Dr. Scott Ketover: “The future of GI remains bright. Because if it goes in your mouth, it’s in our domain” (Interview)
Dr. Scott Ketover is the President and CEO of MNGI Digestive Health (previously Minnesota Gastroenterology). MNGI is one of the country’s largest independent GI practices.
In a world of private equity, MNGI has firmly decided to stay independent. Dr. Ketover shares why they don’t need to and what their growth strategy is. Our conversation explores many topics. Especially insightful are his views on how GIs must build programs for the entire GI tract and not just focus on endoscopies. He reflects on what he took away about the future during the pandemic.
Invest in your future by listening to this interview (29+min). Sometimes just one idea is enough to change our trajectory.
◘ “When practices look at private equity, they should really be thinking about what motivates them.”
◘ Will the dependence on insurance systems reduce overtime, or stay the same, or increase going forward?
◘ “From a financial view point, the work of a gastroenterologist is compensated by the ancillaries that the professional services generate.”
◘ How and when will the shift from just doing endoscopic procedures to focusing on overall health of the patient happen?
◘ What actions must gastroenterologists take today to create a future where GI care means much more than endoscopies?
The Transcribed Interview:
Praveen Suthrum: Dr. Scott Ketover, President and CEO of MNGI (Minnesota Gastroenterology), I’m so honored to have you on the Scope Forward show. I want to first warmly welcome you.
Dr. Scott Ketover: Thank you Praveen I’m happy to be here. You and I have known each other for a while and have crossed paths and along with several others to talk about the future of GI and where we think the practice of GI medicine is going. So, I’m very happy to participate and answer your questions. And as much as information as I can provide, I’m also interested in… I watch a lot of the videos that you produce so that I can learn something new along the way.
Praveen Suthrum: I’m looking forward to this conversation. Since the last time we did an interview which was for the Scope Forward book, the GI landscape has changed dramatically. So, I want to ask you what do you think?
Dr. Scott Ketover: Sure. Well, no one could have predicted COVID or a pandemic or the lockdowns or what happened since we talked, pre-COVID. And that has had a dramatic impact in a couple of areas. One, it proved for gastroenterologists particularly those in independent practice, how vulnerable we are in terms of our revenue. You know, a year ago at the height of the lockdowns, there was essentially very little ambulatory endoscopy going on which is at least from a financial viewpoint the lifeblood of today’s current GI practices. And so, it was a quick awakening. They think that revenue could be down significantly for the year which in the independent world drops right to the personal incomes of the physicians. For physicians in an employed setting, I’m sure they were challenged because their entire institution was challenged. So, COVID was a rude awakening but it also caused us to step back and say… so, our vulnerabilities which we have talked about theoretically in the past are not real. If we can’t see patients face to face, what do we do? How do we provide care? How we take care of our patients? How do we take care of our employees? How do we take care of ourselves?
Praveen Suthrum: And we’ll talk more about that because pre-COVID, you had mentioned that you’ve got to diversify from colonoscopy and you have to focus on the entire GI tract. I’ll come to that in a bit. But first, I want to talk about private equity in gastroenterology. The last I’ve heard, and this is as of this week, that almost 50% of the DHPA or the Digestive Health Physicians Association members are in some form of PE umbrella. Is that accurate? Did you expect to see this rate of acceleration?
Dr. Scott Ketover: I actually did expect it and that’s because it’s a very attractive model for both small and large practices. Large practices of course have the advantage of being the platform to which you can add on other practices and grow that Medical Services Organization. So, I’m not surprised by the attractiveness of these relationships. And I see certainly reasons why many practices would do it.
Praveen Suthrum: Going back to pre-COVID, you told me that you had hired Delloite and MNGI evaluated private equity and decided not to go for it. Now, given the market changes are you staying with your decision, or are you reconsidering that position?
Dr. Scott Ketover: First of all, we are staying with our decision but I’m not sure that the change in the market had a big influence on the decision one way or the other. I thought for a long time that there are essentially three reasons why a practice would want a private equity partner. Now one is certainly to have the business acumen of those who are not clinicians but know how to help develop run and grow businesses and I think that’s an important asset for a lot of practices. If they don’t have it internally or don’t have it through other means then private equity can provide that. Also, I think it’s a great opportunity for practices that want an infusion of capital to spur their growth whether it’s in hard assets or growing their geographic footprint, and their importance in their communities.
And lastly, I think the reason is for physicians who are in independent practice, we recognize that our asset is us and so when we stop practice and walk away, that asset vaporizes and unlike a lot of private businesses where you can build a business for decades and then when it’s time to retire you have an asset that you could transfer to somebody else, you can’t transfer your professional work to someone else when you stop working. And so, for a lot of physicians, private equity is an opportunity to take that sort of illiquid asset of themselves and turn part of it into a liquid asset and take money off the table to invest in other things in their life. So, I think when practices look at private equity, they should really be thinking about… you know… what motivates them? Is it the dollars? Is it the business acumen? Is it the MSO and its impact on the community? And ultimately how it affects patient care.
Praveen Suthrum: So, from a growth perspective what is the growth strategy for MNGI from this point?
Dr. Scott Ketover: I’m glad you asked that question because our strategic plan includes growing geographically as well as in-service lines. And we’re looking at opportunities right now expanding outside of the Twin Cities Metro area in terms of both developing facilities and hiring physicians to be MNGI physicians working in places that are not within the umbrella of commuting distance to Minneapolis and Saint Paul. It’s an interesting question for us to ask ourselves ‘why?’. How important is it to do that to expand that footprint? Does it solidify our place in our current marketplace? Does it give us more leverage with payors? Or does it help us defend against hospitals who might think that they should hire their own GI-employed physicians? And we’re wrestling with that now because it’s not easy to duplicate what you have. Let’s say 90 or 120 miles away from where you sit, where it’s not a place that is affiliated or easy to get to.
Praveen Suthrum: Coming to a couple of key areas. Why people consolidate or practices or businesses consolidate in healthcare or in private practice? Is it the leverage that you get with insurance companies and then that with health systems or local hospitals? How have you managed to negotiate with the insurance and the health systems in your region?
Dr. Scott Ketover: Yeah. Good point. So, that type of leverage I’ve come to accept is what I would think of as negative leverage. And the provider groups the leverage really is saying, ‘we won’t join that network’ or ‘we’ll leave that network’ ‘we will leave that hospital system unless we negotiate a contract that we think is favorable to us.’ But it’s sort of a binary decision, right? You’re either in the network or in the hospital system environment or you’re not. If you leave, you certainly don’t do anything to enhance the care within those systems you’re trying to negotiate with. However; it’s been really the biggest and major lever that independent practice has when negotiating payors.
I’m starting to appreciate that given at our size with 85 gastroenterologists and 900 employees, nine locations, etc. As big as we are, we’re dwarfed by the payors and hospital systems. And even the PE-backed MSO’s – 300 or 500 or 1000 physicians? Yes, that’s a lot of leverage in staying in a network or leaving a network but it doesn’t yet prove with the positive side of that leverage is. And I think that’s really the future of where we’re going – is to see how do we make our leverage-positive. I mean we’re bringing more value for those we have relationships with and we’re steering what happens in value-based care rather than reacting to it.
Praveen Suthrum: Do you think our dependence on insurance systems will reduce overtime or stay the same or increase?
Dr. Scott Ketover: GI still remains a largely referral-based practice. In most areas, gastroenterologists depend upon primary care referrals for patients. We have a strategy trying to increase our self-referred or independent patients and families that come to see us but I think insurance and third-party payors will still have a large role. There’s some talk now you know about expanding Medicare down to age 60 or potentially age 55. What impact that would have? It would certainly increase the percentage of government patients that we see and change the payor mix. But I don’t think we’re going to do away with commercial insurance companies in the near future and certainly not in my career.
Praveen Suthrum: My next question is if you consider digital help about 20 billion-plus dollars were raised during the COVID period in 2020 and over 600 plus deals. The way I look at it is these companies seem to be servicing the same station or you know the same consumer that GI and other specialties are servicing but in a completely different model. So, they seem to be figuring out newer business models while GI and other practices seem to want to do more of what they’ve done in the past. Am I thinking this correctly? Or am I completely wrong?
Dr. Scott Ketover: No. I think you’re on the right track. I think that we’ve been very fortunate for two decades that endoscopy procedures have driven the revenue side of independent GI practice so procedures themselves need to be done obviously face to face or in person. But there are threats to that model. And certainly, as technology improves different screening methods as opposed to screening colonoscopy there will likely be more and more screening methods that help stratify risk for individual patients and families and that will have a negative impact on screening colonoscopy volume. I often talk with my partners about the fact that if you look at just what we are compensated for in our professional services it’s way less than half of our total compensation.
So, from a financial viewpoint, the work of the gastroenterologist is compensated by the ancillaries that the professional services generate. What I’m talking about is the cognitive work that we do in seeing patients, right? That generates procedures, it generates the pathology, it generates anesthesia, generates radiology, generates pharmacy, it generates infusions. It’s almost like a pyramid. And what we’re faced with going forward is what happens when there’s less need for an endoscopy. A lot of those ancillaries start to contract. And so, for the gastroenterologist today the opportunity cost to move away from screening colonoscopy is still too high and what I’m trying to help my practice plan for is… let’s not wait until that opportunity cost drops significantly to spur us into other areas. Let’s think about how we can develop the future anticipating that… that opportunity cost will come down.
Praveen Suthrum: You’ve mentioned in the past that gastroenterologists must own the GI tract. So, you must come up with programs that service the entire GI tract and we must move away from colonoscopy. Can you share more?
Dr. Scott Ketover: Yeah. I started to think about this… years ago actually when I started to do capsule endoscopy and the Given Imaging PillCam, the original commercial name was M2A. And what that stood for was mouth to anus and shortly after they came on the market, they realized that was not a consumer-friendly name to have on their product. So, they switched away from M2A. But it has often made me think that you know the GI tract… really it starts at the tongue and so when you swallow something that’s in the purview of the GI tract, and we should look at what we are treating from swallowing a bolus to the exit of unused portions of what we’ve swallowed and see that GI tract is really our entire domain.
But again, the opportunity costs to move resources away from procedures is still too high for most people to invest. We’ve tried in our practice and I think have been successful in looking at creating centers of excellence around non-colonoscopy issues – advanced esophageal disease, inflammatory bowel disease, liver disease, functional and motility disorders, celiac disease… these are treating more of the patient than just the endoscopic portion. And I think we really need to look at that, we really need to figure out ways that we can interface better with EMT or pulmonary medicine or even urology and colorectal surgery when we’re looking at pelvic floor issues. But again, I think what is delaying that movement is the opportunity cost to move away from the highly reimbursed endoscopy procedures.
Praveen Suthrum: So, how is that shift going to happen Dr. Ketover? Because there’s so much dependence on the reimbursement and we don’t see it quickly going away… It’s steadily going away. So, there is no drive to take immediate action. Everyone keeps thinking that it is on the horizon and the horizon is really far away, maybe it is not at all. When do you think this shift will happen? To doing these other aspects of GI care which obviously comes at an opportunity cost.
Dr. Scott Ketover: Sure, and you know the counter-argument is, on a population basis where there are too few gastroenterologists in the nation, right? We need more gastroenterologists than we have today. And so, you would think that gives us more leverage, right? There’s more cancer screening to be done, there is more endoscopic treatment you can do, there are more infusible drugs. So, you would think we would be sitting in the pretty good seat in terms of leverage of our clinical skill but we’re competing with behemoths that have billions of dollars of assets and are really looking at… well they talk a lot about looking at quality and outcomes. And they are really looking at the cost. How do we deliver what is assumed to be reasonably high-quality care nationwide? How do we just deliver that to the population?
So, I said to get gastroenterologists there, we have to come up with a new way for us to practice our cognitive skills of patient care that separates it from the fee-for-service piecemeal revenue production. And so, my personal thought on this is that the winner in all of this is data. Data is coming and we see this happening even practically today. There are now 17 companies around the world that are creating COVID-19 vaccination passports, and apps for your smartphone. The explosion of electronic and digital data is also happening in medicine. But clinicians haven’t felt it yet and I think that there’s an opportunity for gastroenterologists. Whether they’re already in MSOs or are private equity-backed practices, this still integrates in another fashion around data, around having a huge comment database that is controlled by the gastroenterologists and their entities that can look into clinical questions and really prove where cost-effectiveness can be achieved and where the clinical benefit is really present.
Praveen Suthrum: Do you have any digital health initiatives going on at MNGI?
Dr. Scott Ketover: Well, certainly we’re getting involved with telehealth. We have used our EHR for two decades but I see that this is really going to come from the outside. I don’t think the EHR vendors are going to move into the database management of clinical issues quick enough. I do think there will be third parties that come together and if gastroenterologists don’t pool their resources to do this then I fear that the vacuum will be filled by the large companies that already exist in the tech space and then we will just become another sort of a cog in that wheel. We are generating the data, we are doing the patient care, and yet that data is locked currently in our EHRs. We can’t really mine it to help patients and move the ball forward. And we need to find a way to do it ourselves. So, when you ask if MNGI is currently doing that… we’re very much looking into the opportunity to do that and talking to those who can do that. But it’s not going to be just MNGI. It has to be MNGI and 10s of other GI practices whether they’re with private equity or not. Independent, private equity, even hospital systems. We have to put together the network that allows one database around GI conditions to lead this change.
Praveen Suthrum: I want to ask another question on digital health. Let’s say you have IBS patients now you are treating them in a certain way right now and one of the things that I’ve heard you say earlier is that the way you can address IBS is maybe in partnership with someone with Sleep Medicine or psychotherapy or like cognitive behavior therapy and addressing the condition differently. So, that’s on one side with you as a GI practice but on the other side are several startups, that are helping the very same patients through digital means. So, there is really no physician, it is through an app and there is another artificial intelligence algorithm probably going on. And there are people… yes, maybe there are clinicians sitting in some part of the world and they are creating this… so, the solution is one-to-many. Have you thought out of how this is competition for you and how you will evolve in this light? Or do you not worry about that at all in the current state?
Dr. Scott Ketover: Well, it is a concern. With respect to IBS, I’m actually an investor in a company that provides food meals or I’d been asked to guide them through the FODMAP map diet and to get the patients to a better place. But that’s still a one on one, right? It’s a company and a patient, like the prescription model. But I think you’re right with artificial intelligence and databases of what works clinically, patients will seek that out. Long before western medicine accepted things like acupuncture, patients were already there. They went for acupuncture, they went for hypnosis therapy, they went for different kinds of massage therapy, and things were years ago we used to consider on the sort of the loose edge of actual clinical help but patients found relief and that will continue to happen.
I think the question you’re focusing on is… well there are entities out there that can develop electronic means to bring that help into the patient’s hand into their smartphone and bypass the physicians altogether and how will GI practice cope with that? It will likely mean that we will focus more on the disease entities that require more of a direct relationship with the patient-driven through evidence-based medicine.
Praveen Suthrum: You know this whole COVID period has been a very reflective time for many and especially in healthcare. And again, I heard you say many times about that healthcare is a higher calling. And I’m sure you know like a lot of doctors in this space… you must have thought and reflected on why this is upon us and how medicine could’ve been different and how a physician’s role must evolve or will evolve? But overall, I want to ask you did your thoughts around the future of GI take a different shape during this period? And again, maybe at the personal level your own role in going forward on what you’d like to do based on how GI care might evolve?
Dr. Scott Ketover: Yes, first of all, it has changed. My thinking and feeling have changed but… Pre-pandemic if you turned on Netflix and watch the movie Contagion… it was science fiction and yet there were people in the medical and scientific field who believed that that could happen. And most of us went about our lives thinking not in my lifetime… that won’t happen. That’s something that’s happened in the past and we can protect against that. What the pandemic taught us was that in our connected world which Tom Friedman talked about well over a decade… that something that happens literally on the other side of the world can be in your community in less than 24 hours!
And so, the rapidity with which these things happen is phenomenal. And we should as we come through this pandemic and hopefully you know sometime this year begin to enjoy our social lives and our get out of our homes, and out of our masks, etc. not think that we’re done. I now believe are that there will be another one and another one and another one particularly as to we become closer and closer individuals around the planet. That has shifted my thinking somewhat about patient care to try and think more broadly about populations and how we improve disease management with populations which still filters down to the individual one-on-one relationship. But how do we structure our healthcare delivery so that we can improve the health and well-being of populations at the same time?
Praveen Suthrum: Yeah. What does the future of GI look like from this point?
Dr. Scott Ketover: Short-term looks quite good, I think. But there is still a lot of reason for physicians, practices, hospitals, to invest in endoscopic units into procedures. I think that we are on the cusp of seeing really good therapeutics for diseases we haven’t had anything in the past now we’re looking at you know treating NASG and fibrotic liver disease with drugs whether they be infusibles or oral drugs. So, as the practice of GI keeps moving forward in the short-term, I think there will remain a large emphasis on procedures and I think that’s appropriate. But I also think we have to step back and say, ‘how do we do our cognitive work better?’ ‘How do we devote time to developing the programs that really enhance somebody’s life as opposed to just treat them endoscopically from a surgical perspective?’ Those are tough questions but think the future of GI remains right because as I said if it goes in your mouth, it’s in our domain. And we should accept that and look for ways to keep people healthy.
Praveen Suthrum: With that future in mind, what actions must gastroenterologists take today? What is the foundation that must be laid today in order to make such a future happen where GI care can mean much more than endoscopies – everything from the mouth to the end?
Dr. Scott Ketover: So, we’re still in a siloed world – my practice, your practice, this hospital, this system, right? We still have a great deal of silos in the delivery of GI care. We’ve been traditionally concerned and afraid to share our data with other silos because it either weakens us or strengthens them. I think we need to get beyond that I think we need to look at the individual silos and say, ‘how do we create a network of these silos that makes all of them better?’ I’m really focused on data. I think there will be… and it is coming soon… the opportunity to network practices – whether they’re independent, employed, backed by private equity. The network, the data collection, the aggregation, the analysis, and the clinical use of data in a way that benefits everybody all of the practices, all of the systems, and most importantly the patients.
Praveen Suthrum: Thank you very much Dr. Ketover. Is there anything else that you wanted to share that I did not ask?
Dr. Scott Ketover: No, not specifically that you didn’t ask but I will say that I think you’re doing a phenomenal job with you know certainly the follow-up to your book as well as all of these interviews and keeping us informed. I think I learned way more than I gave but this is one of those areas where you’ve helped me be a taker as much as a giver.
Praveen Suthrum: Thank you, I’m so glad to hear that. Thank you so much for saying so, Dr. Ketover. This has been amazing and I’m sure the GI community will learn a lot from this interview. Again, thank you very much for doing this interview.
Dr. Scott Ketover: Thank you as well.
By Praveen Suthrum, President & Co-Founder, NextServices.