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.

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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Subscribe to Across the Table in your preferred podcast app so that you never miss an episode. 

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.

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. 

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 

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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Subscribe to Across the Table in your preferred podcast app so that you never miss an episode. 

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.

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.

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

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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Subscribe to Across the Table in your preferred podcast app so that you never miss an episode. 

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.

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.

Name: Savanna Ganyard

Organization: VGM Health

Connect: LinkedIn

Name: Colin McDermott

Organization: VGM Health

Connect: LinkedIn

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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Subscribe to Across the Table in your preferred podcast app so that you never miss an episode. 

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.

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. 

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

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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Subscribe to Across the Table in your preferred podcast app so that you never miss an episode. 

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.

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.

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

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.

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

Subscribe to Across the Table in your preferred podcast app so that you never miss an episode. 

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.

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.

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

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.

[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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Subscribe to Across the Table in your preferred podcast app so that you never miss an episode.

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.

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.

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

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.

[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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Subscribe to Across the Table in your preferred podcast app so that you never miss an episode.

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.

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.

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

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.

[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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Subscribe to Across the Table in your preferred podcast app so that you never miss an episode.

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 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.

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

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.

[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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