here today. I'm really excited about today's webinar and the amazing panel of folks that we've put together to help share some of their intelligence with the community today. So what I'd like to do before we even get forward into our presenters is to talk about how we're going to navigate through today's webinar. So what you'll notice at the bottom of your screen is there are two buttons chat and the Q&A button. Now this is a little bit different in terms of the chat will not be available for real-time dialogue back and forth between attendees, but in the chat box you will find a link to today's presentation. You don't have the wrong link, it's only a couple slides of content, but we wanted to make sure that you had that because it also includes all of our presenters and their organizations, so it's something that you can reflect back to. If you'd like to communicate with today's presenters or if you need any kind of assistance logistically with today's presentation, please feel free to use the Q&A button at the bottom of your screen. We will get those questions in and if appropriate we'll answer those in real time or we will wait until the end of the panel discussion to take the audience questions just depending on where they come across and how they fit in with the discussion organically. So thank you all for being here and with that I'd like to invite all of our panelists to come back on video and to join us for today's session. I'd like to introduce Justin Hand. Justin is a managing director of West Cove Partners, one of the founders of West Cove Partners, an investment bank that has been helping with physician and private equity relationships and relationship building and really functioning as a sell-side advisor to make sure that groups find the home that is right for them amongst their many choices. As we've evolved, we've had a number of discussions, Justin and I, around how private equity has really shifted from being able to and starting out primarily acquiring independent physician practices and finding ways to partner with them to what are the differences as these platforms and practices that are heavily involved with hospitals either under a very large scale PSA agreement or under an employment agreement that are exploring private equity as an option for partnership. How does that unfold? What does that look like? What are some of the issues and challenges that are unique to that arrangement and how are folks overcoming those? So that is today's webinar. I'm really excited with the group of panelists that we've put together. What I'd like to do is turn it over to Justin to take us through today's presentation. So Justin, thank you very much. Thank you, Joe, and thank you to Claudia and the rest of the MedEx team for organizing today's discussion. We're excited to share varied perspectives around what is happening from private equity investment within the cardiovascular care, both directly within practices, expansion into consideration of investment into ancillary services, and ultimately how this trend that's been happening over the last three years will start to have more of an influence in and around hospital-based groups, as Joe had mentioned. West Cove, we've had the benefit of participating in probably three or four panels, either virtually or in person, at MedAxium conferences. And connecting with Joe, we thought it would be a really good opportunity to kind of move away from private practice, independent groups, and have a panel focused exclusively on what a transaction could look like for a hospital-based group that's starting to consider their options, either renewing the PSA and existing relationship, or starting to kind of be curious around the calls maybe getting from different potential investors or strategic acquirers or partners that have already considered a transaction. So with that said, I'd like to introduce the panel who's going to be joining us today. We've got a representative from Epstein, Becker & Green, Gary Hirschman. I'll let him introduce himself, as well as four esteemed physicians that are part of private equity-backed cardiovascular practices that have either embarked on creating a partnership with a hospital-based group or are starting to consider doing so. And I'd like to start with Gary introducing himself, give a little bit of background, and then I'll pivot towards you, Dr. Gary, to do the same about your background, practice, private equity, and where you have dabbled in and around these hospital-based relationships to start. Thanks, Justin, and thanks to the MedAxium team for arranging the webinar. I'm Gary Hirschman. I'm a healthcare transactions attorney at Epstein, Becker & Green. It's a national healthcare firm with offices throughout the country. Over the last 30 years, what I've been doing is really advising mainly physicians and hospitals, too, on joint ventures and alignment relationships amongst physicians and hospitals. But more recently, over the last three or four years, when private equity became very active in the cardiology group area, I've worked with a bunch of cardiology groups in doing transactions with private equity, including a couple of groups who have been in hospital PSAs or a group of physicians in hospital employment arrangements. So I kind of have particular expertise on that and look forward to sharing my insights with you all. Thanks, Gary. Hello, everyone. My name is Karthik Giri. I am an interventional cardiologist and the managing partner of The Hard House. We are a large private practice group in southern New Jersey that covers the Delaware Valley. We're up to about 44 providers now. We joined with CVA USA in January of 2023, so we're about a year and a half into our private equity experience, and it's been a good one. The platform has grown since we've joined, and we now have 23 groups and approximately 400 physicians and 500 total providers. To the point of this talk, we have either completed or are in the process of completing three transactions with groups and physicians who were previously employed with hospitals, two very large transactions and one much smaller one. Lots of stuff to be learned from these transactions. I think we certainly learned a lot and are applying what we learned to future transactions, but overall, all three have been successful, and I firmly believe that this is probably the next wave in cardiovascular acquisition in PE is the current employed physicians. Thanks. My name is John Mehal. I had a long career in cardiac surgery and ran a health system in a national CV service line, became a serial entrepreneur, then got involved in private equity, and now I'm a senior VP of strategy for Heart and Vascular Partners, and we have a six-state, about 100 physician group. We're unique in that we're vertically integrated with not just cardiology, but also vascular surgery and cardiac surgery, and are actively growing in all those markets. Jorge Navas, would you mind introducing yourself, give a bit of background, CPL? Yes, good afternoon. I'm Jorge Navas. I'm a Clearwater Cardiovascular Consultant, which is a group in Clearwater, a group that was established in 1975 and has been an independent group throughout its history. We have a very close relationship with the largest healthcare provider in the Tampa Bay Area, which is BayCare. We've worked out of their hospitals for all these years, and we joined private equity in October of 2023 when we joined CVL as one of the initial partners in a four-group partnership now, which has about 250 providers. We've learned a lot over the last nine months, and things are going really well with a lot of opportunities and some positive interactions with our hospital system. Hi, everyone. My name is Rick Snyder. I'm president of HeartPlace. Clinically, I'm a general interventional and advanced heart failure transplant cardiologist. HeartPlace is a group in North Texas with 60 physicians and 17 APPs, about 24 different offices in 10 counties in North Texas in the 8.1 million metropolitan service area, Dallas-Fort Worth market. Our group, we like to say we're hospital agnostic. We're about equally divided between the Baylor, Scott & White, Texas Health Resource, and HCA systems. But saying that, we have PSAs with almost every one of those systems in terms of the typical EKG, echo, and call situation. My own wife is actually the director of advanced heart failure transplant for the Baylor, Scott & White system. We have joint venture heart hospital partnerships with two of the hospital systems, and there's actually three heart hospital systems within North Texas with eight locations. My wife and our CEO actually sit on the board of one of those heart hospitals, and we continue to enjoy very good relationships with that. We're part of the platform US Heart & Vascular. We've done about 10 transactions in about five states. We're up to 150 physicians and I think 280 providers in five states. In the next two months, I think we're going to have about 24 other physicians coming on board with three groups to be announced. Really, we got into the private equity platform because we also feel very much like CARTIC that this is going to be the future. It is far and away the most cost-efficient model for providing high-quality, low-cost care in the healthcare system, which is really being challenged by cost and access for society. Thank you, Dr. Snyder. Before we get into a general Q&A session, I'd like to give a little bit of an overview of private equity investment across not just these four platforms, but broadly across the market. If you wouldn't mind, move to the next slide. Thank you. As an investment banking firm, we saw an opportunity to create a niche in and around the cardiovascular care and align with MedAxium about three and a half years ago because we believed that this sector could benefit from an infusion of capital, smart money to help think around how do you allow physician groups to remain independent as practicing medicine becomes more competitive, more expensive, and hospitals actually, of course, becoming more competitive as well as payers. With the relationship we have with MedAxium three and a half years ago, at the time, there was not a single private equity firm that had made the commitment towards investing into this sector. In the last 36 months since April of 2021, we've now seen nine private equity firms make a commitment towards investing into this sector. They've focused on aligning with the highest caliber of practices in the market. Four representatives are on the call today representing their respective practices. In addition to those nine platforms that have received funding, as Dr. Snyder just said, just his organization, the USHV, have done 10 additional transactions under this one umbrella, being the second one here, USHV with Aries. And so while we have nine platform investments, there are likely to have been 50 to 75 additional transactions ranging from single practitioners up to 15, 20, 30 practitioners or providers joining these platform groups. And I think what we've seen in this marketplace is something that we haven't seen in most other physician practice management groups, is how fast this market has consolidated, how curious cardiologists and providers within these groups were around what a partnership could look like. And ultimately, I think that stems from how much of this market has moved over the last 20 years, as so many groups align with hospitals, either through PSAs or employment models, came to find out that maybe the independence that they offered wasn't quite what they're experiencing now 15 to 20 years later in trying to find alternatives. So as we think about the future of private equity money coming into this marketplace, we'd expect these nine players here on this slide to continue doing transactions for independent groups in private practice. I think what you hear today is that most of the remaining independent cardiology practices have either decided to align with the private equity firm already, are in the process of considering alignment today, or have also made the commitment that they actually want to remain independent and private equity is not for them. And so when we think about the continued activity looking forward for the next half decade, and I think where a lot of value creation is going to come across these nine platforms, or perhaps the 10th or 11th emerges in the coming quarters, we're going to see more and more activity for hospital-based groups in employment, or employment groups thinking about how do we unwind from these relationships and align with these private equity firms that can create value creation for them individually, equity ownership through creative structures, and also with convictions say that we are bringing you into a private practice and going to support that endeavor for you as an individual or your practice going forward. So the future is bright in this market. It isn't going to come with, it's going to come with some turmoil as every type of change, what happens with any change, but we've got some great examples to be discussed today around successes in different markets and how that is likely to continue going forward. As we move on, before we move into kind of some Q&A, I would like Gary Hirshman to provide some insight as you think about this from a legal perspective, what it is that your group should be thinking about and what the restrictions may be as you consider a partnership with those groups that are reaching out to you, or just general curiosity around should you be starting to think about this? Thanks. Thanks, Justin. So I've spoken at a couple of MedAxium conferences in the last couple of years. And one of the things I always like to start with is, you know, a private equity partnership is not right for every group. No one's saying you got to do this or anything like that, that this is the must do thing. Rather, it's an option that's out there. And my belief is that you should be you should be considering it, seeing what the pros and cons would be and how the partnership would look before you decide whether it's right for your group or not. And when it comes to hospital aligned physicians, which is what we're focused on today, I always note also that, you know, there are a lot of physicians in hospital PSAs or employment around the country that kind of like Justin said, feel that maybe they're not getting as much satisfaction out of their arrangement, their, you know, lack of certain kinds of independence or otherwise frustrated. And but then again, there's other physicians who are very happy and get a lot of satisfaction and continue to enjoy their hospital relationship. So again, even if you're aligned with a hospital, the groups I'm working with are ones that are unhappy with their, you know, hospital relationships for one reason or another, and are just looking to explore what types of partnership options they have. So if you could imagine kind of spinning out of hospital employment, if you find a good deal of a good partnership opportunity, spinning out of that employment or out of a PSA is not so easy. You know, you really, there are some threshold considerations you have to think about when you're exploring such an option. And the first thing I ever do when I speak to a group of employed physicians or physicians under a PSA is how easily can you terminate your existing arrangement. And this is the first thing anyone's going to look at an investment banker, a potential partner, first thing anyone's going to want to know. So there are a lot of PSAs, and also employment arrangements that allow the doctors or the group in a PSA to terminate without cause at any time, which is good. If your arrangement has that, it means that you can try to strike a deal, a partnership deal, if you think the terms and, you know, the advantages are substantial, knowing that once you sign that agreement, you would give the notice. It could be 60 days, it could be 90 days. I'm working on one now that's 180 days. 90 days is most common. But there are some agreements I've come across where you can't terminate at any time, in which case you need to carefully look at when your arrangement expires or auto renews. So if you're in a unique situation where you can't terminate without cause at any time, you really, you don't want to get into what I call the auto renewal trap, where if you don't give notice six months before the end of the five-year term, it automatically renews for another five years. And if you don't have this without cause termination right, you again need to carefully consider that when you're looking at your options as an employee or a PSA arrangement. You also, as the second threshold issue, is you need to look at your non-compete. Everyone says, oh, non-competes are not going to be enforceable anymore. And well, there are certain states where non-competes are enforceable or very difficult to enforce, but there's still a lot of states where non-competes are still enforceable and the FTC rule hasn't gone into effect yet. It's being challenged, whether there's authority of the FTC to implement the rule that prohibits non-competes. So you still need to look at your non-compete. And I find that in a lot of PSAs that were entered into in the 2010 time frame, they only prohibit competition with another hospital. So as long as you go back to private practice, you can stay right there in the community, they just don't want you aligning with the competing hospital. But there are non-competes in PSAs and more commonly in employment agreements that have, you know, you can't be anywhere within 10 to 15 miles. One of the groups I worked with that had one of those, you know, it was 13 cardiologists and they were all employed, but they were just about the entire department. So they felt confident that the hospital would waive that non-compete and enter into a new agreement with them as a spun off entity. But you have to be careful. You have to understand your post-termination restrictions and take that into account. So those are the two threshold issues. Some other, seven other issues that you need to look at and think about is under PSA arrangements. Some of them allow you, if you sold your assets to the hospital in connection with entering into the PSA, sometimes the agreements, you know, your attorneys may have negotiated. If the PSA ever ends, you get to buy back your assets and take back over your leases that you may have assigned to the hospital and your non-clinical staff. If you don't have that, then if you terminate the PSA, it would have to be a negotiation with, you know, in connection with leaving what you could get from the hospital versus what your PE partner has to establish for you in the community as of the end of your notice of termination date. So that 90 day or whatever period. Number four, I think it's extremely important and number five and four are closely related that you ensure that there's strong consensus amongst the doctors in your group or amongst the group of employees at the hospital that are looking into this. Essentially, you need to have everybody fully on board, maybe not unanimous, but as close as possible to unanimous agreement on the plan to move forward, whether it's first to explore options and secondly, whether to actually execute and move forward. And likewise, confidentiality, you know, you don't want, if you're not going to be approaching the hospital, and some of the doctors will be talking about this later, whether they want the hospital signed on to the deal or not before they move forward and commit, but there's a bunch of deals I worked on where you sign the deal and then speak to the hospital. And in that case, it's very important that there be good confidentiality. And we've been very successful at that because we've warned physicians, if word gets out, you know, the hospital could terminate you, you know, and you're not no longer in control, have less leverage, all that kind of stuff. But so confidentiality is important. Next, you need to make sure in your agreement, if you decide to move forward with a private equity partnership, you got to make sure that your agreement is very clear with them, that that they're going to provide an EMR and commercial payer agreements on day one, on day one, meaning we're giving a 90 day notice to terminate, and we're not going to have a job in 90 days. Now, sometimes you can negotiate extensions with the hospital, you know, for 30 days or 60 days, but, but you need to be ready, you need to have the your PE partner have a plan to be ready on on day one, when you terminate the effective date of your 90 day or 180 day termination notice. Other options are, you know, when you give the hospital notice, it's now, you know, words out, and you and your PE partner can negotiate with the hospital to maybe license their EMR. I actually think that's a good idea, it keeps you very aligned with the hospital, and they like that. And another point here on the payer agreements is, if this, it's really a plus to work with a PE platform that is in your state, that already has another group that already has payer agreements, that does make it a smoother transition for them to have payer agreements that you're credentialed on, you know, during that notice period, so you could go live. If you don't, it's a little bit of a heavier lift. It's hard to get these these payer agreements in place, if it's a, if it's a platform that is their first time in your state, you know, unless they could kind of work that in advance and really get that ready. But that that's very important for the success of the partnership. And then overall, this concept number seven, everything needs to be carefully choreographed. Unlike if you're in a private practice, you just negotiate your deal. Here you have a lot going on, you want to align your go live date with the private practice, with the end of your contractual termination period, I referenced that before, you want to avoid a gap. I mean, you don't want to be where you've given the notice, and then your partner's not ready for you to have this office ready in the community. And you're kind of in a no man's land. We have had situations where there's been negotiations, where the hospital asked to try to get an extension of another 30 or 60 days, which, you know, was needed anyway, on the physician and private equity side. Number eight is very important. Avoid alienating your hospital. Even if, like I mentioned at the outset, you're not happy with certain aspects of the current employment or PSA arrangement with the hospital. As you'll hear later, some of the private equity firms want the hospital to be on board before they commit to you. That's a little awkward, in my view. I mean, yes, it's smart from one perspective. But from another perspective, now your hospital knows that you're thinking of potentially leaving, and you haven't signed your deal yet. And what if, you know, the hospital uses that to their advantage? And they could have a negative reaction. A lot of times, I think in 50% of the situations I've been involved with, the hospital has this initial negative knee-jerk reaction, private equity bad, we're losing control, because they think they have control under a PSA in employment. But I think what's important is to educate the hospital when you give the notice or whenever. Nothing's going to change. We're still your cardiologist. We're still, you know, committed to you, not to anybody else in town. And coming up with like a, I think Dr. Snyder may have mentioned PSAs, but, you know, you could still have a private practice in the community and have what we call a mini PSA, which is on-call coverage, directorships, other types of things that you would continue to show your alignment with the hospital. And probably what would make them really happy would be some type of joint venture. If there's no ASC, a cardiology focused ASC, and one is planned to be built with your private equity platform partners' involvement, including the hospital in that, to some extent, may soften over the situation too. But you need to really focus on that. This is very important. And then lastly, don't underestimate your value. I think it's very important to be guided by an experienced investment banker, because how, what is your value? This is different than just looking at a standalone practice and its value. Here, you're looking at like, what would the value be if we extract this and put it in an independent practice, this group of 14 employed physicians, or you know, snipping the PSA string between the group and the PSA and the hospital. It could be a little tricky. There's pro formas to project how it's going to look and try to demonstrate your value. But I, it's extremely important. I call it a jungle guide to have to have somebody that knows the numbers and know how this works. And that's not me. That's someone like Justin, who's excellent at this, but extremely important. So that's kind of my overview of these important legal considerations. Great. Thank you, Gary. Appreciate the commentary. I think we can take this down so everyone can see a little bit closer to the physicians' kind of faces and reactions. I think we're going to break out the balance of the section into three areas. One is, how did your hospital-based or employment-based groups, or excuse me, PSA or employment-based groups, think about considering an alignment with private equity? Second, how did that work? And then the third bucket, and depending on time, how's it been since the relationship happened? So first, I'd kind of maybe direct the question around for you, Dr. Mayhall, and around Colorado. As you think about the hospital-based group, which was of significant size, how did they come around to thinking around, does an alignment with someone like an HVP make sense? And then maybe lumping another question into that, what was the greatest fears of that group as they thought about considering a deal with HVP, or ultimately HVP? Sure. Thanks, Justin. I think the, as Gary alluded to, the major driver is a lot of people are very dissatisfied in their PSA or employment relationships and are looking to reset that relationship with the hospital into one of more parity and not as a, you know, parent-child relationship and really regain some organizational autonomy. You know, before cardiologists lost their diagnostics and were in private practice, hospitals used to court them to come to the hospital with good service and better nursing and new tools and good facilities. And once everybody got into an employment or PSA, you know, employment-like arrangement and could only practice at one hospital, the motivation of the hospital to provide really good service was lost. And that's not, you know, ubiquitous, but that was certainly what was going on in a lot of facilities where we have encountered. And so the motivation was really to reset the level playing field with the hospital where the physicians could have organizational autonomy, especially and obviously in the ASCOBL, but also have some leverage with the hospital to get the services they needed for their patients. And I think the biggest fear to your second half of your question was obviously the groups that we worked with were the sole providers of cardiology or vascular or cardiac surgery services in those markets. And the fear is obviously that the hospital is going to react negatively and as illogical as it may be, choose to fully employ all those services in parallel. And that's never happened in any of the markets that we've been in, but that's usually the physician's biggest fear. Dr. Snyder, if I may ask you, as you think about the groups that have aligned, any differing opinion on that, or have you seen an evolution with the way the cardiologists are thinking about the relationship with the hospital today than maybe they did 10 or 15 years ago? Perhaps it's private equity related, or perhaps it's margin pressure within these hospitals? Well, you know, for us, our motivation, and we're an independent group, and it depends on how you define independence. Independent means non-hospital employed, because as you know, there's different ownership models in medicine. Some are not the most cost efficient, you know, vis-a-vis Medicare with site neutrality of things of that nature. And again, our group, we're not aligned just with one hospital system. We're about equally divided with three different competing hospital systems. But even though we're a large group, we have joint ventured heart hospitals, we have our own captive met mouth company, we have our own three ASC cath labs that we own a wholly, you know, we still struggle with recruiting and retention, because we compete against very robust employed models. And so we were looking to try to remain independent. And we think private equity allows us to do this. We're getting in a new era in healthcare with value based reimbursement models. And to do that value based reimbursement model is played at scale, you've got to have scale to do that. And you need a capital partner to get to there. Because you've got to have scale to have the administrative bandwidth and financial bandwidth to have the data analytics for the, you know, to evaluate low value care and limit those, and the unwarranted cost in and quality of care that you get with different hospital systems. So we looked at as as a opportunity to remain independent, as, as, as physicians, but our biggest concern was with private equity is was why we we are independent physicians would be that loss of clinical autonomy, culture and governance. That was far and away the top three things that we were concerned about. I've been look, I've been present the medical staff, I've been on the board of trustees for the hospital systems. I'm the immediate past president of Texas Medical Association. I see this from all our physicians. You know, when you sit on those boards and committees for hospitals, you are nothing really more than window dressing. We really do not sit at the table. And when I talked to physician groups of why are you an independent physician, what are ultimately we're selling, we're selling transparency in the seat of the table. So that is what we wanted to make sure that we were maintaining, again, that clinical autonomy. Because I talked to a lot of the physicians that I compete with who are friends of mine, and they that's one of their biggest frustrations. They don't have that clinical autonomy and culture that they really yearn for. This is the best way for us to maintain that sense, which most of our physicians get a lot of that professional satisfaction from clinical autonomy is, as a banker, and I know Garrett years, this is one of the biggest concerns that practices independent or hospital based fear around aligning with private equity. Dr. Gary is I think you said you had three, three hospital based groups that are either aligned with CVA or in the process of aligning and CVA. How did kind of leadership within the group prior to that alignment, get the partners or peers to consider alignment with CVA in that instance? And then what did CVA USA do to convince that hospital based group, or group under PSA, that life with them as a private equity back group is going to be different than what they experienced under that hospital partnership? That's a great question. So I think to answer the first part of your question, the groups that approach CVSA were in the geographies that we had already established our presence to Gary's point. Like that was a good touch point as they knew that CVSA had big practices already in those geographies. So it wasn't a de novo experience. They weren't taking a double risk per se of pursuing this and being the first one out. So that was helpful. I think one of the things that's important for this call, because I imagine the audience is mainly hospital employed is, or PSA is that if we were alone in private practice and we wanted to take, I had four doctors leave a competing system and joined my group this year. I don't think I could have done that if I was alone in private practice, because simply I couldn't have afforded to keep them relatively whole from an income standpoint, right? That was always our biggest problem. To echo Rick's point, the hospitals are more competitive early on with private practice, maybe not later once you mature in your platform or your practice. Private equity bridges that gap. They have the capital to be able to onboard employed physicians and keep them relatively whole from an income standpoint while they rebuild in their private practice mode. And private equity has the timeframe of five to seven years where that money is safe, right, from their investors. So they have the window to be able to do this. It's not a venture cap kind of thing where you have to see an immediate return on your investment. The other thing I would say is that there's been some bad publicity about private equity in the news right now. And one of the comments that, you know, we've always hear is, you know, they're no better than anything else. They're going to strip you down for parts and sell you and bankrupt your group. I think I can speak for all four platforms here because I've spoken to all the leaders that none of our platforms are in it for that. It's really about clinical autonomy and decreasing the cost of overall cardiac care. And we're able to do that as private practitioners. And the bigger we get, the more we'll be able to do that. And in doing that, we'll obviously keep our incomes whole but we'll maintain what we want the most, which is autonomy on a day to day basis. Thank you. That's really helpful. As we think about kind of pivoting towards the decision of the group is to consider a partnership with an HVP or CVL. Gary commented on this and I know we have two differing opinions and approaches on the call today. But I'd like to hear around, like, at what point did you approach the hospital around communication, around this consideration? And then what was their reaction initially and how has that evolved since the close of the transaction or partnership? Yeah, thank you. Obviously, how you approach, involve or don't involve the hospital is going to be a local decision and folks like you and Gary are critical in making that. The way we did it in most of our markets is we aggregated and vertically integrated cardiology, vascular surgery and cardiac surgery and then went to the health system once that was all complete and looked to renegotiate all of those call contracts and medical directorship arrangements at once. And that strategy worked well for us. Obviously, the initial reaction is always a little bit of surprise. But as you reassure them that you aren't necessarily joining their competitor across the street, but the services will stay the same and that we are going to take on all the issues of governance, recruitment, retention, provision of the service as a whole, whereas sometimes when they are employing, they have to do it in bits and pieces. And really, the clinical care will be uninterrupted. That's really very reassuring. And in many cases, they're happy to, at least on the employed physician side, to have those physicians off their books and not have to be carrying the cost and the, you know, management of them. Dr. Geary, Dr. Navas, any differing opinion on kind of the way in which you approach the hospital and the transactions that you've completed or the time of which you did, either early on or later stage? I can attest to our situation because it's quite different. We have been primarily aligned with one hospital system for many, many years, so we have a longstanding history. So, we felt comfortable in our relationship with that hospital system to approach them early on and to present to them what our goals were. And like it's mentioned here before, the goals of all practicing cardiologists in these groups is to provide quality care, value care, and better services for the community. So, we're likely to innovate faster than the hospital, be more creative as an independent organization, and having that governance for all of our groups, and I think I can speak for everybody here, is very important. I think that's what drives us every day to create better services and better care for our patients. So, it's very easy to talk to the hospital with that language. And as we approach them earlier, we're trying to provide them with the value, an idea, and a vision of the value that we will create for the system. And like everybody said, well, if you go to a competing system or you're trying to leverage one system versus the other, that strategy would never work. But I think we're going to offer, over the years, a very stable platform for the hospitals to collaborate and create new services, and for us to recruit the highest quality physicians and retain them in a private practice sector that probably has to be aligned with hospital systems in order to provide the best care possible. So, that's kind of our story, which is a little bit different than others, but has been very successful. As advisors, we always talk around the openness, but communication is critical in these processes, whether it's communication amongst your partners, communication amongst your associates, those on track, recruits, management, hospital relationships, or other kind of joint ventures. And at such a critical pivot point within an organization, you should maintain those practices that you've done historically. This is not the time to pivot away from keeping information away from your associates if you've always had an open book in communication with the associates. I think the same goes for hospitals. If it's framed, as you said, Dr. Navas, we are investing in the community, we are bringing in private equity to remain independent, to support growth in this market alongside you as our partner, I think that can go a long way. It doesn't always work, however, and so over time, I think we will figure out and see how do these organizations of nine kind of navigate some of the complex situations that they may find themselves in, because they know it's right for the community, but maybe the hospital doesn't agree with that over time. Justin, if I can just kind of interject here a little bit, you know, we're different from Jorge, we're not aligned with predominantly one system, we're kind of equally balanced, and I think the systems were a little nervous to begin with, but we've had such good, long, embedded relationships. We have our physician-citizens on their boards, to the hospital systems, we had joint-ventured heart hospitals with them that obviously we were continuing. And now to the point that they're reaching out to us, they want to increase the physician presence on their campuses by recruiting through us. They've actually said we're more cost-efficient in terms of than their own employed physician groups, that their own employed physician groups, you know, they have to provide that subsidy to, you know, offer them $60, $65 per RVU, and they rather, you know, grow with us in collaboration. We've had several now national hospital systems who've now actually reached out to us. What would it look like if we handed off our employed group to you all? Because what we hear from the hospital systems, they love to say it's not their core competency to employ physicians. They don't do it well, they don't like doing it well, but they feel it's almost a necessary evil to ensure that they have a stable workforce that they can maintain. And I think they enjoy, they like to feel that having a little bit of control is important. But as the economics change with site neutrality and regulation and value-based reimbursement models, that fee-for-service model that their employees as physicians is going to be turned upside down. And I know it's kind of a crude analogy, but just how everyone knew at some point in time Great Britain was going to have to hand over Hong Kong, you can do that in a collaborative way, or you can do it in a very chaotic way. And I think the hospital systems are, you know, looking down the road and seeing where the puck's going to be, and that maybe it's better to collaborate with these hospital systems as partners by which we take over that physician workforce from them. We recruit better, we staff better, we provide that clinical autonomy, but work with partners as opposed to just competitors. And we think that's our vision, part of the reason why how we got into private equity-backed platforms. And I think some of the hospital systems are beginning to sense that. You've seen this with other specialties. For example, HCA did this with anesthesia, with a large anesthesia platform. And we think cardiology is going to be the next space by which there could be some big opportunities. Go ahead, go ahead. You don't mind. I just want to make one thing. So it's interesting, right? So we're also in more of a Rick Snyder situation here, where we have to service four hospital systems on a daily basis. And what we've learned over the years is every hospital has a different personality. Their C-suites are driven by different goals, right? And that's exactly what we've learned in our two major transactions in CBOSA and prying hospital employee groups out, is one situation was dealt with extremely negatively by the hospital. And we're working our way through that. And that was unexpected, sort of expected, but way worse than what we did expect. And we're working our way through that. And the second situation is the exact opposite. The group that joined us has a tremendous leadership presence in that hospital. They're very valued. And the hospital is at the table with us trying to figure out how to make this a win-win for everybody. So I guess my take-home point for me is it really depends on the temperature of your hospital system. Are they physician-friendly or they want to control the physicians? That makes a big difference. And then the second thing is, regardless of that, there's success in either path. Like we've had success with both groups. One was just a little bit more painful than the other. I think, you know, my perspective is some of the hospitals that are more negative about private equity and private practice as a sector, we need to educate them of what value we're bringing to the system long term. One of the things that they're going to feel a lot of pressure is in their profit margins, site neutrality changes over the years. And in some of the health care systems, they also have their own private insurance that are trying to go through their ACOs and try to limit their cost. And we can provide those services for them because we are more cost-effective than the hospital, however, you caught it and put it. So I think we have to work with the systems and educate them as to the value that we would bring to the community and to their cardiovascular services over time. Sometimes it's going to be harder and other times it's going to be easier depending on the relationship with the hospital, the community, the region, et cetera. But I think there's a lot of opportunities to collaborate with hospitals going forward. And I think we're going to provide a lot of value to them. Dustin, can I add something? Yes, please. Just to what Dr. Snyder said about looking at to where the puck's going. In the situation, not with private practices, but with PSA and employed groups, if the hospital has the private offices where these cardiologists are practicing and has other resources, staff and whatnot, and in an employed situation too, that the private equity would want to get and negotiate. I just want to point out that one of the arrows in the quiver, so to speak, that we've pulled out but didn't happen yet is not only a joint venture on an ASC, but also if the hospital's contributing value, instead of getting payment, maybe they get some of the platform equity. So it's almost like a three-way deal where the hospital gets equity in exchange for some contribution of offices and staff and equipment that they have, and they're okay with it. And it's kind of like the USPI model for ASCs, where it's joint venture, the hospital, the big USPI company, and then the doctor. So we see that in dermatology. It started in the Midwest. We're starting to see that there. And we think we pulled that out once, but it didn't work out with cardiology. But it is something to where this may be going. That's interesting. That's helpful, Gary. I'd like to call out something, and I'll put maybe you, Dr. Mehal, on the spot, and if there's a differing opinion from someone else, but I feel like there's a misconception around how private equity firms come in and they're controlling the narrative around transactions. But what I'm hearing from each of you is that it's actually the physicians that are managing the majority of the communication with the hospitals. Like, at what point do we consider approaching them? What is the messaging of that? Is that a fair assumption? And I'm certain that the private equity firm and your sponsor was supportive of it and helpful in the background. But ultimately, were they relying on the local leaders to have these conversations and ultimately convey the message around how this is going to be beneficial for them in the long run? Yeah. I mean, I can only speak for HVP, but in Heart and Vascular Partners, that's 100% true because the physicians are the ones who have these longstanding relationships. You know, I'm the one who negotiated tons of deals with the hospital for our group before HVP ever came along. And so we have that local knowledge. We have the local relationships. We can have the hallway and out of the meeting conversations to set the stage correctly. And so there are definitely points that I'm sure every private equity group, you know, has some guardrails. But within the scope of that, I definitely let the local physicians lead the charge. I would agree. I can attest the same with our group or our environment. It's the physicians and the administration of cardiovascular logistics that are having the discussions in terms of strategy with the hospital systems and with our partners and deciding what's the best course of action and deciding our clinical care and our relationships. And then we're getting the support of our private equity groups. So it's very different than what's pictured outside our community. Same with us. I mean, it's more reassuring the hospitals that nothing is changing. In fact, we want to continue to work collaboratively. We serve on the committees, the boards. We have the many PSAs. I'm president of the group. I must sign a renewal for one of those every week. We're at 40 different facilities. In fact, we've expanded that with the hospital systems. Our ASCs are three separate ASCs in three different counties. The hospital systems must call every week. Hey, we would love to invest in those, be a joint venture with you. So far, we're thinking we want to maintain those, but we're more than happy if we expand to work with the hospitals on that. Ours are more aligned. We're an SCA. Our ASCs are SCA. So in our market, it's with the Texas Health Resource System. But we're working with those. But yeah, like everyone says, it's more the physicians because we have those long-term relationships. Well, thank you, Dr. Snyder. I think maybe in conclusion, when we were kind of prepping for this last week, I think you, Dr. Navas, had like a really salient point. And Dr. Gary, you started this in the very beginning, which is aligning with private equity is not for everyone. And that's a good position to end up for a lot of those groups that out there in the market have decided that we want to remain independent. But there was a comment or my interpretation of the comment you made, Dr. Navas, is maybe the grass isn't always greener and that a lot of these groups that are hospital-based or under PSA are now coming into private practice for perhaps the first time in their careers. And what should they consider or what may they have not have considered as they consider joining, in your case, a CVL relationship or any of the other organizations that are out there? Well, I think my thoughts about that was that when you do a transaction, we did it in great part just to get the leverage and the resources that we could get with a bigger organization. And those resources involve better relationship and leverage in negotiating with the payers. A lot of collaboration with our partners in order to improve our services and what I call creating the best organization for physicians to practice in the community and so that we can recruit the best physicians and retain the best physicians and provide the best services. So I think as an organization, what we're trying to create is the best potential landing zone for those hospital physicians that want to change, that want to get back to the point where physicians are driving the decisions and where there's governance that is really driven by physicians who actually own the platform and have some financial incentives to continue to grow the platform. So I think we want to create the best system to provide healthcare services and collaborate with the hospitals at the same time and provide the best care for our communities. That's our vision and our goal. Justin, I agree with all that. I think one of the important things for employed physicians to consider is that the mass integration is now 15 years in, right? So there's a lot of these employee groups that probably have partners even that have never been in private practice. They've only known one way of practicing. Private practice, as everyone on this call can attest to, is different, right? We're fundamentally different than hospital employment and it helps to have some doctors in these organizations who know what private practice was to sort of shepherd these newer doctors into that. But if they don't, I think the private equity platform should leverage the doctors they have who are in private practice to get these people reacclimated. I mean, it's definitely a change. There's less sort of ancillary health. We sort of do a lot more on our own. But to me, the trade-off of making my own decisions and being able to do things tomorrow that I want to do today trumps all of that. We've actually had several physicians who were in the employed model their whole career, but they're pretty smart guys. One of them had an MBA after his name and he, again, sees where the puck is going. So he actively pursued us. So he wanted to be part of our transaction and this one individual was the highest producing by an RVU measure from a very large employed model. And he said he, you know, he understood he was going to lose a little bit at the beginning, but he sees where the puck is going and where the employment models are going to be under a lot of pressures going forward. You can only accept a loss per position $150,000 to $250,000 per year so far. You can only take that so far. And as you start getting to more penetration with value-based reimbursement models and site neutrality, that's going to be turned on its head. And we think there could be a mass promotion, if you will, of those physicians, but mainly from the CFOs of the hospital saying, hey, we need to put these guys in a different relationship. And we think we could be a solution collaboratively with the hospitals to solve a solution for them and work collaboratively with them. And as we started getting more value-based models, you know, have the full spectrum of outpatient and inpatient value-based risk that you can take in collaboration with. So I think this is a great model by which we can start working very collaboratively and enhance clinical autonomy and be a win-win for both sides of the equation. Well said. Well, we appreciate all the physicians joining the panel today, as well as you, Gary, from the legal minds. I think it's a very interesting topic, very relevant from a timing perspective, of course. And it's great to hear that each of your respective organizations have had success and managing through some challenges as to be expected in any new kind of initiative. But looking forward to the next couple of years, I think this is a trend that we'll see continuing and see a lot of successes. Well, Justin, you've thanked everybody else on the panel. And I would like to thank you, as well, for helping to create this webinar, having the vision for it, and for facilitating so expertly today. So with that, thanks, everybody. Again, I want to reiterate Justin's comments. Appreciate everybody being here and sharing their expertise. And with that, we will conclude today's webinar. And we look forward to continued conversations and input from this group. So thank you all very much. And thanks, everybody, for attending. And have a wonderful afternoon. Thank you. Thank you. Thanks, MedAxian.

webinar

panel of experts

hospital-based groups

private equity firms

cardiovascular care sector

communication

negotiating power

physician-driven decisions

healthcare partnerships