John Brock – The Blueprint for Building an ASC Management Group
As of 2022, 70% of ASCs were independent. With the industry’s current issues (rising competition, static reimbursement rates, staffing shortages, etc.), this number is expected to shrink as smaller ASCs look for additional third-party support.
John Brock and his partner Chase Neal founded SurgNet Health Partners in 2022. During this discussion, John delves into the entrepreneurial journey of starting SurgNet, driven by a need in the market and the founders’ combined experience in hospital operations and ASC management. Here are a few tips that John shared:
🤝 Complementary Skill Sets: John highlights the synergy between his operational background and his co-founder, Chase Neal’s, development expertise, showcasing the importance of diverse skills in founding a successful healthcare venture.
📝 Strategic Business Planning: Their story emphasizes the critical role of meticulous business planning and securing the right financial partnerships. Their collaboration with investment bankers and private equity firms underscores the importance of a well-thought-out business model in attracting investment.
🌎 Innovative Business Model: SurgNet’s approach to taking minority equity positions in ASCs is a game-changer, offering a unique value proposition to physician partners. This flexibility allows physicians to retain significant control while benefiting from SurgNet’s expertise, showcasing a novel approach in a traditionally rigid industry.
⭐ Value of Management Companies: The discussion sheds light on how management companies like SurgNet can add immense value to ASCs. By leveraging industry expertise, they can assist facilities in realizing their untapped potential, optimizing operations, and navigating growth challenges.
📈 Growth and Development Strategy: SurgNet’s balanced approach to growth, through acquisitions and developing new centers, highlights the importance of adaptability in the healthcare sector. Their strategy reflects a deep understanding of the market dynamics and a commitment to sustainable growth.
Find the full episode on Apple Podcasts, Spotify, or YouTube to hear all the details.
Episode Transcript
John, welcome to the show.
1:22s
Thanks, Nick.
1:23
I’m pleased to be here, John.
1:26
You founded SurgNet HealthPartners a couple years ago.
1:29
Can you tell us a little bit about the founding story and why you decided to start SurgNet HealthPartners?
1:34
Absolutely.
1:35
And to be clear, I Co founded my business partner and Co founder, Chase Neil.
1:42
We had been talking about doing this for several years.
1:45
It’s interesting.
1:46
We’ve known each other for a long time, almost 20 years.
1:50
And my background was in hospital operations.
1:53
But in 2005, I got into the ASC world and was running this really large multi specialty Center for Symbion, later to become surgery partners in Texas.
2:06
And Chase, who’s got a development background to my operations background, which is a good fit.
2:11
He came in and syndicated 4 new physician investors into my center, and that’s how we got to know each other and have maintained a strong personal relationship over the years.
2:24
And he called me and said, what do you think about us doing this?
2:29
And I said, you know what?
2:30
I, I think it’s a great idea.
2:32
You know, for years we’ve been working for other people.
2:36
And there’s something to be said for doing it, you know, working for yourself and doing it yourself.
2:41
And we are Chase and I and our other key initial hires are very experienced with most of the larger ASC management companies.
2:52
So we learned a lot there and that includes how to do things as well as how not to do things.
2:58
So we feel like that that positioned as well to take this on and really rolled it out in January of 2022 and here we are that’s fantastic and thanks for walking us through that story.
3:13
And is is you and Chase took this from idea and conversation to hey now it’s getting more serious.
3:20
Did you start to you know build out a business plan or start to document anything in, in a formalized fashion.
3:27
We did and Nick a lot of that came through the funding process.
3:32
You know and when we began this in the first quarter of 22, we immediately developed a relationship with a investment banker in Nashville.
3:42
His name is Jason Denenburg with Wavecrest Securities.
3:46
And we felt like Jason could be of tremendous assistance to us and taking us through the process of working with different private equity firms and working toward developing a a relationship and getting funded.
4:02
And during that time that’s when the business plan was created.
4:07
A lot of I guess you would say was in presentation form, but it was kind of a two birds with one stone thing.
4:13
And then in December of 2022, we actually formalized in a a working relationship with three different firms that are participants at three different levels.
4:25
Fulcrum Equity Partners out of Atlanta was first and foremost followed by Levitt Equity Partners out of Salt Lake and then Harpeth Capital out of Nashville.
4:36
And I guess as they say, the rest is history.
4:40
Got it.
4:41
And what attracted those investment partners into investing with you?
4:47
You know, how did you guys kind of articulate the story and the opportunity to them?
4:52
Well, I think you know that’s a terrific question that probably they’d be in a better position to answer than I would.
5:00
But what I will tell you I I think there were several things.
5:02
I think it was chasing my personalities.
5:05
I think they felt like we were the kind of people they wanted to work with, which is obviously a positive.
5:12
I think they, they loved how we complement each other.
5:15
Chase being an M&A development guy, me being an operator, I think they, you know they felt like we had all the bases covered as a result of that.
5:25
I think that was attracted to them.
5:27
I think they really like the business model which you know with us it’s a little different than a lot of the other ASC companies.
5:37
We’re willing to go in and take a minority equity position in an acquired center where most of the others are not.
5:44
They, you know they go in at a minimum of 51%.
5:48
But one of the things that we do is we can go in at 51% depending on what the physician group wants, but we can also go in at 30.
5:57
And the beauty of that for the docs is that they are able to divest some, get a bite of the apple then.
6:06
And then ultimately when the company is probably sold to a larger aggregator, they would get a second bite at the apple by divesting to get to allow the new acquisition company to get up to 51%.
6:18
So I think that was very attractive to them as well that we were willing to do things a little differently than our counterparts in the industry do.
6:28
It got it.
6:31
And John when you think about management companies in the ASC industry just in general, right, what do you, how do you kind of articulate the key sources of value that management companies can bring to individual facilities?
6:48
Another great question.
6:49
You know, it’s interesting our, our major target type center is a wholly owned center where it’s wholly owned by physicians where it’s not obviously tied to a management company now because chances are if they were, they probably wouldn’t be looking to make a move.
7:06
And you know what we found a lot of these centers have, some of them have done just amazingly well, but what we found is a lot of them, one, they don’t know what they don’t know, that’s something there.
7:21
And two, I think the group of physicians in any given case maybe has taken their center as far as they can take it.
7:30
And when I say this, I’m not talking about that they’re oblivious to AAA, HC or CMS regs or things like that.
7:39
But in terms of I think growing the center and expense management and I’m not talking about slashing expenses, I’m talking about being smart.
7:50
That’s where you can I think make a major impact along with revenue cycle and certainly some standardization in in, in this particular case.
7:59
You know, an example would be getting these centers on the HST platform is a good thing that maybe they weren’t aware of in the past of a company like HST or whatever.
8:09
And there’s just a lot of experience and knowledge that I think we bring to the table that they really don’t have.
8:17
Yep and that makes sense.
8:18
And as you think about your firm SurgNet in in your future growth, you mentioned Chase, your partner strong on the development side.
8:26
Are you planning on developing facilities yourselves?
8:29
Are you planning on acquiring facilities you know like you’ve done the last couple years or a mix of both, a mix of both actually.
8:35
You know, the first two on our platform were both acquisitions, existing centers and certainly that’s where we kind of look first, I would say, which I’d say most companies do that.
8:48
Most of our peer companies do that as well.
8:51
But we’re not opposed to de Novo centers.
8:55
We like those opportunities as well.
8:58
We’d honestly like to do more of them now so they would have a chance to mature with us as the company matures.
9:06
But yeah, I mean we’re certainly open to either one.
9:09
There’s a certain beauty to creating something from scratch.
9:13
And, you know, you feel like, OK, the center is laid out perfectly and you’re doing everything perfectly and which you’re not.
9:21
But you at least you kind of go into it thinking you are.
9:25
But yeah, we’re open to either one.
9:27
Obviously with the existing centers, you know, they’re already up and going and there’s a multitude of benefits to that, especially financial.
9:37
Yeah, yeah.
9:38
And that makes sense.
9:39
And on the acquisition side, is that a big part of how you guys are spending your time is looking at potential acquisitions and individual facilities to partner with.
9:49
Yes, you know we have a couple additional operators on board.
9:54
They are spending a lot of their time with the two centers that we have.
10:00
But Chase and I together along with an additional development person we have, we look closely at opportunities and and one of our OPS people participates in that as well based on knowledge and background and whatnot.
10:15
But yeah, that’s the big thing right now because we’re in growth mode.
10:19
And so to answer your question, yes, that’s what we’re spending the lion’s share of our time on right now while simultaneously trying to oversee the operation of our two existing centers.
10:32
Sure.
10:33
And on that note, on the two existing centers and for future centers, how would you describe your guys’s management style or approach or engagement model with the facilities?
10:47
Do you try to be pretty hands on?
10:49
Do you want the facilities to be more autonomous and and run on their own?
10:54
You know, what end of the spectrum would you say you guys are on from a philosophy?
10:58
Well, in all honesty, Nick, I think it depends on the facility and different facilities have different needs.
11:05
Obviously, anybody that has spending time in leadership and you want to bring people along where they become good at their job.
11:16
And if there’s situations where we need to do that, we will do that.
11:21
We will help, you know mentor and lead and try to get people where they need to be or try to get operations where they need to be a little bit and other circumstances.
11:30
I think we’re going to find that their situations that they’re doing really well and that that’s not really the same priority for us as some of the others.
11:41
So I guess to answer your question, I’d say we’re probably in the middle, but it’s centre dependent and I think all of us, all of our operators, we kind of lead by example, we lead based on our extensive experience and operating AS CS which is a differentiator for us.
12:00
You know I ran a large one, one of our operations people has run four, our Chief Clinical Officer ran one for 20 years and is also a AAA HC surveyor and on AAA H CS board.
12:13
So you’re talking about a significant amount of experience and depth of knowledge that we will be bringing to the table to the centers.
12:24
And I think it also includes leadership style.
12:28
And I and I will say this too as we add additional operations people, they will be people that have run surgery centers and feel like that’s a differentiator for us.
12:40
Yeah, it, it sounds like fantastic expertise and background and my sense is that the groups that choose to partner with you will likely do that in part because they see the, the benefits of tapping into that, right.
12:54
Certainly hope so.
12:55
Yes, great.
12:58
On on that same vein, you mentioned, hey, we’ve got a flexible approach based on the facility.
13:04
Are there any areas where you think that standardization is important, you know, across the different centers that you’re going to manage maybe on things like reporting or KPIs, any benefits to standardization?
13:16
Oh, absolutely.
13:18
And KPIs is a good example of where you want to standardize things.
13:23
I mean it gives you a great opportunity to look at centers side by side based on those KPIs.
13:28
Now you have different things like service lines and volume and what that kind of changed that.
13:34
But you know all ASC administrators look at at certain KPIs and anything from net revenue per case to staffing cost per case to medical supplies cost per case to infection, right.
13:48
You know, you name it.
13:50
And all of those things are, they’re critical in every center.
13:54
But things like an operating platform, we feel like it makes sense.
13:59
You could always look at things too, like satisfaction survey processes, obviously a GPO, different things like that.
14:07
It makes significant sense to do it when you can and when it doesn’t cause a facility to lose its individuality and what makes it great.
14:19
And you mentioned, you know the KPIs, do you guys try to provide benchmarking on, hey, what could great look like in terms of these individual metrics or KPIs?
14:30
Oh yeah, absolutely.
14:31
And like I said, a lot of them, it depends on the service lines and it depends on the case volume and and various things like that.
14:39
But yeah, we do absolutely do benchmarking for the benefit of the people in the centers and and we found in you know some of these wholly owned physician centers that’s not necessarily something they pay attention to in the same way that we do.
14:54
Obviously the clinical things they’re they expect to have a infection rate that’s you know 110th of what a hospital is or whatever.
15:03
But in terms of formally working through that and looking at it on a regular basis in terms of how to operate, I think in, in a lot of cases that’s new to them.
15:14
Sure.
15:14
Yeah, that definitely seems like a value add in terms of it can be easy I think for individual facilities to sometimes focus within the four walls of the facility.
15:24
You know, kind of providing that broader perspective can certainly add value.
15:29
Shifting gears on you to emerging trends, are there any emerging trends in healthcare that that you see that you expect will impact management companies, maybe even the strategy for SurgNet HealthPartners going forward?
15:42
Well, you know, there are a couple of things and I saw something in Becker’s today where they were talking about Medicare continues to push patients to an outpatient setting.
15:54
And you know, a few years back you could only get your knee replaced in an ASC if you were under 65.
16:00
Now they’re doing it for Medicare patients, so they’re starting to do that more and more and the private payers are following suit for CMS.
16:08
So that’s a tremendous benefit for ASCs and I think you know that continues to be a trend and it will continue to lead to more patience for ASCSI.
16:20
Think CMSC has now realized the ASC is a more cost effective operating model for them and so that is and frankly probably better outcomes.
16:33
So that’s a key thing On the flip side, you know, and not to be a parrot of everything that we always see just about every day, but anaesthesia is a major issue not just for ASCs but for healthcare.
16:47
And from a cost perspective in terms of providers to the availability of them, it’s become, I don’t know if I’d go as far as use the word crisis, but probably not that far removed from kind of a crisis situation, right.
17:04
Those are a couple good ones.
17:05
OK, Final question for you here, John.
17:07
We do this every week with our guests.
17:09
What’s one thing our listeners can do this week to improve their surgery centers?
17:14
Listen to spend time with your constituents, you know, assuming your listeners, maybe your administrators or whatnot, spend time with your docs, visit with them.
17:25
Get into work early when maybe every room is full and catch these guys when they finish before they go to the office.
17:33
Spend time with your staff.
17:35
You know, go sit down and pack you and and chat with the nurses or go to materials and chat with those staff and pick a patient or two to go visit with before in pre op and introduce yourself and say hi and tell them you’re glad that that they’re there and tell them you’re going to take good care of them And then how much it means to you that they’re there.
17:56
Yeah, that’s pretty easy.
17:57
One, in terms of what I think it is critical for the relationship piece of operating center.
18:06
Fantastic.
18:07
John, thanks so much for joining us this week.
18:09
Nick, my pleasure.
18:11
I’ve enjoyed it thoroughly as always.
18:17
It has been a busy week in healthcare, so let’s jump right in.
18:21
Becker’s ASC released a story highlighting the most controversial issues in orthopaedics, according to three leaders in the ortho space.
18:30
So Stephen Barnett is the chief medical officer at Hogue Orthopedic Institute, and he shared that one nationally overarching issue is opioid use.
18:40
So Steven said and this is a direct quote, after studying the pain medication use with fellow orthopedic surgeons, pain management and anesthesia specialists, the hospital instituted a new safe medication stewardship program that provides safe medication disposal kits at the bedside for all patients who are prescribed opioids and muscle relaxers.
19:01
We felt an obligation to our patients and their families to deal with this issue up front, providing education and tools to safely dispose of unused medications.
19:11
So obviously opioid use has been a huge issue in this country for a while.
19:15
We see it on the in the surgery side as well.
19:17
You know, there’s an obligation there to make sure we’re educating patients and only prescribing or administering what’s necessary.
19:24
So that was from Steven Barnett from Hogue Orthopedic Institute.
19:30
And then Sarah Holman is the Director of Neurosurgery at Deaconess Health System.
19:35
And she shared that the most controversial issue in her area right now is around inpatient verse, outpatient care and trying to determine the optimal location to have surgery.
19:47
From her perspective, the location doesn’t matter as much as the program itself does.
19:52
Explaining that managing patient expectations and ensuring they understand the process is the biggest key to success.
19:59
And we’ve talked about that a ton, right, the movement from the migration of inpatient procedures being done and outpatient.
20:06
So I’m sure that you know a ton of orthopaedic surgeons and spine too are feeling that.
20:12
And lastly, Felix Savoir, the professor is the professor and Chair of the Department of Orthopedic Surgery at Tulane University and he shared that he believes most controversial issue is the declining reimbursement and increasing denial of care from both Medicare Advantage plans and private insurance companies.
20:32
So Doctor Savoir further explained that from his perspective, these companies put in unfair roadblocks to inappropriately deny care, allowing patients to suffer and require extra time, paperwork and personnel to get the appropriate care approved.
20:48
And once approved, then they refuse to pay for half of the necessary procedures, deny post op therapy or set a co-pay that is so high that no one can afford to pay or attend.
21:00
So this is a significant threat to our patient population and to the practice of medicine, says Doctor Savoie.
21:06
So we’ve seen a lot of that talk as well, just all the payer issues.
21:11
So it’s interesting that all three of them had different perspectives.
21:14
And again, the concerns were opioid use, inpatient versus outpatient and then just general payer issues too.
21:20
And hearing their perspectives, even though if they aren’t new, it’s definitely helpful to make sure we’re staying on top of these issues and aren’t missing any.
21:29
So our next story comes from outpatient surgery magazine.
21:32
And this one I thought was really interesting.
21:34
So surgery centers are feverishly trying to unlock efficiencies as they thrive to meet an unprecedented demand for colonoscopies.
21:44
So there are three factors that are driving the demand.
21:48
The 1st is that there’s a backlog of patients who delayed these procedures due to the pandemic.
21:54
The second is that the new recommended screening age is 45 and thanks to increasing life expectancies, there’s a graying of the population, which means the average age of our population is increasing over time.
22:08
So Janine Benoit is the ASC Administrator and Clinic Regional Manager at the Novant Health Wilmington Endoscopy Center.
22:17
And she said that they have the trifecta at her location, meaning all three of those factors impact their case volume and they are currently performing about 6500 colonoscopies a year.
22:30
So for them, maximized efficiency is really the only option to meeting this capacity challenge.
22:35
And they want to see as many patients as possible, making sure to not only get them in and out quickly and profitably, but of course safely, while providing the highest level of care.
22:46
And for reference, their center, their endoscopy center starts performing colonoscopies each day at 6:30 AM, and then over the next 9 hours or so, each of its three procedure rooms host 16 to 18 patients, with the average colonoscopy lasting 1/2 hour.
23:02
So every minute counts.
23:04
AMSURGE facilities provide care at more than 250 centers in across 34 states.
23:11
And they said it’s national network of gastroenterologists performed more than 1,000,000 colonoscopies at its facilities in 2022 alone.
23:21
And here are three tips from AMSURGE for operating at Max efficiency.
23:27
The first is scheduling.
23:28
So they are continuously evaluating their block scheduling to accommodate more colonoscopies where they can.
23:34
And then they use automated text messaging to make sure patients understand what the prep process is like.
23:40
And this has helped to reduce cancellations a ton, or at least receive the patient cancellation as soon as possible so then they can try to fill the spot.
23:50
The second tip is scope availability, so having enough scopes available to keep a busy full schedule on time throughout the day is crucial to their efficiency.
24:00
This involves not only buying more scopes when needed, but also having loaners on hand and improving reprocessing times.
24:08
They’re also constantly negotiating with scope vendors to make sure they’re on call and have loaners and replacements ASAP as needed.
24:16
And then the third best practice is around room turnover.
24:19
So high volume GI centers closely track room turnover times to optimize the patient flow.
24:24
And for their busiest centers, they might have a runner or somebody else assist in the room to get ready for the next patient, and that’s their sole purpose of the day.
24:33
So again, those 3 tips were using scheduling and improving case cancellations through automated text messages, making sure you have tons of scopes available and then just focusing on room turnover time and metrics.
24:47
So if you are experiencing an increase in colonoscopy needs, just make sure that you’re constantly tracking and adjusting so that everyone is working in lockstep.
24:57
All right, Switching gears, Connecticut based Hartford Healthcare has unveiled a Center for AI innovation in healthcare, So president and CEO Jeffrey Flax said in a statement.
25:10
As we transform healthcare, we are taking new approaches to innovation.
25:14
This center is poised to unlock the full potential of AI, ensuring that every algorithm is not just intelligent, but empathetic and ethical.
25:23
We are committed to pioneering safe, effective and affordable solutions that revolutionize patient care while advancing clinicians expertise.
25:32
So the new AI center has five foundational elements, collaboration and partnerships.
25:37
So they are partnering with MIT, University of Oxford and Google Cloud.
25:43
The second pillar is research and innovation of course conducting ground breaking AI research centered on healthcare applications and developing algorithms for safe real world implementation.
25:55
The third is trustworthiness, verifying and balancing opportunities against potential risks.
26:01
The 4th is education, equipping Clinical and operational colleagues with the knowledge of how to use AI in a safe and trustworthy manner.
26:09
And then the 5th is just invention testing and developing new AI enabled products and they’re already off and running.
26:16
So the Innovation Center has already embarked on many research initiatives including being able to predict COVID-19 related events, hospital lengths of stay, patient deterioration, secondary stroke events and joint replacement surgery outcomes.
26:32
And then they’ve also been working on optimizing nurse scheduling and optimizing OR efficiency, which is a great tie in to our other story about the high volume GI centers.
26:43
We have to be optimizing that OR efficiency.
26:46
So as always, we’ll include the link in the episode notes if you want to learn more.
26:51
But I think this is just the beginning for this Centre for AI Innovation and many more to come and to end our new segment on a positive note, when you picture your marriage proposal, do you picture the hospital?
27:04
Some certainly do.
27:06
So for some couples who share medical careers, the hospital surgery center practice wherever they were could be considered a second home.
27:14
And they have so many memories there together, which of course has led to a bunch of different proposals over the years.
27:21
Now the article shares a ton of stories.
27:23
Here are just two that I thought were fun.
27:25
When emergency medicine physician Anna Darby heard a trauma patient was arriving and urgently needed to be intubated, she raced up to the rooftop helipad.
27:35
As soon as the elevator doors open, she was met with quite a different scene than expected.
27:41
There were rose petals everywhere, and her soon to be fiance, who she met at the hospital, was on the rooftop waiting for her.
27:49
And then the second two doctors were selected for a local news interview on COVID-19.
27:56
Except the interview was really with Good Morning America and there was no interview at all.
28:01
It was actually a proposal that took place at the hospital and on TV and that couple had met six years prior at the hospital they were filming at.
28:10
So I have to say, if you got engaged in a medical facility or know someone who has, please go to HS TS LinkedIn page and leave a comment to let us know.
28:19
I would love to hear your stories and that new story officially wraps up this week’s podcast.
28:26
Thank you as always for spending a few minutes of your week with us.
28:29
Make sure to subscribe or leave a review on whichever platform you’re listening from.
28:34
I hope you have a great day and we will see you again next week.
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