What led your physician group to consider a strategic partnership?
“For our group, the challenges associated with skyrocketing costs, payor reimbursement, hospital competition, staff retention, and continuing to grow our business and operational footprint led us to consider strategic partnerships,” states Dr. A.J.Mencias, President of South Bend Orthopaedics. “The myriad business, operational, and financial complexities of running our private practice had become quite a burden for the physician and executive leadership team. We became intrigued with the possibility of a more “high powered” and robust management team and back-office suite helping us to achieve our short and long-term goals. We also faced succession issues and real “buy out/buy in” dilemmas, and we knew that strategic partnerships could help us address some of these challenges. We decided to explore our options and use an experienced advisory firm to help us evaluate the available partnership options. The process, engineered by Physician Transaction Advisors (formerly ASCs Inc.), enabled us to understand our opportunities to collaborate with other orthopedic groups, hospitals, corporate entities, and private equity platforms; moreover, this furthered our objective of determining what would be best for SBO moving forward.”
Now that you have entered a partnership, what have been the results for your practice?
“To start, every partnership will have challenges; having a strategic partner is no exception,” added Dr. A.J. Mencias. “We are now part of a large orthopedic-focused private equity-backed MSO platform. Large GPO participation and more scalable business initiatives have begun or are in the process of being implemented. Having financial resources and additional management expertise on a larger scale, combined with detailed analytics, will provide long-term stability for our large MSO entity and lead to compounded benefits for all groups on the platform. The platform is focused on continued physician leadership, with physicians heavily involved in leadership and board-level participation. The combined strengths of executive leadership, vast resources, and physician innovation and guidance will undoubtedly yield significant long-term results and stability in today’s challenging medical climate. Ultimately, these partnerships should allow physicians to focus on patient care with an eye on business excellence.”
How does Private Equity impact Physicians practice consolidation?
Barry Tanner, former CEO of Physicians Endoscopy and Integrated Oncology and a healthcare leader for over three decades, states, “The practice of medicine has become much more challenging over time, not just from a clinical but from a business perspective. In the case of private equity, they invest in the future of healthcare practices and offer an alternative partnership option for many practices. They have proven they can spread costs among multiple physicians and provide their partners with the necessary resources, technology, systems, and access to capital that they would not otherwise have. This is commendable, and while there have certainly been missteps and growing pains, the right platforms and PE investors can add significant value to physician groups.”
Should Physicians use an investment bank or advisor to assist with the sales process?
“Given that this is likely the most crucial business decision you will make, it is unlikely that any group will achieve an optimal result without considerable experience in successfully managing these complex processes,” states Scott Palmer, Senior Analyst with PTA. “Highlighting your organization’s strengths and optimally packaging the business, evaluating and aligning with the right strategic candidates, expertly negotiating pricing and terms, managing due diligence and supporting the transaction to closing requires know-how and guile.”
“As to whether you should do this alone or have help, I am confident that every one of our over 300 clients will tell you they ended up with a much better outcome than if they had managed this process themselves”, adds Physician Transaction Advisors (formerly ASCs Inc.) CEO Jim Freund. “We are not an investment banking firm with largely finance-degreed individuals; our senior team has spent their entire careers working exclusively with the physicians and executives who have built and run practices and surgery centers, serving in a variety of leadership roles with industry-leading companies, and we leverage that experience, knowledge, and expertise during every one of our engagements.”
“Our risk-free, transparent process ensures our clients can fully evaluate all of their strategic partnership options and realize the absolute best financial and non-financial outcome without any obligation to consummate a transaction unless they get the results they want”, comments Senior Partner Stephanie Tarry.
“For our group, the expert advice and guidance the Physician Transaction Advisors team provided every step of the way was instrumental in our successful three-way joint venture transaction,” stated Dr. Mrunal Patel, Director of Choice Care Surgery Center. “This is a far more complex and time-consuming process than any of us had envisioned, and they do much more than negotiate the best price and terms: from start to finish, they went above and beyond to ensure we realized an exceptional outcome.”
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