0:00:02 - Mark Henderson Leary

Welcome to Practice Freedom. What if you could hang out with owners and founders from all sorts of healthcare private practices, having rich conversations about their successes and their failures, and then take an insight or two to inspire your own growth? Each week on Practice Freedom, we take an in-depth look at how to get the most out of both the clinical side and the business side of the practice, get the most out of your people and, most of all, how to live the healthy life that you deserve. I'm Mark Henderson Leary. I'm a business coach and an entrepreneurial operating system implementer. I have a passion that everyone should feel in control of their life, and so what I do is I help you get control of your business. Part of how I do that is by letting you listen in on these conversations in order to make the biggest impact in your practice and, ultimately, live your best life. Let's get started. Welcome back. Practice Leaders Got another good one. 

Today. We've got a conversation with Erica Adler, who's an attorney, specializes in healthcare, so she's all sorts of healthcare roles, but 25 years representing physicians and other healthcare providers in the business of healthcare for the firm Retzel Andrus Just a great resource of lots of experience. What's going on right now and all of that. So we dive into. There's a million places we could have gone. Where we went to was what's going on right now. 

And what's going on right now seems to have a lot to do with investment and MSOs, formation and creation. So we really just do a deep dive on what an MSO is and how they manifest. We talk a little bit about how that relates to private equity and investment and kind of go down the path of how to think of investment and talk about leadership and its role in all of that. So if that's your world, if you're thinking about MSOs as a partial or complete solution to what you're doing in terms of creation or consumption of one of those, this could be the episode for you. So before we dive in, of course, don't forget if you're stuck, if you're envisioning that super healthy organization that is making a massive impact and full of people who love to contribute and do what you do and gives you the life that you deserve, then if you're stuck and you don't know how to make that happen, please reach out. 

Practicefreedomcom slash schedule. I'm happy to talk about what a first or next step looks like. So with that, with no further ado, Erica Adler how are you? How's life in the healthcare legal world for you these days? 

0:02:30 - Ericka L. Adler

life is good, super busy, lots of exciting things going on. Especially in the fall, I always find it to be a really busy time. Everybody's thought about things over the summer and wants to start getting things done all at once, and and so it's a pretty, it's a good time for us right now. Well, what are people? 

0:02:49 - Mark Henderson Leary

thinking about. 

0:02:51 - Ericka L. Adler

They are thinking about that venture that has been percolating in their mind over the summer. They're thinking about expanding into new areas of healthcare. They're thinking of hiring new employees, investigating opportunities that came up on the golf course over the summer. I find that a lot of people really kind of socialize and interact over the summer, even though they themselves might be taking vacations, and it leads to ideas. Or maybe they're thinking I heard this needs to be in my contract, or you know, I read an article about that. You know, should I be worried about that? You know, so for us I find the fall to be a really busy plus. There's also the end of the year coming up right, so a lot of people suddenly want to get things done by the end of the year and they start really getting motivated to start working on it. 

0:03:41 - Mark Henderson Leary

So I love that. There's a lot in what you just said and my mind immediately goes to the bright ideas that they, you know we got to do. We got to get into wound care, we need to own our own building or whatever, and I, you know, you and I are probably I will see. I'm curious what your response is. A little bit on the polar side of that, where your job is to kind of like keep them out of trouble with their harebrained ideas. My job is to make sure they focus on and really be very careful with those ideas in the first place. Like you know, really, is this what the organization is here to do? Is this your purpose? Do you have the right people for this? And your job is just more like, all right, if you want to do it, let's just make sure you don't go to jail. 

0:04:19 - Ericka L. Adler

Yeah, exactly Right. There's often a conflict between great business ideas to take you to the next level, and then I handcuff those ideas and say healthcare is not like any other business. So you just you can't do what you want to do, or you can do it, but you can only do it like this, which is, you know, much less efficient and takes much longer, needs approval, you know. So I know I'm getting in your way, probably when you're working with people. 

0:04:46 - Mark Henderson Leary

Yeah, you say that, but I think it's a weird contradiction, because you say there's a lot of regulation, there's a lot of consequences. At the same time, the creativity we'll call it and I mean air quotes creativity of like you know what would be a great idea it seems to be really high in the healthcare world. So what are some of the things that show up as great ideas? 

0:05:12 - Ericka L. Adler

You know people always have great ideas in healthcare about marketing or selling new products, offering new services, hiring new people, bringing in new investors, and every one of those different areas is limited. You know, people in a position to refer can't be an owner. If we are going to make them an owner, what time? What kind of insurance are you taking? What state are you in? How are you going to pay them? You know so every creative idea has a million different limitations that come from every direction that we have to contemplate. 

And when I think of creative, you know what I'm often trying to do is help the client achieve their very legitimate business goals in a way that won't violate the law. So we might need to jump through hurdles, you know, restructure in bizarre ways, all with the end goal of helping them achieve their business goals, but in a way that's compliant. So creative can mean so many different things. At the end of the day, my one goal, obviously, is to be compliant, and you know the government and private payors and state legislatures have made it incredibly hard and there's only more and more regulations coming out every day. So it's getting even harder to do what just a few years ago we could easily do. 

0:06:35 - Mark Henderson Leary

So what's popular right now? What are the things that are trending, if you will. 

0:06:39 - Ericka L. Adler

Well, for us we're, you know, obviously still selling a lot of practices. So we sell practices, quite a few hospital transactions going on, which is unusual because that was really big five, six years ago and kind of slowed down and now we really have quite a few hospital deals going on. Still, private equity we have a lot of private equity going on, some areas more than others. You know, right now pediatrics is kind of big always, aesthetic and derm is very big Still. That's where I probably spend most of my time, just because those are the most popular and lucrative type practices. And then the area where I do also continue to devote a lot of my time is again would be in the creative area of management service organizations, which essentially is the same approach that private equity uses to acquire a clinical practice, which is that they really leave the clinical practice where it is if possible, or they form a new clinical practice, use a professional doctor, veterinarian, dentist, whatever the type of practice it might be, and then they pull out all the non-clinical assets, the space, equipment, non-clinical personnel, put it in a management service organization and they use a management agreement to manage that clinical practice. So just that's the private equity model right there. 

Where it comes to healthcare, we are using that model in so many different ways. We have non-clinical people wanting to I don't want to say own, because technically that can't be done in most states, but to operate different types of practices. We're seeing it in urgent care, med spas, extremely popular veterinary practices, dental practices. So whereas before it was a model that private equity was really using for their acquisitions, we're now seeing a lot of private parties setting up their own investments and management service organizations to achieve these same goals. So it is really something that I probably field, you know a couple of calls on almost every day and we have a lot of these going on. So I would say to me that's really the most active area of healthcare right now for me. 

0:08:56 - Mark Henderson Leary

All right. So let's dig into that a little bit, because one of the things that I've come to believe is that between private equity and a management organization and an MSO as a phrase they show up in very different ways. And sometimes I hear one self-describe as PE and I'm like that sounds a lot like an MSO, and the other way around it's like you're over an MSO, it sounds a lot like PE. Are they the same? And the difference? So start with sort of your simple definition of an MSO and then kind of walk me through the edge-to-edge types of flavors, that how these things show up in the world and kind of your opinions on them. 

0:09:31 - Ericka L. Adler

So an MSO stands for a management service organization. People use different words for it. In the dental world they call it a DSO dental service organization. 

0:09:40 - Mark Henderson Leary

I don't know why I laugh about that Like oh no, it's not an MSO. 

0:09:45 - Ericka L. Adler

I don't know why I laugh about that Like oh no, it's not an MSO, it's a DSO. Really Okay, it's basically a business entity, typically an LLC. It can be owned by anyone and can be formed pretty much in every state. So it's just a business entity, and you involve anybody that wants to invest and you use that entity to provide management services. For the purposes of what we're discussing, those management services are provided to a clinical entity dental practice, veterinary practice, med, spa, physician practice and basically you can run as few or as many services as you want. So maybe you're just handling some management, administrative services billing, collection, maybe that's all you're doing, right. 

The true MSO, though, really does everything for the clinical practice. It owns the space and leases it to the practice. It employs all the non-clinical staff and provides them to the practice. It handles everything from the banking to the billing, to the collection, administrative supply, acquisition. You know every single HR aspect, you know. So it really does everything. Under both scenarios, that practice pays a management fee, right. So it's either a small management fee if there's just some services being provided, or it's a management fee that is so large because the MSO is doing so much that it pretty much is pulling almost every last cent out into the MSO. Now those aren't always owned by investment companies, right? We set these up quite often for our own doctors and maybe their management team. 

It's a way to centralize. If you have multiple practices, it can sometimes just be a more efficient way to offer equity to people that are involved in your business venture. So that's more like how we use it to help independent practices and independent businesses become more efficient and grow and eventually, if they want to sell, they can. It doesn't have to be private equity. It could be another type of investor in independent practices. On the other hand, it's very desirable to have that structure set up for the big investors, the private equity, et cetera. So it's a very simple model and it's really just a matter of scaling. But it can be a really efficient way to centralize just about everything that you're doing in your medical business and in some cases it can really offer a lot of cost savings and efficiencies that independent practices are really looking for, particularly where they're struggling to kind of operate on a day-to-day basis and don't have the expertise to do some of the things they'd like to do. So it's a really interesting model. We like to use it a lot. 

0:12:27 - Mark Henderson Leary

Yeah, it seems like there's and it's very popular, obviously, and I think it's interesting how confusing it can seem, because I think part of the issue is there are two significantly different motivations, and I think you alluded to both of them, and that is hey, I really don't like the non-clinical medical stuff. We're not genetically wired for that. I don't want to lead, that. I don't want to do that. Is there a way to outsource this in a traditional capacity of the stuff I don't want to do? And then so far away in motivation is we want to scale an organization as a group of private investors and we think we can build a viable, scalable organization and we're not physicians or whatever, and so we could go all the way to doing everything with this very specific carve out of, down to the last mile of clinical licensing that is regulatorily required to be there, and there's fundamentally the same kind of DNA but couldn't be motivated more differently. Now, obviously, there is like that overlap in the middle where a private equity backed MSO is like wouldn't you love to have this burden released? Absolutely, that'd be great, and so there's hopefully a common interest there. But where do you see the most interest? 

I mean, I guess, the essence of my question is I get sad when I think of practice leaders saying I don't want to run this business because I come from the entrepreneurial side of this. And I think that there's probably people who got into running a private practice who really wanted just to work in a great place with a great vision and they should work with a larger practice that is doing some of the heavy lifting and they're just kind of in the wrong spot in their life. But I do think there's a lot of entrepreneurial leaders who are frustrated with not getting what they want and they're kind of giving up. And they had it, they had the belief they could have grown something and, for whatever reason, they were there. And that's obviously what I'm maybe not obvious, that's what I'm here to do. 

My passion is to give people who want to lead their organization the tools to grow. And so when people come to you, what's the mindset? Are they burned out? Are they in the wrong spots, or they're like we want to make a lot more money and we think we can do it through this MSO model? 

0:14:30 - Ericka L. Adler

That's a great question. We represent so many different types of healthcare providers, so we represent thousands of healthcare providers. Some of them are just running their own independent practice. Some have built successful groups, and I think their goals aren't always the same. Sometimes they want to stay independent, but they need some help, right, so a lot of them are just looking for help so they can stay independent. For many people, though, the interest in building the MSO with the goal ultimately to selling is a retirement strategy for them, and it is timed so that it's five to seven years before they're about to retire. And it is very much a retirement strategy, no question about it. They want the money, they're willing to put in the time, and then they want to walk away and be done. And then there's that middle group where they have built something valuable. 

It's very hard to take things to the next level and still have the time to be a great clinical provider, and unfortunately, you know and I've been practicing for over 25 years now, so kind of dating myself a little bit there but I've really seen just the regulations and the red tape and the requirements from the commercial payers and Medicare just continue to go up and up and up and you have the same doctors just wanting to care for their patient and having to deal with all this red tape, any number of laws that are hard for lawyers to understand, and there's layer upon layer, state and federal laws everything HIPAA, stark, anti-kickback we've got you know. Transparency laws. We've got you know laws just to touch every part of a practice. You can't be an expert at practicing medicine and be an expert at the law. You get some audits and you get scared right. You have some employment issues that you wouldn't even know. That these particular employment laws. You have a manager who used to be your next door neighbor and she runs your practice for you. I mean the way practices used to be run and the way they need to be run now. To not end up going out of business because of how many laws there are and how many different ways you can get sued or pursued for compliance issues is it's just incredible. So it's amazing. 

Hats off to those practices that are able to stay independent and to find the resources to be able to do so. I know we work with a lot of our practices and they really need to build a team. That team includes not only business and marketing help, right, the normal type of business growth requirements. But they need an HR person, right. They need their financial team, they need somebody who's going to handle the benefits, they need somebody who's going to be on top of all these. I mean, you need a whole team outside your practice just to stay in business. And I think that's really why people are selling or people are turning to other types of or looking for the solution. 

Can another organization give us what we aren't able to do ourselves? 

And I have one client who started a PEO Right that offers, you know, hr benefits and stuff just for medical practices, having recognized that's something they really are struggling with, to do on their own, to stay independent. 

And there's other people out there who are seeing, you know, whether it's about billing and collection or different elements of the practice, to help them be able to stay alive. And you know I love working with those kinds of people because we share a common goal, which is how do we help practices continue to serve patients but be able to be competitive? Don't you know they can sleep at night not worrying that they violated the law and then, if there is some kind of legal issue, being able to handle it without going bankrupt because, honestly, the repercussions of not doing something perfectly these days, under different laws, you know, can put you out of business and it's really a shame. The government is not at all really interested in working with practices who very often make mistakes, errors, things they should have known better, and I'm not really talking about people who bill for services that never happened or anything like that. 

0:18:35 - Mark Henderson Leary

Right right, right. 

0:18:36 - Ericka L. Adler

We're talking about people who have in-house staff that has learned how to do billing, taking classes, and it's so complex. I feel very badly for a lot of my clients. They went to medical school to be doctors and you can't just be a doctor anymore. You have to no, that's 100% right. 

0:18:56 - Mark Henderson Leary

Different hats right. So I think there's two forces at work. One is I'll go with sort of the negative side of this first Healthcare has enjoyed early and it's early, it's a life cycle, a high value, high art, uniqueness and therefore high margin. And so there's enough money in the mix to sort of cover up and buy your way out of the problems of being inefficient as a business. And so I think you know a hundred years of healthcare being a business and it's never really been entrepreneurial until now, it's never been forced to sort of figure out how to go to market and do those things. 

And I sort of bluntly assess the overall healthcare community as being stumped by this challenge of how do we run like a business? We never had to do this before and it's very frustrating for a lot of people, because every healthcare provider founder I've ever talked to has said the same story Like, hey, I'm super educated. You know a decade or more of my craft never been taught anything about how to run a business, and so everyone knows this is a deficiency. So the shift to like, well, how do we do this? How much money do we spend, who are the leaders? I get that that's a major elephant to eat, and so that's kind of where I love to help. I was like there's an answer to this Like and luckily we don't have to invent it, we can just copy this and there's some adaptations and terminology that goes into that and we can model that. But you're also right to point out that there are headwinds, like they're the regulatory tax. I'll call it on like just being in healthcare, you've got to just pay that fee in terms of time, money and energy to be in the game. Now my experience is that the margins are still there and you can still do that. 

You do have to show up as a business more than anything else. It is very, very hard to stay as an individual practice and just sort of survive that. That's not super appealing. I get that. That's what you want to do, and I also get that going to institutions not super appealing either as a physician. It's not where they take care of you. They don't not out there. 

So my great white hope for this is the entrepreneurial community of those leaders, founding physicians, who are excited about leading still. In fact, I find that you know, doctors are made out of a common material that we all share and that is, humans, and they make them out of humans and humans especially in the United States, a great percentage of them come out entrepreneurial and ready to take risks and want to chart their own course, and so that doesn't get muted. Everybody's just sort of wired to be that way, or many people are wired to be that way, and so it's great to see this influx of entrepreneurial leaders and this conversation about MSO to me. I kind of have this fear like well and I kind of talked about that before is those people who are frustrated, they just give up and they just it's another form of institution. 

But when you talk about the various flavors, but when you talk about the various flavors, it's a whole host of tactics. You know, okay, maybe we want some more horsepower and maybe we want some private equity investment. We're going to raise it and we can use this mechanism to get some horsepower, as opposed to me just cash flowing from my two-doctor practice or the other way around. It's like you know, I just struggle with payroll and I still think I can lead my organization. You know, I would love a PEO. 

That would be amazing, and so there's a lot of ways to solve for this and my hope is that maybe through conversations like this, that people who are stuck, they don't see this as like a tide coming in, that like it's all. It's all MSOs these days, you know it's all ball bearings these days. I want people to think it's not. There are more options and there's more sophistication and taking some assessment of where you're at, they don't find out what you can solve for in there. I meant to ask a question of that, but it just turned into just a soapbox. 

0:22:30 - Ericka L. Adler

No, so what the question is? 

0:22:33 - Mark Henderson Leary

now there isn't one in that, but I do have a question in that because I found that there's really a couple of levers of how people reach out to private equity and investment and I think it's really important that people understand the dimensions. And I created a two by two mentally I've not put this in the actual two by two form, but I did this on one of my more recent podcasts in life. I realized on one dimension of there's, why are we getting investment? And one is to add more horsepower to the vision. And the other dimension is I'm looking for an exit. Then, if you flip the axis, there is how desperate am I? Or and how empowered do I feel? So if I'm a highly empowered and want to grow, then I'm looking for very subordinated private equity. Investment is going to do what I say and that's a good thing to know when you're looking for that and those outcomes. Very good If you look across how people do that. 

If I'm desperate, I have pulled a bunch of levers. None of them worked and I want some horsepower to grow. Not as healthy, not as likely. You're likely to somewhere get down the line and kind of be underwater. We're not providing the ROI to the investors and I might find myself taking orders from the investors Not as good and then flip that over to the exit side. You know I've got a very healthy business that I'm very proud of and I would only hand over to somebody who really cares about this shared vision. And I want this legacy to survive me with pride and know that my good name is taken care of. Or, like I've only got three years for I can't do this anymore and I have to find a way to pay off this mortgage or I'm going to really be broke. And so all that to say how do you do you see like MSOs being a way to create healthier, better options in either of those categories, to really get people up to kind of being off the desperate path and maybe exiting a little bit stronger? 

0:24:30 - Ericka L. Adler

I mean I think the MSO presents an opportunity for practices to build something on their own that eventually can turn to a strong exit strategy for sure. It also can present the opportunity to, you know, endure a happier life For many doctors. You know they love practicing medicine and they're not entrepreneurial and they're not business oriented. They went into medicine to practice medicine. So there are always going to be those kinds of doctors and they need to find partners that are, you know, wanting and interested in doing, you know that business part of it and sometimes the MSO can present that opportunity. I think partnership is exactly the right word. I mean you know practices either need to partner within the practice with the right team of physicians and other types of personnel to help grow something. Find that partnership through an MSO, whether that MSO is just people in the industry with expertise, po, billing, collection, hr, whatever it may be, and you know some private equity can be really great partners. I mean I said some of them just buy you out, take over, manage everything, and doctors are willing to put up with that for the payday and then retire, right, there are those that do it for the money, don't love it, leave and go out and start their own practices. So for some people it is just kind of a bump in the road, let's say. And then there are really and I don't know, I guess we're seeing a little bit more of this which is the private equity that really want to partner with the physician. Let's create something. And that's a different kind of partnership, the one where they are co-owning the business more so they are making decisions, they are, you know, listening to the doctors bringing their expertise to the table, but still listening to the doctors and you know we're seeing a little bit more of that. But I think in the past maybe we weren't seeing as much of that and I think a lot of the negativity about private equity is really because you know that was the pattern of private equity in the past. I'm not saying they're not out there. I definitely deal with those type every day still, but I'm definitely hearing a little bit more the keywords of partnership, decision, physician decision-making. 

I sometimes write about this, but one of the things I fight for with my doctors when they do these deals is control. Control over not just professional decisions but their daily life right, their staffing and support, their time off, hiring and firing things that affect their operation. They built a great practice, otherwise somebody would not be out there wanting to buy it. So listen to these doctors as opposed to thinking you know better and in the past a lot of private equity went in we're going to make you more efficient, we're going to make profit, give it back to our investors and you know they made the doctors miserable. And I think best relationships are where the doctors want to be there, right, they feel like they're part of growing something. 

I see a lot of physician boards that are very instrumental now in the you know, the practice management and the growth of the business overall, and to me that's a really positive step because doctors bring a lot to the table. They know what is making their patients happy and unhappy. They know the type of staffing support they really need to be efficient and to see more patients. So, whereas private equity sometimes sees it as you have too many people working here, we need to cut it down, not necessarily thinking about the fact that a higher staffing lets the doctor go from room to room to room and actually see a higher volume of patients. So you know there's different thoughts going on. 

You know on both sides of these deals and I think when they come together and collaborate we're really going to see improvements in patient care. And you know the health care in the community, health care as a whole, and you know you're probably familiar with the fact the government is really kind of cracking down on any type of these ventures now. In many states there are requirements now to report exactly. You know what's going on, how many dollars are involved, the amount of investment, et cetera. So you know it's going to be a little bit tougher now for some of these deals to go through and I'm hoping that the way they present why they're doing it, what their goals are, how they're partnering, will allow them to really continue to see what kind of outcomes they can achieve. And if it's a good, good mix, right, traditional independent practices are great. Maybe there's a way to make them even better. And I think you know with that attitude there's room for everybody in the market. But we'll have to see what's going to happen. 

0:29:13 - Mark Henderson Leary

Yeah, one of the things I agree with having you said one of the things that kind of resonated with me, is the importance of understanding who's the leader, who's leading this? Because if you are a dissatisfied physician wanting to join up, where is this going? And I think that I think it's kind of a I don't know I don't know your opinion on this how common this is. It seems like the idea of group leadership is a common thing the owners, the partners and I think that's terrible. I think that's massively risky in terms of it's ruled by consensus and I think that there's no sense of accountability. 

The organizations that I see as being and the ones I've worked with and know personally, there is a leader who can articulate for you the vision of where we're going and what we're doing and can do things like create the argument to the owners of why we staff like we do. Here are our metrics and here's how it works. We have a process and a flow and an outcome and a journey, and this is what the patient experiences and that's what you're paying for, the value we deliver. And I think that when you diffuse that or you just don't even ask the question who's leading this? You put all of that at risk and the owners can start coming back saying, hey, there's an activist investor who's like I want to exit. You know, tell me about the value. Like you got too many people, too much overhead. You know where's the profit and you lose sense of that big picture. Any opinions on that ownership structure and that leadership concept? 

0:30:40 - Ericka L. Adler

Yeah, I mean, I think leadership is important. I think everybody wants to feel like they're having a say, so you need a good combination between everybody having a voice but then the actual leadership. And I think you know, sometimes leadership without the voice is where we got into trouble. Everybody wants to feel important, they want to feel heard, and so it can be tricky. But an organization that really takes all that into account, gets feedback, but still has a leader who speaks for everyone in the organization is a really effective way to get things done and also takes responsibility for being the leader when they don't do such a great job as well. 

Right, Because it goes both ways. You know, either you're really proud to be the leader when everything's going well and maybe you made some missteps, but you own up to them. So I think you know some combination is really where I see the most success, because people feel happy when they feel like they're part of something, and it may, you know, I don't know how much of a true role everybody really needs to play, but they all bring something to the table and you need to to, as a leader, see what that is and make them feel you know, heard and wanted, and that's why people stay, because they feel valuable, right, If you're easily replaceable by someone else, you know what's keeping you there, right, so you're easily replaceable by someone else. 

You know what's keeping you there right. So to me that's what I hear from my doctors is they really like to be part of something. They don't want to be necessarily the face of it, but they do want to be heard. And so you know, kudos to those organizations that managed to get that balance done right, because it's not easy. It's always a work in progress, I think. 

0:32:24 - Mark Henderson Leary

Yeah, it's a good point because, you know, I like to paint the stark example of if I own what I think is a high value stock, I own Google or Apple and I own it not because they want my opinion, because they do not. They do not call my opinion. I own the stock because I think they're well led and going someplace that matters and, as a shareholder, that's the mindset I and I think a lot of times the voice of the owner is really the voice of the physician, like we're part of this organization and let's not confuse the two. When, hey, you know, in the operating room it's not as good as it could be, you know it's not. Our core values are not showing up here, it's. You know it's not as safe or as clean. You know we believe in this and we've got a plan and a charter and a vision or a sense of common ground. I sense of common ground. I think those are the more common places. 

Now, in large businesses, activist investors are real and so a lot of these partnerships are sometimes closer to that activist investor mentality. There is a voice. I can give you some feedback of where I think we're going, where the market's going, but I do think you really run some real into some dangerous waters if you allow too much activist investing, because we see the headlines when activist investors get involved it's very energy draining and distracting for organizations. You know, really having somebody you believe and trust in and having a sense of like this is where Apple's going and if you think that's great, we love your investment. And if you don't like where we're going, you should invest in Google or something else that is going the direction you want. I think that's a more practical and effective way of leading the organization. 

0:33:53 - Ericka L. Adler

Yeah, it can be and I think also kind of depends on the organization. I mean, for me it's hard to compare Apple with a physician practice A hundred percent and you know whereas the leaders of like you know a company like Apple, I would assume they know way more than I do about the business that they're in. Right, but I don't know that that's necessarily true. When it comes to investors in health care and I think some of them saw the opportunity. They came over from other industries I often, you know, question what they really know or understand about healthcare and you know some from just doing so many transactions. I mean, some of the things kind of boggle my mind. I mean, if you have a really efficient practice, don't make stupid changes or stupid rules. You know, a lot of times I see like private equity coming in and they 'll say you know, this is how it's going to be done and it's a more restraining approach, let's say, than state law. So to give you a good example, like I have, let's say, a practice that does aesthetic medicine, cash very valuable type practice, and the way they're so successful is they supervise a lot of mid-levels who are seeing patients right and state law allows them to supervise X number of people. So they have almost every room full of patients being seen, the doctors being supervised, and then private equity comes in and says oh no, you know what. We're only going to. You have to get rid of some of those people. We're only going to let you supervise you know Y amount of people instead of X. And you know the value of what they bought is based on how this practice was being run. So they want to make this change. It's not required by the law, but they think it will be better. But they're going to cut the value of the practice or things like that, telling them what kind of services they can and can't do, even though the practice has obviously been successful, offering the type of services you know and is following the trends, particularly in, you know, more cutting edge, cash type practices. 

But yet again, repeatedly, I see private equity coming in and say, yeah, we're not going to offer that anymore. You know we see things moving in another direction really, because we're booked out six months with this, you know, and it just it's very frustrating for my doctors just to be told to think that somebody out there, because they decided to be interested in healthcare, knows more than they do and it very rarely comes with a very solid explanation or research. Having back the approach, they assume that doctors and again I'm only speaking about doctors, because that's all I know really right Doctors did. They assume they're smarter. They assume they're smarter, they assume they know more and sometimes they don't show the proper respect for the doctor's experience. 

In the market You've built, you know, multimillion dollar practice. You've been doing this for 25 years. We respect your opinion. No, you know. Instead, they're like this is what's going to be and it just boggles my mind sometimes and to me that's not leadership, right, or at least not the kind of leadership that healthcare needs. And you know, I'm seeing a little bit less of that as we go forward and I see that as a real positive for healthcare. To me, that's the difference between traditional companies and what I see going on in healthcare Could be very different. Obviously, for super huge, you know, healthcare, pharmaceutical companies, et cetera, that's going to be a little different. But my area of expertise to me that's incredibly frustrating. 

0:37:11 - Mark Henderson Leary

That's usually a symptom of bad leadership in the operating organization, and I think that's totally true. Now I think I love what this description it kind of describes like the traditional investor private equity model, where the MSO model hopefully breaks that apart. Now there's obviously shades of gray, right. So people who just self-describe as MSOs, that are really kind of lightweight, they're likely to be out of their depth and operational expertise in terms of strategy. You say like how many doctors should we use those kinds of questions? How many mid-levels? That kind of those ratios might be not the kind of questions your MSO should be asking for you Now. 

But flipping it the way other end of the spectrum, like a village medical model, they're like no, that's us, we know exactly how to hit the boost on the ground and so you will sign up with us because that is our answer and so that's hopefully a great model. 

If you like the way they do it, you do paint by numbers exactly as how they tell you to be on the ground. 

But I do think investors are good at doing a lot of things, bringing resources, horsepower, and one things they are very, very, very reliable at and that is holding you accountable to the financial covenants. So if they will do that and if you sign up with investors, understand that if you ever get to the edge of that, you will experience that from them most of the time. And so, understanding their priorities of value of like, are they really really focused on time-based exit more than anything else, or are they interested in a high value exit where they might hold a second to let the value recover or be exponential or increase? And so you really got to understand those priorities, because rarely do they not do that. Now sometimes they change their story, and that's a thing I've experienced as well. They sound all lovey-dovey and then eventually they're like look, we got to get out of this business, we got to investigate this. So that's a problem as well, but you can count on them showing up one day. Like you know, this was a financial endeavor, not a humanitarian endeavor. 

0:39:11 - Ericka L. Adler

It was a financial endeavor through humanitarian means, but ultimately a financial endeavor. So they will do that. Yeah, absolutely. And I think that's sometimes where the conflict comes with. 

You know, investment in healthcare is that, at least in certain parts of the healthcare industry, it is a very humanitarian, personal endeavor, right, and so kind of mixing it up with a purely investment approach. It's hard to find that perfect fit and there is no one perfect fit. And I think that's where you know people are struggling right now to. You know, maybe they went too far over to pure investment, forgetting about the people and hurting the economy and charging too much and service quality went down, you know, because they were thinking more about cutting costs and making profit. We have to balance that with the purpose of healthcare, which is to serve the community, serve people and hopefully still be profitable. So you know, nobody a little bit of profit if you can make a lot of profit. And I think that's where healthcare is maybe a little bit different than other industries you can invest in. 

And you know, I think it's going to be really interesting to see in the next few years where this goes, because there have been some very publicized bad examples out there and I think a lot of the great examples are just not getting as much attention and we need to really kind of focus on those and see more of those. So it's my hope that that's kind of where things are going. And again, I really you know I'm in healthcare work with a lot of independent practices. I am, you know, supporting any model or any venture, any advice, any business that helps keep them independent, because there is a place for independent practices. I'd like to see more doctors go back to independent practice and stay independent. You know, I think that's just so important and it's my hope that we'll continue to see that grow again rather than shrink. And, you know, the best of both worlds a combination across the country of those two types of businesses. 

0:41:03 - Mark Henderson Leary

Yeah, for sure. I guess, without at the risk of starting the further conversation because we're kind of hitting time, I want to allow you to wrap this up. But you said independent practice. I don't think that means what it used to mean and I think it's an ever-expanding definition of independence. And what does that look like? And I'm frankly excited that there's lots more options there. People love to say you know independent private practice, you know no private equity. I'm like, well, I don't. You know physician led, you know where's the charter, and I think that you don't have to sell your soul. It's not quite so binary anymore. 

0:41:42 - Ericka L. Adler

And so do you see the same thing? The expanding definition of independence. I mean, I think independence means physician-led for sure. In my mind it means you didn't just sell out and work for a big healthcare company where you're completely controlled, right? That being said, you can be independent and still do something with an MSO or private equity, and it's finding that right fit. But you know where? Doctors are still the leaders. They still are the ones deciding what patient care should look like. 

So I think we're trying to find our way and for me, the saddest call are doctors that have built something over the past couple of decades, or more or less time, who say we feel we have no choice, we must sell. We can't make it, and that's what I don't want to see continue to happen. And I don't know what the solution is. Everybody might find a different solution and I think there's a lot of options more and more coming out every single day. People are getting very creative with how they can help practices function and survive and succeed, right? So you know there's no one, just like you said, there's no one solution, but I still think not everybody needs to sell out to a hospital or private equity, and there's a place for you know something in between, for sure. 

0:42:56 - Mark Henderson Leary

Totally agree. We covered a ton of ground. There's a million other subjects that I'd like to talk about and that we're gonna have to cover those in future episodes. Lots of things are on my mind. I had a whole bunch of notes coming in, not even more. 

0:43:10 - Ericka L. Adler

Anything you feel like we missed on this subject. No, I think we really covered it thoroughly. I think healthcare is just fascinating area. I think you know we're going to continue to see some major changes in the marketplace, hopefully exciting ones. People are getting creative and it's going to be really interesting to see what happens. I know I'm excited and, like I said, the fall, I get to see all kinds of new ideas that were percolating over the past few months, so I'll be back anytime you want to talk about it. 

0:43:38 - Mark Henderson Leary

Awesome, absolutely Well. We will have you back for sure. If somebody wants to continue the conversation with you kind of know where you're at. I mean, obviously we'll put details in the show notes. What's a simple way to find you? 

0:43:48 - Ericka L. Adler

You can email me eadler at relawcom. You can find me on LinkedIn. It's probably the easiest way to find me. All my contact information will be shared. You can reach out any other way you choose. I'm always happy to talk about these issues. 

0:44:04 - Mark Henderson Leary

Awesome, Thank you so much. Great stuff. I'm always happy to talk about these issues. Awesome, Thank you so much. Great stuff. I'm super excited to get this out there. Thank you so much, Erica Adler. Thanks for having me. So that's our show for today. 

If you have any feedback, get them to us. We love the feedback. All of it good and constructive. So get the voice notes via SpeakPipe. Hit us with those five-star reviews. Hit us with those five-star reviews. Give us the feedback. 

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If you're stuck, by the way, if you are running a practice and you're feeling like you imagined this being so much better, so much more fun, with an engaged culture, with a client and patient base who are getting super high value and you love every minute of being there, but for some reason you're not there, you're stuck. You're not quite getting that. Please don't stay stuck. Please reach out and we'll talk about what a first or next step could look like for you to get on the path to getting that practice that's high value and gives you everything you want, and so reach out to us at practicefreedomcom slash schedule and we'll talk about a first or next step. We'll see you next time on Practice Freedom with me, Mark Henderson Leary.

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