Private Equity Outcomes for Independent Practices w/ Thomas Cunningham

Erik Sunset: [00:00:00] Hello and welcome back. I’m Erik Sunset, your host of the DocBuddy journal here at DocBuddy. We deliver healthcare solutions that take the pain and costs out of broken workflows, like with our Op Note solution, which gives ASCs the power of instantly generated operative reports. You can learn more about Op Note and all of our other products at docbuddy.com.

Erik Sunset: And today we’ve got a special jet guest. We’re joined by Tom Cunningham. Tom currently serves as director of business development at Physician Growth Partners, where he and his colleagues help independent physicians explore and execute strategic partnership transactions with private equity and strategic acquirers.

Erik Sunset: Tom, thanks for joining us.

Thomas Cunningham: Great to be here. Thanks for having me.

Erik Sunset: We’re so glad you could make a little time for the DocBuddy Journal. And that was kind of a short and sweet intro. What else should listeners know about you?

Thomas Cunningham: Yeah, I think, uh, I mean, just from a health care perspective, um, prior to PGP spent a little bit over a [00:01:00] decade in, in the trenches and, uh, in medical device, uh, helping, uh, companies start up, uh, sort of, you know, commercialized scale, um, contributed to a couple exits and, uh, you know, excited to be here and talk about, uh, the opportunities and the challenges that lie ahead for, uh, physicians that are, you know, continue to, to, uh, operate in a, uh, constrained environment with, uh, with a lot of headlines, but excited to be here.

Thomas Cunningham: Appreciate it.

Erik Sunset: Yeah, and it’s good that we can finally connect. I know I’ve seen you, and I know I’ve seen some of the PGP folks at the variety of ASC events, whether they’re state shows, or ASCA, or Becker’s. Good to finally put a face to the name, I guess. And as you said, Very exciting time in the ASC world. A lot of headwinds, a lot of tailwinds though.

Erik Sunset: So let’s, let’s dive right into it. What’s kind of the general lay of the land as it pertains to private [00:02:00] practice and PE or private equity these days?

Thomas Cunningham: Yeah, it’s interesting, Erik. I think, uh, so for starters, there are, uh, as I mentioned, a lot of headlines, um, around sort of this traditional way of practicing, uh, which is, you know, to your point, 100 percent physician owned, private practice. You know, I went into medicine because I don’t want a boss. Um, you know, I want to, uh, treat patients how I want to treat them and all that.

Thomas Cunningham: And so, uh, that still exists, obviously. Uh, what’s interesting, uh, a report that was put out just yesterday by Rebecca Springer in PitchBook. She’s a great health care analyst. Um, What was super interesting is all these headlines around how bad private equity is for health care and physicians specifically.

Thomas Cunningham: Um, only 3. 3 percent of, uh, physician revenue is private equity [00:03:00] sort of owned or backed. And so you have all these other players, right, Optum, et cetera. Um, health systems. And so, uh, it’s interesting. The short answer, though, Erik is private practice is still strong. I think it’s just there’s a lot of headwinds out there and positions, um, that we that that that our clients and that we’re talking to are certainly just sort of, um, you know, navigating and just want to become more educated on, uh, on how they can combat some of the challenges out there.

Erik Sunset: Well, and something you said really rings true to me is that, you know, being a physician is really noble pursuit. It’s a, it’s a lot of time in school. It’s a lot of training. Uh, the training’s not easy to get through either. And they, they do all that to treat patients and help people live healthier lives.

Erik Sunset: There’s a backend to this too. You can only do that operating a profitable. Business, you know, the lights don’t stay on magically, uh, [00:04:00] obviously. Um, so that, that’s, that’s interesting from the pitch book, uh, analysts, only 3 percent of revenue is, is through private equity. We would dive in a little bit deeper there.

Erik Sunset: That’s interesting.

Thomas Cunningham: Yeah, yeah. So it’s, uh, basically a research report quantifying private equity investment in healthcare providers. And that was the, uh, that was the number less than 4 percent of U. S. healthcare provider investments Of the, of the overall pie of US healthcare provider, um, revenue contributed to, uh, to us healthcare spending.

Thomas Cunningham: So a lot more to the, the, the takeaway is a lot more to unpack there because you, you see all these headlines and it’s, there’s certainly some bad actors in the past from private equity, right? Uh, perhaps their late nineties, early two thousands that were very focused on Wall Street benefiting from the partnerships.

Thomas Cunningham: Versus the doctors, right? And so in our role at PGP [00:05:00] and educating, advising and working with physicians through these transactions is that their doctor led and focused on, you know, uh, which we can get into here in a minute, but, um, you know, a new wave private equity 3. 0, if you will, more, more, more benefit for the physicians.

Erik Sunset: Yeah, well that, that makes a ton of sense. Benefit to the physician, the patient, the system, uh, the overall, um, I guess the, the point I was trying to come home to there, uh, surrounds that. If it’s line item management, you know, taking the physician basically out of the equation, they end up with all the same sort of burnout factors they do, where there’s a lack of autonomy, lack of control, lack of staffing being the big one that that doesn’t work.

Erik Sunset: That can’t work. That never really works for all parties concerned. Um, but with what you’re doing, physician led, uh, investment, that seems to make a lot more sense, a lot more, a lot more, um, autonomy for the provider, because they do, as you said, [00:06:00] prefer to be independent. And what, what happens next when a provider is looking at some of their options there?

Thomas Cunningham: Excuse me, in terms of, uh, when they start exploring, I mean,

Erik Sunset: Yeah, yeah. But before we hit record, you mentioned some of the optionality that a provider has. There’s a few paths that, that may make sense and there may be a path that allows them to continue on doing what they love doing, which is treating patients.

Thomas Cunningham: yeah, no, great question. So best way to think about that or put a framework around it is, you know, physicians today that were in discussions with, uh, five years ago would have never. Responded to an email or been, you know, like, we’re not interested, right? Um, but over the recent months, uh, the process first is becoming educated on private equity on the market.

Thomas Cunningham: Who are the key players? Um, and also comparing that to, to your point, the other options that exist in the market. Pre private equity. [00:07:00] So, um, the kind of the optionality Erik for the positions and we pressure test or benchmark, uh, through a transaction process with the position, uh, private equity. Uh, versus being hospital employed or hospital owned, right, uh, merging with other groups, having a local PSA, which some groups have done, and it can work, right?

Thomas Cunningham: Uh, if you can all get along in the same sandbox, but oftentimes that’s not the case. And so, ultimately, then some of those groups have, you know, done that. Uh, kind of divested and then partnered with private equity. So there’s all these different options, but I would say, um, it’s it’s understanding each for the benefits, pros and cons, and then helping physicians decide, you know, what is best, uh, well, first of all, two things, if it’s, if it can be beneficial private equity, that is for the practice and when it makes sense.

Thomas Cunningham: [00:08:00] And if those two things line up based on their market. And, uh, kind of where they want to take the practice next, uh, we advise them, you know, and help negotiate the, uh, uh, the best, you know, deal terms.

Erik Sunset: And to, to zoom out a little bit, to go a little bit more macro, when, when would something like that make sense? What are sort of the, the rules of thumb? You mentioned that it depends somewhat on the market. help our listeners who are your administrators, your physicians, those in, in a practice, in a facility, you know, w w what are the, sort of the guiding posts there?

Thomas Cunningham: Yeah, I’d say the four levers or four drivers of when our practice, you know, our clients are really, really truly exploring this and not just call it window shopping. Um, you know, number one is that, uh, they’re already high, somewhat high performing. Right. Um, and obviously physicians that go through residency fellowships and are already, [00:09:00] you know, have five star, uh, Google reviews and all that, uh, already competitive.

Thomas Cunningham: And they’re typically already high performing, but they say, well, You know, what’s the next 3 to 5 to 10 years look like? And when you, when you factor in um, the top 3 drivers for why they’re kind of exploring this, one is, you know, reimbursement in many different specialties, whether that’s, you know, orthopedics, pain management, whatever, um, if it’s considerably not keeping up with inflation, right?

Thomas Cunningham: That’s number one. Um, so they have to do more surgeries or more, see more patients too. Generate the same amount of income. So, uh, if you’re, uh, uh, if you’re a hot water heater or electrician, right. Uh, if you had to do twice the amount of replacements to make the same income, would you stay doing that for a living?

Thomas Cunningham: Right. So that in any other position, if your account, if you have to see You know, 200 clients now versus 100, you’d, you’d, [00:10:00] you’d, you’d be burnt out, right? Which I know we’ll touch on that here in a minute, but, um, so number one is just kind of the reimbursement landscape and not keeping up with inflation and being, you know, being tough to run a practice, AKA business, because you have these costs that are, that are naturally built into there.

Thomas Cunningham: Number two is, um, uh, well, with that labor and supply costs, right? So the, uh, trying to maintain that while continuing to produce, you know, uh, the same amount of revenue that you’ve done. And then number three is just the overall competitive landscape, uh, healthcare, health, health systems, private equity, whatever it is, just staying out of the curve and, uh, and, and maintaining your competitive edge.

Thomas Cunningham: So those are the main three.

Erik Sunset: Yeah. And I know I could answer being that, uh, hot water heater replacement guy doing twice the amount of work for the same amount of revenue. It doesn’t sound particularly appealing. And you mentioned inflation, uh, uh, obviously [00:11:00] speaking strictly to Medicare being a zero budget offset item. Um, is under tremendous pressure on the reimbursement side.

Erik Sunset: Virtually nobody’s happy with the direction their Medicare reimbursement is going. So when you look at private equity investment, some of these, even some of these other options, selling to the hospital or physician led PE, how, how does that alleviate some of the pressure there on the reimbursement side or does it?

Thomas Cunningham: Well, just think of capital infusion, right? So in these partnerships, you have an investment from either a private equity firm, if it’s a platform, what’s known as a platform, a new entity formed by a scale, you know, scalable group. Um, Brand new or the group will join with a private at what’s known as an M.

Thomas Cunningham: S. O. Management service organization. That’s a private equity backed M. S. O. Um, who already has [00:12:00] 50 100 200 physicians and the positions, uh, affiliates. You know, with them. And so by doing the ladder affiliated with it with an existing platform, typically, they already have payer contract in place. And so there’s a benefit there from perhaps a potential rate lift on their payer contracts. But then I’d say, you know, to the question of how does that help these positions or why, um, it’s, you know, obviously, like any business when you have a capital infusion, if it’s invested and allocated appropriately, then some of these, like, for example, uh, You know, three clients I can lean on were orthopedic specialists of Austin down in Texas, EuroPartners here in Chicago, uh, partnered with Solaris Health and, uh, Mary Lupo Dermatology down in, uh, Texas, uh, excuse me, Louisiana, [00:13:00] um, Um, you know, we recently wrote an article interviewing them and others on their experience, and it’s sort of, you know, hey, why did you do this?

Thomas Cunningham: How are things going? And, uh, and, you know, thankfully, it’s going well for them. And there’s other other examples. And it’s not perfect every time, by any means, but, uh, I think the, the, the other drivers mentioned earlier, or, yeah, why they’re even considering exploring these partnerships, um, is, uh, is kind of reflective, I’d say, maybe. Two, three, five years later, sometimes 12 months. But again, it’s like any marriage, you know, you’ve got to invest, it takes time, right. Uh, and, uh, sacrifice and compromise and communication and collaboration in the boardroom. And as I mentioned earlier, sometimes that can be a, be a challenge, but

Erik Sunset: Yeah. Sometimes you got to take the kids to school, even when you weren’t expecting to.

Thomas Cunningham: yeah, yeah, that’s, uh, had to do [00:14:00] that this morning, as you know, so it was summer camp, summer camp. So,

Erik Sunset: That’s just how it goes. Uh, in any, in any healthy marriage. And I want to pick out kind of like some of the second and third order effects of one of the other, uh, guideposts that you mentioned around staffing. We’ve, we’ve kind of flirted with burnout and we’ll, we’ll get there. But at present, you look at all the data.

Erik Sunset: Across all the different sources. And there’s some great articles out there. There’s some great surveys that have been conducted from, from class for Medscape. You know, you name the, uh, the outlet, the data all kind of matches up with each other through COVID, it was just strictly too much of a workload to have a workload prior to COVID at all, all the drivers of physician burnout were around the bad technology, the physicians and their care teams are.

Erik Sunset: More or less forced to use we’ll call it forced to use. It’s not totally accurate, but for the sake of the discussion and now post COVID it’s almost exclusively staffing that’s at the top of this list. And that could be [00:15:00] front desk staff, billing staff that could be part of your care team. There’s not enough staff to go around.

Erik Sunset: So when a group is evaluating outside investment, you know, much like you said with that, that rate lift, being able to be a part of a more lucrative contract with a payer, that’s great. But it’s got to be a breath of fresh air to have a mega human resources, a mega HR apparatus to help you hire and retain staff, because that is, that’s.

Erik Sunset: Partly killing the profession right now.

Thomas Cunningham: 100%. And actually, I should have mentioned that earlier, Erik, candidly, but, uh, but I think that’s another, so talent, whatever you want to call it, talent acquisition or recruitment of not only physicians, but. You know, physician extenders, as they’re known, or, uh, you know, advanced practice, practice providers or nonclinical staff, to your point of physicians being able to say, you know what? It’s been fun, but I just want to treat patients and we just want [00:16:00] to treat patients, whether it’s 5, 20 or 50 doctors, you know, we want it. We want, you know, partner to help us kind of with that administrative burden. Um, and yeah, I think to your point, no matter the source, there’s plenty of sources. If you Google labor and supply costs and, you know, running a medical practice, whether it’s M.

Thomas Cunningham: G. M. A. or or what have you. It’s, uh, it’s a real challenge. And I think we’ve heard. Yeah. Yeah, I mean, call it year to date, but even back further than that, that in addition to the other challenges we discussed with reimbursement and everything else, being able to attract talent is another key lever, because you have the capital, you have the resources to really go out and say, Hey, this is the infrastructure we have in place, right? Great positions, but also a great infrastructure of billing and admin and, uh, referral, building referral networks for you, you know, et cetera. So I do think, [00:17:00] you know, uh, the recruiting pieces is huge from a labor and, you know, building a team perspective.

Erik Sunset: And when, when you, when you’re looking at healthcare as a system, so to go, you know, way macro, we zoomed out earlier. We’ll zoom all the way out here. We’re we’re on the brink of a cataclysm of a lack of providers in the U S we’ve, we’ve seen that in the news around anesthesia providers and states are, some states are waving.

Erik Sunset: the need to have an anesthesiologist oversee CRNA activity and making it easier for folks to get the anesthesia that we need. So that’s a band aid on that particular problem. And I, one I personally agree with, I think that’s, that’s what’s needed. That’s what needs to be done. When you look at physicians retiring earlier than they’re expected to, when you look at A lack of med student throughput, you know, going through medical school, anything that can be done to keep physicians practicing longer.

Erik Sunset: And they obviously need to be happy to do so. Nobody will compel a provider to [00:18:00] continue practicing if they don’t want to. Um, but we have got to do everything we can in the short term to make it easier to practice medicine. And it seems like some of the topics we’re discussing do just that.

Thomas Cunningham: Yeah, I think it’s, it’s scary, Erik. And you think about this, the projected supply, demand and balance, right? The, um, you know, my background is mostly orthopedic sales, right? And, and excuse me, when you think about even just that, for example, the number of total hip and knee replacements that continues to go up.

Thomas Cunningham: And the number of positions stay flat or, you know, continues to not keep up with that. Um, And I know we’ll touch on AI towards the end, probably, but, you know, how do we support that, um, you know, patient clinical demand? Uh, it’s, it’s an interesting dichotomy, especially with more physicians, again, um, and burnout might be [00:19:00] overused, but they’re just tired, right?

Thomas Cunningham: So, especially the physicians who are, you know, call it, uh, mid career and, you know, they have a good career going, but it’s just, they’ve really experienced it where the, you know, the, the, the physicians and surgeons who are, you know, almost riding out to the sunset five years or less towards retirement are sort of less, uh, less worried, or could, you know, that they care, um, about the practice, but it’s really that, you know, uh, I’m a I’m a early to mid career physician and surgeon who is feeling this, this, this pain.

Thomas Cunningham: And, uh, it’s going to be interesting how we as a society and a healthcare system continue to support, uh, patients. On the cardiology side, thankfully more procedures have been reimbursed as of late, right? And so more outpatient procedures. And so that’s good. But yet you’re still dealing with the heart.

Thomas Cunningham: The most important, uh, you know, thing [00:20:00] we have in our body. And so. Naturally, there’s an emergency element there, and so you’ve got to be connected. At any rate, that’s a long winded answer to say, uh, it’s going to be interesting to see over the next 10, 20 years how we, we combat the, uh, physician shortage and the increasing clinical demand.

Erik Sunset: And when you, when you pair that, we, we looked, we talked a little bit about some of the data. You know, when you look at the other end of this, what do you do to fix it? And you’re looking at surveys that are being responded to by physicians, by nurses and by their staff. I’m all for anything that helps alleviate these symptoms of burnouts.

Erik Sunset: And I agree with you, maybe an overused term, but it’s, it’s all encompassing. So just burnout as a whole, these surveys are the respondents to the surveys are talking about support groups and being able to talk about how burned out they are within their organizations and not having a stigma of saying, Hey, doc, man, just like you, I’m, I’m crushed.

Erik Sunset: I’m tired of this. I want to get out on my boat or I want to play golf or [00:21:00] whatever. Does that really fix it? It doesn’t, that’s like another kind of a bandaid. You’re not fixing any of these, these problems. And obviously we’re talking about systemic problems now, you know, everything from reimbursement to, uh, working for a health system.

Erik Sunset: And, you know, there are not going to be band aids for all of these things, but it comes back to what can we do to help providers stay providers. What can we do to help them stay away from becoming their own scribe and taking home work, working through the weekends, missing their kid’s soccer practice, you know, whatever it may be.

Erik Sunset: What’s your response to that? What do we do to actually fix these problems? Because while talking about it may help and that’s good, I want everybody to be happy. That doesn’t fix your problem though.

Thomas Cunningham: everyone. Yeah, I mean, look, Erik, if you and I had that answer, we would, uh, we’d probably be retired. But, um, uh, I think, I mean, to your point, it’s a systemic issue and, [00:22:00] uh, you know, I mean, going back to even private equity, it wouldn’t even be in healthcare, you know, if we didn’t have this, the, the, the system we do.

Thomas Cunningham: And so, you know, obviously other first world countries have different systems. And so that, you know, um, if you, uh, read the book, the healing of America, I want to say, I could be running the name by TR read, you know, a patient goes on and really tests all first world countries in terms of a shoulder procedure or shoulder treatment. And, you know, what he found was there are, uh, Uh, the ideal scenario, you know, ultimately would be keeping the lifeblood of American healthcare, which is innovation, it’s, you know, trained medical specialist, you know, uh, yes, being at the, performing at the top of your license, but not over that, right? And so providing quality care at the right time at the right patient, et cetera.

Thomas Cunningham: But [00:23:00] what he learned or uncovered was probably what we know from a macro perspective, which is Japan and Germany and others. You know, I’ll perform the U. S. And in many different areas. So the things we can learn, I think, from other countries would be the The best answer, Erik, in terms of maybe where we go from here as a society or healthcare system, um, but I would say, you know, healthcare still local and it’s, it’s figuring out a way that we can treat, still treat the same amount of patients, but maybe bring in AI and bring in things that are going to help scale, you know, care, which can happen in many different specialties, but there’s certain things where you ultimately have to go in and, you know, The doctor still has to do it, the physical examination.

Thomas Cunningham: And, you know, um, so I don’t, I can’t do that. I don’t know, uh, TBD let’s, let’s table that and let’s have another chat. Maybe in a few months going into 25, maybe we’ll read some more articles and we’ll have some more, uh, [00:24:00] some more info, but I don’t want to overspeak. I have no idea. Okay.

Erik Sunset: the, from the top down, from the bottom up. So I’m glad there’s a lot of smart folks working to figure it out because it seems more or less like an engineering problem in a way. And to bring us back to the core of our discussion, you mentioned there wouldn’t be PE in healthcare except, and PE is looking at market inefficiencies and that is to remove sort of the clinical aspect of this.

Erik Sunset: We don’t want to lose sight of that, but you know, Like we said, starting out, you can’t treat patients if you don’t have a practice or a facility to do it in. So let’s, let’s figure out what these market inefficiencies are. And to go back to the, the optionality that we talked about, some of the, some of [00:25:00] the ways that a provider evaluating, I don’t want to phrase it as losing their autonomy in their practice, but choosing to join a group or seek outside investment, some of these things are selling to a hospital.

Erik Sunset: working more closely with a payer and sort of like a payvider scenario. That was, that was really interesting. Uh, outright PE or physician led PE. When you’re looking at these market inefficiencies that an independent physician is facing truly on their own and The scenario is right to do something else.

Erik Sunset: What would you call is the most popular option right now for that provider?

Thomas Cunningham: I mean, I’d say the most popular option initially, at least in the folks like the positions who reach out to us even, um, across many different specialties. And by the way, this is all we do is represent independent physicians at PGP. There’s no medical device or technology companies. And so the positions that reach out to us and many of them [00:26:00] initially. Uh, in their mind are thinking about selling to the health system, thinking about Optum or the payviders, as you mentioned, and private equity is candidly newer to them, unless it’s in the, unless it’s sort of dental. you know, ophthalmology or potentially dermatology. Many of them know because it’s been around in those specialties for a couple decades. Um, but many others are, are not, are just becoming educated again, as we discussed earlier. And so what happens is when you, when you size all these different options up in terms of who can be the best partner to your point of helping me, number one, maintain clinical autonomy. And that is the number one thing.

Thomas Cunningham: It’s a non starter for us in a negotiation. If, if the potential partner, you know, wants to change the vacation schedule or, you know, tell the doctor how to treat a patient, then, you know, they will be removed from the, from the process, the dating process, if you will, of finding the right partner. Um, [00:27:00] and so the short answer though to the question is what’s the most popular option of those.

Thomas Cunningham: It all depends, right? And so you could argue that with the stat we set from Pitchfork at less than 4%, it’s probably, it must not be private equity, even though the headlines are stating otherwise, um, yet the, the interest has never been higher because independent positions on one side. Even though they’ve been reluctant or resistant to the financial suits and ties, right? As long as, if we can help them find the right partner that focuses on medicine and clinical first, and they just do the rest, there’s, uh, they actually learn that they think and operate very similarly, right? Um, both high performing in what they do on the financial administrative side. On the clinical side.

Thomas Cunningham: So our estimation and, you know, forecast is the private equity continues to grow. Yes, there are challenges, California and [00:28:00] otherwise that are, you know, uh, regulations is out there in the balance, right? That could impact deal making. But if if and when the deals are structured properly, independent physicians can align with a fairly structured partnership.

Thomas Cunningham: That allows them to focus on autonomy, gives them that capital to infuse and, you know, attract and hire and grow and scale open surgery centers. Um, if it’s a C, unless it’s a C. O. N. State and then the, you know, we’re dealing with that, um, conversation in the A. S. C. side, as you know, for another day, but, uh, plenty of plenty of LinkedIn and otherwise around C.

Thomas Cunningham: O. N. And. You know, is that should that be repealed and everything else? But the short answer, Erik, is there’s no a option. It’s just, it’s sort of, you know, in part of the process when we’re advising our client is going through that, like, and some of the clients don’t ultimately don’t [00:29:00] partner with anybody, they stay independent and then they say, Oh, let’s revisit in another 12 or 24 months.

Thomas Cunningham: Right. And so, um, depends, I think, on a lot of factors.

Erik Sunset: And what, one of those factors it’s kind of coming to the forefront now, you know, market inefficiency and a fee for service world is one thing. There’s more and more value based care. And sometimes it depends who you ask what that definition actually means. How does this change though? If we move more towards a value based care model across all payers and across all populations, it seems to, it seems to be what people want to have, not totally there, and I’m not sure how close we really are, but that certainly changes the formula if you are searching for market inefficiency.

Thomas Cunningham: Yeah, I’d say what we have learned, uh, recently over the past couple of years is that value based care. [00:30:00] Should work long term. Uh, and I think we’ll work in many cases. However, it’s still very much a buzzword. And nobody knows what it means. And so if you ask 10 people, you might get, not 10, you might get seven answers worth.

Thomas Cunningham: There’s a couple that, uh, align, but, that being said, you know, the Becker’s Orthospine and Pain Management ASC meeting last month in Chicago, there was a good example of, you know, I think up in Minnesota or somewhere where Spine Group, uh, had partnered with Blue Cross and they were able to really somehow prove somewhat of value to care.

Thomas Cunningham: So there’s examples out there that I think are working, um, but it’s tough from like a multi specialty perspective when you have. You know, high revenue generators and low and you’re trying to, you know, how does that, uh, how do you smooth that out and kind of put it the right reward system in place for which I think this is the elephant in the room for preventative care [00:31:00] and actually rewarding that which are sick care system in the U.

Thomas Cunningham: S. Doesn’t do that right now. Right. And then still continuing to reward the physicians and surgeons who went through five years of residency and fellowships and are just exceptional at treating very difficult patients. course should be compensated very well. And so the argument that they’re overpaid, whether it’s orthopedics or cardiology or You know, like a knee or hip replacement, specifically hip is one of the most successful procedures.

Thomas Cunningham: Yet back to the early discussion, reimbursement to that same position has it’s the graph is like this. Here’s their reimbursement and here’s inflation over the past 20 years. And if you look at, uh, AMA, there’s a chart from American Medical Association. So, you know, I’m kind of going on a diatribe here, Erik.

Thomas Cunningham: I apologize, but I think it’s just so, uh, we have so much work to do.

Erik Sunset: That’s why you’re here. We want the diatribe. [00:32:00] So all that to say, um, are there any scenarios where you’re guiding a client through this process and obviously retaining physician autonomy is at the top of the list, you already said that. Are there any situations to be aware of where it looks like this is the right play, everybody’s going to end up happy doing what they want to do.

Erik Sunset: But they end up, the provider ends up in a situation where they go, man, I am not practicing how I thought I would be. I’ve lost autonomy, getting more burned out. I just, I can’t imagine that’s even an option.

Thomas Cunningham: Yeah, I think it is possible. I think what the best answer, Erik, is like, from our perspective at PGP and the reason why, uh, when a, when a client, a position group engages us. You know, we, the only ask is that we’re their exclusive advisor, uh, M& A advisor through that process. Obviously, we, we could collaborate with, uh, you know, a legal advisor through the transaction and, uh, and otherwise.

Thomas Cunningham: [00:33:00] But what is so important is making sure that, uh, the process, the full process is exercised. And what that means is, A, understanding the current state of the practice, right? Um, What are the initiatives in place? Uh, where is it at in terms of number of providers? Um, just really qualitatively and quantitatively understanding the state of the practice.

Thomas Cunningham: Then where do you want to be? And really kind of, again, putting that strategy hat on being an extension of the position group, you know, because some of the, some of our clients they’re doing so well, but they’ve, they have yet, they have five or 10 docs and they have yet to really put a formal strategic planning meeting in place, even.

Thomas Cunningham: And so we then sort of, uh, not force the hand, but, uh, you know, kind of engage or motivate them to really start thinking longer term. Um, because again, they’re tired to burn out, whatever it is, they’re, they’re busy and they haven’t done it yet. [00:34:00] The scale practices already have the strategic planning meetings and we’re, we then are invited to that kind of again, be an extension of the team, but I think where things could go wrong is if, if, if, and when. For example, we’ve had a few calls in the past couple of weeks where groups aren’t happy with their deal that they did, uh, two, three, four years ago, and they’re revisiting, re, re, kind of re exploring, uh, they didn’t hire an advisor, they went solo, and that’s fine, right? That can work, um, but they felt sort of like an employee, certain, certain ways, and, uh, You know, run of the mill factory worker, but maybe, maybe not to that extent.

Thomas Cunningham: But so again, I think that’s where the process of first it’s first education, right? Like what’s the market, who’s out there, where’s our practice in the, in the, in the whole scheme of things. And then, um, managing a process to really make sure that if it’s a [00:35:00] cardiology group, and ultimately, to your point, if CVUSA ends up being the best partner, then, then great, right?

Thomas Cunningham: We can agree on that, and the physicians, uh, which, by the way, we know them well, they do great work down in Florida and otherwise, um, to Matt and Barry and his team there. So, um, I think that, you know, the key is just really, again, it’s, it’s being a true partner and, and, you know, You know, any fiduciary advisor, whether it’s your 401k or otherwise, uh, needs to look after your best interests.

Thomas Cunningham: And that ultimately, I think is the value of why you hire an advisor, right? And it’s to make sure that you do your homework and ultimately, uh, you don’t have buyer’s remorse. And, you know, are there examples out there, uh, that are not so happy? Probably. But, uh, I don’t know, TBD, I guess, uh, PGP, uh, proud to say most, you know, our CEO, Michael Cronin, his, his famous line is look, if I call our client in two years and they say, I would never do that deal [00:36:00] again, we didn’t do our job.

Thomas Cunningham: Right. And so that follow up call and saying, how are things going? And we certainly keep. In touch more frequently than that, but, um, but it’s, you know, how are things going? What would you change? And that also that does a feedback loop for us for new clients of like helping, uh, you know, maybe iterating and adapting.

Thomas Cunningham: So,

Erik Sunset: Makes sense. And as we, uh, as we look to sort of bring it home here, we’re coming around the home stretch. We, you mentioned AI and healthcare previously that also just like value based care can mean a lot of things to a lot of different people. Uh, define it if you’d like, but what are your thoughts overall on AI and healthcare?

Thomas Cunningham: yeah, I think it’s still so early, um, to have a lie in the sand. I mean, based on the supply and demand imbalance that we’re going to experience, physician shortage and clinical demand that has to play a role. Um, [00:37:00] If I were to define it, I mean, I guess short of Googling it here while we’re live, I would say I would, or, or chat GPT, if you’re 10 or 15 years younger than us, and it’s going to be all about prompts and not Googling.

Thomas Cunningham: I I’ve heard, uh, when I got on a train the other day, some gentleman was like, you know, our, our kids are just, they’re not going to know Google. It’s going to be just prompts and that’s wild. That’s wild, Erik. Think about it. Like we grew up. That’s all we know is Google. Um, and so even our parents, right? And, and everybody.

Thomas Cunningham: So I think the short definition would be somehow figure out a way for AI to help, you know, augment care and continue to bring scale and efficiency, uh, as the imbalance continues to be there. Uh, and what that, that’s from, it’s at a high level, but I think there are other examples, plenty of startups, obviously, uh, Um, right.

Thomas Cunningham: And if you look at the, you know, rock health, I think VC [00:38:00] investment in the space, whether it’s just broader AI or even health tech, you know, continues to be there, even even even in the current, uh, tough fundraising environment. So, um, plenty of examples that, you know, Uh, Verity XR, Sword Health, you know, from an MSK perspective, you know, you have things in, um, uh, you know, in the cancer space, right, that try to do more screening and, and, and diagnosis at an earlier stage. I mean, it makes total sense, right, to just try to, you know, assess, diagnose things earlier. So TBD, but yeah, I think the short answer is it’s, it’s going to, it’s only going to help us assess and diagnose sooner and then allow physicians to do the physical exam when they absolutely need to and, and, uh, treat patients how they, how they want to be treated.

Erik Sunset: I think you hit the nail on the head there with augment care. I might allege you a little astray asking for a definition of it. There are some, I think the more reasonable view is [00:39:00] that it will augment care, allow earlier diagnosis. You mentioned cancer screenings. That’s a great use case for AI, or if you’re a skeptic like me, maybe more machine learning and predictive analytics, you know, AI, possibly a misnomer.

Erik Sunset: There are others, though, that view AI and these tools, uh, you mentioned chat GPT, LLMs as replacing a provider in certain scenarios, like with their correspondence to a patient. And that’s a noble pursuit. Again, have providers spend less time doing administrative tasks. But, you know, the question I come back to and tell me if you agree or not, if you’re a provider and you have a message on your patient portal, what’s going to take you less time?

Erik Sunset: To just reply or to have that prompt you mentioned, you know, ask chat GPT or whatever LLM for the prompt, generate the prompt, ensure it’s correct. Ensure it’s not making something up based on a faulty entry in your EHR. You know, we’ve heard about the chat [00:40:00] GPT hallucinations. Hopefully your EHR data is 100 percent correct so that you can just let the software do what it’s supposed to do.

Erik Sunset: Would you bet though that every patient record and every EHR across the country is 100 percent correct? So what’s going to take a provider less time? Just do it themselves or have to review what a prompt generator gave?

Thomas Cunningham: Uh, that’s tough. I think the trust and it’s healthcare, you know, treat patients all by trust. And I think. They trust doing it manually or themselves now. I think just like chat GPT, whatever we’re on now, 4. 0 versus, you know, has it gotten smarter if you put in a prompt? Absolutely. So I think over time, the ML and the, the algorithms could transfer better confidence to the provider so that they’re good with it.

Thomas Cunningham: Right. Um, but yeah, it’s, it’s, I don’t know. It’s hard to, and generationally, you know, I think if you, if you [00:41:00] Naturally look at the kind of the newer, younger physicians are naturally more open to trying some of this technologies, right? Or the, or the early adopter, you know, later career physician, but they’ve always been sort of that early adopter and they invest in technology.

Thomas Cunningham: They’re entrepreneurial, right? So, um, we’ll see. I mean, I do know plenty of docs right now using Hey, I help inscribe help and doing a lot of that. So I think it’s just a matter of, is that really going to help, you know, ultimately in the long run?

Erik Sunset: Yeah, you’re right. We’ll see. We’re at the very beginning of this, and it’s kind of cool that healthcare is embracing it with open arms, as opposed to many other technologies which don’t get embraced, either at all or with open arms. So Tom, as we, as we wind it down, um, did we, did we hit all of our talking points?

Erik Sunset: Is there anything that we want to cover that we didn’t yet?

Thomas Cunningham: Uh, can you hear, still hear me? Okay. I think my iPod is just

Erik Sunset: Yep. Sound [00:42:00] great.

Thomas Cunningham: Awesome. Um, no, I think we covered it all. I think what, you know, we’d love to, uh, just for anybody in the audience, right, or that’s listening, whether it’s an independent position or otherwise happy to, be a resource, right? As, uh, as we continue to march ahead here in this, uh, trying to blend sick care and healthcare and figure out AI and, you know, helping ultimately just helping physicians, um, you know, maintain quality of care and figure this out as we move ahead.

Erik Sunset: You couldn’t have given me a better segue. How can listeners connect with you?

Thomas Cunningham: Yeah, uh, I’d say the best way, follow on LinkedIn, send me a message, happy to have a chat, email just tcunningham at physiciangrowthpartners. com. And, uh, yeah, I really appreciate the time, Erik. Thanks for having me and look forward to building on these discussions.

Erik Sunset: Yeah, really enjoyed the chat with you. We’ll of course have links to your LinkedIn and your email [00:43:00] and the show notes. And on behalf of the entire DocBuddy team, I want to thank you for listening. Be sure you’re subscribed on Apple podcasts, Spotify, and YouTube. So you always get the newest episodes of the show.

Erik Sunset: And until next time, I’m your host, Erik Sunset. Talk to you again soon.