Category: Gastroenterology

13 Aug 2019

43 Takeaways from GI Outlook 2019 (plus bonus insights)

We were recently at the GI Outlook 2019 conference in LA. As with GI Roundtable, the conference attracts GI leaders interested in the business of gastroenterology.
Topics and discussions gave plenty of insights of what concerns the GI industry at this time. Big insurances. Private equity. Colonoscopy. Private equity. Burnout. Private equity. MSOs. Did I mention private equity?
Just the week leading up to GI Outlook, there were two big industry announcements. Illinois Gastroenterology joined The GI Alliance (started by Texas Digestive Disease Consultants with investment from Waud Capital). Physicians Endoscopy and Capital Digestive Care announced a MSO platform.
I couldn’t attend all sessions because we had a busy time. But I still managed to pause and capture 43 takeaways and then some. Here they are.
1) James Weber, MD (Texas Digestive Disease Consultants): When we were 60 doctors, we still didn’t get the attention of big insurance companies. After we expanded to 100-200 doctors, they are reaching out to us.
2) James Robinson, PhD (UC Berkeley School of Public Health): Doctors have to give up their autonomy so that they get to keep their autonomy as a group.
3) Lawrence Kosinski, MD (Illinois Gastroenterology Group): There’s a hunger, they (big insurance companies) want us to do it (consolidate).
4) Jack Lewin, MD (Lewin and Associates): Questions to consider on the future of GI:
– Will solo GI be gone?
– Shared risk and revenue?
– Telemedicine and e-consulting
– Subspecialization
– Extender use
– AI and big data
– Microbiome
– Empowered patients
5) Jack Levin, MD: 3 key forces affecting health reform:
– scientific progress and demand for new and expensive services for aging population
– general economic factors
– politics on things
6) Ramya Raman (Medical Science Liaison, Exact Sciences): Cologuard 2.0 is in the works (early stages) – tests will be done with a blood sample, not a stool sample.
7) Abe M’Bodj (Provident Health Partners): The biggest risk for the large PE-funded platforms is that nearly half of the money they raised is leveraged debt. If the business doesn’t generate sufficient cashflows every year to pay the interest, bankruptcy could happen.
8) Abe M’Bodj: There have been 200 PE deals in ophthalmology, 20 of those are platform deals. With GI, we can expect to see at least 10 PE platform deals. At this point, there are at least 16 transactions underway, including acquisitions.
9) Lawrence Kosinski, MD: If all partners agree to take a 30% cut then you can use that money to sustain your independence (instead of raising money from PE). Now, try having that conversation with your partners.
10) Scott Ketover, MD (Minnesota Gastroenterology): (question to physicians during a session on burnout): Do you take a lunch break and not work during that time? (2 hands went up)
11) GastroHealth numbers: 140 physicians, 48 APPs, 69 locations, 891 teammates, 15 acquisitions.
12) Nexus Health Capital: Recent transactions/active engagements (investment bank):
Closed: Texas Digestive Disease Consultants
Impending close: inSite Digestive Healthcare (largest in CA)
Active engagements: Arizona Digestive Health (largest in AZ), GastroOne (largest in TN), Allied Digestive Heath (largest in NJ), Associates in Gastroenterology (largest in Nashville), Gastroenterology Health Partners (largest in KY, S. IN)
13) T.R. Levin, MD (The Permanente Medical Group): Value based health care will continue to grow to meet the IHI Triple Aim of Population Health, Experience of Care, and Per Capita Cost:
– Payment will reward quality over quantity
– Quality will directly impact reimbursement
– Population health management will increase
14) T.R. Levin, MD: Multi-Society Task Force: 2017 Guidelines for CRC screening
15) T.R. Levin, MD: Kaiser Permanente Northern California FIT outreach program:
1) PCP Pre-letter mailed
2) FIT Kit mailed
3) Robb-Call reminder
4) Reminder Postcard > Review prompt at office visit
5) Secure Message
6) MA calls
16) Impact of organized screening:
Screening up to date: screening eligible changed from 50% (2007) to 80% (2015)
Colonoscopy: screening eligible changed from 15% (2007) to 30% (2015)
FIT: screening eligible changed from 5% (2007) to 40% (2015)
17) T. R. Levin, MD: Guidelines for surveillance colonoscopy are being revised. Most likely outcome: colonoscopy intervals will be lengthened for 1-2 (possibly 3-4) small adenomas
18) Jack Lewin, MD: U.S. Health care is way too expensive and complicated:
$10,000 per capita per year in 2018
$22,000 per family per year in 2018
18+% of GDP
19) Nexus Health Capital: Need for scale/negotiating leverage:
– Lowered reimbursement risk
– Hospital competition pressures (employment of GIs and referral sources)
– Increasing infrastructure requirements to succeed with MIPS and Value-based care
– Many consolidators recruiting GIs at premium, competing for referrals, competing for preferred payor relationships
20) Nexus Health Capital: Favorable wealth creation environment:
– Premium values for top tier practices
– limited window to consolidate sectors and build platforms
– Shared wealth-creation goal with physicians
– Opportunity to maximize equity “upside”
21) Joseph Garcia (Gastro Health): Often times your EHR is different from your PM system. And your financial reporting system doesn’t talk to any other system. So we knew early on that as our business was scaling, we needed better dashboards. We’ve been using Microsoft Power BI and have been on the project for 1.5 years now.
22) Joseph Garcia: When you are acquiring practices, there’s a lot of scrutinizing of financial reports that goes on. So to keep doing that manually is tough.
23) Joseph Garcia: Dashboards can provide a ton of information from multiple teams. It provides visibility and ability to track. It goes into performance reviews. Brings about great efficiencies.
24) Joseph Garcia: To build dashboards, do the following:
– Identify what you need to run the practice (Data and KPIs)
– Conduct a gap analysis (current reporting vs required reporting)
– Evaluate – build vs buy strategy (outsourced RCM or data analytics vendors)
25) James Leavitt, MD (Gastro Health): What drives PE’s interest in healthcare?
– Dry power of $1.8 trillion
– Healthcare growing faster than GDP
– Healthcare outperformed other PE investment sectors
– Provider fragmentation, lack of professional management
– Create value by increasing efficiencies
– GI of interest because of diverse revenue streams
26) James Leavitt, MD: By affiliating with an MSO, physicians can take upfront value of future earnings.
27) James Leavitt, MD: With a PE structure, physicians can treat their practices as more than just an ATM. They can be part of a structure that creates real value and equity above and beyond the revenue they withdraw as salary from the practice.
28) James Leavitt, MD:
– Understand who you really are
– What is best strategy to meet your needs
– Not everyone is a platform or needs to be a platform
29) Joseph Vicari, MD (Rockford Gastroenterology Associates): With PE, we have to understand who has control of the commodity that we’ll become? Who and what drives decision making as we become a commodity? Will we still be patient advocates? Will we still put quality first? Or, will PE drive decision making? What happens if you don’t meet those 20% growth goals?
30) Joseph Vicari, MD: If we sold or resold, it’ll become like a mortgage. What does it mean for young partners and patients?
31) Joseph Vicari, MD: What happens if the growth of ancillaries stops? What happens if we treat IBD with oral medications and we don’t need infusion centers?
32) Joseph Vicari, MD: If this (PE) goes bad, how does this “unwind”? Who gets what? What happens to the physical structure? What happens to patient records? What happens to ancillaries? If this falls apart, will we truly look at it as a business? What happens to our patients? What happens to us as physicians?
33) Glenn Littenberg, MD (inSite Digestive Health Care): PE is not a cure for:
– disorganization
– a stagnant group that’s unable to grow
– payor pressure
– financing your kid’s tuition
– “kick a mule all you want, it’s still not a race horse!”
34) Glenn Littenberg, MD: people are willing to put in a lot of money into us and want to make a lot more money out of it.. what is that going to do to us or for us? And that’s probably the question
35) Glenn Littenberg, MD: meetings, meetings, meetings, phone calls, emails, more phone calls…
36) Glenn Littenberg, MD: Some physicians are not educated enough but will still come behind you because there’s lack of trust there often based on very inaccurate information, misconceptions on how this could work.
37) Glenn Littenberg, MD: If you are going to do this, you have to become focused, stay focused before, during, after the process.
38) Glenn Littenberg, MD: The question is will they respect you in the morning
39) Glenn Littenberg, MD: What’s the end game? Because second bite is not the final bite
40) James Weber, MD: We anticipate our next partner will be a larger private equity firm with a longer horizon. The third partner may be somebody like Optum or Apple or Google or Amazon or a bigger private equity firm.
41) James Leavitt, MD: There are different types of private equity firms. Lower middle market – start of with $10-20M EBITDA. They grow it from $10M to $50M EBITDA. That’s a 5 times growth. Then there’s the upper middle market – they’ll take it from $50M to $100M. For example, Mednax – they did a PE play and suddenly they were a billion dollar company. They didn’t have a private equity partner to go to and they went public. But that’s four bites down the road.
42) Lawrence R. Kosinski, MD
Major drives of healthcare business model change
– Cost containment (e.g. declining fee for service)
– Structural changes (e.g. Affordable Care Act)
– Consolidation (e.g. PE in GI)
– Demise of independent primary care (e.g. employment of PCPs)
– Disruptive technologies (e.g. EHRs, social media)
– Management of chronic disease (e.g. VCs in this space)
– Consumerism (e.g. patients taking on cost burden)
43) Lawrence Kosinski, MD
[It can’t be] a coincidence the burnout of physicians occurred at the same time as the EMR revolution. We sit there, we watch a screen with procedures, we watch a screen with patients – we are constantly getting hammered with that.
When I reflect on the entire conference, here’s what I finally took away:
1) GI is getting bigger faster. The structure of the industry is permanently changing. The industry is at the cusp of an exponential curve. We’ll see the hockey stick soon.
2) A very small portion of gastroenterologists comprehend these changes. It’ll take most of the industry by surprise. Most will respond based on emotion or hear-say or simply saying yes to whatever comes their way.
3) Plenty of disruption is underway (e.g. Cologuard 2.0) but we will be slow to recognize it. Dependency on colonoscopy reimbursements will be a big risk.
4) Technology will play a major role in shaping the future of gastroenterology.
5) GI practices will make less and less money from direct GI care. And more and more from ancillaries.
6) The need for GI care will keep increasing. How we finance and address that need will dramatically change.
Many summers ago, my buddies and I lost our way while boating in Lake Minnetonka in Minneapolis. It was fun! That lake freezes with over a foot of ice during winters when everything stands still.
GI is a bit like that lake right now. Back in summer, there were no rules. You could be solo or midsize or big. You could do anything you wanted. Life was more predictable.
But now, GI is advancing towards winter – when the ice freezes and rules are set. Once those rules are set, they stay that way for a long time.
Until of course a summer comes by and melts everything all over again.


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

The views, information, or opinions expressed are solely those of the individuals involved and do not necessarily represent those of NextServices and its employees. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained.

Our new book Private Equity in Gastroenterology – Navigating the Next Wave is still available for download. Here was the best compliment we got to date: “I need my entire board to read this!”
03 Jul 2019

Bigger market forces influencing M&A in gastroenterology: Consumer vs System

A PE fund recently wanted to pick my brains on their investment strategy. They found me through my book. It wasn’t just any investment strategy.
It was about finding their sweet spot in gastroenterology. How should they fit in? How should they stand out? Where’s everything going?
I suspect that by 2020, there will be a lot more investors making a beeline for gastroenterology investments. With more deal announcements (there have been 4 big ones), more investors and GI practices will start seeking out each other.
A ripple-effect is inevitable. Money is a powerful force.
Expect the market to heat up.
But M&A within gastroenterology is not occurring in isolation. Beyond common investor thesis (aging demographics, demand for GI, fragmentation of practices etc.), there are bigger market forces at play here.
To understand what’s happening at the CVS-Aetna level, I spoke to Sid Sahni, Chief Strategy and Corporate Development Officer, Prime Therapeutics. Sid, a friend of mine from Ross Michigan, was previously the VP of Enterprise Strategy of Aetna and VP of Market Strategy, CVS.
He helped me understand present market dynamics in very simple terms.
Healthcare is divided into two camps: Consumer vs System.
1) US healthcare continues to be plagued by big problems. We spend more and yet achieve lower outcomes.
2) There are two big aggregators in the country: CVS and UnitedHealth Group. Taking two different approaches to solve the same problem.
3) CVS is thinking, let’s cover all consumer touch points and influence patient behavior to solve the healthcare problem (Consumer).
4) UnitedHealth Group is thinking, let’s fix the system to solve the healthcare problem (System).
5) The rest of healthcare are variants under one of these two camps: Consumer vs System.
Read Sid’s insightful interview below. It’ll prime you for thoughtful decisions.

Interview with Sid Sahni, Prime Therapeutics
Chief Strategy and Corporate Development Officer, Prime Therapeutics, Minnesota
Former Vice President, Enterprise Strategy Aetna, Former Vice President, Market Strategy, CVS

1) What’s driving the present wave of changes in healthcare
If you think at a very high level, there continue to be problems that plague US healthcare. We spend more, yet our quality of life and outcomes are not comparable to countries that spend far less. The question to ask is why? There are three main reasons:
• There’s fundamental fragmentation in the industry. Different players owning different elements, with no alignment with each other. Even if a player wants to do something right, the incentives are misaligned.
• We work on the mindset of paying for activities versus outcomes. I performed a test or prescribed a drug, so I deserve to get paid. We do not pay for value created or results delivered. Not yet.
• US does subsidize innovation for the rest of the world. The fact is we do spend more here but the benefits are democratized over the rest of the world.
With this line of sight, see what two of the biggest aggregators in the country are doing: CVS Health and UnitedHealth Group. CVS has been taking the consumer route. They are thinking let’s cover all the touch points of patients to influence consumer behavior. Somewhere the benefits to the company will accrue if I focus on changing patient behavior.
United on the other hand is taking a system approach. They are thinking the system is out of whack, let’s fix that first. Let’s reduce costs of hospitals by moving care to clinics, outpatient centers. May be they are building a Kaiser of sorts – a closed system. Somewhere the benefits will accrue if I have the right system.
Most other players in healthcare are taking variants of one of these two approaches: consumer or system.
2) What about new entrants like Amazon?
Well, there are a third-set of players: Google, Amazon, Facebook and so on. They are saying, unlike traditional healthcare companies, we have the trust of the consumer. People are usually skeptical about the healthcare system. The tech companies are thinking you need a fresh approach that’s unconstrained by today’s problems. Insiders can’t fix this. That’s the genesis of the Amazon-Berkshire-Chase approach. It’s also that they see a lot of return on investment if done right. Power to them but I don’t yet see a coherent strategy.
3) When you take a 5-10 year horizon, how do you see the healthcare landscape change because of these changes?
I do think that alignment of incentives, vertical integration, a more closed-loop system will bring healthcare costs down. If you get people to change behavior and be more rational purchasers of healthcare (which is notoriously difficult), it can drive enormous change.
It’s not unthinkable that CVS merged with Aetna. It’s a strategy they’ve been considering for years. So Amazon might not have influenced things beyond a point. Insiders are to leave no entry point for the likes of Amazon.
For example, by partnering with FedEx, Walgreens is experimenting with same or next day delivery of prescriptions nationwide. CVS is piloting a program for delivery of medications to home for an annual $4.99 membership in the Boston area.
The likes of Amazon may bring fresh ideas that might benefit everybody. But they will likely need to work with industry players to implement any idea.
4) Where do you think consolidation amongst private practices lead to?
My contention is that regional consolidation is more beneficial to patient care than national consolidation. If a group in Texas merges with another in Washington, what good will come for a local patient?
When you remove the problems of fragmentation that exist in specialties like gastroenterology, you can unlock greater value. In the future, we may see consolidation of large gastroenterology groups with other specialties. Insurance companies keeping pushing risk down to the providers. One doctor may not be able to take a risk on a certain patient. But when put together with a group (primary care, oncology, pharmacy, social workers), the group may be able to assume greater risk and be accountable for the health of regional populations. It is one of the key ways we will make a transition from paying for services to rewarding for outcomes.
5) What do you think about PE-led consolidation that’s underway amongst private practices?
Essentially, their play seems to be that of bringing efficiency in operations. Even for a minute, I don’t doubt that there’s money to be saved and made. However, this approach reaches its limit reasonably quickly. At some point, you’ll finish consolidating billing, accounting, technology and so on. Then what? You are ultimately always looking out for exit multiples. You aren’t solving fundamental problems with a long-term view. You’ll get some runway but that’s not enough for healthcare. The PE-view is completely different from the approach that someone like Amazon-Berkshire-Chase is taking. Perhaps, you need both approaches to solve our problems in healthcare: remove inefficiencies and innovate.
6) What should practices that are consolidating watch out for?
Just because you bring two entities together financially, it’s a stretch to assume there’ll be a match. Don’t underestimate the role of culture. Culture can take a bite out of the success you want.


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

Our new book Private Equity in Gastroenterology – Navigating the Next Wave is still available for download. Here was the best compliment we got to date: “I need my entire board to read this!”
19 Jun 2019

25 Takeaways from Eric Topol’s new book, Deep Medicine

Every once in awhile there comes a well-researched and clearly-written book that deserves to be read end-to-end. While Dr. Eric Topol’s Deep Medicine’s compass points to the future, the book’s heart is rooted in compassion and deep concern for patient care.

My printed copy has so many dog-ears that I’m simply going to list my takeaways for you – with a few comments (>>).

25 Takeaways from Deep Medicine
1) Delays in diagnosis or failure to spot a diagnosis account for a significant number of law suits. The underlying reason is poor chart documentation. AI tools (e.g. Ada, Your.MD, Babylon, Buoy Health) can help.
2) Crowdsourced diagnosis is an upcoming area. Figure One, Health Tap, DocCHIRP, Medscape Consult, CrowdMed (competitions) are some interesting examples. Human Dx has been used by 6,000 doctors and trainees. In the future, AI tools + crowdsourced diagnosis can be real aids for doctors.
>> Our medical knowledge is expanding and growing in complexity. ICD-10 diagnosis codes are 150,000 in number. It’ll soon be impossible for doctors to see patients without the aid of technology.
3) Machine learning works best with raw data and lots of data. If there’s enough data, then the noise gets filtered out on its own.
>> If we take stock of ALL the electronic medical records circulating out there, we’ll notice that the majority is templated and not pertinent. Using that data to create algorithms is dangerous and possibly futile. But with more data, the machine can possible figure out what’s useful and what’s not.
4) AliveCor’s Kardia band is possibly the first FDA approved AI algorithm to help patients with self-diagnosis. It can help users detect atrial fibrillation.
5) Gary Kasparov said IBM’s Deep Blue “didn’t enjoy beating me”.
>> We vastly underestimate the role of human emotion (in this case the joy of competing) in our transactions with machines.
6) 4 areas where deep learning has made big impact already: games, images, voice and speech, and driverless cars.
7) If a doctor makes a medical mistake, it can result in one death or coma. If an AI makes a mistake, it could be devastating – possibly resulting in hundreds or thousands of deaths!
>> Imagine if an algorithm that determines drug dosages for a certain condition goes awry. It’ll be far, far worse than a clinician overdosing one patient.
8) Problem of using current genetic data as input for AI algorithms is recipe for trouble. Because most of the data is from people of European ancestry.
>> The problem is we don’t really have that much data from other ethnicities. So there’s a lot of room in the future to make these algorithms more relevant and accurate.
9) NHS used an app (Streams) that helped triage patients in 30 seconds vs up to 4 hours in the past.
10) The paradox of driverless cars. In the accident that occurred in 2018, the AI detected a pedestrian in the dark but didn’t stop and the human backup driver trusted the AI.
>> I hear this all the time with staff at medical sites: “The computer told me to do this” and they simply do it.
11) In healthcare, there’s scope for building algorithms that are unethical, channeling patient care in a certain direction based on insurance or income levels.
>> Think of someone at a hospital saying this: “the computer suggests that it’s better for you to get a stent placement. Do you want to go ahead?” The problem is a patient will almost never question who told the computer to suggest that and on what basis.
12) In an experiment, 83% of radiologists missed a man in a gorilla suit shaking his fist into images, while reviewing for cancer!
13) It’s not about AI replacing dermatologists. But it’s about AI assisting family doctors who are called to do dermatology cases.
>> I wrote this article about a DNA stool test and colonoscopy and it created much angst among gastroenterologists. The reality is it’s general practitioners who are prescribing alternatives to traditional procedures because patients are approaching them first, not specialists.
14) AI speech processing exceeds performance of human transcriptionists. Can it be used in the medical office to speed up EHR documentation?
15) We are trapped in a binary world of medical diagnosis – normal or abnormal and ignoring rich, finer data on various possibilities.
>> We are barely scratching the surface of what’s possible. The future of AI-based medicine is vast and yet to be uncovered. Google’s using 46 billion data points to predict medical outcomes.
16) Surgery 4.0. Imagine cloud-connected surgeons sharing data to democratize surgical practice.
17) Based on several acoustic biomarkers (voice), AI can sense various mental conditions – from depression, schizophrenia, bipolar disorder and so on.
18) In a study, AI learnt from electronic medical records of 160,000 patients to predict death with great accuracy.
>> Imagine what would happen if this information is released to patients or worse their insurers or employers!
19) Insurers like United Healthcare are experimenting with voice AI to replace keyboarding.
20) It’s likely that AI for medicine will take hold outside of US in countries like China or India. Economist characterized China as “the Saudi Arabia of data” (hospitals are training AI using massive amounts of data).
>> Healthcare is likely to be globalized and more and more uniform in the future. Discoveries in China will impact medicine in US and elsewhere. It’s in our interest to develop a more global mindset in healthcare and be open to new possibilities.
21) Nutrigenomics is an evolving field. Can we personalize food to control disease?
>> It’s too, too early. I doubt we are at the point where we can trust the food we buy yet. How do we then customize it?
22) With $600 million in funding, Chinese company iCarbonX is attempting to collect data on a massive scale across “lifestyle, DNA sequencing, proteomics, metabolomics, immune system via autoantibodies, transciptomics, the gut microbiome, continuous glucose monitoring, and the use of smart toilets and mirrors beyond smart phones.” The plan is to develop a more accurate AI health coach.
>> There many companies that are pursuing similar goals. For the machine to guide our health. We’ll see many forms of AI coaches – possibly not for all therapies but definitely for certain conditions.
23) In 1975, the term “health system” wasn’t coined yet, US spent $800 per patient per year and less than 8% of the GDP. Today, we spend $11,000 per patient, over $3.5 trillion per year and close to 19% of GDP.
>> This is so absurd. And what’s disturbing is that there’s no stopping it. It’ll increase more and more, with no guarantee of better outcomes.
24) AI will profoundly change medicine. Some of these changes will be for the better. Some could make it far worse. We have a choice right now to nudge AI development in the right direction.
25) AI can offer the gift of time to doctors by unshackling them from the burden of data entry into electronic health records. But this requires collaboration across the board from administrators to physician leaders and EHR vendors (some with “gag clauses”). The gift of time is not necessarily to keep seeing more and more patients but to go deeper instead.
My final takeaway: Machine-based medicine need not be the future of healthcare. Instead, AI can move us in the direction of greater human empathy and make space for rebuilding a genuine physician-patient relationship. If we allow it to, it can recreate the space for caring, trust and empathy. To ultimately result in healing.
>> The last chapter had a profound impact on me. It seemed to say, let’s rapidly embrace the future the right way so that we can go back to a simpler past.
Re-reading my dog-eared takeaways, I see that they hardly do justice to what the book represents in its totality. Deep Medicine adds up to much more than this.
Read it if you are in healthcare. But read it even if you are not. Because sooner or later, healthcare affects all of us. So would AI.


Originally published on LinkedIn,  by Praveen Suthrum, President & Co-Founder, NextServices. 

Image Credit: Pexels and Amazon

Our new book Private Equity in Gastroenterology – Navigating the Next Wave is still available for download. Here was the best compliment we got to date: “I need my entire board to read this!”
06 Jun 2019

PE and beyond PE: Who wants to invest in your GI practice?

There are a few GI investment models brewing. Some of these are beyond private equity (PE).
Read on for insights on what’s underway.
The story so far with private equity and GI
In March 2016, Audax Capital’s investment in Gastro Health triggered private equity investment in gastroenterology.
After a lull of about 2.5 years, there were two more PE deals.
In October 2018, Waud Capital and Texas Digestive Disease Consultants created The GI Alliance (TGIA).
In November 2018, Frazier Healthcare Partners bought Atlanta Gastroenterology Associates to form United Digestive. Both The GI Alliance and United Digestive have been referred to practice management companies.
In April 2019, Gastro Health made its first out-of-state acquisition in Southeast Gastro.
In May 2019, we saw the announcement of a $130M GI deal. Regional GI, Main Line Gastroenterology Associates, Digestive Disease Associates took investment from Amulet Capital to create the 7th largest deal in the US.
What does it all mean?
Think of these practice management companies as platforms created with the specific intent of acquiring assets of other GI practices and centralizing administrative and technology operations. Growth is created both organically (better reimbursements, contracting, cost control) and inorganically (acquisition of other GI practices).
The practice management companies create management teams that are responsible for executing on the investment thesis set forth by the PE fund.
In the beginning, most practice management companies will tend to expand regionally. For example, TGIA will expand in Texas and Louisiana. Gastro Health first expanded in Florida.
According to Abe M’Bodj of Provident Healthcare Partners, there are about 12 ongoing transactions including acquisition deals. In 2019 and 2020, we will see regional hubs of practice management companies. They will be the first-movers (high risk, high reward). They will be led by PE funds who would’ve accomplished similar deals in other specialties.
Just as with dermatology and ophthalmology, we will see many PE-backed GI practice management companies emerge in different parts of the country. After most big GI groups are taken, the market will open up cross-regionally. At that point, PE funds (and their platforms) will scout around for healthy GI practices wherever they might be located.
When most of the market is taken (that is, whoever wants to sell has sold), it’ll possibly be a 5-7 year window. That’ll time itself with recapitalizing the original practice management companies with other PE funds.
For example, Audax Group invested in Advanced Dermatology & Cosmetic Surgery (ADCS) in 2011. They built it up and exited their investment in 2016 – a 5 year horizon. If they time their GI investments similarly, then we’d see a spur of M&A activity around 2021. One deal leading to another.
Investment models beyond PE
Companies such as Amsurg (now merged with Envision Healthcare) might consider competing with PE funds to create GI platform companies. As you may well know, the company already co-invests with gastroenterologists to build surgery centers. HCA, Surgery Partners, SCA, Physicians Endoscopy (interestingly, Kelso, a PE firm, owns the company) and USPI are other big ASC players.
Taking investments from Amsurg or co-investing with them to create a GI platform company will likely be a different model than PE led models.
A PE led model might mean selling 80% and converting 20% into stock in the new platform entity. A company-owned model might reflect a typical ASC investment model (where majority, say 51%, is owned by the company) in a smaller regional entity.
This is also referred to as a Management Services Organization (MSO) model. The management company makes money by supplying business services and in some cases, by owning or co-owning assets of the practice. They negotiate on insurance contracts and supplies for members.
An MSO announcement could also be in the works. A management company and one or more GI groups could join forces to create and extend the model as an alternative to PE.
It’s also possible that there might be other investors (other types of companies, asset management firms, family offices etc.) who might compete with PE funds for the right investments. Investment models in these acquisitions may drastically vary.
While no one’s talking about it as yet, industry outsiders (e.g. technology or insurance companies) might venture into GI through an acquisition.
Expect the unexpected.


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

Our new book Private Equity in Gastroenterology – Navigating the Next Wave is still available for download. Here was the best compliment we got to date: “I need my entire board to read this!”
22 May 2019

Loss of autonomy. Compromising on patient care.

I was curious how a PE fund would respond to concerns of losing autonomy and compromising patient care. Would they not work with certain kinds of  GI practices? So I just asked Paul Barrett.
Paul Barrett is the Managing Director of BelHealth Investment Partners, New York. BelHealth is a healthcare private equity firm focused on lower middle market companies. This interview is part of the book, Private Equity in Gastroenterology: Navigating the Next Wave.
When you take a 5-10 year horizon, how do you see the GI landscape change because of PE-fueled consolidation?
The practice of GI and patient care will remain the same, however, with PE investment will come additional opportunities in technology and innovation. There will be significant investment by PE firms in leading technology, equipment and systems in order to drive accelerated growth. The goal of PE groups is to create value by accelerating growth and creating scale so there likely will be more regional and national players vs. small and mid-size groups today. With the increased administrative and regulatory burden in GI, creating groups of scale makes a lot of sense.
What are the main concerns that PE funds have while considering investments in GI?
The main concerns in GI are similar to other physician specialties — ensuring and maintaining exceptional patient care and a compensation structure for physician partners post close that keeps all parties happy and incentivized to work hard. Our model at BelHealth differs somewhat from our peers in that we exclusively partner and back physicians and entrepreneurs. Our physician partners roll significant equity, remain Medical Directors of their practices, keep their local brand and maintain full clinical independence and autonomy. Our role is to support the group by building a best-in-class corporate back office and reduce the administrative burden at each individual clinic so the physicians and staff can focus on providing exceptional patient care.
“We do not partner with physician groups that have one outsized individual or ego that is not a team player.”
For what kind of GI practices would PE investments NOT be a fit? 
For us, it’s critical that the physicians be interested in a partnership model and be enthusiastic about becoming part of a family of practices. Also, it’s important that all of our partners be team players and open to building consensus around all major decisions. We do not partner with physician groups that have one outsized individual or ego that is not a team player.
Several practices are waiting and watching. What might be the pros/cons of joining a PE funded group at a later stage?
The pros of joining a group early on are that it allows you to shape the overall platform as you see fit and in your image. However, there may be a few more bumps in the road as the platform finds its footing. If you join later, it may be a more a seamless transition, however, many of the bigger platform decisions such as which EMR/PM systems are chosen, may have already been decided.
Some doctors are worried that PE involvement will mean greater use of physician extenders, losing autonomy, and even compromising patient care at the cost of financial goals. How would you respond to that? 
It’s a fair concern as some PE firms have not behaved responsibility in this regard. It’s incredibly important that you partner with a group that lives and breathes healthcare and that allows its physician partners to put its patients first and remain clinically autonomous and independent. From our perspective, putting short term profits ahead of best-in-class clinical care is short sighted and leads to a poor investment outcome in the end. With our dermatology platform, NavaDerm Partners, pro forma for our most recent partnership, we have 45 MDs and 3 PA’s and each of our seven founding physicians remain Medical Directors of their clinics.


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

Our new book Private Equity in Gastroenterology – Navigating the Next Wave is still available for download. Here was the best compliment we got to date: “I need my entire board to read this!”
09 May 2019

“If you are paid by Medicare, aren’t you already employed?”

“If you are paid by Medicare, aren’t you already employed?”
When I first heard someone suggest this, it struck me as odd. How can independent gastroenterologists be employed by Medicare? 
Well, let’s consider that question. I looked at Medicare contribution for six different types of GI practices in Q1 2019.
Practice A (group in east coast): 29%
Practice B (solo GI in east coast): 19%
Practice C (group in mid-west): 19%
Practice D (solo GI in northeast): 16%
Practice E (group in west coast): 16%
Practice F (solo GI in east coast): 27%
Yes, one could make that argument. Medicare is an employer of these practices at least 16-29% of the time. Because they are paying doctors and doctors are dependent on that payment.
Would this ’employer’ ever give you a raise?
To answer this question, I wanted to review Medicare ‘allowed amounts’ for colonoscopy. Because those procedures are still the bread-and-butter for GI practices.
During the last 10+ years, here’s how Medicare paid for colonoscopies (approximately).

As you can see, Medicare pays less than what they did 10 years ago!
Here are the ‘allowed amounts’ from 2009 and 2019.
Diagnostic colonoscopy: $369 (2009), $331 (2019). -10.3%
Colonoscopy with biopsy: $442.90 (2009), $424.90 (2019). -4.06%
Lesion removal colonoscopy: $499.52 (2009), $446.16 (2019). -10.6%
Let me just say what you already know. It’s unlikely that you will ever get a meaningful raise from CMS.
In fact, Medicare will keep paying you less
Why? The simple answer is they won’t have money to pay.
Read: Medicare will run out of money in 2026, three years earlier than expected, government report says (Chicago Tribune)
We are looking at a pie that can’t keep up with its consumers anymore.
Look at this graph from Kaiser Foundation. Medicare Advantage enrollment has nearly doubled in the past decade. 6.9 million in 1999. 20.4 million in 2018.
There’s no stopping this trajectory.
People are living longer. By 2050, 83.7 million Americans will be over 65 years (double that of 2012 numbers).
Read: Why Medicare Advantage Is Marching Toward 70% Penetration (L.E.K. consulting)
There’s no stopping this trajectory.
Private insurance companies tend to model their payment strategy around Medicare. They will also pay less – especially for standard procedures like colonoscopies.
Airbnb for gastroenterology?
Many disrupting trends are quite clearly on the horizon. Declining Medicare reimbursements for colonoscopy is surely one. DNA testing is another.
As a business person, it’s easy for me to say cut your dependence on Medicare. But I know that it’s not an effortless path to navigate.
There is money in GI but not from traditional sources. Let me give you 10 IDEAS to consider.
1) Reduce your dependence on colonoscopy reimbursements by adding relevant procedures and ancillaries (e.g. is obesity a subspecialty of GI? Some of the largest GI groups make up to 50% of their money from ancillaries)
2) Diversify your patient volume and sources (e.g. a GI practice hired an Asian doctor to attract a new patient pool. Do you repeatedly see the same demographic?)
3) Outsource and reduce costs of basic operations (e.g. billing, accounting. What’s it costing you to hold onto these?)
4) Start clinical trials for upcoming biologics
5) Develop gastroenterology niches (e.g. infusion centers for Crohn’s. What’s different about your GI practice?)
6) Re-energize your hospital partnerships, establish new ones (How can you partner to help the hospitals succeed? Collaboration and negotiation vs competition)
7) Analyze your top and long-tail referral sources. Nurture new ones
8) Standardize and automate your workflow using technology (e.g. We use a variety of algorithms to bill certain claims, check status, check eligibility etc.)
9) Get asset-light to stay current with changes. Stop owning things (e.g. don’t buy servers). Start renting/subscribing (get on the cloud)
10) Build your brand. Make patient engagement as important an activity as seeing them. (Do your established patients hear from you other than the time of recalls?)
When Hilton needs more business, they go about building whole new properties. When Airbnb needs more business, they simply borrow your assets using a system that they’ve already built. At $31 billion, they are valued more than Hilton or American Airlines.
And here we are still talking about declining payments from Medicare. Even though, the same Medicare population (senior citizens) is Airbnb’s fastest growing demographic.
More on all this soon. But for now, it’s time to shape our mindset towards disruption. It’s time to think differently about gastroenterology.


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

Our new book Private Equity in Gastroenterology – Navigating the Next Wave is still available for download. Here was the best compliment we got to date: “I need my entire board to read this!”
16 Apr 2019

Cologuard = Google car?

Our new book Private Equity in Gastroenterology – Navigating the Next Wave is still available for download. Here was the best compliment we got to date: “I need my entire board to read this!”






Cologuard = Google car?
I sat in a Google self-driving car back in 2012…when it was still a Toyota Prius. See the pic below. Neither I nor the car look this way anymore.

The big gadget on top of the car is the LiDAR sensor. That device fires rapid pulses of light all the time and all around to detect objects in the vicinity. It’s what self driving cars use to navigate.
Back then LiDARs cost $75,000. It wasn’t accurate enough to ensure people won’t get killed on the road. Google spent $200,000 to assemble each autonomous car. Most car companies called it an unreasonable but “cute, research project”.
Every 2 years after that, the LiDAR doubled up in accuracy and dropped by half in price. So did the Google’s self-driving car.

The 8% miss rate
Recently, the Digestive Health Physicians Association (DHPA) lobbied on behalf of gastroenterologists to make sure that Cologuard modifies its multi-million ad campaign. The campaign implied that Cologuard can be as good as screening colonoscopy. Of course, they can’t say that.
As you would already know, Cologuard’s stool DNA technology was approved by FDA in 2014. The product is included in major screening guidelines and quality measures. Medicare covers it.
On their website, they present themselves as a “sensitive screening strategy that improves patient compliance” for colorectal cancer screening. If you click on “How effective is Cologuard?”, an image loads up showing that Cologuard found 92% of colon cancers (per a study involving ~10,000 people).
That’s an 8% miss rate. The company is quick to say in multiple places that false positives and false negatives occur with their product.
At The GI Roundtable conference in April 2019, Jason Dominitz, MD, MHS, National Program Director for Gastroenterology in the Veterans Health Administration asked the audience this question. What risk are you willing to take for your patient?
The question might as well apply to Cologuard.
It’s not my place to comment on clinical aspects of Cologuard. I’m just the biller who knows how to get my clients paid correctly for various GI procedures.
But as a curious technologist, I can’t help but note that it cost $2.7 billion to fully sequence the human genome (in 2003). And today, it costs $200 to do so.
I learn that it’ll soon be a penny to sequence the whole genome. It’ll open new dimensions in digital biology, including editing genes.
I can’t help but think along the same lines with Cologuard.
Screening with a scope is linear – one doctor, one patient at a time. Screening via a test is non-linear or data-based. You can scale the test exponential with no dependency on humans.
With digital biology, we move from analog to digital, taking us into the realm of software engineering. We can now talk about data that can be read, analyzed and possibly programmed.
We are then moving from linear to exponential.


Exponential growth of Cologuard
See these graphs. This one shows their impressive, consistent quarterly revenue growth.

This one shows the number of physicians who ordered the test for the first time. Observe the exponential spike in 2018.

With more tests, Exact Sciences (the maker of Cologuard) will have more data. With more data, the test will tend to get more and more accurate. As of end of 2018, Exact Sciences performed 1 million tests.
Surely, they’ll do more.
Beyond the TV ads, they are making all the right marketing moves within GI. They were the only gold sponsor at the AGA Tech Summit in San Francisco this April.
I wonder if more Cologuard screening resulted in new patients for GI doctors. Because now patients are probably more aware or concerned about colon cancer. I don’t know the answer to that.
What if Cologuard recruits a vast global community of bio-programmers to somehow reduce the miss rate? Or even catch the miss rate as it occurs?
It’s not unthinkable if you’ve ever used the Waze app – a GPS navigation software. Waze even lets you know where cop cars are standing based on what other drivers tell the app.
Catching the miss rate as it occurs is also not unimaginable. That’s how Facebook’s AI pulls down inappropriate live videos – even as they occur.


What I worry about… 
I worry…
• That referrals of screening colonoscopy, the bread-and-butter of severalGI doctors, will decline.
• That insurance reimbursements for traditional CRC screening will keep getting lower. To the point of no return.
• That the forces of DNA sequencing and AI (check ai4giclassifying polyps) will intersect at some point in the near future.
• That ancillary revenues from biopsies (from CRC) will also go away becausenow we will exactly know which polyps are cancerous.
• That GI doctors performing below quality benchmarks will be left behind
• That it’ll be too late when GI doctors realize that the world has changed


Guess the price of LiDAR today?
Today (7 years later), the Google car is called Waymo. They call it “the world’s most experienced driver” (would Cologuard at some point call itself the world’s most experienced CRC screener? 😱).
Waymo got cooler. See below. The little black thing on top is the LiDAR.

Making a car autonomous used to cost $200K/car. Then it dropped to $100K/car.
Then to $50K/car.
Now, it hovers around $1,000/car.
The LiDAR scanner costs $50. To remind you, the scanner cost more than 1,000x back then.
It’s expected to cost $10 and sneak into the gadgetry that occupies your smartphone.
Unlike the LiDAR scanner, Cologuard continues to be priced high. More than screening colonoscopy – at $649 because Medicare and others are willing to pay for it. That’s more than sequencing a whole genome! We are sadly so used to bloated healthcare. But even a broken system can’t stop an exponential curve.
Exponential changes don’t just happen because of one trend or technology. It’s because various trends collide and accelerate the doubling.
Should I say this or is it apparent? GI is in the middle of massive disruption. It just depends on which side of the disruption we choose to be.


All product and company names are trademarks or registered trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.


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

11 Apr 2019
GI Roundtable 2019

59 Takeaways from The GI Roundtable 2019

Our new book Private Equity in Gastroenterology – Navigating the Next Wave is still available for download. Here was the best compliment we got to date: “I need my entire board to read this!”
GI Roundtable 2019
If you aren’t already feeling the tremors of GI disruption, you soon will.
Regardless of whether you are a small, independent practice or a large group, you might not be so sure where the future of GI is going. You might be wondering what should you be doing now and not finding clear answers.
Just know that you are not alone.
This past weekend, we were at The GI Roundtable 2019 in Seattle. It was a congregation of GI leaders (both doctors and administrators) from various parts of the country. Discussions spanned from clinical to business.
There were plenty of insights.
There were at least 59 takeaways that caught my attention.
As Dr. Irving Pike (from John Muir Health) said during his keynote, we can take three approaches to these changes:
1. Digging our heads in the sand and ignoring them
2. Working harder and faster, faster, and even faster
3. Or a more thoughtful and planned approach.
The idea of sharing these insights is so that we choose option #3 as an industry.
Takeaways from Irving Pike, MD, Senior Vice President and CMO at John Muir Health. Instrumental in the development of GIQuIC quality registry.
1. Aging population = Greater proportion of CMS. You already know that CMS pays you less than commercial payors. This means decreased future compensation.
2. If screening colonoscopy declines, what alternative income streams do you have?
3. “Don’t think for a minute what’s impacting hospitals and health systems has nothing to do with your GI practice”
4. Get lean…get rid of waste and reduce your costs.
5. Medicare Advantage enrollment has grown from 6.9 million in 1999 to 20.4 million in 2018. It can reach 70% penetration (per L.E.K Consulting).
6. Increased Medicare means greatest pressure on provider payments. Out of $680 billion increase from 2018 to 2027 in Medicare expenditures, $269 billion is from providers.
7. GI doctors will need to develop ancillary revenues to survive what’s to follow.
8. Unprecedented mega-mergers. United-DaVita. Walmart-Humana. CVS-Aetna. Cigna-Express Scripts.
9. New interest from outsiders. Apple. Alphabet (Google). Lyft. Amazon.
10. New healthcare consumers – 74% of Millennials prefer virtual visits.
11. Direction of payments is moving from Treatment-based to Population-based. Fee for service ► Pay for performance ► Bundled payments ► Global payments for a population ► “Owning” lives.
12. Move from volume to value. Define clinical pathways and reduce variation. Use Quality indicators. Become more transparent with PCPs, insurers and health systems.
13. As of 2018, half of US GI doctors are now employed and the other half is independent. Someone said, if you are getting paid by Medicare, you are already employed.
14. Bring focus to patient engagement and brand building.
15. Use telehealth, advanced EHRs, diagnostic technology.
16. Location (metro or rural) will drive new practice models – from PE to large clinics.
17. Bigger is NOT better without a clear strategy. Bigger can be better because of economies of scale, single signature contracts, new infrastructure, sub-specialization.
18. Physician concerns about Private Equity. Autonomy, autonomy, autonomy. Not everyone will be treated equally. Operating agreement can be non-binding. Change in culture.
19. There will be multiple practice models existing at the same time depending on local circumstances.
Takeaways from Jason Dominitz, MD, MHS, National Program Director for Gastroenterology in the Veterans Health Administration
1. An estimated 145,600 adults in the United States diagnosed with colorectal cancer in 2018. Estimated mortality: 51,020.
2. Screening adherence is only 65%. For non-colonoscopy tests, abnormal results aren’t always followed up with colonoscopy. When colonoscopy is done, quality is often lacking.
3. We are doing too much screening colonoscopy. Low quality after screening is leading to additional testing (missed adenomas are common).
4. In a study, each 1% increase in ADR was associated with 3% decrease in risk of cancer (Corley NEJM 2014).
5. To increase ADR. Expose more colonic mucosa (complete insertion of scope, better bowel preparation, field view of screen, uncover “covered areas), increase recognition of pathology.
6. If you are not meeting benchmarks, there are techniques and tools to help.
7. New guidelines for screening colonoscopy are coming.
8. Colonoscopy can be like speeding on the highway…what risk are you willing to take for your patients?
Takeaways on business of gastroenterology – Reed Hogan, MD (GI Associates & Endoscopy Center, Jackson, MS), Joseph Cappa, MD (Connecticut GI, Bloomfield, CT), James Leavitt, MD (Gastro Health, Miami, FL), James Weber, MD (Texas Digestive Disease Consultants, Dallas, TX), Louis Wilson, MD (Wichita Falls Gastroenterology Associates, Wichita Falls, TX)
1. Reimbursements will drop. Diversify your portfolio and be prepared for changes in payment models. (Dr. Joe Cappa)
2. Strategic planning is not always about scale. It’s also about maintaining quality of life and focusing on doctor-patient relationships. (Dr. Louis Wilson)
3. Negotiating rates with payors is really about building relationships. Seek 1-3 year contracts and do it on a schedule. If they say no, come back to them 6 months later. (Dr. Louis Wilson)
4. Patient satisfaction, ADR, outpatient use of endoscopies all roll into developing relationships with your key payors. (Dr. Joe Cappa)
5. If you are a solo practice, you need to be outsourcing. Use consultants. Take advantage of the structures that someone else has built. (Dr. Louis Wilson)
6. In large cities like Dallas, San Antonio, solo practices are dying. They’ll be busy but they’ll get paid 70% of Medicare to do their work. It’s unfair. They are getting squeezed out. We get 200% of Medicare rates. (Dr. Jim Weber)
7. Rural areas, sub-urban areas you can survive as a small or solo practice. May be because things are less complex. (Dr. Jim Leavitt)
8. As gastroenterologists, you must view the site-of-service differential as an opportunity to align yourself with them (hospitals) – they are going to need you. The repercussions are going to hit us in unpredictable ways – not what you think. (Dr. Louis Wilson)
9. In partnering with hospitals, control the patient and ancillaries. More than 50% of physician income streams come from ancillaries for us. (Dr. Jim Weber)
10. Hospitals view GI as a cost center. But if we have them on our payroll, they can achieve what they want on the inpatient side. (Dr. Joe Cappa)
11. One advantage of being large is you can provide a range of services that hospitals need. (Dr. Jim Leavitt)
12. Even if you break-even on ancillaries, you must have them. It’s great for the practice and the patient.
13. Patients are willing to pay cash for dietitians, for higher quality of care.
14. Simple things like imaging bring great satisfaction. I don’t send them to the ER, they walk across the hall to get their CT, walk to the pharmacy…then they refer their family for screening colonoscopy. (Dr. Jim Leavitt)
15. Infusion centers are great for the practice, great for patients. With larger volumes, your profit margin goes up.
16. Think of payors as customers.
Takeaways on EHR, your staff, patients and you – Daniel O’Connell, PhD, clinical psychologist
1. Have a 5 min huddle before your morning schedule and after your afternoon schedule with your MA.
2. Key things to know before you see the patient – name, date last seen in clinic, who they saw, name of the referring provider, reason for referral. “A doctor should know what’s knowable.”
3. Patients don’t have a problem with a computer. Convey that it’s a “tool for us”. Set up the room in such a way that the doctor, patient and computer are in a triangle.
4. Take 90 seconds and finish up 2/3rd of your note when the patient’s there or right after. Go home for dinner.
5. Take the first 60 seconds to set an agenda and say, let’s make a list of things you want to go over with me today.
6. Magic is when patients leave thinking they are making an informed decision.
7. A good scribe can have more impact than an MA. A scribe (e.g. pre-med student) can start becoming an extension of the care team.
8. Empathy: seeing from their perspective without judging. Cognitive empathy: Demonstrate you understand their thinking. Emotional empathy: Demonstrate you recognize and respect their emotions.
Takeaways on Private Equity in Gastroenterology – Joe Cappa, MD, Jim Leavitt, MD, Jim Weber, MD, Louis Wilson, MD
1. We are in the process of evaluating and understanding this (private equity) a little bit better. What does it mean for younger physician? It also depends on the geography, environment around you, trends of medicine. (Dr. Joe Cappa)
2. There are some risks you can’t predict. Deal team issues. We have 4 out of 7 doctors who have 30+ year window. They are entirely asymmetric. (Dr. Louis Wilson)
3. Alignment is critical.
4. We did our private equity deal to ensure we would remain independent. Anyone who’s tried to consolidate with other groups knows it’s very hard work. PE is a catalyst for consolidation. (Dr. Jim Leavitt)
5. The business of medicine is different from the practice of medicine. Most doctors are happy to give up control of the business of medicine. (Dr. Jim Weber)
6. Nobody wants to be a doctor except the doctor. Payors, hospitals, PE companies don’t want to take the meat out of someone’s esophagus on Friday night. (Dr. Louis Wilson)
7. If you are going to have autonomy, you need to have skin in the game. (Dr. Jim Weber)
8. It’s hard as hell to be a platform. (Dr. Jim Weber)
9. If you want to do PE, go buy a blue blazer because they all wear them. And be prepared to answer the question, what keeps you up at night because everyone will ask you that. (Dr. Jim Weber)
10. Wear your empirical skeptic hat. Keep your options open. Future of GI is still very bright. (Dr. Louis Wilson)
11. There are at least 10 deals underway across the country, including acquisitions by practice management companies.
12. In April 2019, Gastro Health made its first out-of-state acquisition in Alabama.
Yes, there’s too much happening too fast. The future of GI entails forgetting what we know more than learning something new. I’m reminded of these lines from Yuval Noah Harari’s new book, 21 lessons for the 21st Century.
“To survive and flourish in such a world, you will need a lot of mental flexibility and great reserves of emotional balance. You will have to repeatedly let go of some of what you know best, and learn to feel at home with the unknown.”


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

13 Dec 2018

Private equity in gastroenterology: A train that’s left the station

Well, they are calling it the golden age of rectums! The trends are simple and straightforward.

First, baby boomers and beyond are aging and staying alive longer. The gut, a hidden culprit in many ailments, requires continuous maintenance. Colonoscopies. EGDs. Things that require services of gastroenterologists who are always in short supply (14,000 in the US).

Second, gastroenterology (GI) practices are fragmented like hotels were before Hilton. Regulatory, technological, insurance complexities are weighing GI doctors down. Frustrated with the burden of running practices, many doctors join hospitals. And discover that it’s difficult to survive under the thumbs of demanding hospital administrators.

Third, there’s plenty of new money in private equity ($453 billion in 2017). Healthcare, one of the biggest problems of our times, is attracting PE interest, albeit quietly. Unlike earlier decades when IPOs were the main forms of exits, PE companies can now find exits by selling rolled up portfolios to larger PE firms. Plus, PE firms follow each other around.

Fourth, specialties such as gastroenterology can indeed improve revenues by streamlining billing, negotiating insurance contracts, adding ancillary services, and building a strong management team. All of these are possible with consolidation and investments. Given that physician partners don’t usually align, a third-party facilitator such as PE firm would find it easy to disrupt and consolidate.

The question really isn’t about whether PE involvement would be right for gastroenterology or medicine as a whole.

It’s too late in the day to ask that question. The train has already left the station.

Consider these announcements.

  1. In 2016, Audax Group made major investments in both Urology and Gastroenterology.
  2. In 2017, KKR bought Covenant Surgical Partners from DFW Capital
  3. In 2017, Warbus Pincus bought CityMD, an urgent care chain
  4. In 2017, Harvest Partners bought Katzen Eye Group from Varsity Health Partners
  5. In 2016, ABRY Partners invested in US Dermatology Partners
  6. In 2017, Varsity invested in The Orthopedic Institute
  7. In 2016, Sverica Capital acquired RMS Healthcare Management, a primary care provider
  8. In 2017, New Mainstream Capital acquired Cordental Group, a dental chain

The article lists more deals in behavioral health, hospice, women’s health, ER and so on.

Notes from the field:

Given my company’s business, I’m particularly plugged into gastroenterology. At a recent GI conference, we noticed that one of the newly consolidated super groups even had a booth. I met physician-owners who were exhibiting at the conference so that they could court other doctors and eventually buy them out.

What was more interesting is that they were looking for sophisticated technology solutions. And were considering experimenting with computer vision to detect polyps (finding polyps is something that GI doctors routinely do via colonoscopy).

Read: Artificial Intelligence-Assisted Polyp Detection for Colonoscopy: Initial Experience

Naturally, I wondered what it’s like for a doctor to work in a PE-run organization versus a hospital. Like with any large organization, the super groups were run by small boards and a CEO. Firm decisions were made by the board. A larger (“rubber stamp”) board passed the rules further down. These decisions were rolled out to the army of doctors across the organization.

Someone I chatted with said, “The pros were that they had better insurance contracts.” And cons, I asked quickly? He shrugged, “Well, they will eventually get their way!”

Plenty of mid-sized GI groups I spoke to were still wondering what to do. Expand by merging with other groups? Sell-out to a hospital? Be found by a PE firm that’s eager to consolidate? Wait and watch?

I found examples under all models.

A group we work with has been consolidating regionally by acquiring solo and other mid-sized GI groups. A potential client whom we never got around to working with sold out to the local hospital that wanted to create a “state of the art” gastroenterology department. Some others entertained PE conversations across several GI groups only to discover in the end that all talks collapsed. Because the partners wouldn’t see eye to eye. Many others were watching from the side lines.

If you amplify these signals, you’ll surely hear the songs of consolidation.

It’s warming up. The ice is melting. A little quickly now. New rules are forming. No one knows what exactly those rules are. But they are forming anyways. And when they form, the lake will start freezing. Again. To stay frozen for a long time.


1) Provident Perspectives: Private Equity Investment in Gastroenterology

2) How to look at private equity investment in physician groups: Gastroenterology

3) Hot physician specialties for private equity investment

4) Physician and Private Equity Partnership: Goal is to Create Larger, More Robust Platform for Delivery of Care

5) Where Health and Investment Collide: Health Care Private Equity Trends to Watch in 2018

6) Medical practices have become a hot investment — are profits being put ahead of patients?


Originally published on LinkedIn,  by Praveen Suthrum, President & Co-Founder, NextServices. 

27 Sep 2018

NextServices to Showcase The Gastro Suite at the American College of Gastroenterology 2018

The Gastro Suite is an all-in-one software and services platform for gastroenterologists. It combines gastroenterology billing, coding, EHR, endoscopy report writer and MACRA consulting.
– Ann Arbor, MICH. (PRWEB) September 26, 2018

NextServices will be showcasing The Gastro Suite at the American College of Gastroenterology (ACG) 2018. The Gastro Suite is a state-of-the-art platform that comprehensively addresses administrative, technological and compliance challenges of gastroenterology groups.

“Unpredictable income. Old software. Endless mandates. Rising costs. Gastroenterologists are running faster than ever to stay in the same place. It’s time to think differently,” said Praveen Suthrum, President and Cofounder, NextServices. He added, “Through a unified software and services platform, The Gastro Suite makes these problems go away.”

The Gastro Suite integrates:

GI billing/revenue cycle management: Improve efficiency and revenues through end-to-end revenue cycle management. Services includes credentialing, authorizations, payor setups, surgery center, practice and hospital claims submission, denial management, insurance and AR management. Cloud-based practice management software included as needed.

GI coding: Protect from audit risks, bill more accurately and save coding expenses. Certified coders streamline E&M and procedure coding on an ongoing basis.

enki EHR: Certified, cloud-based gastroenterology EHR that is refreshing and remarkably easy to use.

enki Endoscopy Report Writer: GIQuIC certified, cloud-based endoscopy report writer that saves time and money. Includes free future upgrades.

All enki software products come with a 60-day money back guarantee.

MACRA consulting: MACRA/MIPS advisory services that include compliance training, tracking, unlimited support and data submission to registries to avoid negative payment adjustments.

“We’ve seen the gastroenterology landscape change over the last 14 years. Reimbursements have dropped. Costs have risen. And there’s increased regulation to deal with,” said Satish Malnaik, CEO and Cofounder, NextServices. He added, “Partner with us to not just navigate but thrive in this uncertain environment.”

Attendees can learn more about The Gastro Suite at ACG 2018 during October 7-9th, 2018 in Philadelphia, PA. NextServices will be exhibiting at booth #511.


About NextServices

NextServices provides cloud based billing and software platform that gastroenterology practices need to thrive in an environment of tougher reimbursements, high operating costs and increased regulation. Our solutions include – billing and coding services, enki EHR platform, enki Endoscopy Report Writer and MACRA/MIPS consulting. For more information contact (734) 677 7730 or visit the company’s website at

About American College of Gastroenterology (ACG)

The American College of Gastroenterology (ACG) is a recognized leader in educating GI professionals and the general public about digestive disorders. Our mission is to advance world-class care for patients with gastrointestinal disorders through excellence, innovation and advocacy in the areas of scientific investigation, education, prevention, and treatment. To learn more about ACG, visit