Long-term consolidation efforts drive long-term growth
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We at Gastro Health are major advocates for consolidation. We did our first consolidation in 1993 when we added two groups and grew from 6 to 13 physicians.
Within several years we had grown to 17 physicians. Multiple benefits accrued from that growth. First, we had enough volume to profitably build ancillary revenue streams, such as surgical centers and pathology. We also became a “must-have” group for local hospitals and payers.
In 2006 we added two more groups to grow to a consolidated 27 physicians. By 2014 we were 47 strong and were able to add a variety of other ancillary services, such as radiology, infusion, anesthesia, surgery and pharmacy. We had a robust, multifaceted consolidated gastroenterology platform.
However, there were winds of change in the marketplace. It was no longer just about creating ancillaries — it was clear that this whole mantra of volume-based vs. value-based purchasing and alternate payment methods was going to require new thinking and new capabilities. When we went to payers about value-based contracting, they said we did not cover a large enough geographic area, and we were not a big enough spender. They were more interested in attacking cardiology, oncology and orthopedics.
So, we were faced with a challenge: How could we grow more quickly in numbers and geography, capitalize ourselves, build the needed consolidated infrastructure — including deep-data analytics and robust patient engagement strategies — and finally create more value for our shareholders and patients? We needed a way to reinvest in ourselves, and we needed a way to stimulate growth. Every time we invest in ourselves, we knock it out of the park, whether we build endoscopy centers or surgical centers. We knew we needed to invest in ourselves, and we had to find a way to capitalize ourselves to do just that. We had to look at how we can capitalize to stimulate growth and build the infrastructure so we could compete in the modern-day world we live in.
For us, the next logical move was to partner with a private equity firm. In mid-2016, Gastro Health was the first GI platform group to complete a private equity deal. We made sure that our governance documents and agreements would keep our mission statement, “providing outstanding medical care and an exceptional health care experience,” as our core motivation. We now have grown from 47 physicians in one region of Florida to more than 350 physicians in seven states. We are on one platform, which allows us to create a robust data repository and analytic capabilities. We now have profitable pay-for-performance agreements.
It is imperative that physicians lead health care reform. We are the best advocates for our patients. Without significant provider consolidation, it will be extremely difficult to fulfill that obligation. There are many paths to consolidation. For us, this has been a winning approach.
But it is the consolidation process — not just growing bigger but growing better with capabilities that will allow us to survive and thrive in the future — that we believe is the motivation for further provider consolidation.
- For more information:
- James Leavitt, MD, president and chief clinical officer of Gastro Health in Miami.
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