. There's always

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gonna be bumps in the road. There's gonna

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be rate cuts. There's gonna be,

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you know, challenges in staffing models. There's gonna

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be employment issues.

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So really trying to figure out, okay, when

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something did hit the fan, how did they

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react? How did it get solved?

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What was the temperament like, right, is super

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important.

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And then, you know, lastly is

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I always find talking to the most junior

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level staff in the organization. Right? So literally

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interviewing

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the assistants

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and the front desk staff,

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what's the culture of this organization? Do people

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greet you when they walk in and out

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of the door? Does the CEO know your

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name?

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Are you invited to the holiday parties?

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Does your family

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encourage you to show up to work? Right?

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Do you look forward to a Monday?

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You know, usually, you can tell a good

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organization from a bad one

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the respect

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that those most junior individuals have in the

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organization.

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And, honestly, I spend more time there

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than I do talking to the most senior

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folks in the organization.

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I I think that's a really good piece

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of advice. And I think the the marriage

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metaphor is truly apt. And I think this

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will resonate with listeners as well. It's like

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even folks in really successful

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marriages that go long term, it would tell

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you it wasn't always easy. Not not always

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easy. Yeah. And so I imagine it's the

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same here as you mentioned. It's like even

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when you find a partner that's a culture

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fit, well, guess what? You know, your stuff

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is gonna get hard. You're gonna go through

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challenges. Things are gonna go up and down,

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and you're gonna have to ride that with

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them. So I think to to your point,

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you take that culture very seriously. Well and

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and I think you do have to go

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into these with a thick skin. You you

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you know, I I get calls off in

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two, three years in, and folks are ready

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to kind of throw up the towel. And

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like a marriage, you gotta go into it

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knowing that there's gonna be bumps. There's gonna

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be challenges. It's not always gonna be straight

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sailing,

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but that's to be expected with any partnership.

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And anytime you're going from a model where

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you're

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a 100%

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running the ship, controlling the decisions to a

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model where

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you're part of a larger umbrella,

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yeah, there there's gonna be some differences of

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opinion, but you've gotta be able to step

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back and say, in balance, in totality,

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are there certain attributes here that

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are beneficial

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and better, and why and and am I

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happy that I did this? Yeah. Some some

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wonderful points. Some some great stuff, Andy, for

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for our listeners to to to take. Is

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there anything we didn't touch on or any

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thoughts you'd like to share to leave listeners

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with before we sign off? Yeah. The last

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piece I would mention is just

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really

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emphasizing the importance of preparation and having your

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house in order. You know, the analogy I

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would make here would be,

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you know, putting your house up for market

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if you didn't do the fresh coat of

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paint, if you didn't

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take care of the yard and, you know,

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you didn't do the landscaping.

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Right? First look means a lot. And, you

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00:13:18,509 --> 00:13:20,110
know, I think in in a lot of

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these physician groups and physician enterprises,

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00:13:23,230 --> 00:13:25,350
they're they're they're kinda quick to just

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someone shows up with interest and they kinda

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spray information out, don't really think through positioning,

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00:13:31,309 --> 00:13:32,325
don't always think

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through how it gets packaged up. And, you

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know, from from our experience,

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20 to 30% of the value of any

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organization

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is tied to the professionalism

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of how that organization

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is perceived

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and the, quote, unquote, window dressing.

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And so I really can't sell enough the

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importance of really getting that house in order,

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having a five year budget, having accrual based

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accounting,

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having all your contracts and everything organized in

396
00:14:02,245 --> 00:14:04,965
an online data site. Right? All that stuff,

397
00:14:04,965 --> 00:14:07,845
compliance clean bill of health, legal clean bill

398
00:14:07,845 --> 00:14:10,085
of health, right, ten ninety nine verse w

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00:14:10,085 --> 00:14:10,585
two.

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00:14:11,285 --> 00:14:13,605
So I think that is critical. And then

401
00:14:13,605 --> 00:14:15,879
and then the last piece I would say

402
00:14:15,879 --> 00:14:16,379
is

403
00:14:17,240 --> 00:14:19,500
creating a competitive process with optionality.

404
00:14:20,440 --> 00:14:22,779
I often hear of groups that

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00:14:23,480 --> 00:14:26,379
kinda pursue situations on a one off basis.

406
00:14:26,440 --> 00:14:26,940
Right?

407
00:14:27,245 --> 00:14:29,725
They they they evaluate one thing for six

408
00:14:29,725 --> 00:14:31,565
months, and then they switch to another, and

409
00:14:31,565 --> 00:14:33,105
they switch to a third. And

410
00:14:33,485 --> 00:14:34,625
you really can't

411
00:14:35,084 --> 00:14:38,204
run an efficient decision process when you're doing

412
00:14:38,204 --> 00:14:38,704
things

413
00:14:39,759 --> 00:14:40,579
in a haphazard

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00:14:40,959 --> 00:14:42,019
one off basis.

415
00:14:42,799 --> 00:14:43,539
Our recommendation

416
00:14:43,919 --> 00:14:44,579
is always

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00:14:45,440 --> 00:14:46,419
create organization

418
00:14:47,279 --> 00:14:49,839
and evaluate if it's three or four or

419
00:14:49,839 --> 00:14:52,399
five options, evaluate them all at the same

420
00:14:52,399 --> 00:14:52,899
time,

421
00:14:53,384 --> 00:14:55,465
all with the same set of information, all

422
00:14:55,465 --> 00:14:57,465
with the same set of data. And then

423
00:14:57,465 --> 00:15:00,184
what you have is apples to apples that

424
00:15:00,184 --> 00:15:01,565
you can actually compare,

425
00:15:02,024 --> 00:15:04,105
put them side by side, and actually lay

426
00:15:04,105 --> 00:15:06,425
them out because they're all based on the

427
00:15:06,425 --> 00:15:08,845
same set of information, the same time period.

428
00:15:09,440 --> 00:15:11,860
Plus, the partners on the other end,

429
00:15:12,320 --> 00:15:14,419
they're not gonna react well to a situation

430
00:15:14,480 --> 00:15:16,639
where they don't think you're a decision maker

431
00:15:16,639 --> 00:15:18,960
that's serious and ready to move. Mhmm. But

432
00:15:18,960 --> 00:15:20,899
if you can set the table for

433
00:15:21,519 --> 00:15:23,945
this is the process we're gonna run, These

434
00:15:23,945 --> 00:15:25,965
are the timelines. These are the deadlines.

435
00:15:26,424 --> 00:15:28,504
You're likely gonna get more value out of

436
00:15:28,504 --> 00:15:31,144
it because they're gonna be receptive to the

437
00:15:31,144 --> 00:15:32,985
fact that there's likely gonna be a decision

438
00:15:32,985 --> 00:15:35,625
made at the end. Excellent. Well, Andy, it's

439
00:15:35,625 --> 00:15:37,065
been it's been a pleasure having you on

440
00:15:37,065 --> 00:15:38,205
the podcast. I think,

441
00:15:38,539 --> 00:15:40,220
we got we got some wonderful insights out

442
00:15:40,220 --> 00:15:41,899
to folks. So appreciate you taking time. Thanks

443
00:15:41,899 --> 00:15:43,279
for having me. It was great.

444
00:15:43,659 --> 00:15:46,319
We also wanna thank our podcast sponsor, Ziegler.

445
00:15:46,539 --> 00:15:48,459
You can tune into more podcasts from Becker's

446
00:15:48,459 --> 00:15:52,559
HealthCare by visiting our podcast page at beckershospitalreview.com.