Category: Videos

27 Jul 2020

Interview with Dr. Alaparthi: Gastroenterology Center of Connecticut joins Hartford HealthCare

 

Dr. Latha Alaparthi is from Physician Alliance of Connecticut (PACT) and Gastroenterology Center of Connecticut (GCC). She’s also the Vice President at Digestive Health Physicians Association (DHPA). As of July 1st, 2020, PACT GI Center joined Hartford HealthCare Medical Group.
In this interview, learn how a multispecialty GI group made a decision to ally with a regional hospital. Understand what steps PACT GCC took to navigate COVID-19 and what they are doing now to continue endoscopies safely. More importantly, Dr. Alaparthi reflected on how there could be more women in leadership positions in gastroenterology. And how physicians must take care of themselves first.
Watch this fantastic interview that’s soaked with unique insights you won’t get to hear anywhere else.
◘ Dr. Alaparthi’s journey with GCC
◘ The relationship between GCC and PACT
◘ “One of the things we wanted to do was make sure we stabilized our referral base”
◘ The pros and cons of being in a multi-specialty environment
◘ Insights on the big decision to join Hartford Health
◘ What became clear for PACT was to align with an entity that would allow us to remain independent
◘ Does life look the same or does it look different?
◘ How PACT navigated through this competitive landscape?
◘ “We will do what’s best for our patients”
◘ Navigating through the pandemic
◘ “The first few weeks were surreal”
◘ “One of the things that we did early on was to switch to telehealth”
◘ “We were one of the few ASCs that didn’t completely shutdown”
◘ Changes from the patient standpoint
◘  Testing thousands of COVID patients
◘ Staff challenges during COVID
◘ On physicians: “We need to make sure that we take care of ourselves to be able to take care of our patients”
◘ On why there are fewer women leaders in gastroenterology
“It’s basically like running a house”
◘ The future of GI post-COVID

 

The Transcribed Interview:
Praveen Suthrum: Hi Dr. Latha Alaparthi. Thank you so much for joining me today and I welcome you to our conversation.
Dr. Latha Alaparthi: Thank you. Thanks for having me.
Praveen Suthrum: You are part of the Gastroenterology Center of Connecticut and also the Vice President of DHPA (Digestive Health Physicians Association). So, I want to begin by asking you to share a little bit about your practice.
Dr. Latha Alaparthi: Thank you again Praveen for having me. I have listened to some of the other speakers on this and it’s very informative. So, I hope I can be useful to whoever is tapping into this. So, I joined the group in 2001, I actually met the then program director as part of my program at Yale-New Haven who was actually one of the three physician groups that founded this company – Gastroenterology Center of Connecticut. So, he recruited me to the group and I’ve been with the group since 2001.
The group is grown from a three-member group. By the time I joined it was a seven-member group. I was the seventh person. And now it is at 13 and soon to have three new physicians to be joining us from different parts of the country, including one of them being a Yale-fellow (New York) and one that’s transitioning from California to us. We’ve had some physicians who have joined us and then moved to different parts of the country. But we are 13 at this point and have three more joining us in Connecticut.
Praveen Suthrum: Okay. So, I know that there is a relationship between GCC (Gastroenterology Center of Connecticut) and the group called PACT (Physicians Alliance of Connecticut). Can you clarify what the relationship is?
Dr. Latha Alaparthi: Sure. Gastroenterology Center of Connecticut was an independent PC since founding until 2013 when it became part of the multi-specialty group. We’ve had a close affiliation with the Yale hospitals in terms of admitting our patients, taking care of our patients, teaching obligations, and appointments. In 2012, around that time it became clear that many hospitals, including Yale, were acquiring primary care groups in the area… which was troubling to us. It was troubling because that’s how we get our referrals. And one of the things we wanted to do is to make sure we stabilized our referral base. And one of the founding members along with a few in the community decided to brainstorm forming a group, that allows us to remain independent and secure at least part of our referral base, not all of it, but at least a good part of our referral base so that we don’t feel so threatened.
Praveen Suthrum: Did that happen? Did you secure your referral base?
Dr. Latha Alaparthi: Definitely. It has made us feel more secure. As I said before, it is not that all the referrals are coming from this group but majority do. And it definitely helps us in terms of feeling more secure.
Praveen Suthrum: So, this is a multi-specialty group versus a single-specialty group. What are the pros and cons of being in a multi-specialty environment as a gastroenterologist versus being in a large single-specialty group?
Dr. Latha Alaparthi: So, when PACT formed, it had internal medicine, gastroenterology, nephrology group in the beginning, and then its surgical group joined our group and more recently orthopedics. Majority of the physicians were for internal medicine. The way the group was formed was to make sure that the primary care physicians were always given enough of a voice to impact the long-term process of the company. Because that was really our main intention, to make sure that they were stabilized in order to help us stay secure with our referral base. So, initial issues with the company were just really learning to work with multiple physicians rather than running our own company.
So, if you can think of running a GI group versus a primary care group, they’re completely different. When you’re forming an MSO, a billing group that now has to cater to not only colonoscopy codes but also nursing home codes, that becomes a challenge. So, there was a significant amount of learning in that perspective. Plus, the electronic medical record system had to be catered to different types of visits. So, all that posed its own challenges. So, those I would say are the main challenges, learning to work with other physicians but in general, we learned a lot definitely in the first four-five years. Everything from day-to-day visits to navigating through HR, to billing, EMR, we had to almost start from scratch and build it up.
Praveen Suthrum: How did you manage to divide the cost and responsibilities because, like you said it’s two different worlds, and GI as a specialty is procedure-driven, primary care as a specialty is not as procedure-driven, so the earnings are different. How did you figure out how to work on the costs of the MSO?
Dr. Latha Alaparthi: So, MSO is based on the fee structure and the fee is the same. Our endoscopy center is not part of PACT. It’s actually completely separate from the medical practice. It is still a very much physician-owned entity. We have currently a four-room ASC in two different locations of our practice. So, in terms of cost allocation in the beginning there was a little bit of a give and take. Some units needed more help in certain areas and not others and vice-versa. So, in the end, I think it was a trade-off. For example, some primary care groups were on paper charts and they had to convert to EHR completely so that took a significant amount of time in the beginning. But in terms of this individual cost allocations, it’s all completely kept separate.
Praveen Suthrum: You’ve recently made a big decision to join Hartford HealthCare Medical Group. So, that’s a sea change from probably the existing structure or any of your previous structures. So, I was curious to know how you went about with your decision and the story behind that.
Dr. Latha Alaparthi: That’s a very good question and a tough one to answer in a small-time format but I’ll do my best. We, historically as you can think of are in the greater New Haven area catering to Milford New Haven suburbs and into the Guilford, Branford area along the shoreline. So, historically our practice has always been at the Yale-New Haven entities. We still are very much affiliated we have teaching affiliations; we have leadership positions at Yale-New Haven Hospital. What became clear for PACT is for it to align with an entity that would allow us to remain independent. And what PACT has been able to secure at this point is an ability to continue to remain independent with our structure and MSO intact. So, what we have done is to create a professional service agreement that allows us to remain independent and I’m really hoping that this will be a structure that will be alive for many years to come because I think it is very important for a group like ourselves who fiercely protect their independence to remain so.
Praveen Suthrum: Did Hartford have similar agreements with any other group in the region?
Dr. Latha Alaparthi: Well, as I understand, there are PSAs with groups but this is their first and only MSA.
Praveen Suthrum: The reason that I asked that question was because I wondered if you had a template or they had a template that they followed or are you familiar with similar arrangements in other parts of the country that you’ve said, ‘Oh they’ve done it this way, we can follow them’
Dr. Latha Alaparthi: Apparently not for the MSA. There have been templates within the state for PSAs and they followed that to a large degree but the MSA was unique.
Praveen Suthrum: Practically speaking how does this all work? Does life look the same or does it look different?
Dr. Latha Alaparthi: As of right now not much of a difference except for the change in the way we address ourselves when we pick up the phone. That has been one of the major changes. We have changed our name effectively from the 1st of July from PACT gastroenterology center part of Hartford HealthCare Medical Group. Obviously, that becomes a long introduction so we introduced ourselves as PACT gastroenterology center. In terms of the day-to-day work not much has changed but there’s a significant amount of work ongoing to see where we need to make changes and one of the big things that any company venturing into something like this looks for is to make their footprint known. And I believe Hartford Healthcare is no different and understandably so. There will definitely be more of a presence in terms of logos and signs and signage that will change in the next few weeks.
Praveen Suthrum: How did you navigate through the competitive landscape while making this decision with respect to other hospitals that I’m sure you’re close to and so on.
Dr. Latha Alaparthi: It’s a tough one and I’ve said this to many of my colleagues and as a physician that’s very passionate about what I do and the care I provide for my patients and really respecting my independence and wanting to practice the way we feel is best it has been a tough one to navigate and make sure that we are allowed that freedom as we go forward. And to that end, we’ve had to be very open and discuss this clearly with all sides. So, historically as I mentioned, and I trained at Yale so it’s my fellowship mentor and I know many people from that area and we work very closely at the same time we decided what’s best for us is to align ourselves with Hartford healthcare Medical Group for the prior reasons mentioned.
And so, we’ve been very open both sides stating that we will do what’s best for our patients and we will send our patients where their best cared for and where they feel comfortable. And so, to that end, I really don’t care for feeling like a pawn in territorial situations in states and I’m really hoping that both sides will respect that and we will continue to. I mean it is early stages, but we are led to believe at this time from the conversations we have had, I don’t believe they will really force us to change anything. Both sides have been very accepting, and very open in allowing us to be who we are and actually respect us for who we are.
Praveen Suthrum: Would this arrangement be restrictive for you to go see patients at Yale or there’s nothing like that?
Dr. Latha Alaparthi: No. In fact, in one of the smaller hospitals in Milford where are the only GI group and we have very much of a presence it’s a small hospital and I used to be the President of medical staff before it became part of the Yale healthcare system and now it is part of a Bridgeport hospital which is Yale healthcare system and I’m still the chief of GI there. My colleague David Hass who is the chief of GI at St. Raphael campus. We have leadership positions, I’m on the medical executive board of Yale-New Haven medical practice. So, we have a presence at Yale and I do not believe it will change the way we practice And I really hope it doesn’t come down to that because then I would have to fight for what’s right for my patients.
Praveen Suthrum: Okay. I’ll get to COVID now. Connecticut was one of the earliest affected states when COVID hit. How did you navigate the pandemic and how are things going now?
Dr. Latha Alaparthi: When COVID was sort of erupting in the New York region, we were wrapping up our DHPA meeting in DC. The last day of our meeting was very interesting. We had several meetings. I had I believe 12 meetings at the congressional offices and senate offices and it dwindled down to about three meetings and at the end of the day, we weren’t even sure if we would take our train back because of the New Rochelle shut down because the train Amtrak goes through New Rochelle. It was very interesting, the whole evolution of that. One of the people that was first diagnosed with COVID in Bridgeport hospital was a New Rochelle physician. A physician that lived in New Rochelle but practiced in Bridgeport who unfortunately has since passed; he was a pulmonologist.
So, that’s how things began for us and the first few weeks were surreal and I went from having a normal office day or at least seemingly normal office day that Monday after we returned to within two days to go into a complete shutdown and having to change all of our patients that were on schedule for endoscopies telling them that we don’t know when we will open again. One of the things that we did early on is to try and switch to telehealth. We had been doing telehealth in terms of telemedicine phone calls prior to this I was one of the first few physicians that was using it in my office. But we soon transitioned to telehealth and at that point, the biggest crunch was trying to find the right platform to offer telehealth to our patients that was easy to understand and was reliable in terms of connectivity. And then the endoscopy center. That was a huge issue there was so much unknown. What we could only fall back on were the experiences from Wuhan because we didn’t have any in our country at that time.
We were one of the few ASCs that didn’t completely shut down. We had about 5% of patients coming in per week. Those that absolutely needed their procedures and could not or should not be done in the hospitals for the reasons of COVID. We took extreme precautions like an hour in between patients and such just to make sure that those individuals were able to get through their procedures and since the opening, it has been a whole new paradigm. While we were in the first two weeks of the shutdown, I quickly got thinking that we will need to open our ASC at some point down the road when COVID is still here. We can’t be shut down forever. And we have an obligation to offer these procedures and diagnose patients in a timely manner. So, I came up with a format that I thought at that time made sense because I was very excited about the antibody testing which obviously has not panned out as we expected and I presented it to a few people at DHPA, the exec team and to one of the physicians who’s also a DHPA member and also on the AGA leadership and there was a significant amount of interest and that led us to work with AGA and DHPA and in developing that joint guidance along with all of us involved which was a very relevant practical step for us and still to this day is being used.
Praveen Suthrum: From the patient’s standpoint what kind of change did you notice? Like were they as open to come to the ASC? I know you’ve restarted but what is the sentiment right now?
Dr. Latha Alaparthi: Since we’ve reopened in the last three or four weeks it has been a whole different paradigm shift and now because of the guidances and the increased number of cases, one of the major steps that we take is testing everyone. We have developed a ten-day symptom log not just temperature but other symptoms that can affect gastroenterology in specific including bowel changes etc. We expect our patients to fill that symptom log and also have PCR testing within 72 hours of the procedure. So, testing, tracking, and reminding patients to keep their symptom log and making sure the results are in the chart before they arrive or the procedure or actually before they prep for the procedure has been a task of its own.
It has really put a strain on our staffing which is suffering, which is a whole discussion in itself, added complexity to what we do every day. This is in addition to what we have already done in the endoscopy center which is a significant amount of cleaning in between procedures and PPE that everyone is recommended to wear.
Praveen Suthrum: Are you contact tracing post-procedure? And how are you doing that?
Dr. Latha Alaparthi: So, fortunately to date we have not had anyone that has tested positive after the procedure. So, we have not had to elicit that but we do have a process thought through in place as to how we would contact trace if that were the case. So, what we do now is call patients a week to 10 days out and make sure that they have not had any new symptoms that are suspicious with COVID and also instruct them to call us back if they develop any symptoms within the few weeks after the procedure. Fortunately, we have not had any cases.
Praveen Suthrum: Okay. That’s good to know. How has your staff taken all this and how are you managing that?
Dr. Latha Alaparthi: Yeah. I think it’s a good question and a tough one as well. Well, before I get on to that I want to let you know that between our group and CTGI which is another major group in the state we have tested a thousand patients and we have only a handful of patients who have turned positive. That was at the beginning of the pandemic when the cases were still high so it makes sense. And I believe our case rate was 0.02% or so at the time of positive rate. So, it has been very low in terms of the risk and we continue to test everyone. Our staffing, due to the shutdown of business before furloughed for a couple of weeks until the loans became reality and we were able to bring back our staff. Few staff members went on FMLA or took unemployment because they just could not afford to come back because of young children. Because unlike many other companies that can work remotely. We cannot work remotely. We did stagger our staff when the social distancing was still a significant issue in Connecticut and we quickly created HIPAA reliable home access to some of our patients that could room a patient for me to do telehealth.
So, we had to do a significant amount of workaround to make sure that everything was in place. As many people have said, among my colleagues, we put on a significantly higher number of hours as administrators to take care of fewer people in the pandemic time because of the number of workaround and processes, that we had to recreate as we took care of our patients. As of right now we still have a shortage both on the practice side and the endoscopy side or in the hospitals and in our endoscopy centers because many nurses that were on the borderline, thinking about retiring have decided to retire and many with health issues have decided not to work for the right reasons and many with childcare issues and other obligations have decided not to return. So, it is significantly straining ones that are in the mix and having to absorb work for other staff members that are not in the mix. And this is something that I am trying to navigate through every single day including yesterday. Making sure that nothing that is fully associated with our patient care is compromised because of shortages.
Praveen Suthrum: As a physician, you are putting yourself in risky situations and you are taking care of your patients and then you come home, and then you have to take care of yourself and your family. So, how do you navigate these two worlds of taking care of your patients versus taking care of yourselves and I’m asking on behalf of all physicians.
Dr. Latha Alaparthi: So, like any other first responder or physician out there that is interfacing with patients, I think many don’t realize that we perform procedures that are aerosol-generating. And that’s one of the reasons why our societies have come up with such stringent guidelines. For example, recently restarting the manometry or motility study that we perform in our office we had to come up with clear stringent steps in terms of a precaution we take not just for the patient but for the nurse that performs the testing and for everyone that uses that room subsequently. So, yes, it is a real risk that we take every single day in terms of exposure.
One of the things we should always remember is to make sure that you think about yourself because it is apparent from the statistics and the deficits that we are seeing, we are a very valuable commodity and we need to make sure that we take care of ourselves to be able to continue to take care of our patients. So, in that sense, we use the appropriate PPE and we make sure that we don’t compromise on the steps we’ve put in place to make sure that the patients that are coming in are not high-risk patients. The other aspects are to make sure that there are things that we have in place to relax. Whatever it is that takes your mind off and really takes you to a different sphere. Physical health and of course, my pet peeve is ergonomics. Don’t forget that despite the PPE, to ensure that you’re taking care of all the things that you need to establish your endoscopy rooms to not physically strain yourself or hurt yourself.
Praveen Suthrum: So, Dr. Alaparthi, you are one of the few women physician leaders that I know of in GI. I have a twofold question here. One is that how did you reach the role that you currently have, you play multiple roles. So, how did that happen? The second more important question is why is that the case? Why are there so few women leaders in gastroenterology and medicine as a whole?
Dr. Latha Alaparthi: Thanks for that question. I’ll answer it the best I can with my own experience and maybe the second one I can’t answer fully but I’ll do my best. The first was really… working with my office staff and really handling some of the challenges that became known to some of my peers and my senior physicians and administrators, ‘Oh she is good at this!’ and most of the times it was out of necessity. For example, I was extremely efficient with my schedules because of necessity. I had two young children at home and I had to navigate through hospital rotations, seeing patients in the office, making sure my results resulted back to the patients, etc. When they saw that the billings were at the same as some full-time physicians, and they asked ‘How do you manage this?’
So, I went into looking at everyone’s schedule, I started involving myself in making schedules efficient. Sitting down with the physicians, and telling them how they can navigate through schedules. And some of the issues that came up on a day-to-day basis and how I could handle them diplomatically with the patient and the staff. That became known to some of my staff members who then asked me to take on some leadership roles which like any female physician I said no in the beginning because my children were still younger and in schools. One of my administrators waited until I dropped off my younger daughter at college and met me the next day. And that’s when I took over as a managing partner of our company.
It’s basically like running a house. You look at every aspect of what you’re doing on a day-to-day basis and also the business aspect of it. Making sure that it is efficient and every employee is taken care of. Financial aspects are met with and staying accountable to yourself and your company. One of the things that will engulf you is the number of hours you have to put into the company. So, my involvement was a slow trajectory and before I became a managing partner, I was a president of medical staff, just being involved in with the medical staff at the local hospital, Chief of GI at the same local hospital. So, I had been doing more leadership roles in the community and small leadership roles involved in the executive committee of my company just to help.
In terms of why there are fewer female physicians, especially in private practice, I can’t ask for the past but I do see many women rising into the rolls at this point. And I’m hoping that they’re able to see themselves as leaders just as good at understanding the business aspect of the companies. I believe that is the part that many of us, men and women don’t really get a significant amount of exposure during training. But early on in the group, it is important to pay attention and really get into the details and realize that it’s not difficult to understand once you put your mind to do it. And I’m hoping that… that will change going forward. As we know the double AMCs data and my own daughter’s med school class shows that there are more female positions and medical students now than in the past and I believe that this is a number that will continue to increase and it is important to engage everyone into the leadership mix.
Praveen Suthrum: So, my final question Dr. Alaparthi is, what is the future of GI post COVID?
Dr. Latha Alaparthi: I was thinking through, And I think it is going to be technology. Patients still rely on us and the stress increased recently has definitely worsened functional bowel diseases. I do think that we will focus a lot more on putting technology so that we can take care of patients remotely. And coming up with treatment algorithms that are slightly different from what they are at this point. And hopefully adapt some of the technology that’s available whether it’s social media platforms or along the lines, where we can address patients individually but yet in a group through platforms that are secure and are accessible to patients. I think that this is going to be a new paradigm in the future in trying to keep the social distancing which I believe will be in place for at least the rest of the year if not into the next year.
Praveen Suthrum: What do you see to happen if we fast forward four or five years from now?
Dr. Latha Alaparthi: So, I was about to read a pill cam right before this [interview] and I’m probably going to go back to reading it. So, I think we’re going to try and look for platforms like that for diagnostic purposes which are more wireless and remote that can give us the view that we need and for diagnostic purposes or therapeutic purposes that we can intervene and be therapeutic in terms of interventions or procedures we perform and actually fix things. Home-based testing to some degree, of the things that we do including the pill cam-type testing, will probably increase. In terms of technology, we really need to focus on the platforms that we have and one of the things, for example, even today when I have to take care of patients, I sometimes have to have three EHRs open, which to me, is so detrimental in terms of patient care. I really wish there was interoperability and a lofty goal would be to have a single platform. But interoperability or ease of transitioning from one to the other instead of having to print, scan or import information from one to the other two just so I have information in one place I think is really affecting patient care.
The last would be to make sure that we have patients that have access to the platforms that we are putting in place. I was working with the fellows two days ago in one of the Yale GI clinics and it was clear that several patients that otherwise would have had to take public transportation to come to clinics have really embraced the telehealth platform and they really appreciate the fact that the doctor will call them, go over the treatment options and make sure that they’ve done their testing, that is a very time-sensitive one especially for inflammatory bowel disease, cirrhosis, Hepatitis C, along the lines. And that’s the population that oftentimes has the least access to many of these platforms. So, I feel we need to really keep our minds and eyes open to ensure that while we are innovating that we are also making sure that people have access to them.
Praveen Suthrum: Dr. Alaparthi, thank you so much for all the insights. It has been tremendously educational for me and I’m sure people who are watching this will feel the same. Was there anything that you wanted to share before we close?
Dr. Latha Alaparthi: I think the challenges that we’re facing as people. I really want people to know that each one of us are going through the same things about COVID and the transition. But with the whole challenge, has come the thought process and it almost makes you feel you can innovate because you have a challenge in front of you. And I’m hoping that we all embrace it and bring new ideas to the forefront and make them work.
Thank you for having me.
Praveen Suthrum: Thank you.
_


By Praveen Suthrum, President & Co-Founder, NextServices. 

COVID-19: The Way Forward for Gastroenterology Practices
COVID-19 is a double whammy of both clinical and business disruption. This ebook will help you explore possible scenarios and be a guide in your plans for the future.
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14 Jul 2020

Dr. Weinstein (Part 2): “Adapt or die…standing still is not a zero risk option”

 

Dr. Michael Weinstein is the President & CEO of Capital Digestive Care. As the largest gastroenterology group in the Mid-Atlantic states, Capital Digestive Care cares for 70,000 patients every year. 
In the interview’s second part, Dr. Weinstein talks about how many aspects of the medical practice can be done remotely. He reflects on the future of GI post COVID, his experiences with the giants of gastroenterology (e.g. Dr. Gene Overholt, the father of endoscopy) and what must fellows in GI must focus on. More importantly, he deeply contemplates on social disparity in gastroenterology.
Don’t miss this deeply reflective interview
◘ Two learnings: Telehealth really works…staff can function well remotely”
◘ What’s the future of GI post-COVID?
◘ 30-40% of our visits will be in telehealth
◘ Profitability of ASCs may lag
◘ We’ll get into more chronic care, remote management (obesity, NASH, NAFL)
◘ Clinical research may be more complicated
◘ There were aspects of Scope Forward that predict our need to adapt to COVID
◘ “The last thing I’d like to see is a second wave – it would be a financial disaster”
◘ “Adapt or die…standing still is not a zero risk option”
◘ Doing nothing is not strategy
◘ Reflecting back when Dr. Weinstein was an early career gastroenterologist
◘ Learning from the giants of gastroenterology
◘ Learning from Minnesota GI
◘ “Listen twice as often as you speak. You have two ears and one mouth”
◘ The question early stage GIs shouldn’t ask first…
◘ Reflection on social disparity in gastroenterology
◘ How did we only end up with such a small percentage of African Americans [in Capital Digestive]?
◘ “George Floyd aside…COVID really increased our awareness how healthcare disparities influences outcomes”
◘ “AGA Governing Board – there’s certainly recognition…how did we end up here?”

The Transcribed Interview:
Dr. Michael Weinstein: Most physicians within a month figured out a couple of things that they didn’t realize, one is that telehealth really works! You can actually do telehealth effectively. You can actually take care of patients; you can continue to provide healthcare and you can do it remotely. And the second thing that they have learned is those staff that were working in their offices, doing all that work in their offices, can actually function pretty well remotely. Their staff can work from home, a lot of that back-office services can be done remotely – scheduling, registration, claims, billing all this stuff can happen remotely and it doesn’t have to be under your direct vision. And if it can happen remotely with your staff, well then actually, maybe it can happen remotely in a platform where you do not have to worry about people working from home but somebody else can worry about the people who are working remotely.
Praveen Suthrum: What you just said naturally takes me to my next question, what do you see as the future of GI, post the pandemic?
Dr. Michael Weinstein: Certainly, what we see is that we’re probably going to continue to do telehealth. 30 to 40% of our visits will probably stay in telehealth. It may take a little bit of lobbying with the payors and Medicare although I think Ms. Seema Verma recently said “Oh we’re definitely going to have telehealth after COVID”. So, she still certainly feels it is an absolute necessity. The profitability of our surgery centers may lag. I’m not sure whether we will ever get back to the same profitability, at least not for a few years. I think some of the things that we will have to put in place – some of the provisions, some of the PPEs, some of the scheduling modifications to clean rooms, and things like that. I am not sure if we will ever achieve the same profit margins unless we can get a higher payment.
Praveen Suthrum: Don’t you see more cases coming from the hospital to the surgery centers?
Dr. Michael Weinstein: Yeah. But you know, our centers were relatively busy before. Does that mean we’re going to have to expand our surgery center with space and staff and open another room? Most groups probably have a backlog of three or four months of procedures. So, how do we catch up? Assuming that the patients still want to come in, how do we catch up? At some point, we will have to start doing six days a week. But that means hiring extra staff. I think roughly half of the ambulatory procedures in the country are still performed in hospital outpatient departments. So, there are certainly quite a few patients that might shift to ASC locations.
I think we will get into more chronic care remote management. You know it was already starting to happen before COVID. Looking at how do we manage the epidemic of Obesity and NASH and NAFLD and weight management, that’s more chronic disease management. We learned that our clinical research maybe more complicated at least for a few more months of getting patients enrolled into trials because of the number of visits. We are trying to avoid all the face to face contact. That may require some changes in how the sponsors want protocols to take place. And the standard paper binders for clinical research, there needs to be some change to make those electronic.
I have read most of your Scope Forward book, and there are aspects of it that almost predict the need to adapt to COVID. You didn’t know about COVID but the whole concept of innovation and adapting that you have written about, and talk to people about, it’s like… How did he know that we would have to actually meet and discuss and figure out how to adapt to our workflow? I’m certainly very nervous about what I see in Florida and Arizona and Texas. The last thing I would like to see here is a second wave. That would be a financial disaster if we had to close down again. So, I’m hoping we avoid that. I think most of my partners, certainly my older partners, who are in the high-risk groups for COVID, people who don’t do as well when they get infections; most of them are going to wait for a vaccine before they get comfortable. And that’s probably going to be February or March of 2021.
Praveen Suthrum: It is really a precarious time and whichever way I look at it, you know I read all the reports, from clinical to economic, the thing that I really come back to is that nobody really knows. And there are different estimates that keep changing by the week. Yeah so, the way I see it is you have to go with the flow and you figure it as you go along. You have a distant view; and you fold that future in; and you work in that direction but the situation can be very dynamic and it can change quite quickly.
Dr. Michael Weinstein: Adapt or die… adapt or die and that’s it. So, when we did our strategic planning, and some of the partners were very happy where we were, and their comment was ‘Why do we need to change anything?’ ‘We’re doing so well’ ‘Why don’t we keep doing what we’re doing?’ and the consultant said doing nothing is not a strategy. Standing still is risky. Standing still is not a zero-risk option, it is actually a very risky option. Stand still in the middle of a busy street, you’re going to get run over.
So, you have to constantly adapt. That doesn’t mean you have to get it right every time, you may sort of make a maneuver or make a change that doesn’t work out. You need to measure all of the changes that you make and determine whether or not the adaptation is moving you in the right direction. One of the best talks that I ever gave at one of the meetings was, ‘The 10 things I wish I hadn’t done.’ And it was hard to get to 10. I had to cut down from a list of 15 or 20, to get to the top 10 that I wish I had not done! On the other hand, I probably have that list and longer of the things I think, we did correctly. So, so far so good.
Praveen Suthrum: Dr. Weinstein, reflecting back on your own career, going back all the way when you were an early career gastroenterologist. I’m sure you had certain visions about healthcare and where GI would be at this point of time. So, where does that stand? Based on what all you’re seeing going on right now.
Dr. Michael Weinstein: What we’re able to do right now technologically in healthcare is amazing. But then you get a pandemic and you realize how fragile things are. When I first went into practice, I came out of my fellowship and I joined two gastroenterologists. They went from a group of two to a group of three and they had some close friends I could mention some names but, everybody knew this. So, one of my partners trained with Gene Overholt, one of them was close friends with Jim Frakes. You know, I was able to learn from the giants. Because my two older partners made me go spend time with these soothsayers. You know, Gene Overholt, the father of endoscopy, and Jim Frakes who was really this healthcare business savant.
I went up to Minneapolis to meet the leadership of the Minnesota GI group, and looking at how they saw gastroenterologists, and then just paying attention to what was happening in the Mid-Atlantic area, which was a lot of mergers of insurance companies and mergers of hospitals. So, I think within a few years of going into practice I already sort of had the notion that the only way we’re going to be successful is that we have to be more relevant and we need to have our own endoscopy centers. And with the support of my two partners, I built an endoscopy center in 1985 which was very early almost following the floor plan which Gene Overholt had built in Knoxville. So, lucky to do that.
I don’t think I could have foreseen the need to get this big but along the way that seemed to be an obvious change. And it’s not just GI practice, it’s healthcare delivery. I have a partner that likes to say that when he grew up, his father told him that he had two ears and one mouth, that he should listen twice as often as he speaks. So, the idea is to go listen to people who have been through the trenches and have figured out the good parts and the bad parts. Follow the good parts, avoid the bad parts, and pick and choose. So, I feel very fortunate to have been around a lot of those people over a 30-plus year career. It has been a privilege to lead and hopefully lead things a little better. I have three sons and I sort of pass on some wisdom as I said, you get along as you go through life. None of them went into healthcare, but the advice I gave them was, you know, as you go through life, try to pick up after yourself, don’t leave a mess, and try to leave the world a little better off than you found it. That’s the goal.
Praveen Suthrum: What advice do you have for early-stage gastroenterologists?
Dr. Michael Weinstein: Yeah. I love talking to young fellows, maybe because my kids are sort of around that same age. I think if you’re a fellow and you’re looking for a career, that you get to choose your career, you get to choose what you’re interested in and when you go talk to a group, probably the first thing you should ask is – firstly you should say what you’re interested in, what sort of career you see for yourself. Do you want to be an interventionalist? Do you want a career in IBD? Do you want to do liver? Or do you want to do esophagus work? What’s really your passion? Figure out what your passion is and if you’re talking to a group, does your ability to continue to follow your passion fit with the strategic goals of the practice that you’re talking with? The question that you shouldn’t ask first is – How much are you going to pay me? That’s not the first question to ask. First, explain what you love to do and why you want to do that and that’s what I would do.
I think an independent practice has the best of both worlds now. I think independent practice allows with the advent of larger groups. It allows the ability of somebody to subspecialize, to follow a passion within a big group, and to be fully supported in doing that. So, if you want a different equipment, if you want a different schedule to accommodate that kind of patient care, then it is probably easier to get that done in a bigger group then it is in an academic center. You know, they are coming out of their fellowship, they’ve got 30 years to practice. Again, you have to find something you like to do so that you can get up every morning and then do what you like to do. because if you like what you’re getting up to do it doesn’t feel like work.
Praveen Suthrum: Dr. Weinstein, I want to get to a final question and reflect on that a little bit. It is to do with the social disparity in healthcare. Now, whichever way you slice healthcare it’s quite apparent and all these years and probably decades, we’ve probably pushed this under the rug and it’s come to the floor now. So, I wanted to reflect that with you a little bit and read your thoughts.
Dr. Michael Weinstein: Yeah. I have sort of always considered myself very socially conscious but I was obviously been made apparent more so that as much as I thought that I was we weren’t. We got to a situation, and how we got there I’m not exactly sure but, I know that when I went on our website and I looked at all the photographs of all the physicians in Capital Digestive Care, we seem pretty diverse until you sort of start figuring out the ratios and the numbers and you go ‘How did we only end up with you know, such a small percentage of African-American partners?’ In Washington DC this doesn’t make any sense and I’m not sure how we ended up there. We did. And I don’t feel particularly good about it, I mean we have a lot of women partners, and there is certainly an obvious recognition that is in this Washington DC community, that the healthcare disparities led to some very bad consequences for COVID. And that’s the thing.
I think, George Floyd aside I think COVID really increased our awareness of just how much healthcare disparities can affect health outcomes. Because it is very clear that the percentage of deaths is so much higher amongst the communities who don’t have accessible healthcare, who have comorbid conditions that are poorly managed, obesity, hypertension… Their healthcare disparities, their inability to access healthcare, contributed to their deaths. And their inability to access health care has to be on all of us. We may not be able to fix the financing situation, Medicare, Medicaid coverage, fair payment, but that doesn’t mean that we should ignore the fact that health care disparities exist and that if we care about our communities then we need to provide that care.
I’m on the AGA governing board right now. There’s certainly a recognition. I think for everybody, the light went off and we went ‘How did we end up here?’ This is terrible. This was unintended to end up in this situation and we all want to do something; we all want to make it better because we see the problems but the first thing is that we need to understand why it happened. And one of the things I know in gastroenterology is for whatever reason unintended bias or unintentional bias or whatever it is, the African-American contingents in GI fellowship is 25% of what it should be based upon the population distribution. If 18 to 20% of the population is African-American and if 15 to 18% is Hispanic Latino, then how come the fellows are not equally distributed that way and they’re not, it’s terrible, it’s 10% of GI fellows that are ethnically diverse. We need to study that. We need to figure out why that happened and we need to do something to fix it. And it may take a generation, but if we don’t start on that road, we’re never going to get there.
Praveen Suthrum: Yeah and I’m so glad that you’re recognizing it at an industry level. So, what needs to happen that is not happening not just from the physician disparity standpoint but also the patient population, right? A lot of the problems that we see in healthcare don’t really originate in healthcare they go back to the community so it is more upstream. But then insurances don’t pay for going back and fixing problems upstream and where we are, we have created a system that pays for certain things and that doesn’t pay for preventing those things. So, what must happen if you had to freely reflect on ending this?
Dr. Michael Weinstein: There’s no doubt that we have to go upstream. Obviously, we’re a big group in the Mid-Atlantic area in Washington DC, Metropolitan Area, I am not saying that I have any ability to fix the problems in the country but I live in this community, I am a neighbor in this community, I am an employer in this community, and there are things that I can do for my employees, the children of my employees, the communities of my employees, and I may not be able to fix the whole region, but I can start fixing what I can actually affect.
I have to go upstream. I have already talked about providing internships for high school students, for college students spend time in our practice not from all over the country but just locally, that’s the local high schools, the local colleges. We’re going to have a paid summer internship and we’re going to try to increase the interest in healthcare and do things to promote healthier lifestyles in our community. If everybody would look just in their own communities, and if everybody did that there would be a huge change. So, I don’t have a solution for the whole country, I don’t have a solution for Maryland, but we’ve already decided what we are going to do at least in the community that we can touch.
Praveen Suthrum: Excellent. Thank you very much, Dr. Weinstein. Was there anything else that you wanted to talk about?
Dr. Michael Weinstein: No. Love talking to you, love listening to you, love to keep hearing about innovations and things that are on the horizon, new technologies, stuff like that, that will make it easier for physicians to provide healthcare. So, thank you for all you do.
Praveen Suthrum: Thank you so much for saying that and I really enjoyed our conversation and I’m sure that people who are watching this will also do. Plenty of insights right here. Thank you so much, doctor.
Dr. Michael Weinstein: You’re welcome.
_

 

By Praveen Suthrum, President & Co-Founder, NextServices. 

COVID-19: The Way Forward for Gastroenterology Practices
COVID-19 is a double whammy of both clinical and business disruption. This ebook will help you explore possible scenarios and be a guide in your plans for the future.
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09 Jul 2020

Interview with Dr. Weinstein (Part 1): “This is about what you want to be in 2030”

 

Dr. Michael Weinstein is the President & CEO of Capital Digestive Care the largest gastroenterology group in the Mid-Atlantic states. He’s also the past President of DHPA (Digestive Health Physicians Association) and member of the governing board at the AGA Institute
Dr. Weinstein’s interview is loaded with so many insights that I’ll be releasing it in two parts. Each part deserves to be watched in full
How Capital Digestive Care grew to be 60+ providers is a story that’s relevant to many groups looking to consolidate regionally. In 2018, they went on a strategy planning retreat to decide what they’d like to be in 2030. That led to the partnership with Physicians Endoscopy.
Dr. Weinstein outlines the benefits of their MSO to private GI practices. Is there going to be a cash payout during transaction? How does it differ from private equity?
Don’t miss this one.
◘ February had 29 days and March had 300!
◘ How CDC ramped up telehealth?
◘  “Now we’re in phase 3. We have opened up our surgery centers”
◘ “So far, we’ve done over 2,000 COVID tests”
◘ Is this going to be the new norm? 
◘ “If we don’t give them [the staff] enough time, I’m afraid they’ll burn out”
◘ Are patients hesitating to come for endoscopy procedures?
◘ How Capital Digestive Care made the decision of partnering with Physicians Endoscopy
◘ “We started building a culture as Capital Digestive Care, different from the individual cultures”
◘ “We were getting all the private equity phone calls”
◘ What did Capital Digestive Care want to be by 2030?
◘ What doctors say: I want to be independent; I want to be in charge of my own life
◘ “To be successful we needed growth”
◘ “Everything in life is timing”
◘  The pros and cons a private GI practice should look at while weighing their options
◘ Is there money upfront in the CDC MSO model?
◘ “The one thing we tell everybody”
◘ “COVID certainly pulled back the blankets on few of the private equity deals”

The Transcribed Interview:
Praveen Suthrum: Dr. Michael Weinstein, you’re the President and CEO of Capital Digestive Care also the past President of DHPA (Digestive Health Physicians Association). Thank you so much for joining me today and I welcome you to our conversation.
Dr. Michael Weinstein: Praveen, it’s a pleasure. I have been looking forward to this. As we get a little older it is always nice to be able to impart a little wisdom.
Praveen Suthrum: So, I want to start by asking how are things going on with you and your practice in Maryland and DC, you’re in the thick of things. So, I’m wondering how are things there?
Dr. Michael Weinstein: Yeah. We say, it has been a very long year you know, very unusual year. February had 29 days and then March had 300! It certainly felt like that. It’s hard to believe that just four months ago, we were in a totally different world. Maryland started to peak with COVID-19 several weeks after New York and then we got very active, we were in the same boat as most of the practices in our country. Closing down our endoscopy centers, only doing emergency procedures, closing down our offices. I think in the first few weeks, we had two main goals. One was ‘How fast can we ramp up telehealth’ which I think everybody did and I think everybody did it with variable success. And the other was ‘How do we keep our inflammatory bowel disease (IBD) patients treated?’ ‘How do we keep our infusion centers open?’ because those patients are so desperately in need of regular infusions. Those were probably the two priorities. Then, the third priority was who can we partake of the Federal support dollars that were available. So, applying for SBA PPP money, making sure we got our HHS money, the first tranche the second tranche. Then making sure we had the legal counsel to advise us as to what we could qualify for.
We are a big group. So, we were having board meetings three times a week to review everything that was going on. Normally, our practice was to do board meetings once a month. We also furloughed 70/80 employees. Our endoscopy centers furloughed employees. It was scary. Now we’re in phase 3, we opened up our surgery centers a few weeks ago. And we were able to do that while we were doing COVID testing for everybody. COVID testing for patients, staff, doctors, everybody! All the staff and doctors get tested regularly. All the patients are tested two-three days before their procedure so that at least when everybody walks in the room, we can be very confident that everybody is negative. So far, we’ve done over 2000 COVID tests. We have only one asymptomatic patient that was positive, we have one staff member who turned positive. So, so far so good. And on follow-up phone calls, seven days and 14 days after the procedure, nobody who was COVID- positive. So far so good (fingers crossed).
Praveen Suthrum: Is this going to be the ‘new norm’ for the better part of this year and even leading up to next year?
Dr. Michael Weinstein: I think we are certainly going to maintain this testing, I’m sure for the next two or three months. It’s interesting, when we reopened our surgery centers, again, following examples of other regions, we opened at 30-35% of our typical volumes. Next week we will go to about 50% of our typical volumes and not until we get into August where we would be up at 75% to 80% of our normal volumes. So, the cases are stretched out a little bit, I think there’s more downtime. I think the staff needs a little bit more time to rest between cases. You know, they’re wearing full PPE so, all that masks, all that gloving, all that doffing and donning of the equipment is very tiring for the staff. If we don’t give them enough time, I’m afraid they’ll burn out. So, we’re going slowly. The day is about an hour and a half longer. And at this point, we’re obviously trying to catch up with the elective priority cases i.e. cases that we should have done two or three months ago or four months ago. We’re still not scheduling routine cases generally so the true routines cases are probably going to end up being delayed till September or later.
Praveen Suthrum: Is there any hesitation on behalf of the patients to come for the elective cases? Are there delays or cancellations? Or have they adjusted to the new norm?
Dr. Michael Weinstein: I think there is one group of patients who are just terrified of catching COVID and even though they’re due for procedure, they should have their procedure, they’re hesitating now saying well can I wait another month? Is it okay if I wait? And obviously, at this point trying to juggle as much as we are, is four weeks really going to make a difference? Probably not, then we’re letting those patients wait.
But then there’s another group of patients, who are so anxious whether or not they have colon cancer or esophagus cancer or they are so nervous about the fact that their procedure was due in April and now it’s July. So, they’re saying ‘oh I’m very overdue!’. So, there are two groups of patients – those who want to come in right away and those who are willing to wait. So, there’s a different fear factor for different patients. At this point, we can accommodate the patient’s wishes.
Praveen Suthrum: Okay. So, I want to go back in time a little bit. I wanted you to reflect on the growth of Capital Digestive Care and what led up to the size it is right now and how you went about your decisions to build a strategic partnership with Physicians Endoscopy.
Dr. Michael Weinstein: So, now let me spin a story. Capital Digestive Care is now a 74/75 physicians’ group but it was obviously not always that way. We did not grow organically to that size. 2007 there was a Gut Club formed and it was a meeting of about nine practices and some solo physicians and we started discussing the pros and cons of mergers of whether or not being a single large practice would be beneficial to the whole group. It took us a while to work through those issues, to figure how we would govern ourselves, what things we would do centrally, what things we would do as the legacy practices within those old offices.
We did work with the legal counsel quite a bit to try and make sure we met the definition of a group practice which for us meant centralizing certain things that define whether or not you’re a group practice. So, centralized billing and collection, finances, HR, policies and procedures, and every aspect that could be centralized and physicians were willing to give up we centralized. And that let us delve into the opportunities for providing ancillary services, particularly laboratory services.
We went live in 2009 as a single group. Everybody who was in the Gut Club did not stay in the single group. The solo doctors didn’t like the idea of not having complete control. They thought it’d be fair if they had a veto power and obviously that doesn’t work when a group of (at that time) 52/53 physicians. So, we did form a governed structure that everybody was in and formed a new group on January 1st 2009. That is so that the old entities could continue to collect their accounts receivable, they continue to own their assets, they leased any assets to the new corporation, and started as a new company on January 1st 2009. Probably one of the most interesting things we did is we went to all insurance companies before we went live and told the insurance companies what we were going to do. That on January 1st all these groups are going to be one new Tax ID number and how were they going to handle the billing and collection under the one Tax ID number for all these physicians who used to have contracts but had 8 different contracts. So, we settled that up with the insurance companies even before we went live.
Over the course of the next 10 years, did a lot of things as one company. We implemented a new EMR, converted three or four practices that had paper charts and converted those to electronic medical records in 2012, built an infrastructure network so that all the offices were connected, all the marketing was centralized and sort of started building a culture as Capital Digestive Care, different from the individual cultures that the separate practices had in their legacy years. That takes time. You know, you get married, but you have to sort of understand your spouse. And all your partners are now your partners while they used to be your competitors. So, it took us a while to work through those issues. Each of the original practices gradually grew.
We looked back in 2018 and we looked at the goals we had when we started, by the time we were in 2018, we had realized that we had pretty much achieved all those goals except the part about continuing to grow. And we were getting all the private equity phone calls, calls from the bankers and the brokers, I know Jim Leavitt very well, I know Jim Weber very well, we were sort of seeing some of the other things that were happening in the country and it was time for a change. We took a weekend, we listened to an Economics consultant from Carnegie Mellon and her main question to us was (it was 2018 at that time) she said, ‘What do you want to be in 2030?’ ‘What does your practice want to look like in 2030 or 10 to 12 years from now?’ ‘What do you want to be?’. What you have to consider is what’s going to happen to healthcare economics over the next few years that you will have to deal with in order to get to 2030. It was a good exercise. I don’t know if you have ever done any strategic planning or participating in any other strategic planning like that.
Praveen Suthrum: I have actually. And it is very interesting because a lot of times you don’t want to extrapolate the present but you want to do away with the present and come up with a different future. For Scope Forward actually, I tried doing that on behalf of the industry. So instead of taking the past to the future, re-imagined the future like you want it to be. So, I’m curious to know what was the outcome of the strategic planning exercise? What did you want to be by 2030?
Dr. Michael Weinstein: You know, if you ask most of the partners, independent and autonomous were probably the two main words that everybody used. ‘I want to be independent; I want to be in charge of my own life’. When they say they are in charge of their own life, they want to be able to manage the surroundings that they see with their own two eyes. How their staff works in their offices, what kind of scheduling they want to do. I have some partners who want to see at least four patients an hour and there are other partners who go ‘No, I only want to see a patient every 30 minutes.’ We wanted to be flexible enough to allow each doctor to kind of choose their own career. If they want to work four days, if they want to work five days a week, or they want to take off 10 or 12 weeks a year or whether they want to work 48 weeks a year. We wanted to maintain that flexibility, that independence, and that autonomy at the same time as being successful.
In our region, we looked at labor markets, what is going to happen in labor markets, how are we going to compete for our employees, how are we going to compete for associates, how are we going to find the next generation of partners. We looked at technology disruption, I know you’re obviously quite an expert on that. What’s going to happen in technology, artificial intelligence, maybe standard endoscopy may not exist. What could happen technologically that could change? We looked at service lines, what things are coming along that we might want to get involved with as far as clinical research, NASH and NAFLD, chronic disease management, imaging, and other things that are coming along that we should add to our care delivery. And we decided that the one common factor amongst all of these things, to be successful was that we needed growth. We needed size, in order to have an employee benefit plan and opportunities for employees that would be attractive. We needed size to be involved in other service lines that require much larger patient volumes to become cost-effective. We needed size to be able to compete against the big hospital systems and the payors which were obviously continuing to consolidate.
So, if size was the common denominator, the next question that she said was, ‘Now that you know what you want to be in 2030, we have to work backward.’ How do we achieve that growth, what are the ways that we can grow as a practice so that we can accomplish the things that we have as our new strategic goals. You know, we had options. We said we don’t need any help we can do this by ourselves. We can just go borrow money from the bank in order to grow our infrastructure, to attract other practices, we’ll just go borrow money. That was not particularly anything that most of the partners wanted to do because as you probably know doctors are generally a little bit risk-averse and the idea of borrowing money did not appeal to too many people. We said, well we could sell ourselves to the hospital. That was the group of doctors who basically wanted to throw their hands up and say ‘I give up’ ‘Let’s just go to the hospital system.’ if you’re familiar with the Mid-Atlantic area Hopkins is very powerful here. I think they have seven or eight hospitals now in the Mid-Atlantic area. MedStar is the other major hospital system in Maryland, they have 10 hospitals. And Innova Health systems in Northern Virginia have five or six hospitals as well. So, some people just thought the hospitals are going to win the game, we should just sell ourselves to the hospital. That seemed to be, you know, the ‘throw in the white towel.’
We looked at the option of private equity and what the typical private equity looks like. It looked a lot like selling yourself to the hospital. it looked a lot like taking a job not with the hospital but taking a job with the private equity company where you definitely lose a lot of control and you give up a lot of your future income for a payday. It seemed to us to be more of an exit strategy. Private equity didn’t sit very well with us, there were too many negatives and the last option was to find a strategic partner. Somebody who had similar goals for 2030. Somebody who was also looking to be successful for a decade or more.
And you know, everything in life is timing. Barry Tanner and I happened to be in a meeting together. We started chatting, he started talking about Physicians Endoscopy, we were talking about Capital Digestive Care. Physicians Endoscopy was trying to figure out how they could help all of their smaller practices. You know it is interesting, when we look at the private equity companies, they have resources but their definition of resources is money. That’s what they bring to the table, they bring money. They bring cash. They’re like a bank but it’s easier to get the money from a private equity company than it is to get it from a bank. Physicians Endoscopy had money but they were an ASC management company. So, they have a substantial team of personnel with 600 employees, with expertise in all of the same areas that we had, practice management expertise. So, we basically merged two teams of people and formed a new MSO.
Now we think we have had conversations with groups in the and the region that people are understanding of the goal, which is to take away the aggregation of the back office, run that as efficiently as possible, develop new service lines, new sources of revenue, and let the physicians do what they do the best which is to take care of patients and set their own schedules and have their autonomy and independence. That’s more or less it. It was interesting. In 2018 we were doing very well. In 2018 everybody was happy, everyone’s income was good, endoscopy centers were busy, we had a very busy anatomy laboratory pathology option, we had eight surgery centers, anesthesia ventures which most big groups in the country have. But the question is what are we going to need in 2030 because those four main areas are not going to be sufficient in 2030, we need to find other avenues.
Praveen Suthrum: From the point of view of the private practice GI group, how does the model look? Like if someone wants to come on-board, and they want to weigh this option versus a private equity option and versus doing it on their own. What are the pros and cons that they would look at?
Dr. Michael Weinstein: The main things that I heard, when I talked to the private equity bankers and brokers was, you can get a big payday upfront, in multiple of 30 or 35% of your income, you know which means you are going to give up 30 to 35% of your income forever but we are going to give you a big multiple upfront. So, it’s basically taking most of your money off the table and agreeing to work for some number of years in exchange for a payday and the way we are going to make things better in the future is that we are going to have “the second bite of the apple”. There’s going to be a flip. Three years, four years, five years, we’re going to get really big and we are going to flip it and then there’s going to be another big payday.
There is not a lot of discussion about how you re-acquire the income that you have given up, how do you repair the 30 or 35% of your income that you sold. Is there any opportunity to repair your income? I don’t think I have ever heard very good arguments about how a private equity company was going to do that. So, with a typical private equity deal, the pro is that you get a lot of money at the beginning and there is a tax advantage because you get that money as a capital gain…If you get that money as a regular income over the next several years, you are paying regular income taxes today is a tax arbitrage on the transaction. But it’s the exit strategy for everybody who is currently there. And it basically brings all the new associates into your practice at roughly 60% or 70% of what the old partners used to earn. Now the new partners will only earn 60 or 70% of what the old partners used to make. So, see that is the attraction for private equity. If you’re thinking you’re going to work only for five years or seven years, it makes perfectly good sense.
Our model is different. There is a transaction upfront, but not giving up 30 or 35%. We have created a management fee of 15%. A very small amount of your income which is placed into the MSO company to help the MSO growth. So, it’s an investment in a new ancillary. The new ancillary company is practice management services, you are investing in that company, you get to own a part of that company, and that becomes a new ancillary source of revenue. Particularly, again part of the alignment with Physicians Endoscopy, is that there are many small practices outside the region, that need practice management services that can just buy practice management services. They don’t need to join the platform group; they don’t need to join Capital Digestive Care. But within the region, the idea is to grow Capital Digestive Care into a much larger practice, into a more relevant practice when it comes to negotiating with hospitals, with payors, with employers, with value-based purchasing, is to become a relevant player for digestive disease management.
Praveen Suthrum: Well, one question that I have on this is, that you said there is a small transaction in the beginning and that’s 15%. Does that mean they are getting money upfront? Or there is no money upfront?
Dr. Michael Weinstein: Oh no, there is money at the beginning. You know in a typical private equity deal you are selling a 30 to 35% at a multiple and the way we have modeled our MSO is that you’re selling 15% but you’re selling it at a similar multiple. So, there is a cash and equity transaction and asset purchase in our model as well. It just leaves you with 85% or more of your typical income. So, you’re not taking that huge drop in the annual income but there is only a small drop in the annual income and there is much more likelihood that, that income can be repaired just by negotiating and having everybody up to the best contract, having everybody be able to participate in a very functional profitable laboratory. It is very easy for most groups to recapture the 15% that they are getting a transaction for. We have already had one group that gave up 15% of its pre-transaction income and after the transaction based on new contracts and pathology and other services, they’re actually going to make more money than they were in their practice. So, no decrease in income and they got a transaction.
Praveen Suthrum: So, let’s take the number 100. So, the value is 100, they get to retain the 85% and you have the 15% left and that, part of it they get cash, and part of it gets converted into equity into the new MSO. Is my understanding correct?
Dr. Michael Weinstein: Correct. So, it’s up to the group. They have an option. If they want to take it all as cash, depending upon the size they could take it all as cash. Or they could roll some of the cash into equity in the MSO as an investment. There is a tax arbitrage on that as well. The cash part of all these private equity transactions is capital gains. So, depending upon where you live you are paying 21 to 27% federal and state capital gains as opposed to regular income taxes which are probably 42 to 47% depending upon where you live, you’re paying regular income taxes. If you roll some of the transaction proceeds into equity, you further delay the tax. So, it almost becomes like another pension plan. You are taking some of your income and you’re putting it into this MSO, which you own a piece of. So, with the money you’re putting in, you’re basically improving the wealth of the value of the MSO. So, when the day comes when you want to sell your equity, in the model that we have it is much easier to move the equity around between partners at market value and when you sell the equity that’s when the tax is realized. So, you basically get taxed to further growth as well.
These are just the financial aspects. One of the things that we say in all of the groups that we talk to as far as joining Capital Digestive Care is that there are certainly some transactional benefits. There’s cash upfront, there’s an equity component, there is a tax arbitrage that sounds very interesting in the first year but after the first month, most physicians want to know how they’re going to recapture the income that they’re giving up. And for us, it was not about the transaction. We tell everybody that this is not about the transaction, this is about the strategy. This is about what do you want to be in 2030. And if you are 50 years old or 45 years old and you’re thinking you’re going to work 10 or 15 years or more then, a typical private equity deal is kind of risky. You’re giving up a lot of income forever and there’s not a lot of ways you’re going to repair that income and I’m not sure how they will recruit in the future.
I don’t think that they have had any trouble yet although COVID certainly pulled back the blankets on a few of the private equity deals. I think that there is an ophthalmology private equity deal that went bankrupt probably because of COVID but also probably because they were already overleveraged. They had already overleveraged the business. The largest private equity platforms were not able to partake in Small Business Administration loans. I think that there may be some other opportunities for federal support for healthcare companies that will hopefully get them through this terrible gully. It is interesting, most of my partners when COVID hit, said, “Mike, you did the most amazing thing, the timing was incredible”. The timing to do this with Physicians Endoscopy. And I’m going “I don’t think we did this because of COVID!” we had no idea that this pandemic was coming and now we feel that we’re actually probably a good position and that we did what we did!
_

 

By Praveen Suthrum, President & Co-Founder, NextServices. 

COVID-19: The Way Forward for Gastroenterology Practices
COVID-19 is a double whammy of both clinical and business disruption. This ebook will help you explore possible scenarios and be a guide in your plans for the future.
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23 Jun 2020

Interview with Dr. Byrne (AI in GI): “There’s a tidal wave of AI coming and we should prepare for that now”

Dr. Michael Byrne is CEO & Founder of Satisfai Health, an artificial intelligence company that aims to deliver the future of gastroenterology. Dr. Byrne is also the founder of ai4gi, a joint venture with Olympus that focuses on AI solutions for colon polyp detection and differentiation. He’s also an interventional endoscopist at Vancouver General Hospital.
I spoke to Dr. Byrne to understand where exactly AI is in gastroenterology. What must private practice gastroenterologists do now? What does the world of GI look like post-COVID? Stay on top of GI trends by watching this thought provoking interview in full.
◘ Dr. Byrne’s various roles in artificial intelligence in gastroenterology
“Will endoscopists who use AI replace those who don’t?”
◘ Patients will ask, “Is that group using the latest technology?”
What if we are mandated to reach an ADR of 40% to get paid
◘ Remember EUS? Lot of people said it would be niche and it won’t take off
◘ Remember NBI? Initially, people thought it was a gimmick
◘ Would DNA testing or liquid biopsy replace endoscopists who use AI for detection?
◘ How many AI initiatives are underway in GI?
◘ Medtronic GI Genius. Which other companies are making progress?
◘ EndoBRAIN received approval in Japan 18 months ago
◘ How far are we before we start  using AI in GI private practice?
◘ What would GI look like post-COVID?
◘ AI can help with clinical trial recruitment in IBD
◘ Can AI do a stand-alone diagnostic in optical biopsy?
◘ How can private practices pivot and take advantage of these technology trends?
◘ Whether you like it or not, it’ll be there in the not too distant future
◘ AI in GI space is beyond endoscopy. Lots of algorithms in IBD, liver disease, patient meta data, predicting cirrhosis and the various -omics.
◘ Scope Forward encompasses a lot of things GI physicians need to know

 


The Transcribed Interview:
Praveen Suthrum: Dr. Michael Byrne, I want to welcome you. Thank you so much for joining me today. You’re an expert in Artificial Intelligence (AI) in Gastroenterology (GI). You’re the CEO & Founder of Satisfai Health, a company that’s in the AI in GI space. You’re also the founder of ai4gi and an interventional endoscopist. I’m sure I am missing a few hats that you wear. So, it will be great if we start with you telling us about all the different roles that you play as far as AI in gastroenterology is concerned.
Dr. Michael Byrne: Yeah. Thank you, Praveen. I appreciate this invitation and the opportunity to talk about AI and endoscopy. So, as you said, we all wear many hats. So, my hats include being the CEO and Founder of Satisfai Health and I have also founded a joint-venture which we have named ai4gi that I think is reasonably well-known in the GI world of endoscopy. Our vision at Satisfai Health is to become the leading group in AI solutions for detection, diagnosis, and treatment of GI disease, particularly in endoscopy and that’s really where we are putting most of our attention.
So, I am involved in AI at an academic level as you know, I write a lot of leading articles in the GI Journals. I present at the symposia, DDW (Digestive Disease Week), UEGW (United European Gastroenterology Week), all the main GI conferences. Our group and I, we are working at the research and development level for providing solutions in the AI space and also at a commercial level where we are trying to forge increasing relation with the industry. So, I guess that’s a reasonable summary of where I am right now.
Praveen Suthrum: I came across a recent editorial that you had written talking about whether AI in GI particularly in optical biopsy is a hype or reality. You ended that piece by saying that “endoscopists who use AI will replace those who don’t”. So, you know I wanted to take you up on that and ask you to explain what you meant there.
Dr. Michael Byrne: Yeah. I guess you have to be careful with the statements that you make so that you don’t make too many enemies in this space talking about replacing endoscopists! But you know tongue and cheek, there’s a lot in that statement. I do believe that people have to embrace new technology. There are several layers to this answer. There’s a competitive spirit among professionals so, we all want to use hopefully the latest and the greatest technology. There’s curiosity from the public who know all about AI now and it’s benefits and maybe the pitfalls of what AI can bring. And I think going forward, we will probably have mandated performance metrics from the various payors and the regulatory bodies, to look at how we are performing on a day to day basis.
If you use CADe or Computer-Aided Detection as an example, there are several studies that show that this AI-type tool improves the ADR or the Adenoma Detection Rate or in other words looking for precancerous polyps. And several groups in the US, a few years ago, I think it was what was advertising in a competitive fashion, that their group was using the “FUscope”. If you may remember in your previous coverage that the FUscope is the one that had some side lens as well as a forward lens and the idea was that it increased the field of vision of the scope so that you could see more. And, there were some studies that showed that it can out the regular forward-viewing scope from the competitors that could increase the ADR or the Adenoma Detection Rate. So, there were some groups that were advertising to the public: ‘Our group uses the FUscope, this has been shown in studies to improve the pickup rates of polyps, you should come and have your procedure with us’ or in other words, it brought on a competition between groups. So, I think the same will happen with AI. Public who have been availing these services and particularly in healthcare systems like the US will look and see, ‘Okay is that groups using the latest technology? I have heard that AI can help improve the human mysteries’
As I hope and as I expect in the next few years, it is mandated that we reach a certain minimum threshold for performance. So, again I have used the example of the obvious one, colon polyps. That’s the one that most people can relate to. If we are mandated to reach an ADR of say, 40%, I’m going to pick a figure. If you are not reaching that level, by whatever means maybe you won’t be reimbursed and/or your privileges for that procedure will not be renewed by your healthcare institution. And that is maybe the way to drive increasingly better performance. To the naysayers, I’d say remember EUS or endoscopic ultrasound? When that first came out, properly 15-20 years ago, a lot of people said, ‘oh it’s black and white’ ‘it’s going to be niche groups’, ‘it’s going to be very hard to interpret’, ‘we’re not radiologists’ and ‘it won’t take off’. Now you can see it is in every major healthcare institution, driving lots of interventional endoscopy.
Remember the same with the NBI or the narrow-band imaging, the blue light on the endoscope that Olympus got initially and all the other companies like FUJI and Pentax have developed a version of virtual chromoendoscopy since. Initially, NBI was almost felt to be, how can I put it politely…a gimmick or something that most people wouldn’t use because they didn’t know how to interpret what they’re looking at. That’s not the case now. It is driving this visualization of pathology. So, back to your question, will people who don’t use AI get replaced with those who do? Maybe not replaced, but I think, people need to realize that very quickly they have to adopt, get on the train. It’s moving, right? It’s leaving the station.
Praveen Suthrum: Would DNA testing replace or liquid biopsy replace even endoscopists who use AI for detection or for screening? You know, it could be, because if a blood sample is going to tell you whether the patient has cancer, does not have cancer and it’s not doing just for GI-related cancers but say we get to the point where it does for 15 different types of cancers. Then, would they even do an endoscopy on such a patient? And where would that leave some of the AI initiatives which are underway right now?
Dr. Michael Byrne: Now, I think it is a very good point. I think that the scenario that you mentioned that the liquid biopsy, the blood test being very accurate and predictable of certain types of cancers is quite a way away. I mean, I know we are getting lots of biomarkers now for cancer, but I think expecting that next year we are going to have (for example), a blood test that is very accurate for determining your colon cancer risk is aspirational at this point. That doesn’t mean we’re not going to have better and better non-invasive ways to look, whether it’s with imaging, capsule endoscopy, blood tests, or the genetic tests looking for your own risk of colon cancer for example and that, that’s not going to come. I’m sure it is. And maybe that will also help to streamline endoscopy.
So, endoscopy becomes more therapeutical, almost as if you have assessed that somebody has the risk, you’ve assessed that somebody has non-invasive imaging to have polyps, (again for example) on a capsule and then you chase it with your endoscopic procedure to remove those polyps. So, yeah it may take away some of the excessive volumes of screening in endoscopy. It may promote even more appropriate intervention and therapeutic endoscopy or colonoscopy. Will AI play a role there? We still need to see these things when we’re looking for them so, humans still need help. And I feel that the thing we haven’t touched on it in this talk so far is the field of optical biopsy or doing a virtual or real-time pathology evaluation with your eyes or the AI. That will be needed to be aided by technology. Once we find the lesion, we need to know what we’re looking at. So, yeah, very good point but none of these things should be threats. These could all be cooperative interventions, right?
Praveen Suthrum: Okay. So, last year when we spoke for my book, Scope Forward I had asked you how many AI initiatives are underway in GI and you had mentioned that at least a hundred. So, I wanted to ask you how accurate have you been on that prediction?
Dr. Michael Byrne: Well if you look at the publishing, those who are publishing or trying to publish in the main GI journals, then the number must be way more than a hundred. If that’s how we define a group. In the last month alone, I think I have reviewed maybe ten articles to do with AI in endoscopy for the main GI journals and I’m just one reviewer. So, if I’m reviewing ten papers in the last month on AI alone, and they’re all from different groups! You can imagine the number of groups globally who are actively working in this space. I would say probably several hundred groups, looking at this from an R&D or at least from an academic perspective. How many of those are true companies or groups with all the facets, that’s a little hard to define.
Praveen Suthrum: I saw the announcement from Medtronic related to GI Genius. They launched in Europe and they were supposed to launch in the US this year. I’m curious to know if there are other companies that are ready for primetime. Have things been launched already? Can private practices particularly take advantage of any of the AI solutions which are available out there?
Dr. Michael Byrne: So, you correctly mentioned about some approvals for AI in endoscopy in Europe. With the FDA, it’s still a little slow but we’re getting there for sure. There was a thing… I think it was called the ‘First Global Proceedings for AI meeting’, it was in Washington DC in September last year I believe and there were representatives from the FDA, and from the NIH and global thought leaders in this space were there. A lot of these big tech companies – Amazon, Google, and Microsoft people were at this meeting. So, it only got some attention (there) and with the FDA I think things are going to move quite quickly going forward. But as you said, there are some groups that got their CE mark in Europe for detection. So, CADe or Computer-Aided Detection, again in colon polyps, that’s a disease where lots of efforts have been made so far.
So, they include Medtronic with GI Genius, FUJI recently announced that their CAD EYE or their REiLI system has also got CE approval for colon polyp detection or CADe. As have Pentax with their discovery system. I know that Olympus is working incredibly hard in this space too and with optical biopsy or rather CADx but for confidentiality reasons, with my own involvement as I mentioned maybe at the beginning that ai4gi has a co-development agreement with Olympus in polyp and AI. So, I do know Olympus’s plans to a large degree, but I can’t really say any much more right now. But it’s definitely moving very quickly. For CADx or Computer-Aided Differentiation or doing a virtual biopsy or virtual pathology, there is no FDA approval yet to my knowledge. Other than this group by the name of NinePoint Medical, I’m sure you know them. They are doing some great work with VLE or Volumetric Laser Endomicroscopy, mainly in the esophagus (for example) and they have an FDA approval for using an AI tool, the image feature segmentation. But it’s not true optical biopsy. So, more advanced CADx or optical biopsy is still awaited emulation for an FDA approval actually even for a CE as well.
There’s a group in Japan, called EndoBRAIN, who have done a lot of work in the last number of years on CADx or optical biopsy and they did receive an approval from the Japanese version of the FDA called the PMDA (Pharmaceuticals and Medical Devices Agency) about 18 months ago for AI support, for optical diagnosis of colon polyps. So, hopefully, that also sets the scene for other jurisdictions. I think it is important Praveen, to point out that many of these tools, CADe, CADx, detection, differentiation… at the beginning appropriately they should be and will be clinical decisions support tools to help the physician, rather than standalone diagnostics. Because right now we’re not in the space where we can say for certain that, that’s what AI can do. It needs to be an aide to the physician right now. But I think things will change quite quickly.
Praveen Suthrum: So, just to clarify, can a private practice gastroenterologist in the US play with some of these tools as of today or no?
Dr. Michael Byrne: Not right now, because there’s no AI tool in the endoscopy space other than the one that I mentioned with NinePoint Medical for this very sophisticated technology, this VLE device where the AI allows looking for certain features, other than that for colon polyp detection or colon polyp differentiation, there is no FDA approved device as it stands.
Praveen Suthrum: How far are we before the day where they can start using it or at least testing things out?
Dr. Michael Byrne: You know, I’m sure I don’t have an inside track to the FDA processes and what all the groups are doing in terms of their regulatory pathways. But I think, given what has happened in Europe and looking at the huge amount of work that is being published in the journals and the clinical trials that are listed on the clincaltrials.gov website, I think it’s only a matter of short time that the FDA will approve some of these AI devices. So, my best guess is that AI guided detection for polyps will probably be on the market for physicians to use sometime next year.
Praveen Suthrum: Okay. So, as you know we’re in the middle of a pandemic that’s not over yet. And what I have noticed since the beginning of COVID is that a lot of trends that were already underway have accelerated. And these could be business trends or technology trends, be it the number of AI initiatives. So, I want to ask you what kind of a GI world do you see post-COVID?
Dr. Michael Byrne: Well, the very obvious one is what you and I are doing today, we’re having a zoom meeting. And I think with respect to many of my colleagues in my group here in Vancouver, probably didn’t even know what zoom was three months ago. So, you know many physicians are not particularly tech-savvy but it’s very incredible to see how quickly endoscopy for large meetings have gone virtual. So, people are getting more familiar with technology.
As you said, COVID had a lot of significant downsides, a lot of heartache, and disease burden which is very sad, and hopefully, we’re coming out of it now. But a lot of groups focus as you say, in GI, on the COVID effects from the clinical standpoint, to name a few – ‘How COVID impacts patients with Inflammatory Bowel Disease (IBD)’ ‘should we stop or start new biologics?’. ‘The PPE use in endoscopy’ you know, it became fairly quickly clear that endoscopy was a risky procedure for transmission of COVID because of aerosolization for example. ‘How do we triage patients after lockdown?’ So, all of this came out of the recent pandemic. Can AI help in these COVID related situations? I’m sure the answer is yes. We have now huge backlogs for colon cancer screening. There are several papers coming out now showing that the burden of disease in the last three months is really quite alarming. We have to know how best to come out of that. How do we triage these patients? Who gets done first based on urgency and disease likelihood? I’m certain that AI can help to decipher some of that for us. It can see patterns that are hard to see from a traditional regression type model.
Live endoscopy causes which used to be of course mostly people at that facility but transmitted globally that’s all virtual now and is going very well. So, I think this is just going to increase the appetite. We need help with improving clinical trial recruitment overall, in IBD, in other disease states. We need to maybe rely less on human interaction all the time. So, we talked in the last few minutes about CADx or optical biopsy, if in time AI can do a truly standalone diagnostic in an optical biopsy, maybe we can take away the need for an expert pathologist to do some of that very high-volume but very low-hanging fruit work and leave them to do the more difficult work and more important work for cancer diagnosis.
This is more of your expertise than mine in the venture capital and the private equity world. Of course, there has been a huge economic downturn in the last few months and is likely for the foreseeable future and my impression, I’m not sure of yours, is that there is an appetite from such VC and PE groups to look for safe havens or growth havens for their investments. And healthcare has often been a safe haven even in crisis and I think now, groups are seeing that healthcare technology including AI is a safe haven and actually almost certainly a growth haven. So, I think all of these factors will just help promote a quick adoption of AI into our practice (hopefully).
Praveen Suthrum: My final question Dr. Byrne to you is – So, for practices who understand these shifts, they’re seeing that AI is coming, they see these technology shifts coming but then they are currently tied to an older business model where they are doing a lot of endoscopic procedures, seeing patients in the office, but they also see a shift saying all this is going digital. Now, based on everything that you know, what advice do you have for them, how do you pivot and take advantage of what’s happening?
Dr. Michael Byrne: So, again that is a very insightful question. It is tough. There are naysayers out there or there are other people who are slow adopters or may seem to some degree threatened or that they don’t need to pivot their practice quickly to technology such as AI. And we do need to get physician acceptance, physician familiarity with AI so that we can feel comfortable and pass on that message to our patients, right? So, do people need to pivot straight away? Probably not, I mean it will take leaders in the field to have clinical experience in the field in the next year or two or three with all of these tools that will be coming to our hands quite quickly. Beyond that, do people need to prepare right now? I’ve used a phrase in one of my editorials that there’s a tidal wave of AI coming, and we should prepare for that now.
I do believe that’s the case. AI is pervasive in all aspects of our life. Every time you pick up your phone or use Siri or Alexa, every time you search for a flight it is all AI guided as you very well know. AI in genomics, what used to take humans months or longer to find, an AI model can decipher in minutes or hours. If you read any GI journal in the last 18 months or any medical journal in the last 18 months, I would challenge you to find an issue without an article on AI. So, it all shows that this is all coming very quickly. Look in particular at the Pharma and the device medical industry, they are all focusing on better optics, better visualization, new light technology, better resolution, knowing fully that the human eye cannot appreciate all that new data being thrown at them and so that you will need some sort of intelligence built into their endoscopes. So, the OEM’s, the device manufacturers, know this is coming and they’re investing heavily in this space. So, if you’re looking from the outside in, and you are feeling threatened and you feel like you don’t need to bring AI into your practice, maybe that’s okay for now, but in the not-too-distant future, in the next year or two or three, it’ll be there whether you like it or not.
Praveen Suthrum: I wanted to ask you if there was anything else that you wanted to share?
Dr. Michael Byrne: No, I think we touched upon all the main points. Of course, you know, AI is beyond just endoscopy. AI in our GI space for my GI colleagues listening or he medical colleagues, there are lots of predictive algorithms for re-bleeding risk in patients with peptic ulcer disease, for who will respond to certain biologics, in IBD, in liver disease, without using invasive technology looking at bio-data and looking at patient metadata, clinical data, predicting with great accuracy how likely is somebody with viral hepatitis is to get cirrhosis in 12 months’ time. Lots of AI models are showing huge potential in these spaces and we could spend the next half an hour Praveen, if we had that time today, talking about the various omics – the genomics, the transcriptomics, the proteomics, the metabolomics, and the microbiome and the effect of that on GI disease and how AI can help us decipher all those interlacing signals. But again, that would be a very separate and long conversation.
Praveen Suthrum: Yeah. That would make a good part 2 of this interview. But thank you so much for taking the time today.
Dr. Michael Byrne: Praveen, I would just like to say that I have been following many of your publications and your writings in the last couple of years. Your blogs which have been really helpful to show the business side of GI but also where technology is going. Scope Forward which I know is coming out this summer 2020, seems to encompass a lot of things that we as GI physicians need to know. What is the business angle in GI, how does the current crisis that we have come through affect our practice, where’s technology going? All of these things are very important to know and I think you’re doing a great job to encompass it in one space for busy physicians like me to digest it quickly.
Praveen Suthrum: Thank you so much, Dr. Byrne. Thank you for saying so and for taking out the time today.
Dr. Michael Byrne: You’re very welcome. Thank you.
_

 

By Praveen Suthrum, President & Co-Founder, NextServices. 

COVID-19: The Way Forward for Gastroenterology Practices
COVID-19 is a double whammy of both clinical and business disruption. This ebook will help you explore possible scenarios and be a guide in your plans for the future.
button_download
15 Jun 2020

Interview with Scott Fraser: “Practices that are nimble will come out of this pandemic stronger”

Scott Fraser is the Founder and Managing Director of Fraser Healthcare, a consulting practice focused on growth strategies for healthcare companies and private equity firms. He’s worked in the gastroenterology space for 25 years with companies like Given Imaging, EndoChoice and Boston Scientific. More recently, he was President of Practice Management for Physicians Endoscopy.
Watch this super insightful interview in full to understand where the business of gastroenterology is going. Scott delves into new ancillaries you could start right now. He talks about making a practice attractive for investment. And he reflects on the future of GI when present market forces accelerate.
Two key questions: How do GI practices recover? How do you evolve and think differently?
EMRs have a wealth of information to identify future patients
Easy to implement ancillary revenues from IBS and NASH
◘ Patients are putting their symptom scores into an iPhone app
◘ Massive patient population walks into ASCs everyday – very little is done to identify them
◘ Upwards of this ancillary is more than half a million dollars
◘ How do clinical trials work as an ancillary?
◘ What are PE funds thinking? Valuations and future of consolidation
◘ “We are still in the early stages of consolidation of GI”
◘ How would Scott make decisions if he were a GI practice today?
◘ “If you are thinking about selling your house, get it in order”
◘ “Make investments to make your practice more attractive”
◘ Revenue cycle management: Leaving thousands of dollars a day because of errors
◘ “Now’s the time to review your contracts”
◘ Collaborating with industry to gain patients
◘ “Become members of DHPA”
◘ What’s the holy grail for GI?
◘ The market forces are toward consolidation: payers, hospitals, industry (med-tech, pharma), sub-specialists
◘ “Practices that are nimble will come out of this pandemic stronger”

 


The Transcribed Interview:
Praveen Suthrum: Scott Fraser, thank you so much for making time today for this interview. It’s really nice to see you. You have been in this space for 25 years now and that too a variety of roles touching both on the business and technology side. So, I’m really looking forward to this conversation.
Scott Fraser: Thank you Praveen for having me. I’ve really enjoyed the panelists that you’ve had to date, and this is really a great forum in this virtual world, and as you’re getting different perspectives from thought-leading groups and bankers and stakeholders on how they’re weathering this crisis and coming out of it. Really, it’s about sharing best practices because we’re all in this together so, thank you for that.
A little bit about myself, I’ve been very GI/endoscopy-centric pretty much my entire career for now about 25 years. I first started off in Medtech with Microvasive which was the endoscopy division of Boston Scientific, both in sales, product management, and market development and then had a really unique opportunity for my first startup being one of the first US employees of Given Imaging where I led the marketing efforts during the launch of capsule endoscopy and that was such an amazing time frame. Then from there, I was one of the founding executives of EndoChoice which is now part of Boston Scientific and again we launched during a downturn in the economy. We founded the company in late 2007 and then 2008 hit when we were trying to raise money. After that, I was a consultant with a private equity-backed ASC company and I was the president at Physicians Endoscopy to form a new division of Physicians Endoscopy which is the partnership with Capital Digestive Care and that was an incredible experience to be on the operator side of both an ASC company as well as a practice management company.
Since that time, I have had the opportunity to work with both, leading private equity firms as well as fortune 500 Medtech and also startup Medtech companies, really advising them on the evolution of what’s happening, not just in gastroenterology but other subspecialty medicine where private equity is investing in MSOs and it has been a real honor to have these companies seek me out and I formally founded Fraser Healthcare which is my consulting group that advises both private equity and Medtech clients. I think even more important than my business experience is that my dad is a colon cancer survivor and he almost died because of colon cancer and that has instilled in me the importance of screening.
Praveen Suthrum: So, I wanted to start by asking you the two questions that you had told me the other day that most GI practices are thinking about right now. The first one being, how do we recover? And the second one being, after we recover, how do we evolve? And how do we start thinking differently? I’d love to get your perspective on both these questions.
Scott Fraser: Yeah. As I look at ‘How do I recover?’ and some of the best practices that have been shared by some of your previous guests and just in some of the discussions I’ve had with many physicians, it’s looking at your different lines of business and whether it’s your ambulatory surgery center as well as your practice, if you’ve got infusion, or if you’ve got clinical research, and understanding what a pathway to recovery looks like. The thing that I think is that a lot of smaller groups don’t fully appreciate is that their EMRs are a wealth of not only patient information but identifying future patients. And as I talked to different groups and also talked to some of the EMR gurus that are in the space is that very few groups really do a good job querying or mining that data meaning that you have patient populations that have IBS, you have patient populations that are at risk of NASH, and identifying those patients or the at-risk hereditary patients and proactively reaching out to them and it’s not your answering service or your call service contacting these patients, I would really encourage caregivers, nurses as well as physicians to pick up the phone and proactively call these patients and share with them, educate them that they are potentially at risk and they need to come in for an interval or screening.
Particularly the areas that I mentioned, there are some easy to adopt ancillary lines of revenue that some groups are doing right now, and I mentioned the IBS patient population, I look at IBS population, these patients are very difficult and frustrating for gastroenterologists to manage because medical treatment is not terribly successful but there is successful dietary management with the FODMAP diet. There are ancillary streams through third parties like Modify Health that allow you to off-load your IBS patients to their team of dieticians and they administer the FODMAP diet through a set meal plan, the whole time the patient is putting their symptom scores into an iPhone App and you as a provider have it integrated back into your EMR so, you can better manage that patient population. They have seen great success with the groups that are doing that type of program now.
You know, moving over to the hepatology space, I think this literally and figuratively a massive patient population that walks through the clinic doors and the ASC doors every day, and very little is done to identify them or do appropriate workups. And now with the recent technology of Fiber scan, which is easily implemented in the office, and can be done by a medical assistant that maybe takes five minutes. Although not a huge ancillary stream, it helps you identify at-risk patients and manage them accordingly. And then, on top of that if you have a clinical research entity to enroll patients in the new NASH studies, you know, there’s billions of dollars right now in the development of NASH drugs that are all waiting for FDA clearance.
And clinical research has burned a lot of smaller groups previously particularly with IBD and you know they had a difficult time with it, it was a big investment. There are companies out there like Objective GI which works on a joint venture model to help make this a really frictionless process. They take care of bringing the protocols, training the staff, running budgets, recruiting staff, and all you do as a small to mid-size practice is refer your patients over to this joint venture clinical research entity. The profit margin on this ancillary is very substantial you know, upwards of half a million dollars after you have it up and running and it offers a clinical benefit to your patient.
Shifting gears to the ambulatory center, you know, so much of GI is dependent on screening colonoscopy, around 60-70% of any ambulatory center’s revenue is from the screening business and then the downstream revenue from pathology and anesthesia also is very substantial. But now that our endo centers have slowed because of COVID protocols, we might be at half capacity. And in some cases, centers that are just opening here in the Mid-Atlantic and the northeast or maybe at a third capacity. It’s about thinking what we can do for at-risk patients. Maybe with advanced imaging. Advanced imaging has been around for almost two decades and you know, I’m thinking about EUS or confocal microscopy or the cellvizio technology. With confocal microscopy, there is established reimbursement for that procedure that CMS has category one code and you know, it’s an adjunct to EGD with biopsy and again, it adds about $600 to $650per case to the facility fee. It’s meaningful if you’re doing it appropriately with at-risk patients which everyone is seeing with these high-grade dysplasia patients.
So, I think there’s a lot of things that gastroenterologists are trained in during their fellowship, a lot of my good friends are also gastroenterologists have somewhat neglected because of the fact that historically there has been such volume and such a need for screening colonoscopy and a tremendous revenue stream and I think it’s going back to our training meaning the gastroenterology training to understand what are we trained in, what clinical service can we provide to our patients, that is warranted and I think that’s a more important point, and what are we going to be paid for and the examples that I just gave, all have very favorable ancillary revenue streams that could encourage groups to evaluate.
Praveen Suthrum: If you take diet and nutrition as an ancillary. I think everybody knows that it is an important ancillary and everybody does it, but the margins are so thin on that so there’s no clear payment model. So, how do you figure that out?
Scott Fraser: Yeah, it’s a great question. I know a lot of groups historically even large groups have maybe hired a dietician and the ROI with that staff member just wasn’t favorable and one of the things about the company that I mentioned, Modify Health have done is that they have devised a model that has their dieticians as in you’ll be referring your patients to Modify Health and for that referral, the patient is then buying the FODMAP diet which is a neat program. Not that it is a huge ancillary stream. It’s about $100 to $150 per patient that’s enrolled. But what it allows you to do is that you’re not investing in a dietician, you’re not spending the time to try to educate a patient on the FODMAP diet which is complicated I think even for the most skilled gastroenterologist and a very educated patient. It’s hard to understand what to do and what not to do on each week of this diet and it is being managed by a very simple symptom score app.
So, essentially it is taking a very difficult patient population that a lot of gastroenterologists are frustrated with managing and the figures with IBS patients moving from gastroenterologist to gastroenterologist, on average they see five gastroenterologists before they actually feel like they have had some treatment because there’s such a frustrating patient population to manage. This program is a way to keep these patients, make their symptoms go away, and not eat up valuable resources in your practice or make big investments while still recouping some ancillary stream from then. And although it’s not substantial, it is a way to keep that patient engaged in your practice.
Praveen Suthrum: And how about the clinical trials with Objective GI that you mentioned. When you say half a million dollars, is it per trial? How does that work?
Scott Fraser: Yeah, it’s a great question and you brought up the question before about established reimbursements. You know, large groups do clinical trials very well. If I look around the country, whether its Gastro Health, TDDC, or Capital Digestive Care or MNGI they all have very large clinical trial organizations and upwards of 20 different protocols at any one given time. It was a big investment at it was a slow ramp.
The nice thing about clinical trials is that they’re not dependent on reimbursement. You’re getting paid directly from the sponsor. And particularly with the latest NASH trials, the enrollment fees are very high because it’s such a race right now to get these drugs to market from about 32 different pharma companies that have the drugs in some phase of development right now related to NASH. So, what the team at Objective GI does is that they come in under a joint venture model. It’s a small startup fee from the mid-sized practice and really it becomes an integrated part of your practice that they are managing for you meaning that they are not only bringing the protocols to you, which is often difficult for groups to you know, get to meet the different clinical trials sponsors. But they have set protocols, they have a very experienced team of clinical research organization executives. And they are providing the training, the staffing and the budgetary process needed to run successful clinical trials and you as a provider, based on a set criterion are working up patients, in this case, you’re working up patients with fiber scan which is paid for by different sponsors. You may work upon 30 patients with fiber scan and only identify two that you’re enrolling in a trial but that fiber scan which is in your clinic is being reimbursed for by the clinical trial sponsors.
The numbers on fatty liver disease are anywhere between 80 million to 100 million Americans of which about 25 million will develop NASH again, this is literally and figuratively a massive patient population that our gastroenterologists see every day and very few groups are doing a lot for these patients. So, I’m really excited about that particular ancillary because again, it falls in line with GI and so much of fatty liver disease is dietary management too. So, we can help these patients based on your nutrition training as well just by losing 10 or 20 pounds.
Praveen Suthrum: Let’s switch gears to private equity. Since you have been involved with private equity for a while. I want to know what the PE funds are thinking.
Scott Fraser: We are still very much in the early stages of the consolidation of the subspecialty of gastroenterology. If I look at other subspecialties where private equity has been very active in dermatology or in ophthalmology, particularly in dermatology you have over 30 platforms and by the latest estimates I’ve seen, about 50% of the private practice dermatologists are now part of an MSO. Where you know, right now eight platforms within GI and close to 1000 gastroenterologists, I know there are a lot of deals that are in the pipeline that should be closing by the end of the year. We still have a really small percentage of the overall 13,000 to 14,000 gastroenterologists in the US that are part of an MSO. In terms of deal structure, the thing that is changing right now in this level-setting is that the sellers meaning the groups are being asked to take on more risk and this can be done in a number of different ways. The structure typically is in the seller’s note and what the buyers, private equity firms as well as their lenders are asking them to do is to structure deals that allow groups to get an additional payout for that transactional value when they hit their historical values of 2019. So, really the onus of the burden is on that group.
If I’m a group of 20 gastroenterologists and my volume hit down to 30%, I’m really betting on myself and my partners that we are going to get back to that 100% level that we were at 2019 to achieve full transactional value. Additionally, the structure of these deals is less cash. So, no longer it is this massive cash payout. Sellers are being asked and taking more equity. Again, betting in yourself. And, I have always stressed to gastroenterologists that are good friends that you know, many doctors have invested in real estate or restaurants or a bit more risky type investments. Investing in themselves is by far the best investment they can ever make. And looking at your own ambulatory center is a great example. Ambulatory centers were an investment that you made in yourself and your group and I would argue that they are absolutely one of the most valuable assets probably in your entire portfolio today.
Praveen Suthrum: Scott, if you were to put yourself in the shoes of an average GI practice anywhere in the country, how would you go about making a decision today? The GI practice out there has several choices right now. They can continue to be independent, doing what they’re doing now, or they can consolidate with other groups in the local areas independently or they can seek out private equity and go that route. How would you go about making a decision if you were in their shoes?
Scott Fraser: It’s a great question. I think the first thing I would do with my partners is really do a deep assessment of the local market conditions. So much of healthcare as we all know is local. So, not only what payor market looks like, what our referral market looks like, but I think more importantly what’s happening in our broader healthcare market meaning I’m going to reference the DC area, it is a great example, where I did a transaction with Capital Digestive Care previously. The DC market has a common threat that really has caused a lot of consolidation across all subspecialties and that was a combination of Hopkins moving south and not only buying hospitals but primary care in the DC metro area as well as MedStar which again is another major hospital group doing the same.
That put a real threat across all subspecialists in that area and you’ve seen massive consolidation in that marketplace. Not just with gastroenterology and Capital Digestive Care but if I look at urology, dermatology, ophthalmology, Premier Carrier, one of the largest primary care groups of Premier Health in that market and most recently a transaction during this pandemic was with Shady Grove Fertility which is a multi-state platform not just in fertility but also in women’s health. They have all consolidated because of the common threat in their local market and also because they have a major payor that has about 30% of that market. So, they needed size and scale and sophistication to be able to negotiate contracts. That would be the first step that I’d do.
The second step, I think is very similar to the analogy that if you’re thinking about selling a house, it’s getting your house in order. Meaning, if I have an outdated bathroom or I need a new roof. It’s about making investments that will make my practice more attractive to not only a potential strategic meaning an established MSO platform or a potential suitor with a PE platform if that’s the avenue I want ahead. I think it’s an investment in an EMR, some data analytics, Revenue Cycle Management as you well know is often an area that groups don’t have sophisticated Revenue Cycle Management or a process and system to track that and often, they are leaving 100s of dollars to 1000s of dollars a day on the tables because of the errors that they’re making in coding or just not following and processing claims so, it’s a very low hanging fruit. So, it’s focused on you know, if I want to be acquired making the time and the investment upfront to make my practice more attractive.
And then if you’re truly thinking about looking and staying independent during this consolidation, I think it’s looking at what we can do and what we can offer additionally to our patients. We talked about screening colonoscopy business being a threat. It’s really diversifying your groups into some of the areas that I talked about before. One area I didn’t mention is an area that has been around for years and again has established reimbursement is hemorrhoidal treatment. Looking at sometimes the small incremental things that you can add to your practice is that’s going to make you more stable, you know, as we whether through this storm. Now is the time to scrutinize and review every one of your contracts. It can be from your leases on your office or your ambulatory center with your landlords looking to defer payments as you are trying to recover.
Praveen Suthrum: How could GI groups collaborate with industries?
Scott Fraser: Industry whether it’s the big pharma companies or Medtech companies, and supply companies have local marketing campaigns and budgets and more importantly, promote practices that are utilizing their products or maybe recruit patients via social media in a certain disease segment. So, as opposed to the industry coming to you and trying to sell you on a new product, and then offering up a potential marketing program, I would reach out to your industry partners and enquire about this because it does exist and they have the resources.
There are some great courses and forums every year. One being the GI roundtable that Bergein Overholt, MD started, and Klaus Mergener, MD has now taken to the next level. This meeting which has been around for years is really where the private practitioners in GI, talk about different business strategies and new ancillaries and it’s a great forum.
I would also encourage private groups to become members of DHPA (Digestive Health Physicians Association) an advocacy group that now has close to 3000 members across the country. And the sharing of best practices with the DHPA leadership has been phenomenal and I would argue that DHPA has been part of the wave of PE sponsors meaning they’re sharing best practices, transactional advice on how to maneuver through a transaction and what to prepare for and what to do with each other and again, it’s a very collaborative effort. In a nutshell, understand your data, understand your local market, understand where there may be threats.
Praveen Suthrum: When you push this ball five years from now, or longer into the horizon, what do you see happening? What is the holy grail for GI?
Scott Fraser: You know, it’s a great question. I think that the market forces right now that you mentioned right now and one of the biggest market forces are payors. If I look at the larger ecosystem within gastroenterology, at the top of the food chain are payors. Payors have consolidated massively and now are looking at buying providers. So, they have never liked consolidating across different markets, they are consolidating service lines. If I then go down a step, we talked about hospital consolidation that has happened then another step-down, you look at the industry. Industry has consolidated. You know, my two previous startup examples both with Given Imaging which is now part of Medtronic and EndoChoice which is now part of Boston Scientific are great examples of what’s happened with industry consolidation.
In pharma, consolidation has been massive as well. The reason why consolidation has happened all around us has so much to do with economies of scale and resources. Speaking from my executive experience at EndoChoice, we didn’t have the resources and the field team that a Boston Scientific has. They’ve taken our company which was approaching 80 million dollars in revenue and those product lines and have grown them substantially in the last three years because of their commercial infrastructure that we just couldn’t invest in. So, scale matters. Unfortunately, at the bottom of the food chain of this consolidation are the gastroenterologists or the subspecialist. They haven’t consolidated. But I look at groups that have consolidated and have integrated as well and I think that’s a key point.
I know you had Jim Leavitt on previously from Gastro Health, they’ve been at this now for four years with Audax and you’ve seen the evolution with what Gastro Health has done. They’re a fully integrated platform right now and have tremendous efficiencies that are all centralized versus some of the other platforms that are just starting that are yet to do that integration and create those efficiencies. So, I think in the future, the more integrated a platform can be, and a GI group can be lowering their administrative burdens, but also allowing them to maximize different ancillary lines, maximize at-risk type contracts. If we look at whether it’s a colonoscopy bundle or managing a certain disease patient population like IBD, these are the initiatives that integrated groups are pursuing that really will limit and exclude private groups because of the resources needed and the scale needed to be able to negotiate with a payor or a major employer.
You know it has been really interesting to see what some of these large-scale groups have done going direct to employers with GI Health and having a direct service line to their practice. So, that being said, I think consolidation is going to happen and I would encourage groups to have an open mind to it. It is not a threat at all, it is something that is an evolution and it allows groups to stay independent. These companies that are nimble or practices that are nimble or also embrace change will come out of this pandemic stronger.
Praveen Suthrum: Scott Fraser, thank you so much for all these insights. It has been fantastic chatting with you.
Scott Fraser: Praveen, I really enjoy your labor of love if you will, in terms of not only the research but the writing and the time, sharing best practices with the broader GI community. It is much needed. I wish everyone continued safety and continued growth and success during this difficult time. We will get through this.
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By Praveen Suthrum, President & Co-Founder, NextServices. 

COVID-19: The Way Forward for Gastroenterology Practices
COVID-19 is a double whammy of both clinical and business disruption. This ebook will help you explore possible scenarios and be a guide in your plans for the future.
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01 Jun 2020

Interview with Dr. Leavitt (Gastro Health): “I’d love this disruptive thing to spur innovation”

Dr. James Leavitt is the President and Chief Clinical Officer of Gastro Health, a PE-backed platform based in Florida. Private equity in gastroenterology began with Audax investing in Gastro Health back in 2016. Over the last few years, Gastro Health expanded to 250 providers and to other states like Alabama and Washington.
This interview is insightful at so many levels.  Watch it in full. Also, if you’ve always viewed private equity uni-dimensionally (that it’s all about the money), definitely watch the last segment. Dr. Leavitt talks about how passionate we all are about making healthcare better.
◘ Gastro Health volumes went down dramatically when COVID hit
◘ At one point they did 6,000 tele-visits a week
◘ Are things different in different geographies?
◘ “I’m not private equity. I’m a company that’s partnered with private equity”
◘ Are they pursuing practice acquisitions at this time?
◘ Are valuations taking a hit because of COVID?
◘ “We are already getting inbound calls from people saying help!”
◘ Short term and long term effects practices will face
◘ How do you make decisions if your finances are down?
◘ Steps to take if revenues are going down
◘ What risks do PE-backed platforms carry during COVID?
◘ About negative media on PE-backed medicine
◘ “I’m proud of what we did. I’m friends with a lot of people who’ve done PE”
◘ How would GI change post COVID?
◘ A lot of pre-COVID trends are accelerating right now
◘ What was the original vision for Gastro Health?
◘ “It took us 8 years to go from 27 to 47. 3.5 years to go from 47 to 250 [GIs]”
◘ “As long as that remains what we are about, I’m not worried about the PE situation”
◘ Has COVID delayed Gastro Health’s “second bite”?
◘ “Would I have preferred if none of this happened. Of course, but for more than private equity”
◘ “It’s been an interesting experience. What can we do to be better? We need to be better”
◘ “You need something disruptive to change. The current system is a monster. I’d like this disruptive thing to spur innovation.”

 


The Transcribed Interview:
Praveen Suthrum: Dr. James Leavitt from Gastro Health, thank you so much for joining me today. I welcome you to this conversation.
Dr. James Leavitt: Well, thanks for inviting me.
Praveen Suthrum: Yeah, absolutely. So, how are you and how are things with Gastro Health?
Dr. James Leavitt: Well, me, personally I am fine. You know, no cough, no shortness of breath, life is good. I’m home as you can see and after I am done with this [interview] I’ll be doing my televisits for today. So, for me, it’s fine, my family is fine. So, it’s always a good start. As far as Gastro Health, obviously, like everyone else, things have changed.
Our volumes went down dramatically. We closed several of our centers, our surgical centers. We kept open the strategic ones just to do urgent cases. For example, we did a case, I had a 69-year-old woman with two months of progressive dysphagia and 20-pound weight loss, we had to do that endoscopy.
But we went from maybe doing, in these two centers that are next to each other, 500 cases a week to 15 cases a week at one point. Our numbers went down, and we furloughed about half our staff. But you know, it was an interesting thing, necessity is the mother of invention. One of the things that we wanted to do was to start to look at televisits and ramp them up. Boom! We’ve done that. So, within about 10 days we rolled out televisits in Gastro Health and then in Florida alone at one point we’re doing 6000 televisits a week! So, it was an interesting experience.
The other part that was affected was that we had done a lot of deals. So, we had brought a lot of groups on board and we standardized our platforms so that everyone was on one platform. We had to slow that down because we couldn’t travel to other places to really bring them on into a single platform. So, there was a nadir and now we’re back. We are over 50%, we have opened up. A lot of our surgical centers are starting to open up across the country. We’re about 50-60% back to where we were so, things are starting to pick-up, we’re starting to see patients back in the office. Although still, I think televisits are the dominant way of seeing patients for most of us still today. Part of that is us and part of that is the patients.
Praveen Suthrum: What you’re doing, is it different in Florida versus elsewhere?
Dr. James Leavitt: Yeah. Exactly. So, I am in Miami-Dade County so, I think there have been like 60,000 COVID cases reported in Florida, a third of them are in Dade County alone, right? If you go to Birmingham, Alabama now that numbers are starting to pick-up there but it’s still relatively low, right? And so, obviously, the effects have been somewhat different. But everybody dropped. There was no one that stayed the same, everyone had a significant drop. I think the rate of return has been different based on the prevalence of the disease and the incidence of the disease in that particular area. So, I think that’s what is being affected – the rate of return.
Praveen Suthrum: What is happening right now as far as PE deals are concerned across the board based on what your sense is and what you know?
Dr. James Leavitt: Yeah. So, the first thing I want to say is it is very interesting how people think of this… like what’s the effect of COVID on private equity, right? That’s what you want to know. Well, I’m not private equity. I’m a company that’s partnered with private equity. So, you ask what the effect on my company is. Now, what’s the effect of private equity companies… I can talk about that but that’s probably not what your audience is interested in. So, they’re two different things.
So, private equity company, obviously if they have multiple platform companies, they’re out there helping the companies and cash is king and they are really digging into the 13-week run-outs to see what their cash positions are and things like that. And we’re also doing that also. But that is internalized and so, we are still a healthcare company. We deliver healthcare, that’s what we do. And we have a private equity partner which has been very beneficial through this time for us in many ways.
Praveen Suthrum: In what ways has it been beneficial?
Dr. James Leavitt: We’ll hire a healthcare law firm, a national one but they’ll use it for all their healthcare platforms. So, we have the ability to get real experts on things, they help us find the technology that we can use onboarding on, we are capitalized better. We have better relationships with banking, we can get a revolver line of credit more easily. And they have the expertise that they can bring to us above and beyond. So, I think that actually, we are more secure in many ways than the average four-person group out there who is struggling more. So, I think it has helped us in a lot of ways like that.
Praveen Suthrum: Are you pursuing any physician practice deals in the current times?
Dr. James Leavitt: We still have a pipeline that’s active. We still are talking to a lot of groups, we’re singing NDA’s and letters of intent, we’re doing due diligence of the deals that were in the pipeline right now. So, all those things are progressing. The closing date… we’ll see! But the processes themselves are still ongoing.
Praveen Suthrum: Are valuations taking a hit because of COVID-19?
Dr. James Leavitt: Yeah. That’s a hard question. So, number one, it depends on where you are in the process with the group. Number two, we think if you had to close right now, would they take a hit? Yeah, it’s hard to figure out what the valuations are and it’s harder to get lenders to feel comfortable with your valuations when they see a 60 or 70% drop in the revenues right now.
So, you have to convince them that the revenues are going to come back and what the plan is. So, it’s a more difficult process. And do I think you might see a decrease in multiples? Again, I’m not a soothsayer, I don’t know but my guess is it might. Because the valuations might be similar, but the multiples might be lower because the multiple is just an expression of risk, right? So, there is more risk out there right now so I wouldn’t be surprised if you saw some diminution in the multiples.
Praveen Suthrum: If you wear the soothsayer hat and see into the future, what are some short-term and long-term effects that practices in this phase will face?
Dr. James Leavitt: So, from the practices’ point of view, the short-term effect is, stay safe, keep your patients safe, do the right thing, make sure you understand what you have to do… to do that and it’s still all about your patients and your staff. Still deliver great care, ramp –up your televisits, and hope that’s something the government will allow to stay, and payors will pay for it at a reasonable rate in the future, that’s number one.
Number two short-term is, look at your cash-flows, make sure you can stay in business. We’re not the US government, we don’t print money. So, we have some rate-limiting steps there so understand. For example, one of the things that we did is we built a calculator for each of our care center and each surgical center. So, we knew what our volumes need to be to break-even and from there we can understand our cash-flows and where we could go out to. So, short-term, really act like a business.
And there’ll be some people hurting, so long-term depends on where you are. Do your financial planning and your planning around patient volumes, understanding, and hoping that our goal is to get to 70 to 80% by the end of the year and what’s the financial outcome on that. How can we start thinking long-term, how can you run your practice more efficiently? I think all of us have learned that there are various more efficiencies that we can do. You can do more with less actually like I said, necessity is the mother of invention. How can you return even stronger and better? One of the things that we can put in place or we already put in place that we can leverage into the future to make us a better company and provide better care. So, I think that’s what you have to think of and I think there’s going to be some suffering in some groups that aren’t going to be capable of doing this from the private equity point of view. We know we’re already getting inbound calls from people saying help.
Praveen Suthrum: So, if you were on the outside as in if you were not part of a private equity-backed and you were an independent practice right now and then we go to the end of the year and your finances are not looking good. What would you do? Would you look at private equity? Because you’re in a buy-in, right? If you look at private equity or a PE-backed platform, then your valuations are not high so, you’ll probably sell out at the valuation which could be far lower than pre-COVID days but if you don’t do that you’re struggling financially. How do you go about your decisions and what would you do?
Dr. James Leavitt: Yeah. So, you have to look at many different options and one size doesn’t fit all obviously. It depends on how… so if it is a choice between doing something or going out of business, you do something. Or, if you’re 68 years old and you can retire from your solo practice then maybe you retire, I don’t know. But there’s a lot of options. Then, there’s the hospital, I think that the hospitals are one of the reasons that doctors are consolidating because they don’t want to join the hospital. I think there’s lot of problems joining a hospital.
I think that physicians are consolidating one way or the other and have been for a number of years because it’s the best model for us. It’s our obligation to lead healthcare reform, we’re the best advocates for patients. So, I think this may be a wakeup call to some people to say maybe I need to confine a place to consolidate and my argument would be it’s not the hospital because that usually raises costs, it’s a problem and you’re now employed in a way that your contract is good for two years and then you’ve got a new contract and they can say goodbye, etc. But in our model or with other groups, hopefully, this spurs consolidation, this gets us to a place where we can lead healthcare reform and do what’s right for the patients and ourselves.
Praveen Suthrum: So, as a practice, if revenues are going down, what are some steps that you can take?
Dr. James Leavitt: So, there are two sides to the equation, it’s what’s coming down to the bottom that’s important, it’s what the profit is. So, we may say hey for a while, we’re going to get to 80% so, if our topline revenues are 80%, I think if we can affect some efficiencies in our practice and decrease cost and overhead, then we can still have a good bottom line. So, I think we need to start looking at it from a business point of view and not just a functional point of view.
I mean simply, if 25 to 35% of our visits are going to be televisits, do we need as much real estate? Can we start decreasing or consolidating? For example, in Gastro Health, can we start consolidation some of our care centers and offices and so we don’t need that much space, so I can reduce rent and also reduce personnel and things like that. So, I think there are opportunities from the efficiency point of view. So that if revenues are down a little bit, we know now that we can do with less and be more efficient, and if we apply those two standards, we’re going to do alright.
Praveen Suthrum: For a private equity-backed platform, what are the risks that they carry? Especially in a time like this.
Dr. James Leavitt: Well, the business doesn’t come back. You’re over-leveraged. So, when we purchase groups, we borrow money, it’s leveraged. So, if you’re in a position where you’re very leveraged i.e. you have a lot of debt, and then the revenue that you brought, decreases significantly, you’re over-leveraged.
It’d be like if you have a $500,000 mortgage in your house but you were making $800,000 a year, you wouldn’t worry about it and if you had a $500,000 mortgage in your house and somehow you lost your job and you could only make $70,000 a year, you have a problem. So, that could be a problem with this, if you are already over-leveraged and you don’t have a good comeback for your revenue stream, you could be in trouble and that’s the risk that’s going on, not just in private equity, certainly in private equity but in public companies, I mean part of a lot of news out there is about how public companies and other companies have used debt and there’s so much in debt that’s what’s happened to Hertz, etc. We’re subjected to the same things as the rest of the business world.
Praveen Suthrum: There has been plenty of media attention towards private equity led medical practices and a lot of that is negative. I’m curious to hear from you on what you have to say.
Dr. James Leavitt: So, you can always find a few bad apples in the barrel, right? And if you’re the media and you just want to concentrate on the bad apples, that’s fine but there are way more good apples than bad apples. So, we all know most physicians care about their patients, care about doing the right thing and giving great care and we all know physician groups or physicians whether they have private equity backing or not they’re very money-focused and they do things that we wouldn’t necessarily look at in a good light.
And so, I know for us, we are very mission-driven and not margin-driven, but every medical practice is a for-profit company, there’s no shame in that but if you’re mission-driven then, that’s what you want to be. So, we’re very mission-driven, we remain mission-driven. I know we’ve done great things. We have markedly increased our ADR rate; we’ve done episodes of care on colonoscopy and EGD and we are in Florida where 75 to 85% of the average cost of an episode of care, all costs three days before and 14 days after for colonoscopy and EGD compared to the rest of the state, we do look at expenses, we don’t try to just drive revenue.
We brought in a group and the number of bottles they did per case pathology because they had a small path lab was way out of line and we brought them back in line because we want to do good medicine and give good care. And so, I’m proud of what we did, and I know a lot of them, I’m friends with a lot of people with private equity deals that have been platform companies and I know they feel the same way I do.
Praveen Suthrum: From your lens, how do you see the future change? You know, at some point we’ll be out of COVID and this will be behind us. And how would GI have changed by then and beyond that?
Dr. James Leavitt: I think, we’re going to be more efficient. I think it’s going to help us. I think we are going to be able to run our businesses more efficiently out of necessity. I think patients are going to have different expectations of safety. I think in the next two or three years, I can’t tell you 10 or 15 years from now, I don’t think you’re talking about that future. But I think patients’ expectations of safety will remain very high and you’re going to have to prove to them that you care about that.
I think for televisits, as long as the marketplace stays with some reasonable reimbursements, I think it’s here to say. So, we can devise our strategies around that. We’re looking at new and different ways of patient engagement that are going to be aided by technology. I think all those things are going to be very important more touchpoints remotely using predictive analytics to be able to know when to touch the patient correctly, that’s what I think is going to happen. I think this will spur us to do things. We’re not going to wait till the patient is in crisis, what can we out in place now that will touch the patients in ways other than just bringing them in the office. I think this taught us a good lesson. I think that’s where GI and healthcare is going to be going.
Praveen Suthrum: The way I see it, a lot of the trends that were already underway pre-COVID are probably accelerating right now. Like telemedicine was there before, AI was there before, DNA testing was there before. I’m guessing all these technologies will accelerate and change the demand-supply equation in gastroenterology. You know until now GI practices have relied largely on colonoscopy but if you see some of the large practices, a lot of the revenue is not coming from GI services alone but there is dependence on ancillary reimbursements and revenues and that’s only going to increase, right?
Dr. James Leavitt: I think so. And I think the motto will change too. So, when we first consolidated, the idea was to build other revenue streams and have enough volume. I think that has morphed a little bit. Now, if you think we want to control costs and population health and the experience of the patient, right? So, as we change the way we think about reimbursements, now we can control every bit of cost and so we can take that to the marketplace so, we can keep people out of the ER, we can do those things. We’re going to take that and do different types of negotiations with payors and think more about populations.
Can we do chronic care management? And if we control every bit of cost, we can have alternate payment methods that we can take to payors. So, these ancillary revenue streams can be ancillary revenue streams but also controllers of cost. I mean, a hospital can’t do a CAT scan for $1000 and make a profit but I can make a profit on a high-quality CAT scan for a lot less. I think we can start leveraging those types of things. Our infusion centers will be great cost-savers. Like the ancillary revenue streams are great cost-savers. So, as we get to these fewer direct touches but more remote touches and thinking about populations and doing all that stuff. All these things if you have them, it’ll be great for the patients, it’ll streamline everything.
Praveen Suthrum: What was your vision when you started Gastro Health, and when you went after private equity, created the platform, built this large practice that you have now. So, what was the original vision?
Dr. James Leavitt: I have always thought doctors had to consolidate. As I had said before, it’s imperative for us to lead healthcare reform, we’re the best advocates for patients. I think we’re the solution to many for the problems that are there in a healthcare system. And I thought we could build a more disruptive model that would really make a difference. And we needed to get larger to be able to do that and we need to be capitalized. So, there are a lot of different models and that’s how I came up to go to private equity. Because we needed all those things and we needed something that would be a catalyst to growth. Because it’s very hard to grow otherwise quickly.
It took us about eight years to go from 27 to 47 and it has taken us three and a half years to go from 47 to 250 so it’s a catalyst to growth. But why did we want to grow? Not just to get bigger, that’s not the point it’s what we can do with that. So, everything is going to be on about data. So, what we’re trying to do is we want to build data warehouses and data lakes. We already have a robust business intelligence platform but now how can we take data from disparate sources, put them in a data lake, start to do analytics and predictive analytics. How can we do all that stuff?
Well, if you’re a four-person group, you can’t. But if you are 500 doctors, number one, we are capitalized so we can build those things and number two, we can spread that expense over 500 doctors because it’s hard to do. We were actually starting to work on all this pre-COVID, it has been delayed a little bit because we had to do other things, but we’ll get back to it. So, that was the vision, that we needed data to drive better outcomes, to be predictive, to take care of populations. But a small group couldn’t do that. They don’t have the wherewithal, they don’t have the ability, the money, the capitalization. By being large you collect a large amount of data and you have the wherewithal to do something with that data to make a better world and better outcomes for our patients. That was what this was about, and it goes back to your original question about the downside of private equity…As long as that remains what we’re about, I’m not worried about the private equity situation.
Praveen Suthrum: Your practice was the first one to take private equity. Now, that was back in 2016. Typical private equity horizons are five to seven years. So, you know, my own calculations always have been that I’m going to see Gastro Health exit probably at some point. You know, the second bite of the apple is going to begin for GI in 2021/2022. Now, COVID has paused everything, put things on hold. Based on whatever you can share and know, I’m curious to know would all these exit horizons change? Would it be longer now? And what would determine an appropriate time for recapitalization in the GI space?
Dr. James Leavitt: I think I’ll go back to my original answer. I think the deals have slowed down that would be another deal, right? So, the deals have slowed down, and we’ll see when the market comes back. If we can get back to doing deals, by the end of this year or first quarter of 2021, maybe we’ll be behind by six months to a year, we’ll see. And then you have to understand what the appetite of the next buyer is. I think that’s all to be determined. Would I have preferred if this never happened? Of course. But for more than just a private equity deal, right?
Praveen Suthrum: Yes. I have covered a lot of ground on the questions that I had. Was there anything else you wanted me to ask? And we could do that now.
Dr. James Leavitt: I think that it has been a very interesting experience and I hope we all take it as a learning experience. What can we do to be better? We need to be better. And all through this, what I’m amazed at is healthcare and how passionate we are about it. So, that’s a good thing.
Praveen Suthrum: How do you make it better?
Dr. James Leavitt: Well we already talked about it. We can be more efficient, we can touch the patients more, and all those types of efficiencies, I think will has been spurred. I think televisits will have better touches and more frequent touches with patients. I think we’re looking at being more efficient. I think technology will be better. I think we’ll start talking about populations and taking care of our people in different ways. I think it’s spurred us, and we don’t have to see the patient in the office to take care of them.
Praveen Suthrum: So Jim, we’ve gotten ourselves into this, right? As a healthcare system. For me, when I reflect on this time, a part of me is saying that you know, that we asked for this in a lot of ways. So, we’ve created the inefficiencies, we’ve created the wastages in the system, we’ve created this whole monstrous, expensive system and we have kind of trapped ourselves and somehow, we are not able to use this system that we have created to solve the problem that has hit us suddenly and across the board.
Dr. James Leavitt: Because that’s the whole concept of disruptive innovation, right? It’s the whole concept. You need something disruptive, to change! You can’t say… if you want to change the health system, this is my philosophy and one of the reasons why we did what we did, is that you have to be disruptive. You can’t say, ‘how can we use the current system to change?’ because the current system is a monster. So, you need to think about things in a different way.
And so, I’d love this disruptive thing to spur innovation. And I think it will. So, I think this could be the seed of disruptive innovation for the future. And we can’t do things the same old way with the same old system and the same old processes. You’ll just get the same results. So, I’m hoping that this is the seed to start to think about doing things in a different way. And I think it is, I see that within our own company.
Praveen Suthrum: Yeah. Well, thank you so much, Dr. Leavitt. This has been a fantastic conversation and very reflective too. Was there anything else that you wanted to add before we close?
Dr. James Leavitt: Thanks for doing all the stuff that you’re doing. I think you’re keeping people informed and you’re doing a great service for people.
Praveen Suthrum: Thank you very much. Thank you for saying so.
_

 

By Praveen Suthrum, President & Co-Founder, NextServices. 

COVID-19: The Way Forward for Gastroenterology Practices
COVID-19 is a double whammy of both clinical and business disruption. This ebook will help you explore possible scenarios and be a guide in your plans for the future.
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26 May 2020

Interview with Dr. Spinnell: “Everyone knows someone who had the virus”

This Memorial Day, I spoke to Dr. Mitchell Spinnell from The Gastroenterology Group of Northern New Jersey. Bergen County where Dr. Spinnell and his partners practice is a red zone. After prolonged closure, they are opening up their office and surgery center this week.
In this incredibly insightful interview, Dr. Spinnell shares his experience while working at a COVID unit to Cologuard to consolidation in New Jersey.
Dr. Spinnell’s experience working at a COVID unit
◘ Closing down the surgery center and opening it now (“Number of cases skyrocketed”)
◘ Exact steps they took to open up from staff training to PPEs (“cases every 45min to an hour”)
◘ What concerns did staff have? What were they fearful of?
◘ “Everyone knows someone who had the virus”
“I was concerned about my exposure [to my young family]”
◘ What if someone tests positive AFTER you start? Do you open or close?
◘ What’s confusing as a clinician and business owner?
◘ We furloughed our entire ASC staff (The financial piece is a struggle)
◘ Does Dr. Spinnell foresee patient behavior change?
◘ “We’ve seen a significant uptick in Cologuard”
◘ “Cologuard is a force. I would rather be a part of it than fight it.”
◘ Consolidation in New Jersey
◘ Would interest from doctors change if PE valuations change

 


The Transcribed Interview:
Praveen Suthrum: Dr. Spinnell, welcome and it’s really nice to see you. I would want to start by asking you about your practice. If you could tell us a little bit about your practice.
Dr. Mitchell Spinnell: Great. Well, I appreciate the invitation Praveen. This was a really welcomed way to start my Memorial Day celebrations. So, I am a gastroenterologist practicing in Englewood, New Jersey. Englewood is in Bergen County in Northern New Jersey right across the bridge from New York City. And we were you know, sort of in the hotbed of the COVID pandemic.
We’re a 11 physician GI specialty group with some roots in internal medicine. We have one nurse practitioner. We work out of an ASC that is partly hospital-owned. Middle of March, things had really exploded at an exponential level and Bergen county has remained a red zone after that.
Praveen Suthrum: And you worked at the COVID unit in the Englewood Hospital. How was that experience?
Dr. Mitchell Spinnell: Yeah. It was incredible. The hospital was sponsoring weekly or bi-weekly meetings and was sort of updating what was happening at the institution. And as the number of cases was mounting, there really was an effort to convert the hospital, increase its ICU capacity, and turn the majority of the units into COVID units.
There still was an incredible shortage of manpower. So, there was an outreach to some of the specialty physicians to assist. I devoted a little over two weeks to the COVID unit specifically. I wanted to carve out a block of time and you know; over that period, I was involved in the care of over 40 COVID patients.
Praveen Suthrum: How long has your practice or your surgery center been closed?
Dr. Mitchell Spinnell: Our last day of full operation was on March 16th and it was the weekend before that Monday that we really began to see the number of cases in New Jersey skyrocket. And I believe on the 13th, the Governor declared a state of emergency. I was doing endoscopy on that Monday, the 16th, and there was great concern because the unit didn’t have appropriate PPE.
Many of our cases either dropped off because of patient concerns and we had to cancel quite a few because we were concerned about upper endoscopy and not having proper protective gear for the staff, the physicians, and the anesthesiologists. The unit officially closed on the 16th of March. I’m happy to report though that we are scheduled to open up this coming week on Thursday, May 28th.
Praveen Suthrum: And how are you transitioning, you know from this phase to the phase of opening up back again? Do you have enough PPEs? What kind of staff training and physician training did you have to undergo in preparation of this opening?
Dr. Mitchell Spinnell: Yeah. So, that question really encapsulates my last two weeks because it has really been a challenge. You know, we have three rooms in our facility and what we’ve opted, at least to start is that we’re going to have one provider toggling between two rooms. We are going to schedule cases every 45 minutes to an hour. And for the first weeks, we plan on scheduling no more than 12 cases on a given day. Part of that is because of our lack of PPE. Part of that is to gain comfort for the staff and the physicians, many of the physicians have not been on the hospital environment during the pandemic and they are not familiar with protocol and we have done extensive training.
We have been able to secure some PPE. The biggest variable are the N-95 masks. As a result, we have actually purchased some respirators, a number of them for the entire staff. And those are hopefully going to arrive this week. We do have enough N-95 masks to maybe last for 10 working days. So, those are the limiting factors. We’re going to really start at a snail’s pace. We spent three days training the staff last week. And we have really put in a protocol that I think is going to be quite effective.
The detail on that is because we’re in a red zone. As per our hospital protocol, which we will be following and now it’s mandated throughout the state of New Jersey, all patients receiving elective procedures and we wouldn’t consider our initial patients to be elective, they’re more semi-urgent cases, all patients will require a COVID nasopharyngeal swab 72 to 48 hours prior to their procedure. We’ll have documented a negative swab upon the patient and the patients are then asked to self-isolate from the time of their swab till the time of the procedure. They’ll arrive at our unit where they will be questioned by a nurse. They’ll get a temperature check and we will also be evaluating them with the pulse oximetry and then, assuming that their COVID is negative, and they haven’t answered affirmative to any of the questions, they will be admitted and the procedure will take place.
We’ve also asked our staff if they were interested in getting swabbed and antibody tested prior to restarting and all of the staff were interested. I’m happy to report that everyone was negative. But this is the protocol that we set up and I think it is the best way we can maintain safety for our staff and our patients.
Praveen Suthrum: Yeah. I’m glad to hear that everybody tested negative. When you were going through this training with staff, what kind of concerns did they have? What were they fearful about?
Dr. Mitchell Spinnell: You know, I think it’s the fear of the unknown. There is not a single employee in our unit that has not been affected by this pandemic. Everyone knows someone who has had the virus, knows someone who was hospitalized, and we have had several family members who have lost relatives.
So, there still is great concern about exposure. I think that we’ve really tried to reassure the staff that with proper PPE, they can remain safe. You know, when I was working on the unit, I was very concerned about my exposure, I have a young family I was away from my family during my time of work and I was concerned that when I did reunite with them, that I would be bringing the virus back. And I think this is a big concern that the family had that you know, after a workday when they return home, what will they be bringing with them?
I was able to reassure them that, after my stint in the COVID unit where I was seeing 10 or 12 COVID patients a day, at the end of my term, I nasal tested negative and my antibody was negative. So, the PPE clearly works, if it’s used properly and you’re absolutely fastidious about the details of donning and doffing, I think you can remain safe.
Praveen Suthrum: So, if after you start, someone tests positive. As in you end up discovering that the patient was infected maybe after you do the procedure or after you’ve seen the patient. Then, do you remain open or do you close? What is part of your protocol? How have you thought about that?
Dr. Mitchell Spinnell: Yeah. I mean that’s a great question. You know, the big concern is that we don’t want our unit to be associated with any infection. Because clearly as things open up, everyone is going to be hyper-vigilant about new clusters of cases that emerge.
Our plan is that obviously we are not going to admit anyone into our unit that either test positive or answers affirmative to any of the approving questions and their cases can be deferred. But after their procedure, typically we would do a follow-up call on their first post-procedure day. Our plan is to extend that. So, we will follow-up the day after the procedure, a week after the procedure, and 14 days later.
And this is our way of contact tracing, making sure that nothing has happened to the patient after an exposure. And this will all be tied-in with the local health department. If we do find a positive, obviously we’re going to need to restore. We’ve also offered to our staff, you know, they will be tested daily on arrival at the unit with temperature checks. We’re going to be logging all of that data and if they do want to get periodic swabs or periodic antibody testing, that is available. Our hospital network has really ramped up its capacity to provide necessary testing, particularly for healthcare workers.
Praveen Suthrum: I want to ask you about what must be confusing for you right now, both as a clinician and as a physician partner or business owner?
Dr. Mitchell Spinnell: The financial pieces is clearly a struggle. We furloughed our entire ASC staff and more than 50% of our office staff during the height of the pandemic. We’re bringing back 50% of our staff in the ASC and about 75% in the office as we ramp up and start to see patients.
We were lucky that we were very aggressive in applying for the PPP (Paycheck Protection Program) loans that were available and we did receive all aspects of the loan. And that has carried us through. We are now obligated to try to utilize that money during a certain time period. So, having our staff back and paying our staff is very satisfying. Most people want to come back.
Clearly there were some people affected by the pandemic in a variety of ways. Some are still at home mourning others have childcare responsibilities given the fact that schools are still out. Summers programs will probably not be available. So, these will all be challenges moving forward.
You know, the financial piece of it will remain a challenge. I don’t think we can expect things to get back to normal for quite some time. I think it’s going to be a matter of just surviving and working our way through this. The financial piece will hopefully come maybe towards the end of the year but that’s all contingent on whether or not we see a second wave. But at this point it’s just a matter of staying positive and trying to forge forward. You know, I don’t have a better response to that. It’s scary.
Praveen Suthrum: Do you foresee patient behavior change during this period? Do you think, that patients would think, ‘If I can avoid screening colonoscopy, maybe I should. Why get into a healthcare facility if at all it can be avoided’?
Dr. Mitchell Spinnell: I think that many patients are going to feel that way. And I think that the internists that we work with are quite sophisticated and are aware of all the screening tools. You know, we have seen a significant uptick in Exact Sciences’ Cologuard use. Over the last year, year and a half. I mean, it’s there. We utilize it ourselves for patients that are higher risk or endoscopic procedures that do require a screening test. I think to bury your head in the sand, and think it’s not going to have a major impact, I think is false.
It’s here to stay and it will continue to grow. I think we’ll have to be creative in terms of how we structure our practice moving forward. There are many services that we provide, and we continue to expand the services and patient offerings. And I think we need to be innovators. I think Cologuard is a force and I would rather be a part of that force than to fight against it.
Praveen Suthrum: Talking about consolidation in your region. So, you’ve had small practices talk to you? Smaller practices call you, share their concerns? What is the vibe about consolidation in your area?
Dr. Mitchell Spinnell: So, you know consolidation has been in and out of New Jersey for the last four years now. There have been multiple attempts at trying to form a large super-group and private equity has had its hand in New Jersey for quite some time. I know that there were quite a few deals that were being explored. Our group has certainly considered the possibility of syndication either with a private equity group or with a large hospital network. We have been in talks and we’re trying to decide on which direction we want to go.
I’m amazed that some of the groups that have been exploring, investing in gastroenterology groups in New Jersey have fallen off and have not been expressing the same kind of interest as they were months ago. But there still are some very dominant, large private equity groups that are still showing interests. So, the talks are ongoing. There has not been a major transaction in New Jersey, but I anticipate that in the months to come something may finally come to market.
Praveen Suthrum: If the valuations change, would the interest from doctors also change?
Dr. Mitchell Spinnell: I think so. I think a lot of it is going to depend on whether or not it makes financial sense. But more importantly, depending on what your horizon is I think we know that consolidation is really the only way forward. In order to mount some strength against the payors, groups of two or three physicians won’t be able to survive. Larger groups have a better chance.
But I think the weight of a private equity partner or a hospital partner is really what’s needed in order to see some light. Clearly as a result of the pandemic, our expenses are going to increase significantly. And the only way we can whether those added costs is if we are part of a larger entity and have the ability to negotiate. So, I think consolidation remains the way in the future.
Praveen Suthrum: What kind of advice do you have for GI practices or endoscopy units that are outside of the red zone and looking to you. You know, you’re in the thick of things and you’re opening up now.
Dr. Mitchell Spinnell: You know, I don’t think you can underestimate the variety of ways that this virus presents. We have all been blown away by the variety of clinical manifestations and presentations. I remember a patient of mine who was in the emergency room with what sounded like peptic ulcer symptoms. They did a chest X-ray on him and they saw bilateral ground glass infiltrates. He had absolutely no respiratory symptoms at all and was diagnosed with COVID. So, my point is that we have to take this virus incredibly seriously. I think that PPE is critical. We have to be sensitive to our staff and make sure that they feel protected. And I think appropriate questioning and screening of our patients remains essential.
I mean, even in people that are outside of red zones, I think we need to change our approach to donning and doffing the PPE and I think we need to remain absolutely fastidious about the details of putting on the equipment and taking off the equipment, using shields, things that we very often took for granted in that past really need to be adopted and we need to be absolutely strict and we need to call each other out. When people are not doing things properly, whether it’s a physician or a nurse or a technician, we really need to be on top of each other because that’s the only way we’re going to be protected.
Praveen Suthrum: Dr. Spinnell, thank you very much for sharing all these insights. Incredibly useful. I wish you all the best in opening up this week. I wish you well, I wish your staff well. Take care. Thank you!
Dr. Mitchell Spinnell: Okay Praveen. Thank you very much, I really enjoyed it. We’ll talk soon.
_

 

By Praveen Suthrum, President & Co-Founder, NextServices. 

COVID-19: The Way Forward for Gastroenterology Practices
COVID-19 is a double whammy of both clinical and business disruption. This ebook will help you explore possible scenarios and be a guide in your plans for the future.
button_download
18 May 2020

Interview with Dr. Gagneja (ACG Governor for S. Texas): “Telemedicine is not a panacea!”

I recently spoke to Dr. Harish Gagneja from Austin Gastroenterology, the largest single specialty group in Austin, Texas. Dr. Gagneja serves as the American College of Gastroenterology (ACG) Governor for Southern Texas. He is also the former President of Texas Society of Gastroenterology and Endoscopy.
During the interview, we debated on how much digital technologies will impact healthcare during and after COVID. Dr. Gagneja had contrarian but very practical views on telemedicine, which he feels is overhyped.
Also, if you are opening up your endoscopy center this month, you’ll find plenty of on-the-ground insights in this interview.
Impact on their practice – “We moved very fast”
“No more an on/off switch. We’ve replaced that with a dial”
“Testing [before endoscopy] is an overkill”
Are patients scheduling for screening colonoscopy?
“We will be at 70%-80% this year”
◘ Our debate: “What do you mean healthcare will be permanently changed?”
“Digital revolution so far hasn’t really helped”
Practical challenges with telemedicine: payment, video freezes, patients don’t know how to turn on the microphone, distracted patients, more work than office visit, back and forth
“Yesterday, my colleague’s patient was ordering a fish sandwich!”
“Telemedicine is overhyped”
“Screening [colonoscopy] I’m divided on”
Advice on opening up for GI practices

 


The Transcribed Interview:
Praveen Suthrum: Dr. Gagneja, thank you very much for joining me today. You are from Austin Gastroenterology. I want to get started first by asking you to share a little bit about your practice in Austin.
Dr. Harish Gagneja: Praveen, thank you for having me today for this interview. I can tell you that we are the largest single specialty group in Austin, Texas. We are about 35 physicians and 25 mid-level or 60 plus providers. We have a three endoscopy centers. We are vertically integrated which means we have all the ancillary services available through us and we have presence in all major hospitals in Austin.
When the pandemic hit it was mid-March, I think 17th or 18th of March when all the guidance came out, so we had to really move very fast. We stopped elective procedures, all of them. Within a week we furloughed about 35% of our staff. We temporarily shut down our satellite offices. You know, I have to tell you something that we are very blessed to have a very talented C-suite. Our CEO, CFO and COO we are together for more than a decade, 12 – 13 years and we have learned together from the 2008-2009 crisis as well. We moved really fast and then we were talking about the process of getting telemedicine onboard and this really accelerated it, COVID-19 accelerated it and now we are opening up again we’ll be opening up slowly.
What I say is that there is no more on and off switch, now we have replaced that with a dial. We will be dialing up and dialing down depending upon how the city is doing. At this time, the city prevalence is about three percent. We are watching it every day. Our cases are a flattened. There is no decrease yet. Our hospitalizations are about the same number, about 40 to 45 hospitalizations so, we have opened them slowly. We have three endoscopy centers, we started opening with the first. We had six rooms in that we have opened three rooms only doing all the social distancing, we’re keeping all the patients… everybody who comes down in the morning, they get checked with temperature, with all the symptoms. Patients are called three days and one day before. All the patient’s relatives stay in the car outside in the parking lot. So, we’re taking all the precautions. We also have increased our block times as well.
Praveen Suthrum: And you have enough PPEs available and enough testing going on?
Dr. Harish Gagneja: Yes. We have enough PPEs available. We are not doing testing at this time are we doing only PPE but there’s a talk of doing testing, upper endoscopy cases only. But we are not doing testing at this time. I can tell you, in my humble opinion testing is overkill. If you have a PPE, then there’s no need for testing if you don’t have PPE at all then testing is done.
Praveen Suthrum: Okay. I’ve observed that you know this view on testing differs from state to state. 
Dr. Harish Gagneja: That should be used for somewhere else… we’re wasting testing if… I was listening to a podcast from University Minnesota, Infectious disease. So, within next one month there will be a need for one billion, not million, billion tests all over the world. Where is all those tests going to come from? Tests are one thing, then there are swabs, reagents, when you start adding all that up, it really adds up. If you have PPE as I said, I think testing is not really necessary because N-95 masks are really 95% effective. You look at the refugees’ article that was published, which was recently, two weeks ago. That article clearly shows that… and that was done in the Lombardy area all the high-risk areas in Italy. 85% of their endoscopies were done before even they started taking significant universal precautions and PPE. The risk of transmission was 4.2% in health care workers and 0.6% were hospitalized which is as good as community. So, I think there is a lot of knee jerk going on. I really think that if you have a PPE, testing is not necessary.
Praveen Suthrum: What kind of patients are you seeing in the endoscopy center? 
Dr. Harish Gagneja: So, right now what we’re doing is that we are triaging our patients. We are seeing all the symptomatic patients. So, there are three buckets: one bucket is a kind of a semi urgent bucket, so we’ve been through that very quickly with all those patients. Second bucket is all the patient with diagnostic codes, so we are going through that right now and we’re making sure that patients who need the endoscopy are get done first because we’re right now operating at about 30% of our capacity. So, then after this we’ll be getting back to our doing screenings as well, which would be probably next week.
Praveen Suthrum: And patients are scheduling themselves for screening? Is that happening?
Dr. Harish Gagneja: Personally, I have a backlog of about 200 patients who are calling to get scheduled. If we open it up, I think we’ll fill it up. It’s just the matter of getting them done safely.  
Praveen Suthrum: What kind of changes do you see happening after this COVID period?
Dr. Harish Gagneja: We’ve all utilized telemedicine more than before but not to a degree which is being projected in the media as well as a lot of people are talking about it… we will do that. I personally believe and that’s only me, I’m not talking about the group, talking for me personally I believe that we will not get to 100% this year, I believe that we will probably hit 70 to 80% this year and that also depends on what happens with the second wave for U.S. If everything goes well, no guarantees for anybody, we think that vaccine will be available by first quarter of 2021 and I think after the vaccine will be available, then normalization starts and that doesn’t mean that it is going to be normal, but normalization starts. I again, personally believe that by end of 2021 everything is going to be normal again.
Praveen Suthrum: End of 2021? And by then, health care might permanently change itself right or do you believe it… you know things will be a little bit of the same or different? I’m just curious… your views on how things will be different?
Dr. Harish Gagneja: What do you mean by that… permanently change. Everything will not be telemedicine.
Praveen Suthrum: Everything will not be telemedicine, but what this whole period is prompting us to try new things and different things that we have not tried before. Telemedicine is definitely one example, but there are several aspects of digital technology that is coming very actively into healthcare. My view is that, it might expand because you know, now that we have gotten the taste of it, it just might expand and after this whole period is over it might become part of the new norm. But I know you think differently about telemedicine and that’s what prompted this interview, but I’d like to hear what you have to say.
Dr. Harish Gagneja: Yeah. As we know, crisis is mother of innovation and it really gets accelerated during the crisis times. So, some of the business stuff that I said will be normal in the end of 2021, I didn’t mean that we won’t be doing anything, right? We’ll still be at 60 to 70 or 80 to 90% of what we are doing, and it won’t be 100% like we were doing, right? So, all of that stuff will still be happening, and I can tell you… we just opened up face to face as well. There’s no double booking, we’re still booking instead of 15 – 17 patients we’re booking 10. Then, we’re adding telemedicine in between and still getting to 15 – 17 patients and have something like that, right? Stuff is still happening.
But digital revolution is going to happen. Whether that happens in these two years, five years or ten years, I don’t know. Whatever so far has happened in this digital revolution such as Electronic Medical Record (EMR) that really has not helped. I think it is being projected as telemedicine is the savior, it is the panacea. If they’re seeing 20 patients in half-day and with telemedicine, they’re seeing six or seven or eight patients a day and not seeing 20 patients. Yes, they started telemedicine, but they are not fully blown with telemedicine, that’s number one. Number two question is, right now we are under the emergency act. Basically, an emergency from CMS. So, what’s happening with that is, telemedicine is being paid at same level that office visit. Whether that will ever continue I don’t know that.
Even though I know you’re talking about… Seema Verma said that the genie’s out the bottle. Yes, but what happens after COVID-19 is over? Or are they going to continue with that. Having said that, I would also tell you that telemedicine is more work than office visit for our staff and our physicians and paying at the same level even doesn’t cut it. I think it should be paid more. Let’s set up. Let’s talk about them. Steps with telemedicine: number one is set up. You’ve got to have all the setup of telemedicine takes, then you have a pre-visit where you prep the patients for pre-visit. Then you have during the visit. So, setup, pre-visit prep and during the visit.
Visit is very easy it’s not hard, but two things can happen during the visit, i.e. challenges which happens quite frequently actually… technology challenges, videos freezing up, voice is not going in and patients don’t know how to turn the microphone on or have staff walk them through all that but it happens all the time. I can tell you it happens about 30 to 40% of the time. Sometimes you can see, the ‘seeing of their own on their face’ but they don’t know how to look at the (camera)… a lot of things happen like that, right?
Then, the other thing I tell you is distractions during the visit. I have had a patient, I had to stop televisit because they were driving and doing televisit. People are abusing it not even using it but abusing it. I also had one of my colleagues tell me yesterday that one of his televisit patient was ordering a fish sandwich and he said he had to stop the delivering the televisit. So, people are not using the televisit like your office visit.
They think… It’s just something else. They’re walking around, walking in the speed and then they tell that doesn’t work. So, that’s the ‘during the visit’ telehealth challenges. Then post-visits, check-outs. So, any procedures that needs to be scheduled, that’s multiple phone calls multiple back and forth. When patient is in the office visit, the procedure is 10 minutes everything is done – prep, insurance, and scheduling. Here, now you have multiple phone calls for prep, for insurance issues, they will keep on calling you back for insurance and then scheduling they have a back and forth multiple times. If you look at all this, like I outlined, telemedicine is not that straightforward as it sounds to me.
Praveen Suthrum: Those are all really very good points and a lot of practical challenges there, right? But could that be part of the learning curve? But I want to also read out Seema Verma’s quote like since you brought it up. She is the CMS administrator and she said, “I think it’s fair to say that the advent of telehealth has been just completely accelerated that it’s taken this crisis to push us to a new frontier but there’s absolutely no going back”.
So, it looks like you know, Medicare will continue to pay for it, at whatever level like you know there will be the reimbursement part associated with it. But I’m also thinking for chronic GI patients, right? Like so they’ve now… yeah there’s always a negative side to a coin and you know there are these patients who are taking or misusing this whole benefit but there are also patients who would otherwise have driven a long way to meet the physician and it may be a follow up visit but now they have this whole benefit of seeing you remotely. Don’t you think that will stay?
Dr. Harish Gagneja: So, you are mistaking my point. My point was that telemedicine is being overhyped. It means that ‘Oh my god everything will be done with telemedicine’. Telemedicine has a definite role in future. I really think that… I’m very happy that this happened with telemedicine not at all with COVID-19. But telemedicine… it definitely has a role. I can give you examples. I personally feel that in my practice I will be doing about 20 to 25% telemedicine not 50 to 60% what a lot of people are putting out. I don’t say that it’s going to go over completely. No, telemedicine is here to stay and it’s going to happen.
Screening I’m divided on. I think that if a patient is insisting on telemedicine to screening sure no problem. But I said outlined previously that there’s a lot of challenges. Challenges are best for one reason; I know that I’m against the grain here regarding open access endoscopy. I just do not like it because same thing, telemedicine for screening – prep issues, insurance issues, issues with scheduling. There’s so much time taken. If you’re in the office, it takes 10 minutes to get all that done and one time and you’re done it doesn’t take three or four or five phone calls and back and forth, “let me call you back”, “let me do this”, it doesn’t happen (in office visits). So, screening if my patient is insisting, sure I’ll do it. But I prefer that I see them, talk to them.
Praveen Suthrum: I have one final question. You know given where you are you’ve already started your surgery center, you’re seeing patients, you know you’ve restarted. What advice do you have for GI practices you know that might be watching this?
Dr. Harish Gagneja: The first and foremost thing I would say is that make sure that you are in regulatory compliance. That everything was okay. So, that’s very important. Your state, the city, the county, and of course CMS, CDC, look at all the guidance papers. I would point them towards the paper we just published, white paper from American College of Gastroenterology with 12 people task force, look at that. That’s a very comprehensive document to look at. Safety of your patients, your staff, is the paramount importance. So, do all the necessary things.
I was reading an article from Atul Gawande this morning. It was about a recipe… he was talking about… a cocktail. The cocktail is hand hygiene, social distancing, masks. That’s the cocktail. One each by itself doesn’t work very well. When you put them all three together, then it is very good. So, make sure that you do all the rules in your practices. And then fourth part of the cocktail was screening which needs to be done.
So, that’s the starting. And I said before in our interview that to me that it is not a on and off switch anymore. It’s going to be the replaced by a dial. You go dialing up to dialing down depending upon what happened in your city, county and state. So, that’s important thing. If you think that you are going back to 100% like what you’re doing before that’s a mirage. The way things are, the way the regulations are going to be, with the government… what is your real estate needs? Do you really need all the real estate anymore? I think we will diverse some of that. So, I think those long-term future or questions you start asking yourself, what do you have, what do you need? So, that all needs are to be thought about.
Praveen Suthrum: Well, thank you so much Dr. Gagneja, this was very helpful and insightful and people who are watching this would feel the same. I wish you all the best in opening your center in more, as the months go by and all the best in keeping safe to you and your staff as well. Thank you so much for your time today.
Dr. Harish Gagneja: Thank You Praveen. Thank you very much. Thank you for having me. Have a great day. And you know what I say, in these interviews these days I say, “stay positive test negative”.
Praveen Suthrum: Thank you.
_

 

By Praveen Suthrum, President & Co-Founder, NextServices. 

COVID-19: The Way Forward for Gastroenterology Practices
COVID-19 is a double whammy of both clinical and business disruption. This ebook will help you explore possible scenarios and be a guide in your plans for the future.
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07 May 2020

Interview with Abe M’Bodj: Impact of COVID-19 on private equity in gastroenterology

Yesterday, I spoke to Abe M’Bodj from Provident Healthcare Partners, an investment bank that’s been very active in the gastroenterology space. Abe has always had a pulse on where private equity is headed in healthcare.
During our chat, I was pleasantly surprised to learn that Abe’s parents are gastroenterologists. This super insightful interview would help you understand what private equity is thinking while COVID-19 is on.
You must watch it in full to get to the depth of these insights. Here are some key highlights:
Provident Healthcare Partners is a healthcare focused investment bank
◘ What’s PE thinking? How has COVID affected private equity?
◘ There are transactions that are getting done but with creative transactions
Number of transactions that would be underway even during COVID-19
◘ Will valuation remain the same if you choose to wait until the other end of COVID-19?
This is going to accelerate M&A activity
Will multiples (valuation) drop? (cash in closing changing)
◘ In any transaction, there are 3 parties: seller, buyer and the lender
◘ What would happen to highly leveraged transactions?
◘ It’s a possibility that companies can end up in bankruptcy (may be not GI)
◘ If this uncertainty plays out longterm, what will investors do?
◘ Use the capital to help GI go digital?
◘ If we sit here 24 months from now (similar situation), if they’ll invest in GI anymore
Advice for mid-size or small GI groups considering PE (pros and cons) – his parents are gastroenterologists in Maryland

 


The Transcribed Interview:
Praveen Suthrum: Abe M’Bodj firstly thank you so much for joining me today. You have been very involved in private equity transactions throughout 2019 and even before that and PE in gastroenterology has been a hot topic for 12 months to 18 months now and then COVID hit. A lot of physicians are actually wondering how it’s going to pan out from this point on. And I’m so glad that you could join me today and I look forward to chatting with you about this.  
Abe M’Bodj: Absolutely Praveen. Thank you for having me. I have watched the interviews you have done previously and thought they were well done. So, very happy to participate. Again, I’m Abe M’Bodj with Provident Healthcare Partners and we are a healthcare focused investment bank that has large focus on physician transactions. So, lot of work in the GI space, lot of work in the physician space in general. So, we have been on the frontlines of seeing private equity and the change that COVID has brought to the market. So, happy to talk about that.    
Praveen Suthrum: Thank you. Let me start by asking you a broader question. During this COVID period, what is private equity thinking and how has it affected private equity as an industry in general?  
Abe M’Bodj: Yeah. Well, I think it has forced everyone just like society at large. It has forced everyone into two buckets. There are people who are pressing forward and are trying to figure things out from adeal standpoint and then there people who have taken a step back and are evaluating ‘is it the right time to deploy capital?’ ‘should we be investing right now?’. A lot of them have been forced to focus on their portfolio companies or the businesses that they have already made investments into.
I think now we are starting to see the dust settle not entirely in regard to COVID or what’s going on but in regard to getting a hand on what’s going on within our businesses. We are starting to see some private equity firms return to at least talking about the timeline to either completing the older deals that were put on hold as a result of COVID or looking at new opportunities. You did an interview with the president of OneGI, there have been couple of transactions that have closed as well. With OneGI and Webster in the GI space. In April we closed a women’s health transaction, in another space obviously but there are transactions getting done albeit I think all transactions are getting done at this point of time. They have creative structures that are involved that are different than what everyone thought they were going to be.  
Praveen Suthrum: (Now before COVID hit), we used to talk about the number of transactions that were underway in GI and you would come up with a number of 16-20 and we went with that for a while and that was my estimate as well. So, If I ask you the same question now, so, how many transactions are underway in GI, what does that number look like right now?
Abe M’Bodj: Yeah. I think the number of transactions underway hasn’t changed significantly, right. So, some of them have closed, some of them have stopped. So, I’d say they are still in around the 15 range. That being said, those transactions I’m certain are all figuring out what are they going to do and just because they are not going doesn’t mean they immediately want to close, right? They are figuring out and it doesn’t make sense for us to wait for things to turn around. What impact could that have on our transactions and at the time when we went to the market? Will our valuation remain the same if we chose to wait till the other end of COVID-19?  Some people are going to wait. Others are trying to figure out are there structures that can make sense for them to close the deal in short-term, is there an opportunity to structure the cash pay-outs because really everyone is concerned about cash right now. Or private equity firms with platform transactions it is difficult to get third party lenders or outside financing to close those transactions.  
So, they need to put more cash out there out of their investment pools. If you’re an established platform, you know, their lenders are skeptical to give them more money or let them draw too much of their credit facilities or revolvers that they use to finance transactions and frankly, they have a business to run as well, right? So, they want to conserve as much as cash as they can also. It is our firms expectation that this is going to accelerate the M&A activity, when that’s going to happen we don’t really know but on the other side of this, it is painting a picture that absolutely shows the benefit of being involved with a large organization of this scale that can navigate an environment like this as opposed to having to navigate this as an independent practice. And, I have seen the mindset change from physicians and practices that were skeptical about ideas like this. They are seeing the value in some of it now. 
Praveen Suthrum: So, pre-COVID, the multiples were pretty good for private practices in general and even in gastroenterology. How have these multiples changed after COVID? Or how do you expect this to change now? Are the valuations going to drop? From the point of view of private equity, how will they compute valuation at this time? 
Abe M’Bodj: Well, most deals that are currently underway and when I say underway, they have moved all the way to the point of identifying the actual party they want to get a transaction done with and are in which is called due diligence, right? Those transactions we are actually seeing valuations remain the same in terms of the total purchase value or the enterprise value of the transactions are remaining to what was agreed to at the letter of intent stage when they identified the buyer and chose to move with that party. Now, that been said, what’s changing is really the cash at closing. So, you may not get as much cash at the closing of the transaction as that you originally signed the letter of intent for. But cash deferrals or seller notes or different source of financing you’re getting back to the same place over, you know called 12-24-month period.  
From a multiple standpoint going forward, we are expecting multiples to come down a little bit, without questions there are transactions in the market maybe not necessarily specific to GI but healthcare services and physician investment in general. Just valuations have been absurd for the last few years. Valuation routines, double-digit multiples were at normalcy at non-normalcy if you look at the history of healthcare services investing. So, we do expect those to come down. 
I think also, the other impact, this is again in any transaction where there are three parties, there’s the seller, the buyer and there are lenders who finance a lot of these transactions. Lenders’ perspectives on the economy and COVID and the deal environment are going to impact valuations as well. They are going to be more skittish to lend money for new platforms that have recently gone through a new traumatic business event thinking about this from the other side now, they’ve got to have a very strong certainty on what the future cash flows of this business is going to be, what are the profits going to be, because they need to get paid back whatever capital they are lending to this company.
So, if the lending markets or the debt markets are frozen as well then you can’t raise as much debt or finance a transaction which also has an impact on valuation. People used to quote ‘dental practice management never had a down year’ the only year the industry didn’t grow was in the midst of the financial crisis no way to know they did not. That was probably one of the hardest hit industries in terms of the electives procedures dropped with COVID and a lot of businesses are in serious trouble. So, people are finding these areas of investment that they thought were originally untouchable are not so untouchable and as a result it’s going to change their risk evaluation of practices and valuations will come down.   
Praveen Suthrum: So, you brought up the third player in a transaction, the lenders and these are typically for deals that are leveraged. Meaning you take debt on behalf of the company that you’re investing in and that’s how the transaction happens, correct? 
Abe M’Bodj: Yep. That’s correct.
Praveen Suthrum: So, now I would assume that a lot of private equity transactions that have happened not just in GI but in the medical practice industry in general would be leveraged. Which means that it is like taking mortgage to understand very simply, right? Now, it is imperative that I generate the amount of cash that is required to pay my mortgage every month, every quarter, every year, whatever that is. now, in a pandemic situation like this, like you know when there is uncertainty about cash flows in general for all businesses, what happens to lender behavior? I’m not talking about new transactions now but I’m talking about transactions that are already in existence now. How would lenders behave with companies that might be struggling with cash flows in the future, who knows? Just wanted your views on that. 
Abe M’Bodj: I mean you have seen large companies out there enter chapter 11, I mean that’s the worst-case scenario, right? If these companies get to busting, they call it in the industry, busting their covenants. There are certain covenants, think of it like a house, you need to maintain a certain amount of value ratio, or just to stay up on the payments but the companies generally need to maintain some sort of EBITDA to debt ratio and that’s there in their loan covenant for agreement. You obviously have COVID which is causing EBITDA to drop, and they have a certain amount of debt in the books or the ratios are coming up. Some lenders who are willing to stand by their portfolio companies and actually will lend them more money that will get them through this short-term fall-out because of COVID. 
Look it is certainly a possibility that there are companies that end up in bankruptcy. I don’t think that’s the case specifically with GI and healthcare services in general. You know there are companies out there that have taken on the outside debt financing and they are not going to be able to pay those obligations so, that does happen. Now, how that plays out practically, if we think about it like a house, the last thing the bank wants to do is foreclosing the house, that’s a headache for everyone, the bankers don’t enjoy doing that. They haven’t got paid back and they are trying to recoup their investment through the foreclosure of the house, I mean, physician practices or private equity portfolio companies it’s the same thing, the last thing they want to do is foreclose or force these businesses into bankruptcy. What happens a lot of times is they end up taking the equity of the company because that’s all that the company has as they’re not paying back their debt. But everyone in the market at least from a lending perspective from what we’ve heard has been pretty rational about this stuff. In a sense that the expectation is that things will get back and return to normalcy.  
Praveen Suthrum: Okay. So, let’s say the uncertainty plays out for a longer period and then you have investors on one side who have capital, its not like private equity players don’t have capital, they are sitting on a lot of capital but then they want to look for the perfect deal or the right kind of deal they’re conservative, they’re gun shy right now and they want to wait and watch for the economy to turn around and let’s say the economy takes it time to turn around what happens in that scenario? As far as these private equity transactions are concerned. Are they going to continue to sit on the money or are they going to begin to take more risk than they usually would in such a scenario? 
Abe M’Bodj: Yeah. There’s just so much of capital that has been raised and there is so much dry powder and you are absolutely right there is… they have pools of capital. Frankly that capital has to be deployed. If they don’t deploy that capital, they don’t get paid for managing that money and that’s what they are in business to do, right? So, they need to find a way to deploy that capital
Albeit they certainly don’t get paid if they deploy that capital and then lose it because they made a terrible investment. If we are in the current state where we are in quarantine, we are 24 months from now then I don’t see transactions happening at that point because now we’re past the narrative that is keeping transactions and M&A work alive then things are going to recover and return to a sense of normalcy at least to a point where these physicians can sustain themselves.  
Praveen Suthrum: Yeah. I would think Abe, that if there is capital and if this is a long-term situation, then you’ll use the capital to figure a way out. Like you now, if private equity can wear that hat and help businesses get digital like you know, GI groups or physician practices, that’ll be interesting. While it’s not what they might have signed up for, but it will be an interesting way to deploy capital and see practices and the healthcare industry out of this situation.
Abe M’Bodj: I agree, I think there is… I think it’s actually a great point to meet. Its going to shift what they are making investments into. There are areas of healthcare that haven’t been as impacted. So, I was more so speaking about the current private equity initiatives that… where investments have been made in things like that. They will stick with their portfolio companies as long as possible but we’re still seeing valuations for businesses that haven’t been impacted by this and you have a financial track record to show that you haven’t been impacted by COVID. You know, actually private equity firms have shown a lot of interest in those types of models
Hospices is an example of industries that haven’t been as impacted, interventional pain management is another space where we have certainly seen a reduction in volume but they haven’t seen the same reduction in volume as say the GI industry has so, that has found a lot of private equity interest. People think that on the other side of this, women’s health is going to see a lot of activity as well in the short-term, coming out of this. So, certainly there are spaces going to see investments and you’ll see private equity firms transition towards that.  
Another interesting space would be the healthcare IT space as you referenced, in terms of moving a lot of the stuff to the digital realm and helping practices or helping businesses do that you are certainly going to see private equity and venture capitals chasing those investments because those are going to be big businesses. So, private equity firms are smart people, smart individuals, they are in-charge of billions of dollars for a reason and have been good stewards of that money. They are going to find creative ways to invest their capital but if we are sitting here 24 months from now, I just don’t think it will necessarily be in the GI practice space, but they’ll find ways to invest those dollars.   
Praveen Suthrum: From the lens of a mid-size GI practice, or a small GI practice and if you were to see it from their lens, not the super large groups and so on that have already created the platforms. But the mid-sized and the smaller groups, when you see it from their lens, what the pros and cons of considering private equity at this point of time, what advice would you have for them?   
Abe M’Bodj: I don’t think I’ve ever told you this Praveen, my parents are gastroenterologists, a small GI practice with about five doctors. So, this is the type of conversation I’m having with them on a regular basis. And they have certainly been impacted in a big way by this whole thing. For them...Just speaking specifically for them, I think they will be benefited, they feel like they would benefit by partnering to a large organization that can help them navigate something like this, right? As everyone would, instead they’re like a lot of these other practices that are scrambling to figure out where they can get some funding from, some government programs to meet payroll, they are having to furlough their employees and lay people off which a lot of practices are doing, big or small, and it’s a challenging environment. 
So, certainly one of the benefits could be that it wouldn’t be all on their shoulders, handling those decisions, and figuring out what to do so that they can keep their livelihood same as it is today. Now, the cons of that obviously, specifically related to COVID, you know, one of the things that came out with some of the government funding acts was that private equity owned companies were actually not able to participate in some of those, in some of the funding. So, certainly that is an angle on the other side of the spectrum of medicine where the government is kind of taking the stance , ‘hey you have millions of dollars of capital, it shouldn’t necessarily be on the taxpayers to help you get through a crisis like that’ and whether you like it or not is for another conversation.  
Similar cons that you have pre-transaction, there’s a certain level of autonomy that you’re giving up in joining a large organization and assimilating with a larger group. Like I said, there’s benefit to that in terms of… you’re not bearing the whole risk you’re not having to face the consequences of making the decisions at that point in time but on the flip side you’ve given up a lot of autonomy to be in that position. So, for physicians I know it’s always the biggest concern with any of these transactions. So, same cons really still exist.   
Praveen Suthrum: Okay. Well Abe, thank you so much for your extremely insightful comments, I learnt a lot and I’m sure people who watch this interview would also be learning a lot. Do stay safe and I will talk to you soon. Thank you so much. 
Abe M’Bodj: Absolutely. You too stay safe Praveen. Thank you for having me. I appreciate it. 
_

 

By Praveen Suthrum, President & Co-Founder, NextServices. 

COVID-19: The Way Forward for Gastroenterology Practices
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17 Apr 2020

COVID-19 is a watershed moment for digital gastroenterology – Interview with Dr. Atreja, Chief Innovation Officer at Mount Sinai

I spoke to Dr. Ashish Atreja, the Chief Innovation Officer at Icahn School of Medicine at Mount Sinai. He’s a well-known keynote speaker in the field of digital medicine. Also, a board member of Rx.Health that released the Virtual Care Hub (with AGA) this week.
He called this a “watershed moment” for gastroenterology. This interview has so many insights that it deserves to be watched in full and a few times.
Watch this interview to get insights on:

◘ The situation on the ground at Mount Sinai in NYC

◘ How Dr. Atreja’s role changed after the crisis (#STOPCOVIDNYC initiative will reach 1 million patients)

◘ How New Haven uses Rx.Health to track employee wellness

90% of work of telemedicine is pre-appointment

◘ We are laying the foundational layer for digital health

◘ How’s the GI department at Mount Sinai responding

◘ In a massive outreach to patients – 40% agreed to be monitored regularly

Watershed moment for GI

◘ What should a private practice do to move towards digital GI?

◘ Is healthcare now local or global+local?

◘ Can I become a global IBD doctor?

Five years from now how will the GI world look like?

The Transcribed Interview:
Praveen Suthrum: Dr. Ashish Atreja, thank you so much for joining today and I welcome you. So, you are based in New York and New Jersey. How is the scene on the ground? 
Dr. Ashish Atreja: It’s changing very fast Praveen. I think two weeks ago when I was in the hospital, it was chaos, I would say controlled chaos but still chaos. We didn’t know protocols; we didn’t know how much patients were going to come. 80% of our capacity was all COVID. This time when I went around last week, I think we know it’s bad, but we know how to manage it. We have increased our capacity significantly. So, it’s getting better since last week and that’s very heartening. I know the patterns are going to last long, there are going to be many more mortalities. But I think we have learnt how to manage majority of the patients. Which is very heartening. 
Praveen Suthrum: You are the Chief Innovation Officer at a very large health system and a very busy hospital. What steps did you take as soon as you got wind of the crisis, how did your role change?
Dr. Ashish Atreja: Yeah. That’s a great question. I think one of the things we realized that the heart of everything is… how different streams came together. So, the marketing team, the communications team, the Chief Medical Officers and the medical operations, and the digital health team and the core IT team, everyone came together in a command center way. We have daily to twice daily huddles. To know around health system wide to see what’s happening and what’s not happening because things are changing so fast from equipments to supply chain to healthcare workers getting sick, there is lot of moving pieces. One of the things we started doing was… we already have a building capacity for digital health for the last six- seven years. I lead the digital innovation center called AppLab there so, we rapidly turned our capacity in partnerships with other groups as well at Sinai to have just a complete online presence. So, people can just have what we call as Mount Sinai Now which has been our initiative to telehealth for some time now so, anyone can come and get an immediate video visit. We have also turned on our ‘text to talk’ through one of our partnering groups where anyone can come on the website and chat with anyone and we actually enroll medical students and others to be able to do the light touches there. We have also turned on our behavioral assessment because there is lot of anxiety and stress that happens and also bereavement that happens.
We have also launched a public health very big research initiative called ‘Stop COVID NYC’. We reached out to 14,000 patients in the first day itself which is text to enroll and a chat bot now we have around 30,000 people already enrolling to that within a week. The goal is to reach 1 million+ patients in a very easy goal in the prescription manner, we are able to prescribe right on their phone and activate them into a research registry.
Praveen Suthrum: You also run a spin-off called Rx Health that came out from the Mount Sinai AppLab and you recently partnered with AGA to announce the Virtual Care Hub. How is this linked with what’s happening within Mount Sinai and is it more targeted at other hospitals, what is the difference? 
Dr. Ashish Atreja: That’s correct. So, in Mount Sinai we are using the same platform internally and we’re learning what the needs are and Rx Health becomes I would say that glue which takes those needs outside to serve other health systems and other GI practices. It also works the other way Rx Health is also our sound bite as we speak or a sounding board to know what is needed in the community even if we don’t feel it from Sinai and things get built and we take it internally at Sinai and I can give you an example of that New Haven which has partnered with Rx Health actually had a really big need of tracking their employee wellness and workforce what happens to them every single day because most of them are distributed remotely so they helped with Rx Health to create a program for employee wellness and workforce management and we believe that is such a critical element that we can now plan to bring it to Sinai or plan to bring it to other health systems or GI practices as we are starting with that. So, it becomes a network of networks where there is one platform and we are able to see the needs and are able to rapidly able to ingest the digital assets for example in Virtual Care Hub we put the asset of telemedicine but not just telemedicine as a video visit because 90% of the work in telemedicine is pre-appointment, make sure the patient comes up, make sure the patient downloads the app, make sure they show up in the room, and the post-visit follow-up. So, it creates a whole continuous eco-system from appointments to follow-up but also monitoring and triage so about. And the goal is to not only serve the immediate need of converting in-patient appointment to virtual appointments but also rapidly build the foundational layer of capacity for digital health so when the recovery period happens, all the GI practices are actually very much at par with the infrastructure that is needed to provide a high quality care and combine digital with in-personnel seamlessly. 
Praveen Suthrum: Coming back to Sinai. How is the GI department in the hospital or the different hospitals what’s happening there?  
Dr. Ashish Atreja: Yeah. Oh, leadership under Bruce Sands and David Greenwald, rapidly structured all our services so, in fact instead of having regular so many physicians at Sinai, being in the hospital, we took turns to be in the hospital and since 80-90% of the patients were COVID, we actually partnered with a GI fellow but also are in the medicine service taking care of COVID patients. And as a small team dedicated itself to the GI service, GI councils and the leaders. So, I think the restructuring was very rapid and was very well-done and we refined it over time to meet the search capacity. Now, one of the things that we have learnt is that few patients are coming in with diarrhea, nausea and vomiting as presenting symptoms. So, the more we are aware of that we don’t have to immediately scope them we are able to actually watch out and do a COVID test and if it is COVID we watch for it or rule out CRP number. So, there is definitely overlap with GI symptoms we are starting to see more and more anti-coagulation now that we have to use in these patients. I’ll give an example – an average COVID patient has a CRP or inflammation of around 150 which is one of the worst that UC (Ulcerative Colitis) patient has before surgery. So, there is so much inflammation that leads to fatigue, but that inflammation also becomes prothrombotic to lead to blood clots and PE and we have already seen a lot of patients coming back with PE. 
So, rapidly we have changed protocol for anti-coagulation, and they are going to be public soon, but the flip side of that is that can lead to some more bleedings in the hospital. So, we have to be very cognizant of that for the incoming patient population as well. The third part that we did for GI population is for IBD. A lot of patients with IBD were on immuno-suppression and they actually told us that they want to stop immuno-suppression because they don’t want to be affected by COVID severely. So, we had to do a mass-outrage. So, we were able to reach the same RxHealth platform and reach out to 5,700 patients engage with the, educate them and also gave them the probability if they want to be monitored on regular basis. So, 40% patients agreed to be regularly monitored. And out of those 40%, if you ping them, 80actually follow-up and report their symptoms. So, we have just created a real-time registry of activating preventing patients and that’s actually a great model which can be scaled nation-wide not just for the IBD patients, but we can adapt the same strategy for our healthcare workforce as well which maybe at even bigger risk because of their exposure to COVID.  
Praveen Suthrum: That’s an amazing statistic, right? So, clearly, we seem to be moving towards a digital phase. Not only GI but all of medicine. But I’m interested in your views in what does digital gastroenterology look like beyond the telemedicine stuff which is happening right now.
Dr. Ashish Atreja: I think this is one of the most fascinating parts from digital GI perspective. I think while the virtual health is obvious, I feel there are going to be three other streams that are going to be very pivotal and they are going to change… I think it is going to be a watershed moment for medicine as a whole with respect to digitization and gastroenterology specifically. Telehealth, virtual health, of course taken for granted and I think it’s more than just the video visit I think it’s about engaging the patients before and after.  I would say real-time digital registries and trials are going to be the other part. We are actually planning to scale up to our next phase for our AGA initiative to setup a nationwide clinical trial network which is completely digital recruitment. So, you can do recruitment through e-consent bot which we are currently doing through Stop COVID NYC to ePRO which we have been doing for the last five years through NIH funded initiative to actually combine the data with EHR to do real-time digital registries and clinical trial enrollments. The third of course there has been lot of discussion and Praveen you have been in the thick of that is the AI part for endoscopy. And I have started seeing conversations of AI being used for lesion detection and others and then standalone companies doing actual partnerships or becoming part of the major GI endoscopies after this. That is when it becomes a double mixed role or what we call as translational otherwise it is just a standalone tool which people do not use. 
I think these three things virtualization video visits, registries and clinical trials all virtual, clinical care research and AI augmentation part I think will also create new models of population health and better aligned GI which has been typically fee-for-service in many ways with ACO’s population and health plans for bundles for payors. So, I think we never had the capacity but now, we will have the capacity post COVID to be able to go to health plans and negotiate bundles because we are able to look at populations as a whole.
Praveen Suthrum: That’s very interesting. Now, it is one thing to talk about digital health as Mount Sinai and quite another thing to talk from a private practice perspective. What does the everyday practice on the ground do right now at this time, in this period in preparation of this whole digital phase of gastroenterology that might surface right after this pandemic settles down. 
Dr. Ashish Atreja: One of the key things… this is actually in a way, even though it is a moment of crisis, it is a great moment for capacity building. The in-person appointments or the endoscopy volumes which was keeping all gastroenterologists, many of us, busy is lesser, lighter or not there. So, that frees up time to build operational capacity, digital capacity training and really optimization to make everything seamless. There is a concept in digital health which is, for technology to really be effective it has to become invisible, right? Like internet is invisible, but you still use it. But you don’t have to say how you are going to go to the internet. It just happens, right? 
So, lot of our work at Mount Sinai with AppLab but also working with AGA as part of the Virtual Health which is national transformation and I would say it can be a great model for global transformation for GI through partnerships is to make all the knowledge we have and all the experience we have as an open network, open knowledge network to everyone else but also set up a steering group of people in IBD and others to come together to be a guiding force and also doing tutorials, learning lessons and sharing things through journals and through publications. So, use this time to absorb and assimilate, increase capacity and make our practices so super-efficient that technology is not a barrier technology really becomes a facilitator the way it was supposed to be but never got a chance to do before.  
Praveen Suthrum: Right. I have one other question on this whole connection between digital health and healthcare being local. Forever now we have talked about how healthcare is very local and is very different from state to state from hospital to hospital and region to region, right? But if anything, that this crisis has shown that is healthcare is both local and global at the same time. Within a matter of weeks things spread to every part of the globe. So, again I want to connect the dots back to GI. How do you think in this whole phase of digital GI that we will get into, how is it going to affect the regionality of healthcare? That we are so used to right now.
Dr. Ashish Atreja: That’s a very good question. I think… you know this is going to be a watershed moment not only in technology but also in practice and research. The practice patterns are going to change, the referral patterns are going to change. You can imagine… I don’t know how long the government will stay this way… But you can practice across the border. This is the first time since I have been to the US in last 20 years that I can actually treat any patient across US in any state. That was possible in India before and I can still treat patients in India in any state, but I could never do that in the US but now I can. So, it is possible that it may not be taken away. So, suddenly… well you always can dream, right? I still haven’t stopped dreaming. Can I become a global IBD doctor, right? Because IBD care is so much centered around sub-specialized center that we see a lot of gap, lot of disparities in the geographical areas, in remote rural areas, even if you go 100 miles away. Can we completely break that barrier? And decrease the disparities, right? People becoming global physicians in that regard. And that was only a dream but I think I can see some segments of that dream actually may become real and there are many other doctors who may take that or healthcare professionals who may take that.
I think sometimes if you haven’t tested anything you don’t know how it is possible. So, there’s a concept called self-efficacy which means I want to do it, it is a good thing to do, but I don’t know how and that is stopping me from doing something there‘s lot of literature in smoking cessation to behavioral things. But I think physicians as a work force have this self-efficacy in fact all of us as humans do or lack of self-efficacy is when we say “hey I do not know how to do it, it’s too big and I’m too tired to do it right now”. This moment will increase your capacity and self-efficacy that many of us will continue to march ahead. I truly wish the GI community takes it. It’s not just one or two people, it is actually that majority of GI should take it and become a more national workforce than just hyper-local workforce knowing that some of the procedures will always remain hyper-local but the reach from an out-patient practice, from a consultative nature can become much more regional and eventually global.  
Praveen Suthrum: That’s actually very interesting to hear. Thanks for sharing all these points. One final question. You are talking about dreams and you are a gastroenterologist and a technologist at the same time, a very rare combination. My question is, five years from now, and if you have to look ahead, how is the GI world going to look from your lens? If everything that you have imagined comes true. 
Dr. Ashish AtrejaThat’s a tougher thing and you know why Praveen. We have learnt that you can never predict what happens in technology five years from now. And Bill Gates has a favorite saying, you all estimate the impact of technology in the short term, but you completely forget the impact of technology in the long run. When patient portals came, I was doing my informatics fellowship in 2003, we thought oh my god, patient portals are a no-brainer within five years everyone would have it. It is coming closer to that, but it is 20 years right now it is still taking time. On the other hand some things happen faster than others, right? 
If I have to see what things will for sure happen in five years, I think augmentation through AI for visualization is given. That is going to be not a good practice if it doesn’t have it. Digital care in terms of pre and post procedure, I mean we just gave a sheet of paper to our patient for colonoscopy and 50% of the patients forget where they have kept the paper sheet before they come for the colonoscopy, one in four patients have it with them, right? 20-30% of the patients never come back in the right time, we have no way to recall them, especially in academic centers. With the initiative with AGA for transformation endoscopy, completely that is going to be automated. So, all our practices will not only be seamless but will be of the same standard in the digital standard, not just clinical protocol standard but digital protocol standard will be similar and that is where societies will have a big role to play.  
Research will become much more global and much more national. Most of the study that we are doing are one-centered, two centers, every time retrospective, they’re going to be platform registries for mass populations very much like Stop COVID NYC and we are going to have like 300,000 people, GI people in the gird maybe or you know 20,000 or 30,000 IBD registry globally or nationally. So, we can actually do better research, better recruitment, I think it is going to be fascinating time. There will be little bit of role changing for gastroenterologists and I think that’s great. There’s lot of Vinod Khosla talks on you know, upskilling. So, technology enables a generalist to become a specialist and a specialist to become a super-specialist or more importantly everyone can do more than the top of their license with technology enabling and I think it will become a much better population health. Delivery care experts will be able to provide not just the science of the medicine but also care delivery is sent much more better in our practice and they will become much better national and global researchers by adopting this in a meaningful manner. 
Praveen Suthrum: Excellent. Stay safe, you and your team and thank you so much Dr. Ashish Atreja.  
_

 

 

By Praveen Suthrum, President & Co-Founder, NextServices. 

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