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The Healthcare Investor

Insights on Issues & Trends that Impact Investments in Healthcare & Life Science Businesses

Healthcare & Life Sciences Private Equity Deal Tracker: WindRose Sells Trust Healthcare Consulting Services

Posted in Healthcare Services Investing

WindRose Health Investors has announced it has completed the sale of its portfolio company, Trust Healthcare Consulting Services (TrustHCS).

TrustHCS was acquired by a joint venture established by an affiliate of The Carlyle Group and Cannae Holdings.

TrustHCS, based in Springfield, Mo., is a provider of staffing and advisory services for coding, clinical documentation improvement, denial management and coding education solutions.

WindRose, based in New York, pursues control equity investments in healthcare companies. Founded in 2000 and formerly MTS Health Investors, the firm invests in a broad range of industry segments.

The Carlyle Group, with its U.S. headquarters in Washington, D.C., targets companies in healthcare and many other industries. Founded in 1987, the firm has more than 20 buyout funds and more than 10 growth capital funds.

Cannae Holdings, based in Las Vegas, is a diversified holding company with investments in technology-enabled healthcare services and other business lines.

Terms of the transaction were not disclosed.

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A View From the Top: Judson Ivy of Ensemble Health Partners

Posted in Healthcare Services Investing

Please see below for the latest installment of our interview series, A View From the Top. This series features interviews with C-suite leadership of private equity-backed portfolio companies. This installment features Judson Ivy, founder and CEO of Ensemble Health Partners. To recommend a leader for a future interview, email Holly Buckley at hbuckley@mcguirewoods.com.

As a reminder, our 17th annual Healthcare and Life Sciences Private Equity and Finance Conference is February 19 and 20 in Chicago. The save the date is available here. Please contact us for more information or to indicate an interest in participating on a panel.

Q: What do you believe is the most significant current challenge to growing your business and what will be necessary to overcome it?

Judson Ivy: Healthcare and, specifically, healthcare revenue cycle are changing drastically in the sense that there is a desire for payors and providers to come together. Eventually, to get cost out of the system and achieve improvements and efficiencies, this bridge between payors and providers must be built. But in today’s environment, there’s a distrust between them. Our job is to try to help resolve some of that distrust.

This is not necessarily a challenge to growing the business, but more specifically, market dynamics that are affecting how this industry sector will eventually evolve. There is still a great deal unknown about how to eventually bring payors and providers together, especially as distrust and misalignment in incentives persists.

I participated in a payor-provider summit a few weeks ago. The provider said to the payor, “Will you let me see the margin that you are making on this particular contract?” The payor’s answer was, of course, “No.” The provider responded by saying, “But you are asking me to go through your contracts and support price transparency. You want to see what my cost is through this equation. Why is what’s good for you not also good for me?”

As this exchange shows, getting payors and providers to work better today is going to be a challenge. Our job in the revenue cycle often requires our removing the barriers placed on providers, who are our customers, such as authorizations, denials or other such issues. There are a lot of pressures on providers today, including consolidation, payor behaviors and regulatory changes, which is a big reason why our business is growing.

Q: What plans do you have to further grow your business and what will be necessary to achieve this growth?

JI: Our plans are to continue to grow, but at a pace consistent with our founding ethos. We believe that, essentially, the devil is in the details. We believe that technology is an enabler, but it is not the largest differentiator between mediocre and great results. What we focus on is how do we hire great people to effectuate results for our clients and do this in a way that produces not only great financial results, but great customer satisfaction as well.

We are very proud of our customer satisfaction results and want to continue to grow the business around that ethos. We are adding some very innovative technological capabilities around artificial intelligence, machine learning and automation. We don’t do so with an eye toward replacing our people, but rather to augment what they do and allow them to focus on the higher-value work. We are looking at growing not into a tech company, but more of a tech-enabled services company that allows us to be more efficient and make better decisions.

Q: What do you think is the key to attracting and retaining your talent?

JI: Our culture is extremely important to me. It’s the one matter I will never compromise on. Since I started the company and was the first employee, through today when we have close to 5,000 team members, we believe that you need to treat people really well, whether they are mailroom associates or have executive vice president by their names. Engagement, making people feel valued, treating them like family, investing in their growth and giving them a purpose are key parts of what we do.

Giving purpose is tremendously important in our work. We’re in the business of providing services to healthcare organizations. Typically, it’s very easy for nurses, doctors or clinicians to find a purpose in what they do. It can be harder for billers, collectors or registrars to see how their work translates into providing better care for patients. They sometimes see it as purely transactional work. We make a daily effort to connect the dots for our associates, illustrating the impact that excellent revenue cycle performance has on clinical outcomes and patient experiences. Since we’ve been able to align our $16-an-hour employees with purpose, our turnover is much lower and engagement scores are outstanding.

People ask me, “What do you attribute your success to? How have you taken the business from one employee to almost 5,000? How have you achieved your client results?” I answer that the one thing we attribute this all to is our culture and people. Retaining our people is my top priority. They are the differentiator for us.

Q: What do you think is necessary to most effectively capitalize on the momentum of your recent private equity investment?

JI: One of the reasons we selected Golden Gate Capital (which invested in Ensemble in August 2019) was the experience it brought with technology outside of healthcare. It doesn’t have any other healthcare assets; that was a positive for us. We are trying to revolutionize the way that healthcare revenue cycle management works and essentially apply many of the lessons learned and value-adds from other industries. Our partnership with Golden Gate is designed to add capital around our investments in technology that will not, as previously stated, replace people, but help them make better decisions and focus on value-add work versus transactions.

Our partnership is about the long view. Golden Gate has a perpetual fund versus a set horizon to monetize the investment, so it is not on a three- or five-year horizon. That was important to us. We did not want to need to make decisions that negatively affected our customers and/or our associates and how we are going to grow the business. We can take a five- or 10-year perspective on how to make investments that will pay dividends for the life of the investment versus trying to get the business to be the most profitable within a three-year period.

Golden Gate wanted us to continue to run the business in a customer- and associate-centric way, believing that if we do those two things and then make additional investments in technology, the long-term result will be exponentially greater than a short window of purely trying to work toward a financial goal. This approach can be successful, but we’ve seen plenty of examples where bad decisions are made that affect customers and associates, simply to “succeed” in that three- or five-year window. We didn’t want that. We really felt that our long-term reputation in the marketplace is more valuable than a short-term window to create profit.

About Judson Ivy

Judson Ivy founded Ensemble Health Partners in 2014 after spending almost 15 years as a revenue cycle executive in large hospital corporations. His belief in loving what you do, providing excellent service and caring about your team are at the core of the Ensemble Health Partners’ philosophy. Ivy has extensive operational experience in helping providers maximize their revenue cycle operations, in addition to his ability to drive innovation within revenue cycle.

As vice president of revenue cycle at Health Management Associates, he was responsible for regional service center operations, patient access services, health information management and revenue integrity and analytics. Ivy held multiple related positions with Community Health Systems, including director of patient financial services, regional patient financial services director and vice president of the regional service center. As vice president at Community Health Systems, he was responsible for establishing a new regional service center and received multiple internal awards for his accomplishments.

Ivy is the co-author of “Cataract Surgery for the Revenue Cycle” and a member of HFMA and ACHE.

To contact Judson Ivy, email judson.ivy@ensemblehp.com.

Healthcare & Life Sciences Private Equity Deal Tracker: EW Healthcare Partners Invests in Sonendo

Posted in Healthcare Services Investing

EW Healthcare Partners has led an $85 million financing round for Sonendo, according to a news release.

Sonendo, based in Laguna Hills, Calif., is a dental technology company. Its solutions include the GentleWave System for root canal therapy.

EW, based in New York, is a private healthcare growth equity firm. Established in 1985, the firm seeks to make investments in commercial-stage companies in the pharmaceutical, medical device, diagnostics, and technology-enabled services sectors in the United States and Europe.

Joining EW in the investment round were several new investors, including Redmile Group, ArrowMark Partners and Broadfin Capital, and a number of existing investors, including General Atlantic, Orbimed Advisors, Meritech Capital Partners, CVF, NeoMed Management, Perceptive Advisors, JMR Capital, SEB Private Equity and Security Pacific Finance.

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Ridgemont Equity Partners Portfolio Company Acquires Comprehensive Autism Center

Posted in Healthcare Services Investing

Speech Pathology Group (SPG), a portfolio company of Ridgemont Equity Partners, has acquired Comprehensive Autism Center (CAC), according to a news release.

Founded in 1993, Ridgemont is focused on investing in middle market companies to secure majority ownership or be the lead minority investor. Based in Charlotte, N.C., the firm prefers to make more substantial investments from a dollars perspective in several sectors, including healthcare.

SPG is comprised of a team of speech-language pathologists, behavioral specialists and school psychologists serving adults and children in the San Francisco Bay Area.

CAC is an autism services provider offering in-home and center-based applied behavior analysis therapies to pre- and early school-aged clients throughout Southern California.

CAC was advised by Provident Healthcare Partners. Formed in 1998, Provident seeks investments in middle market healthcare companies. With offices in Boston and Los Angeles, the firm is the healthcare investment banking division of Provident Corporate Finance.

Terms of the transaction were not disclosed.

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Consonance Capital Partners to Sell Enclara Healthcare to Humana

Posted in Healthcare Services Investing

Consonance Capital Partners (CCP) has announced it will sell Enclara Healthcare to Humana.

Enclara, based in Philadelphia, is a hospice pharmacy benefit manager.

Humana, based in Louisville, Ky., is a national health insurance company.

CCP, based in New York, is a private equity firm targeting companies in the lower middle market of the U.S. healthcare industry. Target companies generally have between $20 million and $150 million in revenues.

Humana will also acquire Enclara Pharmacia, GuidantRx, and Avanti Health Care Services from Consonance as part of the transaction, reports HealthLeaders.

The deal is expected to close during the first half of 2020.

A View From the Top: Steven Windwer of Bay State Physical Therapy

Posted in Healthcare Services Investing

Please see below for the latest installment of our interview series, A View From the Top. This series features interviews with C-suite leadership of private equity-backed portfolio companies. This installment features Steven Windwer, president and CEO of Bay State Physical Therapy. To recommend a leader for a future interview, email Holly Buckley at hbuckley@mcguirewoods.com.

As a reminder, our 17th annual Healthcare and Life Sciences Private Equity and Finance Conference is February 19 and 20 in Chicago. The save the date is available here. Please contact us for more information or to indicate an interest in participating on a panel.

Q: Your organization recently transitioned to working with a private equity firm. How was your business evolving leading up to this partnership?

Dr. Steven Windwer: We were growing at a very fast pace. Over the past several years, we made a concerted effort to grow the people and infrastructure of the business to the point where we felt it was a platform business.

In our space, we are one of the larger privately owned practices in the country. Since the tailwinds for physical therapy are so strong, there is a lot of activity in the space. We have received calls and emails from folks interested in our business for the past four or five years.

Q: What led you to decide to make the transition?

SW: The decision essentially came from the marketplace telling us we should think about pursuing a partner. We were large, had market share and market dominance, had a proven track record and had built a platform business. As a result, we believed we should think about pursuing a transaction, either with a larger, established and more national physical therapy business or become that platform ourselves.

There was some internal transition in the business, and I was also thinking about my age and how to have a succession plan for myself. In addition, there was consideration of what was happening in the marketplace in general. This included the thought that the money markets wouldn’t remain as strong, meaning the stock markets might eventually crash and valuations could become depressed. I felt an internal tension telling me the timing felt right. My concern was that while we could continue to grow, during that period, the entire marketplace could shift dramatically.

It seemed all of these factors happening simultaneously made it a good time to think about and move ahead with a transaction.

Q: How did you identify the firm you wanted to partner with?

SW: Having so much inbound activity over a number of years gave me an opportunity to get a flavor for the potential prospects in the marketplace.

Ultimately, what I learned during the preceding two to three years is that who the partner is must be the most important consideration. Finding someone who would be a great partner became the top priority on my list. After meeting with many prospective partners, I came to understand what I didn’t want and ultimately set out to find what I did want. This was someone who would be a trusted, thoughtful partner and one that would have tremendous integrity. That turned out to be Calera Capital.

Q: What advice would you give to a founder CEO when evaluating potential partners?

SW: Get to know all of your potential partners so you can decide what’s most important to you. Value and money are certainly important, but you need to think about what life is going to be like after the deal is completed.

Choose your partners wisely. Selecting a partner is a gigantic decision, so ensure you understand before going into it what you are getting into and all the likely ramifications.

Q: What other lessons did you learn while going through the evaluation process?

SW: During the process, you speak with a number of people essentially at the same time. I was blown away by our first conversation with the folks at Calera. They came off as being very impressive and really aligning well with us. With that said, I expected to eventually be disappointed in some aspect of the firm, as this had been our experience with other firms. But that experience never occurred with Calera. They were thoughtful and full of integrity throughout the process, which was long and difficult. Now, many months post-deal, they’re still great. I learned that behavior doesn’t lie. If you follow the behavior during the courting process and diligence process, you really get to know folks.

As a founder and practitioner who does not live in the financial/business world, I’ve found it’s eye-opening what’s out there. There are all types of people and firms. It’s important to stick to your values and attract the type of partner that really fits who you are, and not just chase the dollar.


Steven Windwer, DC, PT, is president and CEO of Bay State Physical Therapy, based in Randolph, Mass. After graduating from Boston University with his degree in physical therapy, Dr. Windwer elected to go back to New York Chiropractic College. Holding dual degrees in physical therapy and chiropractic, he opened his first office in Quincy, Mass., in 1990. Firmly believing in the manager/partner model, Dr. Windwer has been able to establish more than 60 physical therapy offices and 13 chiropractic offices across Massachusetts, New Hampshire and Rhode Island.

To contact Dr. Steven Windwer, email swindwer@baystatept.com.


Healthcare & Life Sciences Private Equity Deal Tracker: Primus Invests in Trilliant Health

Posted in Healthcare Services Investing

Trilliant Health has announced it received a “major growth investment” by Primus Capital.

Trilliant, based in Brentwood, Tenn., is a healthcare analytics and data science company focused on patient acquisition.

Primus, with offices in Cleveland and Atlanta, is a growth-oriented private equity firm focused on investing in healthcare, software and technology-enabled services companies. The firm targets companies with enterprise values of up to $250 million and typically invests between $15 million and $70 million.

Trilliant stated that the investment by Primus will be used to “… continue building its data science and technology teams to enhance the capabilities of its analytics platform.”

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Up-and-Coming Women in PE to Know: Kim Hruby

Posted in Healthcare Services Investing

McGuireWoods is undertaking a yearlong effort to profile up-and-coming women leaders in private equity. This profile series complements our existing Women Leaders in Private Equity profile series, which will continue throughout 2019. For this profile, we are pleased to feature Kim Hruby of Council Capital. Access her profile.

To recommend a rising star for a future interview, email Amber Walsh at awalsh@mcguirewoods.com.

A View From the Top: Greg Bellomy of CareATC

Posted in Healthcare Services Investing

Please see below for the latest installment of our interview series, A View From the Top. This series features interviews with C-suite leadership of private equity-backed portfolio companies. This installment features Greg Bellomy, president and CEO of CareATC. To recommend a leader for a future interview, email Holly Buckley at hbuckley@mcguirewoods.com.

As a reminder, our 17th annual Healthcare and Life Sciences Private Equity and Finance Conference is February 19 and 20 in Chicago. The save the date is available here. Please contact us for more information or to indicate an interest in participating on a panel.

Q: What do you believe is the most significant current challenge to growing your business and what will be necessary to overcome it?

Greg Bellomy: Education of employers and their advisers (i.e., brokers and consultants) will be our biggest challenge. Healthcare has largely been built around an economic model that has driven behavior of providers and insurers.

The notion was that people would access what they need in a rational manner, and so long as providers were compensated in a manner reflective of their skills and regional market conditions, it would be a fair and balanced model for care. This notion also contemplated that carriers would be satisfied with covering their costs and enjoying a reasonable profit margin.

As payers attempted to control costs, providers began looking for ways to capture additional revenues and margins by controlling downstream revenue sources, such as surgery centers, dialysis clinics, radiology and the like. This created an incentive for increased utilization of services that, although state of the art, might not be appropriately utilized. Since carriers were compensated on a percentage of costs/fees paid, there was little incentive for them to fundamentally change how care was delivered. In fact, they are now trying to control more of the spend and participate in margins across the continuum.

In short, no one was really working for the employers and their covered employees. The model we follow at CareATC is simple and very different. We are paid to provide the appropriate care in the appropriate setting; to do no more and no less than what is clinically appropriate. We measure our success based on our ability to drive down total cost of care and improve the health and wellbeing of those we serve.

As simple as that concept appears, implementing it is not as easy as it sounds. It requires collaboration and cooperation with the employer around a number of elements. Plan design, employee education, risk stratification, engagement strategies and plan administration all have to be looked at differently. It’s not enough to build a clinic and make it available. You need to modify and reward the right behavior to see meaningful results. This takes effort and a commitment to change. The reward for doing so is a true reduction in healthcare spend and ultimately a happier and healthier workforce. Most employers have no idea that these solutions are available to them; thus, our challenge.

Q: What do you believe is the most important personality trait in a leader?

GB: I’m a fan of Peter Lencioni. In his book The Ideal Team Player, he describes the desired attributes as being hungry, humble and smart. Intuitively, I sought these characteristics with my leadership team, but didn’t have a framework for how to think about them. Looking back at the teams that were most effective and sustainable, I saw they had leaders that put the wellbeing of the organization and their teams ahead of personal interests. There were those who could drive better financial or key performance indicator results, but they usually achieved it through brute force versus leadership. Invariably, things would break down over time. Pairing these attributes with a clear vision for success and being able to make it relatable to a meaningful mission makes for an effective and dynamic leader.

Q: You have worked at a high level in various healthcare sectors. How do you quickly learn the most important things about an industry?

GB: For every healthcare organization, there are four stakeholders who must be served:

  • Patient
  • Payer
  • Provider
  • Bank

For the patient, we must understand the individual’s need and how to best meet it in a manner that delivers a positive experience. For the payer, we must demonstrate that we are exercising fiscal responsibility with the available resources that are afforded to meet the need. Providers want to make a difference, feel valued for their skills and not be commoditized. Finally, whoever is providing the financial resources to meet the needs has to believe the capital is being put to good use with a reasonable return on investment.

Understanding the industry dynamics relative to these stakeholders’ needs and wants helps you understand where to focus your energies. In doing so, you have to look at the trends within your sector and how they correlate to broader healthcare trends. Everything in healthcare goes through cycles. Knowing where the particular sector is in the cycle and how it correlates to the broader trends helps you understand where future opportunity may exist.

Armed with this information, you can typically ascribe an equation or formula that speaks to the motives of each stakeholder and postulate a thesis that describes what the ideal state looks like for all concerned. Then you must test the thesis and see if your assumptions are correct. Then you need to determine what the gaps are in the model you have today versus your thesis and define a plan to get there. Unless you have substantial buy-in with the core stakeholders, your probability of success is low.

Q: What is your best tip for recruiting talent?

GB: My field of vision for hiring talent is focused on the need three to five years from now, not today. My guidance to my teams is to hire two levels up from what they need today. If the person they hire is only competent to perform the task needed today, they are setting themselves up for a problem in the future. Hiring talent that understands the goals of the organization and is motivated to grow with the organization is a much smarter way to go.

Q: What healthcare trend will cause the most change in the next 10 years?

GB: Technology and disintermediation of the traditional healthcare service delivery chain or continuum of care is going to yield amazing results qualitatively and financially. The technology you wear on your wrist knows more about your health and wellbeing than what your doctor could possibly tell you in a typical patient encounter. Little things like sleep patterns and gait patterns, not to mention heart rate and other biometric data, can accurately predict the probability of an adverse event when normalized against a peer group and your historical data. Unlocking the data and using artificial intelligence tools to alert patients and providers will unquestionably lead to better outcomes and lower costs.

Similarly, creating engagement strategies with patients around how to manage their health and wellbeing in a non-fee-for-service environment, where there is total transparency around costs and outcomes, will change purchasing and utilization patterns. It is conceivable, and it is already happening, that employers will create a “virtual health plan” and eliminate carriers and plan administrators from the service equation as they add more cost than value for the relative spend. Employers now want to understand the financial incentives of the various stakeholders embedded within their plan design and will begin taking control over provider network contracting and purchasing of routine items, such as medications. This will create a more competitive and higher-quality product in the future as their claims administration cost for providers will be substantially less. In addition, the employers can steer utilization that allows for economy of scale for the providers, leading to the market becoming more efficient and effective.

About Greg Bellomy

Greg Bellomy has 20-plus years’ experience as president and CEO of some of the most influential healthcare service companies in the country. Most recently, he joined CareATC as president and CEO in the spring of 2019.

Being on the spear tip of healthcare innovation is his passion and what drew him to CareATC. Innovation and leading transformational change in how care is delivered is the common thread in his experience. CareATC is uniquely positioned to fundamentally change how healthcare is delivered for millions of insured but underserved people secondary to the dysfunctional economics of main street healthcare.

Bellomy has enjoyed tremendous success as a division president of a company that was ranked No. 2 on the Inc. 100 Fastest-Growing Companies and division president of three publicly traded companies on the NYSE and NASDAQ. He has led two private equity/venture capital-backed companies as president and CEO. Bellomy has also served as a senior operating adviser for LLR Partners.

To contact Greg Bellomy, email gregbellomy@careatc.com.

NovaQuest Closes New PE Fund With $275 Million

Posted in Healthcare Services Investing

NovaQuest Private Equity has reached its hard cap of $275 million in capital commitments for a new private equity (PE) fund, according to a news release.

NovaQuest Private Equity Fund I targets tech-enabled healthcare solutions and pharmaceutical services investments.

NovaQuest Private Equity is the PE group of NovaQuest Capital Management. Based in Raleigh, N.C., and formed in 2000, NovaQuest Capital Management provides strategic capital to life science and healthcare companies.

The firm stated it has already completed three platform investments and two add-on acquisitions out of its new PE fund, including investments in Azurity Pharmaceuticals, Clinical Ink and Catalyst Clinical Research.

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