Across the Table

How Heightened FTC Scrutiny Affects Roll-Up Strategy, with McGuireWoods’ Holden Brooks: A Cross-over Episode from Deal-by-Deal

McGuireWoods - Alyssa Campbell and Kayla McCann Marty — Thu, 30 Nov 2023 03:00:00 -0500

In this special crossover edition of Across the Table, we're excited to republish an insightful episode from our sister podcast, Deal-by-Deal. Host Greg Hawver talks to fellow McGuireWoods partner Holden Brooks about antitrust considerations for private equity investors in the middle market (and, interestingly, the lower middle market).

They begin by discussing the Hart-Scott-Rodino Act, which requires pre-close filings for deals valued above $111.4 million that also meet certain other criteria — and note that some add-on strategies and other deals below this threshold may be subject to investigation by the Federal Trade Commission or Department of Justice if there are antitrust concerns.

Hawver and Brooks also discuss FTC v. U.S. Anesthesia Partners and Welsh Carson, a lawsuit that highlights the importance of assessing one's own acquisition conduct, being precise and accurate in communications and documents, and involving antitrust counsel in the pipeline stage of deals.

Join us as we bridge the gap between Across The Table and Deal-by-Deal, bringing you the best of both worlds under the roof of McGuireWoods.

Meet Your Guest

Name: Holden Brooks

Title: Partner, McGuireWoods

Speciality: Holden is a partner in the firm’s Antitrust, Trade and Commercial Litigation Department, where her practice focuses on mergers, complex litigation, civil and criminal enforcement, and counseling across several industries with significant experience in the area of healthcare.

Connect: LinkedIn

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This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

Crafting Successful Healthcare Investments: The Power of the Right Partners and Assets

McGuireWoods - Alyssa Campbell and Kayla McCann Marty — Mon, 15 May 2023 03:00:00 -0500

On this episode of Across the Table, host Kayla McCann Marty is joined by Alexis Rathborne, Managing Director of Investments at Trident for a discussion on the healthcare market and the investment thesis driving Trident’s team. Alexis explains how she applies Trident’s investment thesis – that identifying the right investment and operating partners is key to successful acquisitions – to the specialized physician investments she reviews. For Alexis, the right deal is all about finding the right asset within those specialties and the right partners to work in those sub-industries.

This approach reflects Trident’s belief that their operating partners–including CEOs, physician partners, and others on the ground–are just as important in driving their success as anything else, and they have no problem sharing credit with them.

Throughout the episode, Alexis shares insights into popular sub-sectors of healthcare investing that have interested the Trident team, along with some of the current challenges involved in making an acquisitions deal. She and Kayla also share the opportunities they see in the market and what they anticipate looking ahead.

Featured Guest

Name: Alexis Rathborne

What she does: Alexis Rathborne is a Managing Director of Investments at Trident. Since joining Trident in 2019, she has been instrumental in executing Trident’s investment thesis. Prior to Trident, Alexis led direct investing at Clear River, a single-family office in New York City, with a focus on restaurant investments.

Organization: Trident

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode

Having the right asset and partner makes an investment interesting. According to Alexis, Trident is interested in the optometry space due to the level of unconsolidated practices and the quick synergies that can be exercised in the industry.
Independent sponsors bring unique strengths. Working with operating partners or independent sponsors can help you find unique investment opportunities that are off the beaten path and not banked.
Valuations have been challenging in healthcare. With tightening debt markets requiring either lower valuations or larger equity investments, valuing acquisitions has been challenging. COVID has also affected practices differently, and there has been a disconnect between valuations and intrinsic value.

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Optimizing Success by Empowering Others with Matthew Pettit

McGuireWoods - Alyssa Campbell and Kayla McCann Marty — Thu, 27 Apr 2023 03:00:00 -0500

When leading a company, few things are as important as building a strong team and empowering those team members, according to Matthew Pettit, founding partner of Seven Hills Capital.

Before Matt formed Seven Hills Capital, he founded and worked as CEO of another successful business, Ascend Dermatology. His goal was to create an organization that provided top-tier compassionate care to dermatology patients and to offer a unique succession planning vehicle for practice owners. With that expertise under his belt and his prior experience as a healthcare private equity investor, Matt took his skill set and started Seven Hills Capital, an operator centric private equity firm focused on the healthcare industry.

On this episode of Across the Table, host Alyssa Campbell speaks with Matt about successful strategies he and his team have used to address staffing challenges, how acquisition growth strategies have shifted in a post-COVID world, and his emphasis on positivity in the workplace.

Featured Guest

Name: Matthew Pettit

What he does: As the founder of Seven Hills Capital, Matthew is focused on building the best in class healthcare services companies. Matthew set out to create a long-term operating perspective to healthcare services investing.

Organization: Seven Hills Capital

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode

The key to retaining employees comes down to good recruitment and good treatment. Matthew credits Seven Hills Capital’s partner companies' skilled recruiters with creating positive work cultures and articulating the company’s goals to prospective employees. Their partner companies provide health benefits and compensations competitive with larger companies, and for back-of-house employees, it also provides in-house daycare and hybrid work-from-home options.
Sometimes, you need to take conversations to the front end. When approaching the close of an acquisition process, it’s important to talk to the actual providers. Matthew attributes this to the large spread between buyers and sellers, as well as a tightening market in which cash flow becomes more important.
A company is only as good as its employees. Matthew operates under the notion that the right partners will positively impact, change, and drive culture. He believes if you empower employees to grow the way they want, the practice will thrive.

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What Q1 Earnings Reports Reveal for the Healthcare Industry

McGuireWoods - Alyssa Campbell and Kayla McCann Marty — Thu, 13 Apr 2023 03:00:00 -0500

On this episode of Across The Table, McGuireWoods partner Alyssa Campbell is joined by Colin McDermott and Savanna Ganyard of VMG health for a discussion of the publicly traded healthcare operator’s Q1 earnings reports, along with expectations for the rest of 2023. They also touch on whether today’s investment climate reflects a return to typical healthcare acquisition trends or if we’re entering a new post-pandemic era.

Public sector earning reports didn’t indicate any new trends across the industry as a whole for Q1, most of the notable trends were sector or company specific.

According to Savanna, the valuations during this earnings season have been interesting. Colin echoes these observations, noting that, “as we see multiples trend down in the public sector, even slightly, that's going to compress what their [buyers] are willing to pay for private companies.”

VMG Health regularly follows 23 publicly traded healthcare operators so they can provide their clients with industry expertise. Each quarter they produce a one-page earnings summary with quotes on major themes. This information was made publicly available to all clients last year due to high interest, especially following COVID. The summaries can be found here.

Featured Guests

Name: Savanna Ganyard

Organization: VGM Health

Connect: LinkedIn

Name: Colin McDermott

Organization: VGM Health

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode

Q1 earnings reports varied by company and by sector. Of the healthcare companies VMG follows, 15 had positive revenue surprises and 12 had positive EBITDA surprises this quarter, with no major industry-wide trends. Valuation multiples remained flat or decreased slightly, and EBITDA decreased for half of the companies, indicating more sector or company-specific than industry-specific trends.
This earning season has driven an interesting commentary on valuations. Companies that VMG is following have indicated they may be focused on targeting smaller companies and smaller deals compared to past years.
Buyers are resetting purchase prices more quickly than sellers. This may result in an unwillingness to sell, or broken deals when prices must be reset. Private transaction pricing changes tend to be reflected more slowly, causing tension between buyers cautious with their investments and sellers who want to stick to their pricing.

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A True Partnership: How To Grow a Successful Business Between Clinicians and Investors

McGuireWoods - Holly Buckley & Geoff Cockrell — Mon, 09 Jan 2023 03:00:00 -0500

Honesty and trust are two of the most important elements of any strong relationship. The same is true for the business relationship between private practice physicians and investors, according to Andrea Balogh who joins host Kayla McCann Marty for this episode of Across The Table.

Andrea is the Chief Growth Officer and Chief Legal Officer at Integrated Oncology Network (ION), where she’s responsible for developing and executing the company’s growth strategy. She also spearheads ION’s business development, market strategies, and marketing and payer strategies teams.

With more than a decade of experience in the healthcare private equity industry, Andrea believes three behaviors are essential to successful partnerships: open conversation, physicians and payers staying in (and respecting) each others’ lanes, and the alignment of goals and practices.

Tune in to the episode to learn how to develop strong partnerships and how investors can optimize their business relations and track trends in healthcare.

Featured Guest

Name: Andrea Balogh

What she does: As the Chief Growth Officer and Chief Legal Officer at Integrated Oncology Network, Andrea is responsible for creating and executing ION's growth strategy across the United States, as well as leading their business development, market strategies, and marketing and payer strategies teams.

Organization: Integrated Oncology Network

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode

There are three ingredients to a successful acquisition. At ION, Andrea emphasizes the value in physicians having a close, community-based environment where they can deliver care at the right time and place.
Honesty is the best policy. There is no better business practice than honest, open communication.
The future of the private healthcare equity industry is shifting. Take note of the move toward comprehensive care in the independent practice setting and how it is shifting to larger scale practices and partnerships.

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Looking at Acquisitions and MSOs in a New Light with SCA Health’s Kyle Lynch

McGuireWoods - Holly Buckley & Geoff Cockrell — Mon, 05 Dec 2022 03:00:00 -0500

In a “post-COVID” world, specialty care centers are trying to keep up with the ever-changing landscape of the healthcare market.

On this episode of Across the Table, host Kayla McCann Marty talks with Kyle Lynch, a Group Vice President of Development at SCA Health, which is part of OptumCare and is a leader in specialty care, practice management solutions, and outpatient management. Through his work at SCA Health, Kyle leads the acquisition and new partnership activity in the physician practice and practice management space.

Kyle discusses the company’s trend tracking, following how the market has changed since the beginning of COVID-19 and its prioritization of forming genuine partnerships that have longevity beyond the first five years.

Tune in to learn about trends in the current market, how SCA Health tackles MSOs, and the hopeful turn toward a more care-centric model in specialty health.

Featured Expert

Name: Kyle Lynch

What he does: As the Group Vice President of Development at SCA Health, Kyle Lynch leads the acquisition and new partnership activity in the specialist physician practice and practice management space.

Organization: SCA Health

Words of wisdom: “We [at SCA Health] are much more oriented around creating genuine partnerships where we can support practice operations and deliver our unique strategic value while preserving true physician practice autonomy.”

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode

Genuine partnership is a must. Kyle and the team at SCA Health is focused on creating genuine partnerships in which they can provide their unique strategic planning while preserving the practice’s operations and autonomy.
There’s a different way to think about MSOs. At SCA Health, MSOs are unrestricted. The MSO equity is almost immediately returned as a stream of constant income for shareholders.
There is so much value in specialty practice spaces. Kyle explains the flow of value that can be utilized and monetized for the benefit of independent specialists. He believes SCA is perfectly positioned to capitalize on that for the sake of its clients.

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Navigating the Competitive Deal Sourcing Market

McGuireWoods - Holly Buckley & Geoff Cockrell — Tue, 14 Sep 2021 03:00:00 -0500

Paul Barrett isn’t afraid to get in the weeds to help an entrepreneur in the healthcare industry fulfill their vision. He and his team at Argosy Healthcare Partners pride themselves on seeking out organizations with smaller EBITDAs.

The way Paul sees it, both sides win with this approach. Argosy avoids the stiff competition that comes with high-worth companies; and the lower middle market companies Argosy pairs with are able to forge ahead with more capital support.

That said, Paul knows it’s not always easy to buy and build a relatively small company. But it pays off, he insists.

“It’s super important for us to find the right business and quality of founder, and we can do a lot of that from due diligence,” Paul says in this episode of Across the Table.

“We can build a personal relationship with the founder who is looking for capital to execute on acquisitions, or to clean up their cap table, or are just ready to grow a little more quickly.”

Paul is always keeping an eye on interesting areas in the healthcare world — which are not hard to come by these days. Thanks to the pandemic, evolutions in medical science, and a quickly aging population, there is plenty for a creative capital provider who really wants to make a difference to watch out for.

Tune into the episode to hear more about Paul’s business strategy at Argosy Healthcare Partners, and what he thinks about the future of funding in healthcare entrepreneurship.

Featured Experts

Name: Paul Barrett

What he does: Paul is a managing partner at Argosy Healthcare Partners, where he works in fund management, developing, assessing and strategizing on investment opportunities.

Organization: Argosy Capital

Words of wisdom: “We focus on the small stuff. That's a key part of our thesis and strategy in trying to differentiate ourselves in a super-competitive market.”

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode

★ Smaller EBITDA means less competition. Venture capital is very competitive, especially in the lucrative healthcare industry, and especially over companies with a high EBITDA. Instead of constantly fighting to source deals, Paul and his team look at companies with smaller EBITDAs that they can help grow.

★ Don’t back away from less sophisticated founders — but set boundaries. Argosy’s strategy of investing in lower middle market companies means the firm often deals with boards and founders who aren’t necessarily well-versed in the business world. This allows for a really hands-on approach to buying and building a company, but requires tougher work from the jump. Paul does set limits: He and his team don’t work with companies with founders who are retiring, and EBITDAs under $1 million. There is a limit to what they can do.

★ Pay attention to subsectors and trends. Argosy Healthcare Partners is passionate about supporting companies in specific subsectors of the healthcare industry, for example healthcare staffing and post-acute care. Pay attention to social and cultural trends — as well as events like the COVID-19 pandemic — that change the landscape and determine which subsectors have the potential to heat up.

Episode Insights

[1:26] How it began: Paul talks about Argosy Capital’s 30-year history of focusing on small- and medium-sized companies, and supporting majority controlled and founder-owned healthcare service companies.

[02:23] The small stuff is a big deal: Paul discusses Argosy Capital’s strategy of investing in smaller, less-competitive opportunities. The ultimate goal, he says, is to support founders in executing their visions.

[03:48] Game on: Paul says that prioritizing organizations with less than $10 million in EBITDA has helped eliminate competition in the past, but more capital providers have started taking an interest in these opportunities.

[07:00] Getting in the weeds: Dealing with less business-savvy founders pays off when you get to work intimately alongside them, to help grow their companies from the ground up.

[12:51] Focusing on industry subsectors: Argosy focuses on specific subsectors in the healthcare industry, particularly healthcare staffing, which has been particularly dynamic for the past several years — making it interesting for capital providers.

[14:35] The pandemic changed the healthcare market: For example, the traveling nurse business boomed during the pandemic, whereas there have been downturns in other parts of the healthcare industry, like elective surgery.

[16:24] The Boomer effect: As the Baby Boomer generation ages, home health and hospice will become more lucrative. Paul is interested in investing in post-acute companies that are aimed at this population, because the market is going to continue to grow.

[17:57] Investing in innovation: Paul says another fascinating part of the healthcare industry right now is biotech and life sciences.

[20:14] Macro market insulation: Paul discusses how funding in lower middle market healthcare companies provides some insulation from macroeconomic trends that impact other industries.

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The Importance of Cultivating Borrower-Lender Relationships

McGuireWoods - Holly Buckley & Geoff Cockrell — Wed, 25 Aug 2021 03:00:00 -0500

As a private equity borrower in the ever-changing healthcare field, you have leverage in your deals with lenders.

Penny Zacharias, Clayton Stallbaumer, and Ying Hsu are all partners in McGuireWoods’ debt finance group. They regularly work on sponsor-backed lending transactions in the healthcare space, and are particularly familiar with the borrower side of the equation.

To these experts, if you’re a private equity borrower in this field, the most important tool at your disposal is communication — and staying organized.

“Look at the long-term and think of this as a relationship,” Clayton says. “We've seen private equity firms and their portfolio company borrowers have a lot of success when they frame their communications in a way that is honest, but benefits them.”

If you are looking for funding in an innovative field like healthcare, you’ll want to be able to feel like there’s room for change. Better communication at the outset of the credit facility will enable more flexibility down the line.

And have a system for all those documents. Ying says that organizations doing complex healthcare deals should make sure they have all their paperwork together, and get all the needed signatures in advance where possible, so they can get the deal passed efficiently. There should be no surprises the night before you close.

Tune into the episode to hear from these debt financing professionals about how you can form great relationships with your lenders and keep your finger on the pulse of the borrowing landscape, to make sure you’re getting the best deal.

Featured Experts

Name: Penny Zacharias

What she does: Penny is a partner in the debt finance group at McGuireWoods, where she draws on her 15 years of legal experience to represent financial institutions in a broad range of lending transactions. She is also the co-chair of the company’s Women in Private Equity & Finance Initiative.

Organization: McGuireWoods

Words of wisdom: “Thinking of your lender as a partner will afford a greater level of flexibility in negotiating from the outset.”

Connect: LinkedIn

Name: Ying Hsu

What she does: Ying is a partner in the debt finance group at McGuireWoods, working in ABL and healthcare. She also serves as the deputy co-chair of the Women Lawyers Network of McGuireWoods’ Chicago office.

Organization: McGuireWoods

Words of wisdom: “Nothing beats being hyper-organized about closing deliverables when it comes to making the process go as smoothly as possible.”

Connect: LinkedIn

Name: Clayton Stallbaumer

What he does: Clayton is a partner in the debt finance group at McGuireWoods, representing agents, lenders, borrowers, private-equity firms, and debt funds in a range of lending transactions.

Organization: McGuireWoods

Words of wisdom: “A little bit of good faith goes a long way in strengthening those borrower-lender relationships.”

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode

★ There’s an art to the borrower-lender relationship. Penny, Clayton, and Ying all say that you cannot overstate the importance of a good relationship between a borrower and lender, especially in the healthcare investment space. Clear communication and transparency are essential for successful deals.

★ Make room for flexibility from the start. Before signing a credit facility, a borrower should make sure all parties are on the same page about growth trajectory and add-on acquisitions. As a borrower, you want to make sure that you have some wiggle room to grow and change, without catching your lender by surprise.

★ Borrowers have some leverage. Ying, Penny, and Clayton all encourage borrowers to use the leverage they have in a favorable market to get the deals of their dreams. Remember that power, and use it wisely, instead of grasping at straws from lenders.

Episode Insights

[03:02] The swinging pendulum: Penny discusses how leverage between the borrower and lender changes depending on the lending environment. Right now, it’s a competitive market, giving borrowers extra power to get good deals.

[04:50] Work on your relationship: Clayton talks about how private equity borrowers can rethink their transactions with their lender partners, to build a mutually beneficial long-term relationship.

[06:45] Good faith and judgment: Clayton says that as long as borrowers are negotiating in good faith, taking an honest look at their business, that borrower-lender relationship can continue to thrive.

[09:29] Communication is key: Penny points out that if you prioritize communication and flexibility before you sign the credit facility, it will save you trouble down the line.

[12:10] Stay organized: Ying talks about the importance of keeping hyper-organized when it comes to deliverables, especially in a complex healthcare deal. Meet your closing requirements and get all the documents in order, and you can keep legal fees at a minimum.

[14:09] Keep on top of the cash: Ying says that in healthcare deals, knowing your lender’s cash management requirements can help eliminate roadblocks on the way to closing your deal.

[14:54] History matters: Clayton says a lender who is familiar with a private equity firm and has a history of successful transactions with them has more flexibility in their deals. Building up that positive pattern takes strong communication skills and time.

[17:36] Time to refinance: Ying, Penny, and Clayton all reflect on the ways borrowers can determine that it’s time to refinance, and how to decide when and if they need to change lenders.

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The Consolidation of Healthcare — What Does it Mean for Investors?

McGuireWoods - Holly Buckley & Geoff Cockrell — Fri, 30 Jul 2021 03:00:00 -0500

Investment in the healthcare sector is as strong as ever, but balancing risk and profit can be tricky when it comes to consolidation. Doctors want reassurance and investors want lucrative deals.

How do you find the balance?

Rajesh Kothari, Founder and Managing Director of Cascade Partners, offers his insight and experience on the outlook of investing in healthcare services in a seller’s market.

It is becoming more and more difficult to survive as a solo practitioner in today’s healthcare world, and the consolidation of healthcare services is continuing at a steady rate.

For some, this is an investment dream come true, for others it is a reality to get used to.

“We joke all the time that you can be a good CEO or you can be a good clinician. They're both full-time jobs and you can't do both,” Rajesh explains.

“That's a cold dose of reality for folks that for the last 20 years could have a good administrator more or less, rather than making a good living. You can't survive in the healthcare business world today and deliver high quality care and run like you ran 20 years ago.”

What does consolidation and other major industry trends mean for the healthcare investor? Host Geoffrey Cockrell and Rajesh break it down and examine the market.

Featured Experts

Name: Rajesh Kothari

What he does: As the Founder and Managing Director of Cascade Partners, Rajesh helps companies, shareholders and boards realize the full value of their endeavors. With 30 years of experience, his work in the healthcare, industrials, business services, and technology sectors is unrivaled, and through the years he has guided and influenced his clients’ growth and development to ultimate success.

Organization: Cascade Partners

Words of wisdom: “I describe it to the physicians as it gives you maximum flexibility, because you can either go down the private equity path or you've got the capability or the resources now to kind of go at it on your own and continue to succeed. And I'm a big believer that optionality is the best path.”

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode

★ The consolidation of healthcare providers isn’t slowing down. What started in anesthesiology and emergency medicine has spread to every specialty — from women’s health to podiatry. Being a solo practitioner is becoming more and more difficult to maintain in today’s market.

★ Size doesn’t matter if your leadership stands out. When it comes to valuations for small practices, a strong leader can be highly attractive to potential partners. Investors want strength and confidence — not necessarily size — when thinking about where to put their money.

★ Reassure doctors on the process. When it comes to acquisitions, a certain level of doubt and suspicion is expected. Learning how to quell these fears and make sure doctors understand expenses and rollout is vital to maintaining a healthy partnership.

Episode Insights

[2:10] Is there an end in sight?: Geoff points to physician consolidation when it comes to the question of whether the consolidation of healthcare providers will ever end. Or is consolidation the new normal? Rajesh explains the consolidation process.

[6:47] Specific sector growth: Not all parts of the healthcare world are created equal when it comes to financial growth. Rajesh gets into the details of which sectors are trending upwards and Geoff points out the benefits of joint ventures with these sectors.

[9:20] To contract or not to contract: Rajesh and Geoff discuss why value-based pricing is strong in some areas and still very much so a new idea in other sectors, especially when it comes to smaller practices.

[12:22] A physician’s frustration: When it comes to a potential partnership, Geoff and Rajesh break down why smaller physicians and practices find the process difficult, but also how they can use their size to their advantage.

[15:16] A seller’s market: When it comes to deal terms, the market is very much tilted towards the sellers at the moment. What does that mean for investors? Rajesh breaks down things investors can do to make sure they get a good deal.

[18:23] The bottom line: Geoff explains a deal from a doctor’s perspective, how important their clinical autonomy is, and how to work with such potential partners.

[23:32] What the future holds: Rajesh predicts where the market is going and what to expect. It’s a tax law change year, and there will be a lot of upheaval.

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Analyzing Current Healthcare Trends & Their Relationship to Private Equity

McGuireWoods - Holly Buckley & Geoff Cockrell — Fri, 28 May 2021 11:05:00 -0500

Healthcare investing is experiencing a gold rush — thanks to the explosion of investments in healthcare technology since the onset of the COVID-19 pandemic.

Scott Becker, Partner at McGuireWoods and the Founder and Publisher of Becker’s Healthcare, joins the podcast to share insights on healthcare technology investments.

Investments in healthcare technology have been fruitful for venture capitalists and private equity investors over the last few years and that has only accelerated through the pandemic.

Scott has also seen a movement toward practice-type investments — with lots of investment in provider-driven transactions, such as group practices, orthopedic specialties, dermatology, dental and more.

There are two other big trends looming; one is the investment in value-based businesses and models and the other is the notion of investors moving toward asset-light business versus asset-heavy business.

Listen to the full episode as Scott discusses the trends of healthcare private equity investing and venture capital investing before diving into three issues the health systems are facing, including the competitive pressures hospitals face and the race for COVID-19 vaccines.

Featured Experts

Name: Scott Becker

What he does: As a partner at McGuireWoods and CEO and Founder of Becker’s Healthcare, Scott takes his experience in the healthcare industry and turns it into digestible information for private equity investors.

Organization: McGuireWoods

Words of wisdom: “What I find interesting is these venture funds, these private equity funds, some of which have a few billion dollars under management, some which have a billion dollars under management, no less, have made a hugely outsized impact in the healthcare technology space. I find it far more fun to watch those, then the Googles, the Amazons, the Apples and so forth. Those are always going to be big players. They've got so many resources.”

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode

★ Subscription-based services are the new “gold standard.” Recurring revenue is attractive and when charging on a subscription basis, revenue won’t change depending on if a surgeon had a busy day or not. Subscriptions fit well with shifts towards value-based healthcare.

★ Asset-light businesses are more technologically scalable. Asset-light businesses focus on connecting the assets and resources rather than owning them, which makes for more solid profit margins, according to Scott.

★ Health systems face growing competition as the #1 call for patients. Hospitals have seen competition come from the internet and urgent care centers. In order to maintain their patients’ prioritization, hospitals must be more responsive to their patients.

Episode Insights

[2:44] Healthcare investing today: Scott expands on the success of venture-based investments and private equity investments. He explains how this relates to the explosion of healthcare technology and digital investments.

[6:40] Moving with an impact: Scott digs into why watching venture funds move into healthcare technology is more interesting to him than watching Big Tech and how those venture funds leave their mark.

[9:14] The gold standard: Scott explores value-based care before and during the pandemic and the “gold standard” of subscription-based services.

[12:46] All the rage: Scott compares asset-heavy businesses versus asset-light businesses and why asset-light businesses are much more scalable around technology than asset-heavy businesses.

[15:44] The main focus: With COVID-19, hospitals and health systems found themselves in an unexpected situation. Here, Scott dives into what health systems are focusing on now in terms of the economy and employment.

[20:22] Under pressure: Scott explains why the current struggle for health systems is maintaining their status as being the number one place patients call in a time when urgent care centers are surging.

[23:54] The dash for vaccinations: With the rollout of COVID-19 vaccinations, Scott identifies three issues health systems face – the supply of vaccines, actually getting people vaccinated and vaccine hesitancy.

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Looking at Payment Optimization in an Increasingly Digital Healthcare Landscape

McGuireWoods - Holly Buckley & Geoff Cockrell — Thu, 22 Apr 2021 03:00:00 -0500

Paper is so yesterday — and the team at healthcare and financial technology growth company Zelis knows this firsthand.

Eric Schaefer and Yusuf Qasim, Zelis’ Executive Advisor and President of Payments, respectively, focus on strategy and market direction to adapt in an ever-changing healthcare landscape. The industry’s increasing dependence on tech is what leads these two to believe that moving toward a 100% electronic payment method is the way to go.

“We really focus on the payer, the provider, and then the member of the health plan, trying to impact processes and efficiency in the consumer's journey — them trying to navigate and understand healthcare,” Eric says. “I think you're going to see more of this virtualization of care, where it's applicable.”

Yusuf agrees, adding that as consumers become more educated, they want a better healthcare experience — so there’s no better time than now to build an improved system.

According to Yusuf, the COVID-19 pandemic actually ended up being helpful for Zelis. As a healthcare payment technology company, the way Zelis is set up enabled it “to be a conduit for those businesses that were either heavily reliant on manual processes or had a lot of onsite presence.”

“We just sat really well-positioned to help facilitate that and to leverage our expertise and our scale to avoid any disruption in service,” Yusuf says.

Eric says the best way to head in a more technology-driven direction is to get away from people-oriented manual processes — for example, getting rid of paper-based systems.

Tune into the episode to learn some of the ways companies like Zelis are going digital. This includes not only moving toward entirely electronic payments, but crafting initiatives such as Zelis Assembly, which is a new way to deliver company information to customers and stakeholders who can’t meet in person but are also sick of traditional Zoom calls and virtual conferences.

Featured Experts

Name: Eric Schaefer

What he does: As the Executive Advisor and Board Member at Zelis, Eric uses his nearly 15 years of experience as the CEO of RedCard, the company that merged with Zelis, to help guide business decisions.

Organization: Zelis

Words of wisdom: “I think you're going to see more of this virtualization of care, where it's applicable. You're going to see more information, this wealth of information that is just floating out there. You're going to start to see that information get honed a little bit better so that it's more usable for the consumer.”

Connect: LinkedIn

Name: Yusuf Qasim

What he does: As the President of Payments at Zelis, Yusuf provides strategy and go-to-market direction to drive Zelis’ market leadership, capabilities, and client services in payments optimization.

Organization: Zelis

Words of wisdom: “Thinking about how we approach this as a group, and as an industry and getting the message out there, being able to have a platform that iterates and really delivers bite-size information was just really important to us.”

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode

★ There’s always a bright side, even in a pandemic. According to Yusuf, the pandemic has been a good opportunity for Zelis employees to talk about things like accelerated payment and moving away from the manual, which is only holding the company back during this period of impressive emerging technology.

★ It’s time to steer away from people-oriented manual processes. The world, especially in the era of the COVID-19 pandemic, is becoming increasingly digital. Those in the healthcare payments field need to catch up, which is why Eric says Zelis’ goal is to work toward 100% electronic payments.

★ When you can’t connect in person, you must innovate. That’s why Zelis created Zelis Assembly, a new way to deliver company information to customers and stakeholders who the team can’t meet with in person. Yusuf calls it a fun way to share expertise with clients and partners.

Episode Insights

[00:51] Getting acquainted: Eric and Yusuf describe their respective backgrounds in healthcare payments and technology and how they got involved with Zelis.

[02:32] The perfect pairing: Eric discusses why Zelis and RedCard merged in 2019 and why that year was the right time to do it (hint: it’s all about leveraging).

[04:30] Payment pioneers: Yusuf describes Zelis’ unique payment model, which he says was a buildup over time, and why the pandemic was a good growth opportunity.

[06:21] Glass half-full: Yusuf explains why the amount of interest in the mergers, and acquisitions, and capital being injected into the healthcare space is a good sign for the industry.

[07:42] Focusing in: Eric jumps in to explain why Zelis focuses on the payer, the provider, and then the member of the health plan to impact processes and efficiency in the consumer's journey.

[09:34] Post-pandemic perspective: Yusuf discusses the importance of finding a safe way for Zelis to continue to manage and scale its print facility operations during lockdown.

[11:07] The death of people-oriented processes: Eric describes why, lately, the accelerated trend has been to steer away from people-oriented manual processes, whether that's in a clinical setting like virtual care visits, or people getting rid of paper and other manual processes.

[12:22] Getting innovative: Eric explains Zelis Assembly and why it’s the ideal way to deliver information about Zelis’ work to customers and stakeholders in a world that doesn’t allow safe face-to-face communication.

[14:13] Coming to fruition: Yusuf discusses why Zelis Assembly is a way to share the company’s expertise with clients and partners through a medium that combats Zoom fatigue and virtual conference fatigue.

[15:20] The future of Zelis Assembly: Yusuf reflects on the journey to get Zelis Assembly launched and explains its role in awareness.

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Navigating the Complexities of Digital Healthcare

McGuireWoods - Holly Buckley & Geoff Cockrell — Wed, 24 Feb 2021 03:00:00 -0500

The COVID-19 pandemic fast-tracked an already expanding telehealth industry, and while there is no doubt about the convenience this will create for health consumers, the complexities of implementing these practices go far beyond the creation of apps for patients to communicate and share data with their doctors.

Janice M. Suchyta and Andrea Linna, Partners at law firm McGuireWoods, are advising IT companies, software developers, and medical device manufacturers as they navigate through this complex new world of digital healthcare.

They know that as the industry expands, so too will the ever evolving rules and regulations that companies will need to follow. It might seem daunting to stay on top of those restrictions, not to mention how public and private sectors will work together to share sensitive patient data across multiple platforms, but the lawyers share what they are seeing, to help you know what to expect from this exciting new world.

“There's going to be a huge trend in regards to developing data platforms that are interoperable so that everyone is on the same system and is able to use these interchangeably without having to use different platforms,” says Janice, “It's going to be very exciting.”

Along with data platforms that communicate with each other, there will also be apps where a doctor or care provider can monitor patients through a computer or wearable. That’s right, interconnectedness is the key to the future of digital healthcare on many levels.

On-demand healthcare, Janice and Andrea say, is headed beyond primary care. Behavioral health, psychology, and tele-psychiatry will also be added to the mix. Data is and will continue to be a necessary tool for providers to care for patients at a distance, and that is where the complex regulations come in, as you’ll hear in this podcast episode. Companies will also need to invest in data security, and stay current with how to protect this sensitive data in a world where hackers and breaches are top of mind and make people hesitant to share personal information.

Tune into the episode to begin to understand some of the complexities of digital healthcare and how it will change how providers give care and patients receive it, especially in the post-COVID-19 world where virtual will certainly be here to stay.

Featured Experts

Name: Janice M. Suchyta

What she does: As a Partner at McGuireWoods, Janice advises health IT companies, technology companies, software developers, biotech companies, network device and medical device manufacturers and private equity and venture capital firms in regulatory matters.

Organization: McGuireWoods

Words of wisdom: “There's going to be a huge trend in regards to developing data platforms that are interoperable so that everyone is on the same system and is able to use these interchangeably without having to use different platforms. It's going to be very exciting.”

Connect: LinkedIn

Name: Andrea Linna

What she does: As a Partner at McGuireWoods, Andrea helps healthcare companies navigate telehealth, telemedicine, remote patient monitoring, different emerging technologies, HIPAA, and healthcare IT such as electronic medical records. She also works with healthcare companies across the spectrum on mergers and acquisitions and other regulatory compliance issues.

Organization: McGuireWoods

Words of wisdom: “2020, as terrible as it was, really was a breakthrough moment for tele-health and we saw this great advancement, reduced regulatory burdens, widespread adoption.”

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode

★ Artificial intelligence as an investor opportunity. The collection of data in healthcare is widespread among a range of providers. Now the question is, how can we use this data for better health outcomes? “There is a huge uptick in regards to value-based care models,” Janice observes on the podcast.

★ Future reimbursement for telehealth is in question. Legislators had to quickly change reimbursement laws when the pandemics first hit. Now, state and federal legislators are figuring out what virtual care payments look like post pandemic. For example, lawmakers in Idaho announced changes made to telehealth reimbursement are now permanent.

★ Now is the time to consider the post-pandemic environment. Telehealth, digital health, and wearables create a tangle of laws and requirements. Companies need to think not only about what to do now, but also how they will stay in compliance post-pandemic.

Episode Insights

[02:00] Pandemic fast-tracked digital healthcare: Janice discusses her background and notes that the changes in digital healthcare are only going to continue.

[4:00] Connected health: Janice describes why health data systems have to be engineered to work together and why we’ll likely see more of them.

[06:21] On-demand healthcare: The pandemic has forced the adoption of remote healthcare, which is only going to continue across different areas of care. Janice outlines the areas where we will see increased investment in telehealth, including in behavioral health and remote patient monitoring.

[10:27] AI tools are an investor opportunity: Janice talks about how AI will help make meaning of the different data points collected by apps and remote monitoring devices.

[12:52] Digital health stakeholders are changing: Thanks to conditions brought on by the pandemic, government entities and even government regulators are jumping on the digital health bandwagon.

[14:03] Virtual reality in digital health: “We always think of virtual reality as just your teenager using it for a video game,” Janice observes before noting the investment opportunity in VR and how it is being used in healthcare settings.

[14:54] Robotics explosion: Robotics have been used in surgery for a while, but there's a trend in using robotics outside of that — even for daily patient care.

[16:07] It’s all about the data: Data is the top regulatory issue Andrea sees in healthcare right now. “Digital health — in its essence — it's really about healthcare data,” she says, outlining the various concerns when it comes to collecting, managing and protecting data.

[18:24] The future of payments for virtual care: There’s a “flurry” of state and federal legislation dealing with tele-health and reimbursement to define what it will look like post-pandemic.

[21:00] Changes on the enforcement front: Andrea doesn’t think new regulations (due to the pandemic) will be rolled back overnight, but she sees some areas — like HIPAA regulations about how providers can communicate with patients — changing eventually.

[23:14] What’s next?: Andrea believes there’s a lot more innovation to come thanks to telehealth becoming much more accessible to consumers.

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The Emerging Models of Home Healthcare

McGuireWoods - Holly Buckley & Geoff Cockrell — Thu, 28 Jan 2021 16:15:00 -0500

Undeniably, the COVID-19 pandemic has changed the lives of billions across the world. It's caused great suffering, altered the way we go about our daily lives, and transformed the healthcare industry too.

One major consequence of the pandemic: the shift toward home health.

"Families recognize the imperative of trying to keep their loved ones comfortable and safe in their home," says Barry Freeman, Managing Director of Lincoln U.S.' healthcare industry team.

That's not the only difference in the healthcare industry. Along with this shift toward home health, the industry is also seeing a movement toward value-based models and joint ventures within health services — in other words, the combining of services to offer patients better outcomes.

"We are seeing more and more of these kinds of models emerging, and it's very beneficial for high quality home health operators who do have the technology, the infrastructure, the clinical pathways, and the ability to inter operate with the hospital to be really valuable partners," Barry says.

This episode of Across the Table features a conversation between Geoffery Cockrell and Trey Andrews of McGuireWood and Barry at Lincoln U.S. All three have experience working in the healthcare space, whether that be working in mergers and acquisitions or providing guidance on transactional and regulatory models.

Geoff, Trey, and Barry lend their expertise on how the healthcare industry is changing, and specifically the prognosis for home health and telehealth. They also chat about the future and provide insight into why the diversified model of healthcare is the one to watch in coming years.

Featured Experts

Name: Geoffrey Cockrell

What they do: Geoff is the Chair of McGuireWood's private equity group and serves on the firm's Board of Partners; he has extensive experience in mergers and acquisitions, especially in the healthcare space.

Organization: McGuireWoods

Connect: LinkedIn

Name: Trey Andrews

What they do: As an Associate at McGuireWoods, Trey focuses on transactional, regulatory, and enforcement matters for healthcare providers and private equity firms in the healthcare industry.

Organization: McGuireWoods

Connect: LinkedIn

Name: Barry Freeman

What they do: Barry is the Managing Director of Lincoln’s healthcare unit; he provides merger and acquisition advisory services to players in the U.S. healthcare space.

Organization: Lincoln International

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode

★ COVID-19 has changed the landscape of healthcare. The pandemic has illuminated the advantages home healthcare has over hospital care. Plus, telehealth has allowed doctors to meet with patients as healthcare facilities become overwhelmed. These aren't temporary trends, either; the runway for the home health industry could last 5-10 years.

★ PDGM has shifted to value-based care. The Patient-Driven Groupings Model (PDGM) has shifted to a reimbursement scheme largely dependent on the value-based care model. In other words, companies are incentivized to deliver quality outcomes rather than simply offering a great number of services. Although there was some skepticism about whether this shift would be effective, healthcare agencies benefited from government cash flow to aid during the pandemic, which may have made a smooth transition to value-based PDGM.

★ The pendulum is swinging back to a diversified model of healthcare. These days, pure play models — or companies that focus mostly on one type of care, like hospice or pediatric care — have higher valuation than diversified models that might incorporate skilled and unskilled care, for instance. However, Barry believes that the shift to value-based care will also end up favoring diversified players.

Episode Insights

[3:12] A catalyst for home healthcare: COVID-19 has increased the push for people to have their loved ones cared for at home instead of in hospitals. Barry says this is not just a temporary consequence; he predicts this turn toward home health will have a lasting impact.

[7:54] Changing to value-based care: Healthcare providers are shifting their focus away from offering a high volume of services to providing quality patient outcomes.

[13:54] Partnership: More hospitals and home healthcare operators are turning to joint venture relationships, or combining services rather than siloing them.

[21:26] The rise (and challenges) of telehealth: Although telehealth has been around for at least 30 years, the pandemic accelerated its use. However, it's not a replacement for some areas of healthcare, like home health services that require physical assistance.

[27:35] Diversified vs. pure play models: Healthcare providers focusing on one specialization may have higher valuations now, but the market is moving in a different direction. These days, investors are beginning to look at companies with more diversified models.

[31:35] Value-based structures in the home health area: One value-based model appearing in home health include the CMS innovation program, which concentrates more on holistic care to avoid hospital readmissions and manage chronic conditions.

[34:38] Looking toward the future: With greater stability from government reimbursement, Geoff believes that "the tailwinds are going to continue to blow in the direction of consolidation" which "bodes well" for the industry.

Pharmacy Services and Pharmacy Benefit Management

McGuireWoods - Holly Buckley & Geoff Cockrell — Tue, 22 Dec 2020 01:00:00 -0500

Pharmacy benefit managers are the middleman in the drug supply chain, but over the past few years, there's been a great deal of controversy with respect to their role. Kate Hardey, a partner at McGuireWoods, wants you to better understand the role of PBMs.

“When you think of a pharmacy, your insurance normally pays for your prescription,” she says on this episode of Across the Table with host Geoff Cockrell.

“A lot of times there's a pharmacy benefit manager in the middle who is negotiating the fees and the costs for that prescription between the insurer and the pharmacy.” The PBM contracts with employer health plans to negotiate prescription drug benefit plans. Additionally, they contract with the drug manufacturers to negotiate drug discounts.

Tune in to this episode of the podcast to understand what you need to know about pharmacy services and the role of PBMs if you’re looking to invest in this space. Kate explains the difference between a 503A pharmacy (think Walgreens or CVS) and a 503B pharmacy, which is a specialized type of pharmacy and which type of pharmacy could make for a better investment.

The episode also covers the issues that can arise when investing in this sector, such as a lack of compliance when it comes to FDA, HIPAA and PCI regulations, licensing (especially when crossing state borders) and managing costs.

Featured Expert

Name: Kate Hardey

What she does: As a Partner at McGuireWoods, Kate advises healthcare providers, pharmaceutical, medical device, dietary supplement and life sciences clients on regulatory and compliance matters.

Organization: McGuireWoods

Words of wisdom: “When you're doing diligence, understanding whether or not a pharmacy has had a history of issues with the state board is very important. And understand if anything needs to be cleaned up, or you might have issues with the pharmacy going forward.”

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode

★ Take note and heed state-specific pharmacy rules. Each state requires a pharmacy to hold a license to practice. But if you're conducting pharmacy services in Colorado and you often ship pharmacy products to nearby Wyoming, for example, you will be required to be licensed in both states. State laws that pertain to pharmacies vary, which becomes very important in a transaction because the state’s pharmacy board is going to require at least notice and potentially require an entire new application to be submitted.

★ Dig into the complexities of all PBM contract terms. The area that requires some of the most diligence — when you're looking at a PBM business — is the various contracts and all of the key contract terms. It is critical to understand both the PBM relationships with manufacturers (their rebates, discounts, etc.) and the contract with the employer groups.

★ Keep your eye out for possible issues. You have to be on top of your game in this sector because you’re dealing with drugs and private health data, so stay compliant when it comes to not only HIPAA, but FDA regulations and the Payment Card Industry Data Security Standard.

Episode Insights

[02:18] The role of PBMs: Pharmacy benefit managers are the middleman in the drug supply chain, but over the past few years, there's been quite a bit of controversy with respect to their role and drug price increases.

[04:48] The difference between 503A and 503B pharmacies: 503A pharmacies, which includes well-known companies such as Walgreens and CVS, is where Kate has seen more financial activity, versus newer 503B pharmacies that do compounded drug products for manufacturing.

[11:51] Do your homework on licensure before investing: Licenses are key in pharmacies, so it's very important in a transaction and also applies if you're doing or a stock deal. The state board of pharmacy could potentially require a new application to be submitted.

[14:31] Dealing with audits: If there is an issue, most pharmacies will get an opportunity to correct it. If issues are not corrected, occasionally they’ll be fined by the state board of pharmacy. It’s a fairly easy cleanup, but not something to let linger.

[16:44] Ensuring compliance: 503B pharmacies are 100% under the purview of the FDA. Kate discusses the frequency of inspections and how the FDA alerts pharmacies if they need to step up their game.

[23:21] PBM investor activity and diligence concerns: The biggest area of diligence with a PBM business is the various contracts and key contract terms.

[28:29] Be on the lookout for retail pharmacy spread and kickbacks: Ask the PBM for data on how payments are working if an employer or an insurer is being charged more for processing a drug, because then the pharmacy actually gets paid. So for that, you would want to ask for specific data from the PBM and how the payments are working.

Healthcare Provider Service Transactions in 2020 & Outlook for 2021

McGuireWoods - Holly Buckley & Geoff Cockrell — Mon, 07 Dec 2020 03:00:00 -0500

When considering a private equity partner for your physician practice group, there are several factors to consider that are just as important as the economics of the deal. To ensure a successful working relationship after the deal is done, it’s imperative to identify not only the right cultural fit for your practice but to ensure the partner possesses relevant industry experience.

On this episode of Across the Table, McGuireWoods partners and hosts Holly Buckley and Amber Walsh are joined by Michael Kroin, co-founder and managing partner of Physician Growth Partners. Physician Growth Partners is a healthcare transaction advising firm focused on representing founder-owned single-specialty physician platforms in private equity transactions.

Michael reveals how the unique circumstances of 2020 shaped the deal market. While the year started off strong, with significant momentum coming out of 2019, the pandemic saw the M&A market for physician practice deals began to fall. However, over the summer months, Michael and his team were able to deploy creative techniques to get pending deals across the finish line.

Michael notes that what we’re currently witnessing in the deal market is a very positive outcome. Deal volumes are strikingly similar to pre-COVID numbers, which “gives us all the indications that there’s still an interest to go down the private equity route. Sellers still have a willingness to ultimately complete a transaction and find the right partner that could help them achieve their goals and succession plans.” (4:41)

Highlights from the episode:

Background on Michael Kroin & Physician Growth Partners (1:25)
How 2020 shaped the deal market (2:44)
Physician Growth Partners’ process for counseling buyers based on their unique objectives (5:25)
The divergent effects of the 2020 market on distinct transaction types (8:54)
Sectors receiving the most attention in the waning days of 2020 (12:08)
Finding the right cultural fit for physician groups and preparing them for the sale (14:27)
Michael’s key observations for 2021 (16:56)

We appreciate you joining us on this episode of Across the Table. To learn more about today’s discussion or to contact us, please visit our website at mcguirewoods.com. You can also visit physiciangrowthpartners.com for more information on Physician Growth Partners.

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The Evolving Role of the Hospital and Health System in the US: What Private Equity Should Understand

McGuireWoods - Holly Buckley & Geoff Cockrell — Fri, 06 Nov 2020 03:00:00 -0500

In light of the continuous technological advances in the healthcare field, the question arises, how do we keep people healthy while keeping them out of the hospital? With increasing medical costs and potential exposure to disease, what can the US Healthcare system do to ensure high-quality care while easing the burdens on the healthcare system and patient’s wallets?

Addressing the evolution of care providers in the US healthcare system on this episode of Across the Table are McGuireWoods partners and hosts Amber Walsh and Holly Buckley, joined by Dr. Jay Robinson, clinical psychologist turned Hospital Administrator at Kaiser Permanente.

Dr. Robinson explains how the Kaiser model is de-emphasizing the hospital, “[w]e really want people to be in the least restrictive setting. And we try to, through our access initiatives, to make sure that we're addressing your needs well before you have to come to the hospital.” (4:33)

Some highlights from the episode:

Dr. Robinson’s background (1:19)
The three different entities of Kaiser Permanente: hospitals, medical group, and insurance company (3:07)
How do we keep people out of the hospital and keep them healthy? (5:02)
The most effective ways hospitals have made themselves less important (5:49)
How innovative surgical procedures are reducing demand for hospital beds (9:03)
Pros and cons of private investment in the healthcare space (9:56)
How private equity-driven value-based care may lead to better care with better margins (13:17)
The biggest game-changers Dr. Robinson sees on the horizon: high quality at a low price, a good patient experience, telemedicine, and equity is access to medical care (15:00)
How Dr. Robinson leverages his unique training and background in his role as hospital administrator (18:13)

We appreciate you joining us on this episode of Across the Table. To learn more about today’s discussion or to contact us, please visit our website at mcguirewoods.com.

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Trends in Hospitals and Health Systems as Investors in Innovation

McGuireWoods - Holly Buckley & Geoff Cockrell — Wed, 07 Oct 2020 03:00:00 -0500

The modern world has seen the healthcare system evolve and join forces with complementary disciplines in an effort to provide superior solutions and services. A prime example is the relationship between private equity and healthcare, with companies in these sectors identifying significant growth in provider-driven joint ventures.

Tackling the evolution of such partnerships on this episode of Across the Table are McGuireWoods partners and hosts Amber Walsh and Holly Buckley, joined by Scott Becker, a partner in the McGuireWoods Healthcare Group and Chief Content Officer of Becker’s Healthcare.

The group kicks off the discussion with just one question: “tell us some of the more interesting things that you’ve seen health systems doing relative to their venture arms and their kind of partnerships with private equity.” (1:09) Scott explains that this partnership evolution must be analyzed based on the two types of ventures that exist: provider-driven joint ventures and hospital venture-related operations in the technology space. The group then examines these two ventures, providing brief information about each and discussing the significant changes in the space over the last 10-15 years.

· Provider-driven joint ventures (01:56)

· Hospital venture-related operations (02:51)

· Technology-driven solutions innovation funds are investing in (05:29)

· Origin of the talent and ideas in these partnerships, does it come from the health

· system or where? (06:40)

· Has COVID increased or damped interest in these venture arms? (08:35)

· Private equity funds vs. health system, which should we trust? (10:44)

· Commercialization, the goal of the venture funds (14:55)

· The future of these partnerships (16:39)

We appreciate you joining us on this episode of Across the Table. To learn more about today’s discussion or to contact us, please visit our website at mcguirewoods.com.

Connect with us on Facebook, Twitter, Instagram, YouTube.

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

Diligence and Structuring Healthcare Trends

McGuireWoods - Holly Buckley & Geoff Cockrell — Tue, 30 Jun 2020 03:00:00 -0500

As the world works to recover from the COVID-19 pandemic, businesses are starting to open up shop and resume operations. While certain sectors of the healthcare industry have been largely unaffected by the crisis, others have suffered severe losses. This volatility has contributed to a growing interest in mergers and acquisitions, both on the buyer and seller side.

In this episode of Across the Table, McGuireWoods partner Geoff Cockrell is joined by Grant Thornton’s Glenn Barenbaum and Lance Beder as well as John Kerins of Cain Brothers to discuss the impacts of COVID-19 on M&A in the healthcare industry. While buyers are typically hesitant to engage in deals in times of uncertainty, there are those that are willing to test the market and angling to acquire smaller or distressed businesses.

The group examines different aspects of an M&A transaction, including valuation concerns, conducting financial due diligence, and debt financing. A multitude of factors are taken into consideration that go beyond how the seller is positioned in the space. How the “new normal” looks in the industry will also be a deciding factor in whether many of the deals push through.

They also provide insights into the distressed market and how businesses can survive post-pandemic. Questions on rapid warranty insurance and the trend of private equity firms supporting portfolio companies were briefly explored as well.

Ultimately, if a company is well-positioned in the space and has established a good rapport with an interested buyer pre-COVID, there’s a greater likelihood the transaction will close.

Episode highlights:

Valuation concerns 04:19
Financial diligence 10:3
Availability of senior debt financing 16:27
Impact of no face-to-face meetings in the transaction 20:22
Trends in the distressed market 25:56
Sustaining healthcare businesses 33:06
Consumerism and healthcare 38:07
Forecast of new transactions occurring 41:44
Private equity firms supporting portfolio companies 47:26

We appreciate you joining us on this episode of Across the Table. To learn more about today's discussion or to contact us, please visit our website at mcguirewoods.com.

Connect with us on Facebook, Twitter, Instagram, YouTube.

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

Dealing with Distressed Healthcare Transactions - Part II

McGuireWoods - Holly Buckley & Geoff Cockrell — Sun, 14 Jun 2020 03:00:00 -0500

Across a multitude of industries, businesses are still reeling from the impacts of the COVID-19 pandemic. Companies in some sectors are uncertain if recovery is even on the horizon for them or just how long it’s going to take if their markets do recover. Conversely, some providers are keen to expand and diversify their platform, even considering entering into M&A deals while the pandemic is still upon us.

In this episode of Across the Table, McGuireWoods partners Geoff Cockrell, Amber Walsh, and Mark Freedlander are joined by Huron Consulting’s Laura Marcero. During this interactive group discussion, they talk in-depth about distressed transactions, particularly in the healthcare space. They explore the increased attention investments in distressed assets are receiving, which may be surprising given the current crisis. The discussion then focuses on the types of companies that may benefit from distressed transactions, including providers severely affected by the pandemic and those who are desperate to find liquidity sources.

The group examines different deal sources and where you can find opportunities, such as special situations M&A groups, workout lenders, financial advisory firms, and independent sponsors. They also address deal dynamics and the factors likely to affect the success of this type of deal, including valuations and protection policies for both buyers and sellers.

What is common across the board is how a company’s positioning pre-COVID will be a primary factor driving distressed transactions.

Episode highlights

Types of companies that will involve themselves in distressed transactions 02:17
Factors to consider when deciding to resume operations 05:51
Greater level of patience exercised with a medical practice 08:36
Deal sourcing and where to find opportunities 11:00
Utilizing advisory firms as a referral source 12:50
The value of independent sponsors 14:09
How are lenders thinking about the situation 15:54
Importance of speed 17:38
How are people thinking of valuations 19:19
Speed element in transactions 23:27
Rep and warranty insurance 24:27
Different viewpoints on the impact of the pandemic 29:07
More attention on distressed deals 31:58
Quick reformation of pricing process, BD, and diligence 33:16

We appreciate you joining us on this episode of Across the Table. To learn more about today's discussion or to contact us, please visit our website at mcguirewoods.com.

Connect with us on Facebook, Twitter, Instagram, YouTube.

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

Reopening Healthcare Businesses

McGuireWoods - Holly Buckley & Geoff Cockrell — Mon, 08 Jun 2020 03:00:00 -0500

As states are relaxing stay-at-home protocols and other Coronavirus-related policies, many businesses are resuming operations. Healthcare providers that shuttered their practices during the pandemic are beginning to receive patients again. And, while the threat of the virus remains, clinics and institutions will need to eventually open not only to care for patients but to avoid significant financial decline.

In this episode of Across the Table, McGuireWoods partners Holly Buckley, Amber Walsh, and Scott Becker provide insight into the critical considerations healthcare providers face as they prepare to reopen.

Amber and Scott provide a thorough list of those considerations – the most significant being the extent to which the county, municipality, or state you’re in has implemented prohibitions on elective procedures. When deciding whether to reopen, these prohibitions should be a key factor in your analysis. The other considerations involve access to PPE supplies, patient population, any government or private relief received, your capability of dynamically updating processes and procedures, and staffing concerns.

The team goes on to explore how you can build patient and staff confidence by implementing systems that demonstrate a commitment to their safety. Amber and Scott discuss the rise of telemedicine and what the new normal may look like for healthcare businesses moving forward.

As the pandemic continues to develop, healthcare providers are working diligently to formulate the best course of action to serve their patients while continuing to ramp up operations safely.

To learn more, email Holly Buckley at hbuckley@mcguirewoods.com, Amber Walsh at awalsh@mcguirewoods.com, and Scott Becker at sbecker@mcguirewoods.com.

Episode highlights

First significant consideration 02:09
8 things to consider 04:23
Other factors 10:29
Building patient confidence 12:54
Rise of telemedicine 14:28
Address staffing issues 16:48
The new normal for healthcare businesses 20:24
Differences across different health specialties 22:31
Low-volume high-cost procedures 25:52
Healthcare providers are doing the best they can to figure out exactly what makes sense for the present 27:02
Update on current stay-at-home and elective procedure orders 27:48
How providers are ramping up operations 30:07

We appreciate you joining us on this episode of Across the Table. To learn more about today's discussion or to contact us, please visit our website at mcguirewoods.com.

Connect with us on Facebook, Twitter, Instagram, YouTube.

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

Healthcare Subsector Headwinds and Tailwinds

McGuireWoods - Holly Buckley & Geoff Cockrell — Thu, 21 May 2020 13:15:00 -0500

It’s too early to speculate how companies in the healthcare industry will weather the current crisis as the world is still in the trenches of the pandemic. While companies are going to rebound and bounce back more robust than ever, some may not be as successful. And, with M&A transactions still on the horizon, investors remain vigilant for valuable acquisitions in the health services industry.

In this episode of Across the Table, hosts Amber Walsh and Geoff Cockrell speak with Ryan Loehr, director at AMB, about the factors that create headwinds and tailwinds, and affect a healthcare company’s stature post-pandemic. Trends investors are closely monitoring include geographic locations and how the states have rolled out regulations – such as stay-at-home policies – and how locales are easing these restrictions.

He also discusses the telehealth industry in great detail, including issues surrounding it in the reimbursement space. Although it is not a new concept, more are seeing the value and efficiency this provides patients and consumers. They also talk about elective medical procedures and other services provided in hospitals and how the current crisis will impact these offerings in the long run.

Ryan, Amber, and Geoff also highlight the healthcare service providers with the greatest chance of thriving during the pandemic. These providers have a nominal risk for exposure to the virus, while still meeting patient needs.

As the ultimate effects and impacts remain on the horizon, it is certain M&A transactions will continue, notably in the healthcare industry.

Episode highlights

Location as a factor 01:42
Telehealth industry 03:55
Telehealth fraud 07:37
Reimbursement issues 08:17
On elective medical procedures 09:57
Lost demand for certain procedures 13:03
Impact of the benefits provided by employers 15:20
Impact on services done in hospitals 17:06
On distressed acquisitions 18:51
Health services providers that can thrive 20:41
Other factors and challenges 24:07

We appreciate you joining us on this episode of Across the Table. To learn more about today’s discussion or to contact us, please visit our website at mcguirewoods.com.

Connect with us on Facebook, Twitter, Instagram, YouTube.

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

Executing Tuck-in Transactions After the COVID-19 Pandemic

McGuireWoods - Holly Buckley & Geoff Cockrell — Mon, 20 Apr 2020 03:00:00 -0500

As the bulk of the healthcare industry is focused on responding to the Coronavirus and COVID-19 pandemic, it’s inevitable that many medical practices will face economic loss and financial duress. It’s expected that distressed transactions and investing will continue even months after the crisis slows down.

In this episode of Across the Table, hosts Holly Buckley and Geoff Cockrell talk to Bart Walker, a partner in the healthcare group from the McGuireWoods’ Charlotte office. He dives deep into what tuck-in transactions are and what they entail for both the buyer and the seller.

Walker gives insights into what tuck-ins to avoid and what factors acquirers and sellers should watch out for when looking in the market, like regulatory issues. He provides tips on how platforms can rework their existing processes and systems to accommodate these types of acquisitions and the type of due diligence that needs to be done.

Although it may be a difficult situation, struggling practices have the opportunity to seek financial stability through this type of asset purchase, the tuck-in acquisition.

Episode highlights

Overview on tuck-in transactions 01:28
How to scale down the process 05:01
Dealing with acquisition rates 07:11
Creating the sales pitch to a physician 08:21
Effect of the pandemic on small practices 08:48
Building a pipeline for tuck-in transactions 10:13
Advice for acquirers 11:01
Tuck-ins to avoid 12:41
Doing effective due diligence 14:41
What sellers should look for in a potential partner 16:28
3- to 6-month transaction flow forecast 18:01

We appreciate you joining us on this episode of Across the Table. To learn more about today's discussion or to contact us, please visit our website at mcguirewoods.com.

Connect with us on Facebook, Twitter, Instagram, YouTube.

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

Dealing with Distressed Healthcare Transactions and Acquisitions

McGuireWoods - Holly Buckley & Geoff Cockrell — Mon, 23 Mar 2020 03:00:00 -0500

It’s an unfortunate reality, but a number of companies are failing to adequately navigate today’s rapidly evolving climate. However, there is still hope for these distressed businesses as there will always be those on the look out to acquire or purchase them.

In this inaugural episode of Across the Table, hosts Holly Buckley and Geoff Cockrell speak with Mark Freelander, a partner from McGuireWoods’ Pittsburgh office. He dives deep into distressed transactions and acquisitions, explicitly addressing the process in the healthcare industry. Freelander explores how distressed asset transactions differ from traditional asset acquisitions.

He also stresses the importance of buyer due diligence before making a purchase, like understanding why the target is in financial distress and the underlying causes behind its predicament. Understanding these causes allows a buyer to formulate adequate solutions to address such issues. Buyers must also be cautious of red flags, such as a price that seems to good to be true.

Freelander recommends consulting with financial experts actively involved in this market as well as involving regulators early in the transaction. Experts and regulators can determine whether an acquisition is a good value and assist in reviewing healthcare provider contracts and other business agreements.

For more information about distressed healthcare transactions and acquisitions, you can contact Mark Freelander at mfreedlander@mcguirewoods.com, Holly Buckley at hbuckley@mcguirewoods.com and Geoff Cockrell at gcockrell@mcguirewoods.com.

Episode highlights

What are distressed transactions 02:10
Out-of-court distressed transactions 04:59
Type of buyer diligence done for distressed transactions 05:31
Importance of regulators in distressed healthcare transactions 08:51
Where to find distressed transaction targets 10:25
Points of reference for potential buyers 12:14
Issues in distressed healthcare transactions 14:31

We appreciate you joining us on this episode of Across the Table. To learn more about today's discussion or to contact us, please visit our website at mcguirewoods.com.

Connect with us on Facebook, Twitter, Instagram, YouTube.

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

Welcome to Across the Table

McGuireWoods — Sat, 21 Mar 2020 03:00:00 -0500

Welcome to Across the Table, a healthcare private equity podcast brought to you by McGuireWoods. Across the Table brings you inside the conversation with the specialists and professionals of the healthcare private equity industry.

To learn more about McGuireWoods or to contact us, please visit our website at mcguirewoods.com.

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.