Interview with Dr. Krishnan (PE Platform Peak Gastro): This concept of YOU gave us explosive, unexpected growth
Dr. Prashant Krishnan is the Chief Medical Officer of Gastro Care Partners/Peak Gastroenterology Associates. In December 2019, Peak Gastroenterology partnered with Varsity Healthcare Partners to launch the sixth PE platform in GI.
In this insightful interview, Dr. Krishnan reveals a core strategy (called YOU) that led to their explosive growth from 4 to 43 providers. That growth opened doors to private equity.
Watch this extremely interesting interview. Do not miss this one (25+ mins)
◘ “Dr. Buck Patel has always been ahead of the curve in terms of technology and how it can advance gastroenterology”
◘ Growth numbers at Peak GI – from 4 to 43 providers
The Transcribed Interview:
Praveen Suthrum: Dr. Prashant Krishnan from Peak Gastroenterology, I want to welcome you to our conversation. Thanks so much for chatting with us today.
Dr. Prashant Krishnan: Thank you, Praveen. It’s really an honor to be here today.
Praveen Suthrum: Prashant maybe to get us started can you give us a little bit of a background of yourself and Peak Gastro?
Dr. Prashant Krishnan: Yeah I was born in Houston, grew up there for the first few years of my life. Virginia for four years, New Orleans for 12 years. I went to LSU Medical School in New Orleans and then I went to Henry Ford Hospital in Detroit for both my internal medicine and gastroenterology training. And then from there, I moved to Colorado Springs. And I have been with Peak Gastroenterology since October of 2013. Peak Gastroenterology was actually created by Dr. Buck Patel, the founding partner of the practice. Back in 1996, he started this as a solo practitioner covering his own clinic and four hospitals all by himself every single day of the year. And then in 1998, he added a second physician in 2000 a third one. In 2006 he started using Electronic Medical Records before it was a mandate or before it was a fad. He was always ahead of the curve in terms of technology and how it can advance gastroenterology. In 2007 he created one of the first freestanding endoscopy centers in Colorado Springs. And then as I said I joined him in 2013. I was probably 34 years old at that time and I don’t know what it is he saw in me, but he brought me in and every single day for the first week after work he would sit down with me he asked me what my personal and professional goals were? What vision I had for Peak and how the two could intersect? And so, when I started telling him some of my ideas he was really impressed with that and so the two of us started working together, collaborating together on a daily basis, multiple times a day. Every morning 6.30 am phone call to strategize for the day, every night 9 pm phone call to make sure we achieved all of our goals for the day and planned for the next day and the next few days.
And so, we mapped out what the practice should look like over the next one, three, five, and ten years. And to our surprise, we exceeded all of those expectations very quickly. And I think part of the reason for that is the philosophy that the two of us brought to growing Peak Gastroenterology Associates. One of the things that bothered us is everybody in healthcare talks about patient-centric care. That’s sort of the keyword in healthcare. And when we were thinking about who actually executes on this well… there are not a lot of people or a lot of institutions we could think of. And so we started to expand beyond the healthcare field and said who does customer service extremely well? And Buck at that time said that’s the hospitality industry – the hotels, the restaurants, they really make the customer feel like they are at the center of everything they do. The way they brand, the way they treat you. I mean you know as soon as you leave a really nice restaurant or a really nice hotel what chain that is and you’re always wanting to come back. And so we wanted to introduce that level of customer service into healthcare. And the way to do that is most physicians are not trained in business, they’re running a medical practice to the best of their abilities and we wanted to completely turn that around and say we’re going to run a business. We happen to be in the business of healthcare and our focus is on the patient experience and customer service. So, we really transformed Peak Gastroenterology into a relationship-based institution.
Praveen Suthrum: We’re going to revisit that definitely. I want to first start by understanding what that vision was when you were sitting with Dr. Buck Patel and having those conversations what was your vision then and what kind of growth did you see in the last five years?
Dr. Prashant Krishnan: Yeah so, I think in a word if I were to describe what that vision is that word is YOU. Y-O-U. There’s a lot of stuff that goes into that YOU campaign that we created or that YOU concept. And we really made it part of the DNA of Peak. Every single decision that we made from that point onwards, we ran it through the lens of YOU to see how does this benefit all of our partners. And when you’re talking about customer service you’re really talking about all of your different clients that you’re providing a service for. We happen to provide a service in gastroenterology so, we have to define first who are our clients are. And so, our clients are the patients obviously. They’re the most important and as long as we take care of the patients we’re achieving our primary goal. But we do have other clients as well. Every single referring physician, every single referring provider is a client of ours. They expect that we are going to take care of their patients in a way that makes the patient feel good both health-wise and also emotionally. They should feel good about that experience. In addition to that all of the insurance contracts that we have they’re with insurance companies. So, they’re partners of ours we have to be responsible and make sure that we’re doing the best we can for the patients and for all of the partners. And that also includes the hospitals, their administration, and the different health systems. These are our different clients and so, we need to make sure that we’re taking care of everyone. And what this concept has really resulted in has been unexpected, explosive growth. We knew we wanted to grow but we just did not predict how explosive this growth would be for us. And I think that… that was basically because of this YOU concept that we had.
Praveen Suthrum: So, Prashant can you please share some growth numbers that you experienced leading up to the transaction itself in 2019?
Dr. Prashant Krishnan: Sure. So, as I said I joined Buck and Peak Gastroenterology…my official first start date was October 17, 2013, and at that time just before I joined we had four providers in Peak and six years later we were at 43 providers. When I first started we were just in Colorado Springs. Within three weeks after I started, I introduced Buck to one of the CEOs of the hospital in a town called Castle Rock about 30 minutes north of Colorado Springs. And within three weeks we hammered out a deal where we would come out and cover all of the calls, and start the clinic, and do procedures up there. So, we expanded to Castle Rock then we expanded to Woodland Park and then we had to make a decision. There were two opportunities one in Salida and one in Trinidad. Both of them are about two hours southwest and south of Colorado Springs respectively. They asked us whether we could come and help them out over there, take care of their local patients and that’s a long commute.
Round trip it’s four hours and then we would have to go once a week effectively between those two places. And so we needed to make a decision. Is this something we want to do? Where’s the win in it for the patients locally? And that was an obvious answer. Where was the win in it for the hospital? That was a pretty obvious answer. And one of one of the things that I think is really important is Peak Gastroenterology Associates from its inception and especially over the last several years has really focused on giving back to the community. So, it’s not just about taking care of the patients but somehow beyond medicine, also giving back to the community and in this case the giving back here is to make sure that people who normally drive six hours, seven, or eight hours to see us now we’re cutting about two hours into their drive time so that we can see them a little bit more locally, we can take care of all of the basic GI stuff at those locations. If there’s something more complex, yes, they do have to come to Colorado Springs. But this is improving accessibility for patients locally in rural areas as well and then for the more complex stuff, we already can identify them at their location or more locally and then bring them to Colorado Springs to give them the best world-class care that they deserve to get.
Praveen Suthrum: That’s amazing. As far as attracting talent and other gastroenterologists two-year fold. Are they primarily younger gastroenterologists or have they been mid-career? Could you comment on that?
Dr. Prashant Krishnan: Yes. So, I think that primarily they’ve been either younger or mid-career and we’ve done that a little bit by design because what we want to do is create a lot of enthusiasm. We want people who want to come in and they want to just work and make sure that the patients are taken care of. Obviously, we want to make sure that their personal lives they’re achieving everything that they want to achieve in their personal life as well. So, we want a really good work-life balance. I’ll tell you… I have a 16-year-old daughter. I have not missed a single performance of hers in her life. Each year we were recruiting somewhere between four to six, four to seven providers… And it got to the point where we were probably saying yes to one every six to eight applicants that we were interviewing because it wasn’t just bodies that we wanted, we really wanted to raise the level of care. Obviously, we wanted to differentiate ourselves on customer service but all of that can only happen if you’re at least as good as every other practice if not better. And that comes from the quality of providers that you have. So, we started recruiting experts in the field IBD expert Douglas Nguyen, we started looking for advanced endoscopists, Chris Harmon and Ali Siddiqui. We will have an announcement probably within the next two to three weeks. It’s a pretty big announcement regarding an advanced endoscopist. And so we’re really talking about world-class care.
Praveen Suthrum: Prashant, how did you figure out the relationships with your local and regional hospitals?
Dr. Prashant Krishnan: The hospitals came to us. I didn’t have to figure out how to approach them because they approached us. I think part of the reason is… even they started seeing the success that we were bringing into our own practice volumes at their centers, at their hospitals were going up simply because some of the sicker outpatients that we had to scope, we were taking to the hospital and they started noticing the increase in volume. A lot of practices look at hospitals as a burden because they want to focus on their medical practice, they want to focus on their surgical center and they look at the hospital as something that I have to do so, I’ll take care of it at the end of the day. But if you think about it the hospital has the sickest patients. These people are really sick, some of them are bleeding, and some of them have other co-morbidities they don’t want to be there. And the longer we keep them there the worse the experience for them and so one of the things that we decided is in order to stay true to our YOU concept we need to see these patients, these hospital-based patients the moment they get there. And so, when I’m on call, I will get a call from the emergency room telling me someone is bleeding I usually see the patient in the ER we bring them to the GI lab before they have left the emergency room I scope them, I find out what’s going on. If it’s a low-risk lesion and the patient can go home then typically the hospitalist has enough time, to admit them, check their blood counts, and within you know, six hours to eight hours they’re on their way home. And so what we did is, we agreed with the hospital we’re going to keep someone physically at the hospital at all times that’s to make sure that we’re instantaneously responsive to the needs of the patient.
Praveen Suthrum: And the hospital never thought about either competing with you or starting an independent GI department, staffing it on their own? Did that ever happen?
Dr. Prashant Krishnan: So, every hospital has that capacity, right? They do have the ability to staff their own physicians but hospitals are really good at certain things and those things tend to be hospital-based stuff, inpatient-based stuff. For a hospital it’s broad-based and it’s typically the sickest of the sick. But when you talk about gastroenterology which is 85 percent outpatient and most of these patients are not extremely sick it’s a very different type of patient population that you’re dealing with. GI is a very fast-paced field. EGDs take us 5, 10, or 15 minutes. Colonoscopies may take us 15, 20, or 25 minutes. So, these aren’t the surgeries that are going to last for three, four or six hours and so, we get through our patients fairly quickly. So, typically we have one patient scheduled every 30 minutes for procedures in the surgical center, for the clinic, we will see patients every 20 minutes and so a hospital is not good with maximum efficiency and from a patient’s perspective when they’re not feeling well and they have 10 other things that they want to do, they don’t really want to be at your office they’re there because they have no other choice. They’re feeling miserable, they’re feeling sick. It’s not like they’re coming just to say hi and how are you… they have a problem, they want to be addressed. But they want that addressed in an efficient manner so they can go take care of that ten other things that they have to do during that day. And if you go to most doctors’ offices and I hate to say this but go to any physician’s office and typically you’re never seen at the time that you’re scheduled for. In any other profession, you would lose that customer but in healthcare somehow patients still come to us when we’re not punctual. I actually walked through the office with Buck two or three times as though I was the patient and the first time it took an hour and 15 minutes and this was… I was their boss and so my guess is they pushed me through faster than they would a patient and so we said this is completely unacceptable. We met with the entire team in the lobby of the office and said what is it that we can do to improve their experience? And we got buy-in from the staff too because they gave some of these ideas and we started changing the processes around, the paperwork around. And so, our goal was 30 to 35 minutes for an established patient that does not have to fill out any paperwork and that’s for everything check-in, being brought into the exam room, seeing your provider, the checkout process, and then 45 minutes for a new patient.
Praveen Suthrum: Let’s get to the private equity portion. How did you make that decision with Varsity?
Dr. Prashant Krishnan: Yes. So, I’ll go a step back first. How did we even decide to move forward with private equity? And then why Varsity out of all of the options that we had. So, as you grow a practice we were at 43 providers spread out across the state with over those years as we grew and Smita Patel who also was the founder of Peak Gastroenterology, she was the chief operating officer the three of us had to manage a practice that was growing faster than we had expected not just in the number of providers but the geography as well and so we would have regular meetings with the CEOs of the hospitals to make sure that everything was going well. Sometimes we would have to travel for two hours to meet with these administrators after work. So, we’d get there at seven o’clock, have a meeting until eight o’clock, turn around and come home. And almost every day Buck and I were coming home at 11 pm or 12 pm. We had two full-time jobs and that’s very difficult to manage. And in addition to that, we started having opportunities outside of the state of Colorado people and other health systems from outside of Colorado approached us and asked us to do stuff for them and we did not have the number of providers to be able to do that yet although that was not concerning for me because you’ve seen our recruitment success story. But what was concerning is how do we spread ourselves out to other states now and still stay full-time clinicians? I love being a doctor. Buck, I don’t think we’ll ever quit until he’s dead. I mean… he just really enjoys being a physician. And so, how do we go to other states? And then they want to build other surgery centers which costs money and they want to do joint ventures and so you’re talking about physicians having to pony up 50 million to 75 million dollars of cash we just don’t have that type of capital. And really the patients benefit from outpatient surgery centers because it’s highly efficient and the cost is really contained and so we had all of these opportunities that we weren’t able to explore in detail yet. And so, this is where private equity came in because not only can they help bring the infrastructure required to run a practice that was no longer for providers but 43 providers and continuing to grow aggressively. But in addition to that, they can bring the additional capital required to actually fulfill all of these other projects that we wanted to be involved in.
And so, that’s how we started looking at private equity. Two of them initially approached us… A huge learning experience for us. I’m really glad that we were able to have those conversations with those two private equity groups. Then, all of a sudden we got requests from about 130 different private equity firms. We had a broker at that point and so he sent a book out to everyone and we got responses back from 130 or so. Of those, half were very serious so, about 65. And Buck and I said to the broker we are really busy we can’t talk to 65 different private equity firms you need to narrow this down significantly. So, he came back to us with 17 and then 10 and then seven. So, we agreed we’d meet with those top seven choices that we had and of those seven choices the very first group that came and met with us was Varsity Healthcare Partners. I still remember it was a fantastic meeting David Alpern who’s one of the founders of Varsity Healthcare Partners was here personally he made the effort to come and talk to us personally and it wasn’t just talking to us he listened to us he heard our story and he understood why it was so important to us that this legacy that we had been creating continues in a very positive and upward trajectory. And so, he was very thoughtful he understood why it meant so much to both Buck and myself and to Smita and he also conveyed that it is important to him that he helps us reach our goals and it really mattered to him. I mean it wasn’t just words you could see it in the way he was talking. And we did a lot of research into Varsity Healthcare Partners. We talked to several other practices that had been involved with Varsity in the past nothing but glowing comments from all of these providers. David did not restrict us as to who we should be able to talk to. He said to talk to any of my physicians and that’s what we did and that’s the same policy Buck and I had so we really appreciated that.
David Alpern brought Ayush Singhania with him and it was just there was chemistry between David and Alpern like there was chemistry between Buck and myself and there was also the chemistry between our side and their side immediately. And so, as soon as the meeting was over and they left, Buck just looked at me and we were quiet there was sort of this silence in the room and this was the very first private equity that we had met with of these seven and he just said “this is the group” and I said, “how do you know we haven’t even met with the other six yet.” He said “this is the group” and he just left it at that so every time we met with another private equity firm. I used Varsity as the gold standard to compare them with and so we went through the other six, Varsity was still number one for us. We asked the top three choices to come back one more time just so we could make sure that our thought process on this was correct. And the second time we met with the top three we all knew it was Varsity. And they were very happy when they heard that we wanted to move forward with them and when we got their letter of intent, this is how much they understood our practice we play a lot of practical jokes on ourselves and our physicians, they’re all in good fun. I mean we have a lot of fun with each other. And in the letter of intent, this is a professional document, when Avengers End Game came out and there were all of these superheroes on the poster Varsity took all of the heads off of those superheroes and put Peak heads and Varsity heads and sent that as part of their letter of intent. So, it was apparent they understood the culture of Peak and our physicians and that was really important to us because what we wanted was further growth in the same way that we had already created historically. We didn’t want a complete change in the trajectory. We thought a lot of what we’re doing was fantastic and there were some things that we could probably do better. We wanted them to work on those things that we thought we could do better on and not to change the things we thought we were doing extremely well on. And so, that was Varsity and we chose extremely well. And I’ll tell you this is how much we liked Varsity they were not the group that offered us the most money. For us, it was not to maximize money. It was to truly find a partner to help us accomplish all of these goals – we wanted to grow, we wanted to expand, we wanted to participate in a lot more endoscopy centers, we wanted to partner with hospitals so that we can deliver better GI service lines for them.
Praveen Suthrum: A lot of the private equity conversations when practices are deciding, you know, whether to go for it or not, the question is how about the younger physicians versus the ones who are retiring but plus how about the future physicians who will be joining the practice? So, how did you navigate all these decisions?
Dr. Prashant Krishnan: Yes, so, again our practice tends to be young heavy. Most of the physicians are in their 30s or 40s a few of them are in their 50s and we probably have two of them in their 60s we want people that are going to be here 15-20 years because once you invest a lot of time and hard work into these really good physicians, you want that this to be their final home for their professional career. And so, one of the things that we did is… we transacted on December 6, 2019, and instantaneously we made all of our associate physicians’ partners so they partnered in on the day that we transacted. So, they are partners in Gastro Care Partners. Our platform is called Gastro Care Partners and all of our physicians partnered in into Gastro Care Partners. As far as new physicians coming in they have the same ability to partner in and private equity is a new concept for gastroenterology, relatively new and so, it takes some time and some understanding to explain this to new physicians coming in.
When you come in and join a typical medical practice by the time you partner in you’re having buy-in to the practice, you’re having buy-ins to each endoscopy center, to anesthesia, and pathology. These are all separate buy-ins and sometimes it becomes cost prohibitive especially if you’re young and you haven’t had time to save up money. It really hinders your ability to partner in when the amounts get to be obscene and so one of the things that we’ve done is everything sits underneath Gastro Care Partners. And so, you’re going to partner in as a new physician directly into Gastro Care Partners which means you are now part-owner of all of the entities that sit below Gastro Care Partners – that’s the medical practice, every single endoscopy center, and not just the current ones all future endoscopy centers too. It’s like buying stock in Apple let’s say when you come in whatever Apple owns if you buy stock in Apple you’re part owner of everything that Apple owns as well. It’s the same thing with Gastro Care Partners. You have shares, the share price is whatever it is on the day that you want to buy-in and we open it up every single year so that you can buy-in to the company and so as the company continues to grow, your equity in that company continues to grow as well.
Praveen Suthrum: Okay. Where does the story go from here, Prashant? What is your vision for the next five years or beyond?
Dr. Prashant Krishnan: 2020 has been a very unique year. Obviously, COVID hits and it really changes not just healthcare but the entire country, and the entire world. And so, we were very fortunate to have already partnered with Varsity because when COVID hit, they immediately stepped up. We never had to worry about any sort of financial crunch. We knew that we had enough capital to keep us going at least through the end of 2020 if not further. And so we were very confident that as long as we worked hard, and provided the level of care that the patients deserve, the finances would never be an issue and our focus could stay with the patient.
So, the vision for me and for Varsity and for Gastro Care Partners and Buck I think is obviously nothing trump’s making sure that the patients are taken care of and they get care the level of care here has to be equal to or greater than any other place that they can go to. Part of that is expanding that footprint so that we can deliver that type of care everywhere and so we will be expanding beyond the state of Colorado to other locations. And our goal is not to standardize medicine so that everyone gets the exact same care because the needs of patients are not the exact same. Different patients have different needs and we need to meet them at that need at what they need. And so we want to make sure that the floor is set so that everyone inside Peak never drops below a certain threshold of the standard of care. But we want to make sure there’s never a ceiling placed on any of our providers because we want them to be able to achieve everything that they can possibly want to achieve and the higher they go who’s the beneficiary? It’s the patients, they win.
Praveen Suthrum: Wonderful. Any final comments, Prashant, that we didn’t cover?
Dr. Prashant Krishnan: I think that the next few years are going to be exciting for medicine in general and gastroenterology specifically. Everyone has a choice. All the practices have a choice and they need to figure out what it is they want to achieve? What’s their goal? Do they want to maintain the status quo? Do they want to grow? Do they want to bring physicians that are experts in their field to deliver the best care possible? And based on what it is they want to achieve, they can make the choices that are paralleling their goals. But as gastroenterology continues to grow private equity is going to dominate this field, the influence of private equity will continue to increase over the years. And who you choose is very important because what you want is someone who’s truly a partner that will lift you up where you need the lift but never compromising on your ability to do your job as a health care provider. In fact, you want someone who’s going to raise your ability to do your job as a health care provider and that’s where your focus really needs to be. And your focus can only be there if you choose the right partner, I’ll tell you just having Gastro Care Partners help us manage Peak in the last year everything that we’ve been doing over the last few months. All we did was change a few operational issues that we never thought about but people who are really experts on these operational issues came in and showed us making a small change here, tweaking something there, really changes everything. In October, simply by making those small changes the volume of patients, we saw in the clinic, the volume of patients that we scoped at the surgery center, even at the hospital has gone up by about 15 to 20 percent. That’s a big deal. Why is that a big deal? Because those patients that are waiting two to three months to see a provider now can get in much faster.
Praveen Suthrum: Dr. Prashant Krishnan, thank you so much for sharing your story. I had a lot of fun understanding and also getting your perspective on where you’re coming from. I’m sure the GI community will enjoy listening to your views. Thanks so much for having this conversation.
Dr. Prashant Krishnan: It’s really been a pleasure talking to you Praveen. I really appreciate the opportunity. If you or any of the listeners have any questions please feel free to contact either me or anyone at Gastro Care Partners and we’re going to be there for you just like we are for the patients.
By Praveen Suthrum, President & Co-Founder, NextServices.