The interview below is part of a McGuireWoods series featuring interviews with C-suite leadership of private equity-backed portfolio companies. To recommend a leader for a future interview, email Holly Buckley at firstname.lastname@example.org or Tim Fry at email@example.com.
Q: Can you tell us about Ambulatory Management Solutions (AMS)?
Scott Mayer (SM): AMS is an outpatient anesthesia platform exclusively focusing on non-hospital cases, surgeries and environments. That means we cover anesthesia for ambulatory surgery centers (ASCs), as well as offer a turnkey model for physician offices, dental offices and clinics. If anesthesia-related support is needed by any of these settings, we deliver it.
From a market perspective, our platform stands out because of that support. We pride ourselves on being more than just an anesthesia staffing company. We deliver an unmatched number of value-adds to our clients’ facilities. For example, our office-specific model provides preoperative, recovery, nursing and all clinical support staff. We put the patient to sleep and provide that anesthesia service to the surgeon or proceduralist. We’re also prescreening to avoid same-day cancellations for our partners, and helping that patient and facility from when the patient enters the building all the way through the surgical process to the end, when they’re recovering from anesthesia, and then walking them out to their driver to take them home. We also handle anesthesia-related drug supplies and equipment, so items such as propofol, defibrillators, emergency airway items and IV start items. Finally, we provide analytics on issues like clinical outcomes and turnover times to our partners. You’d be surprised how many organizations don’t even track that, let alone offer it to clients.
We describe what we do as a “floating surgical suite” or “surgical support platform.” If someone describes us as an anesthesia company, this puts us in that box. We offer more of a holistic approach to anesthesia. There’s just so much more that encompasses anesthesia than the procedure itself, for the patients and especially the surgeons. In truth, I think to meet us on our level and call yourself an anesthesia platform, you have to cover the clinical and patient safety side but also the financial and operational facets. It’s not just about providing “bodies.”
Q: You founded AMS more than 10 years ago. What has changed the most since then?
SM: The anesthesia world has changed quite a bit, from the billing side, with going in- and out-of-network with insurance carriers, to the former “physician-only” model moving to care team models with physicians and CRNAs. Now we’re seeing anesthesia assistants coming into the workforce as another midlevel anesthesia provider.
During the pandemic, a lot of anesthesia providers decided it was time to retire or significantly scale back their work. There also were people in medical school or residency with plans to pursue a career in anesthesia who, after seeing how crazy things were, began questioning whether they wanted to go into a potentially dangerous hospital environment. Many of them decided to get fellowships in other areas like pediatrics or stay in school to delay entering the workforce. That created a big anesthesia shortage, which has driven compensation through the roof — up 20%, 40%, even doubling for people working at locum tenens companies.
We’re now seeing a kind of “mercenary/work-for-hire” situation where supply and demand are out of whack. From an anesthesia provider standpoint, people can essentially name their price and get paid top dollar to be put in any setting. That changes the business model significantly for anesthesia practices. You’re getting calls all the time from surgeons saying, “we need you,” but you don’t have the bodies to help support them.
Another big challenge to the business relationships with our clients is helping them understand that we’re paying our providers significantly more, and the insurance carriers are either paying us less or really pressuring our reimbursements to come down. This, in turn, puts pressure on providers to deliver more case volumes, a better payor mix, a stipend subsidy or some form of financial support for us because we can’t afford to financially support and subsidize our facilities.
The No Surprises Act is another big development. The anesthesia community is all in favor of making sure patients don’t have large, unexpected out-of-network bills. We’re all on board with transparency and helping our patients. AMS and its affiliated companies have always been in-network. We’ve never wanted to play that out-of-network game.
However, what happened with the No Surprises Act is the insurance companies are using it as leverage to say, “You don’t have any threat of going out-of-network and charging our patients a lot of money or gouging us for huge returns, so we’re going to force you in-network and basically pay you whatever we want to pay you.” That’s contributed to anesthesia reimbursement coming down significantly. Without anesthesia companies having at least the option of going out-of-network as leverage for contract negotiations, all you can do is wait and see how much insurance companies are going to try to decrease your rate even further.
Josh Gantz (JG): I’d add that the use of data has progressed significantly. Anesthesia is a secondary provider. Nobody goes to the doctor to be sedated; the sedation comes as needed, based on the procedure. Because of that, you’re sometimes looked at as a commodity and told, as the saying goes, to “show up and shut up.” We’re changing that perspective. We value technology and data, and we have a dedicated analytics team that helps us provide meaningful data to our clients.
Some of our clients are large health systems and private equity-backed organizations. When we give them what we view as even basic data, like information on average length of procedure, many are amazed and say they’ve never had access to such information. A little bit of good data can go a long way. We’re seeing an opportunity to fill a much-needed data gap, even on a basic level.
Q: How do you differentiate AMS from competitors?
SM: The external services we mentioned certainly differentiate us — whether it be personnel, working together on financial modeling, providing needed supplies, or sharing data. We use our infrastructure to form partnerships with our clients and be a solution to a lot of the challenges they confront.
For example, during the COVID-19 pandemic, we established a strong lab relationship and helped clients with COVID testing so they could get back up and running. We are always looking for ways to help solve whatever major issue or obstacles are in front of our clients.
As Josh mentioned, we’re a secondary provider. We have no control over how many patients we’re going to see in a day because they’re not our patients until they arrive at the facility. They’re our patients for that time, but they’re always our clients’ and facilities’ patients. Being a secondary provider, we rely on working closely with our clients, so they also always have our best interests at heart. We want to constantly remind them about the value we provide that goes well beyond putting patients to sleep and safely waking them up.
Q: How have AMS and AMS-supported practices retained and attracted top talent during the tight labor market we have seen in the past few years?
SM: We’ve always prioritized and maintained a very strong culture. We enjoy investing in our team and showing them that we care about their personal lives, work-life balance, mental and physical health — all of it. We encourage socialization within the company and make sure there are opportunities for people to meet and enjoy time with one another.
It is crucial for us to have great talent, and we have really come to rely on internal referrals and work to continue receiving them. Especially during this anesthesia shortage, we want people to tell their friends and family how great we are to work with. Having our people, who we already think are great, spreading the word about how we are different than the rest of the anesthesia community has been our biggest source of recruitment.
I mentioned that the anesthesia shortage has created a situation where many anesthesia providers are out for themselves. Hospitals are starting to look at providers asking for double payment and expecting double the value of their work. Hospitals are pushing what they can get back from providers because of what they’re spending — pushing the limits of how many patients you’re taking care of, the sickness of these patients or the number of CRNAs you’re supervising. This is leading to more hours, including more 24-hour shifts. That’s not sustainable for the providers or good for patients.
What we’re trying to do is show anesthesia providers that this added work and pressure are eventually going to burn them out. We’re happy providers are getting paid a lot, but they need to take care of themselves. We want providers to know that when they hit a wall and decide they need a work environment and culture where they can feel fulfilled, appreciated and supported, we want AMS to be that alternative — and that they will still be well-compensated.
It’s crucial that our staff want to stay with us. We’re so proud of the tenure rates we have and our very low attrition. We hear about many other groups struggling with staff and losing facilities, with some at half of what they may have been just a year or two ago. Meanwhile, we’re continuing to grow, which shows the significance of what we’re investing in our culture and how we’re taking care of our staff. We want people to do what’s best for themselves, and we want to make sure we’re treating them the best, supporting them the best.
Q: How do you see private equity firms, payors and providers responding to the various market changes you have noted?
JG: There’s increased attention on site of service. Insurance companies are incentivizing procedures to be done in the most optimal setting, both clinically and financially. Private equity dollars are following accordingly. We’re seeing increased investments in gastroenterology, gynecology and other surgical specialties where there’s an ancillary revenue model rewarding those who control and perform procedures within their own four walls. The focus on the site of service is more important than ever.
With payors, I think we’re seeing a little bit of the chicken or the egg. Payors have been the driving force for the movement of some specialties, but they are also lagging with others. As anesthesia providers, we support all types of specialties. We can see where surgeons are leading the charge and demonstrating a willingness and ability to do procedures in their offices, but insurance companies have yet to determine the right reimbursement and incentives to support this migration of care.
I believe investing in ASCs is going to be a bigger challenge in the next few years. The pace of procedures being moved from hospitals to ASCs is faster than the pace at which they’re building more surgery centers. There’s always going to be a place for ASCs, and they will always play an important part in providing outpatient surgical care. But we think the emerging third site of service, the office setting, is going to be big in the coming years. There’s a lot more investment dollars going into certain procedures being done in that outpatient, office-based setting than people are realizing.
About Scott Mayer
Scott Mayer is the chief executive officer of Ambulatory Management Solutions (AMS), a role he has held since the company was formed in 2011. Prior to founding AMS, Mayer served as the chief financial officer and practice administrator for Mobile Anesthesiologists. He received a BA in finance from the University of Illinois at Urbana/Champaign.
About Josh Gantz
Josh Gantz is the chief financial officer of AMS, a role he has had since AMS’ founding in 2011. Prior to AMS, Gantz was an associate at M3 Capital Partners, a real estate investment banking and private equity firm. He received a BS in finance from Washington University in St. Louis and an MBA from the University of Chicago Booth School of Business.