Organic Growth Podcast: Organic Growth Isn’t One Lever: Building the Healthcare Growth Machine

Stewart Gandolf (Healthcare Success): Welcome to the Healthcare Success Podcast. We have a special edition today where we are at McGuireWoods broadcasting live. And in fact, in partnership with our friends at Levin Associates.

So my next guest is Louis Oster. Good to meet you, Louis.

Louis Oster (ECG Consultants): Nice to see you, Stewart.

Stewart Gandolf (Healthcare Success): And Louis is with ECG Consultants. Can you do me a favor and just give us a quick 30 seconds on what it is you guys do?

Louis Oster (ECG Consultants): Yeah, ECG is a management consulting firm. We focus largely on provider services and payer services, really across the entire provider services market, though hospitals and health systems, private equity, physician enterprise, and then payers as well.

Stewart Gandolf (Healthcare Success): Great. So we were talking offline about organic growth, and that's really what we're talking about today. And I thought it was really interesting. Your comments before we started were pretty good. So tell me about what you think.

Louis Oster (ECG Consultants): Well, I'm excited to hear everybody talking about organic growth and talking about integration over aggregation. Three years ago, it was all about roll-ups, and now I think people are seeing we have a situation where it's EBITDA cobbled together, and we need to recognize what it takes to drive P&L performance.

And when it comes to exits, the valuations need to be cleaner. So talking about organic growth, building the machine that is a high-performing physician enterprise, it takes a lot of levers. And that's why I'm glad folks are recognizing this in the room. It's not simply marketing. It's not simply acquisition.

And one of the things folks really need to do and focus on is a very concerted effort on new patient acquisition. So that's a key part of organic growth. Organic growth has the best ROI, but then once you have a new patient acquisition strategy, you need a machine around that.

For example, you're acquiring new patients, but you've failed to put in enough payment posters and revenue cycle. Some little thing that we forget about, but if the payment posters aren't there, the revenue's not there. So you have to build a whole machine. Recognize the regulatory complexity, recognize the behavioral complexity of labor and the type of labor we have.

And then just the entire process from seeing a patient to collecting to having that patient return and become loyal to the practice.

Stewart Gandolf (Healthcare Success): So it's great. It's funny. You mentioned a couple things. First of all, we're at McGuireWoods. And back a few years ago, I used to be on a lot of panels here every year. And one of the things I always talked about was the role of marketing to generate new patients.

And it was typically one of the things we talk about is in private equity. We think about roll ups. We think about revenue cycle management and cost cutting and de novo and all those things. But marketing usually isn't thought of a lot. And then you mentioned today just a moment ago about new patients, which like people do seem to forget about that part sometimes.

Louis Oster (ECG Consultants): They really do.  I think having a strong brand wraparound is really important. I think being really thoughtful in your marketing is also very important. Simply just blasting everybody with Google Ads isn't sufficient. That brand community awareness and recognize that type of community.

So if you're working in rural or underserved markets, a lot of times a local newspaper is still an effective place to market.

Stewart Gandolf (Healthcare Success): Oh, I love it.

Louis Oster (ECG Consultants): You look at the cost of it. If you're in a dermatology practice and you want to grow your Mohs business and you find a 55-plus magazine that goes out to people in the northern part of New England, it's a really cheap way to reach a lot of people that are prospective new patients.

So there's a lot of cost effectiveness there. But underlying all that is a strong brand, strong online presence so that folks can find you. But once you've built that brand, you need to make sure you have the new patient access.

There's nothing like building a strong brand, having patients reach out to you and you can't be seen for six, 12 months. That just been your brand. Everything you've invested in brand has been undermined.

Stewart Gandolf (Healthcare Success): And you have to pick up your phone, too.

Louis Oster (ECG Consultants): You have to pick up the phone. You have to pick up the phone. So unless you have AI agents or not, you need enough staff to pick up the phone.

Stewart Gandolf (Healthcare Success): Louis, this is really fun to me because these are the things we talk about all the time with our company. And you're hitting on those

issues right away.

First of all, the idea of rural health care and being able to use newspapers. I just had a conversation like that with our traditional media buyer yesterday. We were talking about this. So we have a traditional media team. And traditional media typically works best with either in rural markets where it's dirt cheap and really easy to buy. Or if you're in a metro area where you have lots of locations, then traditional media can make sense too. And it's completely forgotten.

And we're talking offline, like, what makes you guys different?

That's one of the things we do is offering that traditional media. The other thing you mentioned was the brand part. which is also a big part of it. And so rather than just jumping straight to paid search or organic SEO or whatever, we talk a lot about building a brand and doing that very methodically. And then also the brand integration strategy with multi-location is a big deal. And then on top of all that, you mentioned access, which is a thing today.

And then I was joking about the phone.

Louis Oster (ECG Consultants): No, it's not a joke. It's very real.

Stewart Gandolf (Healthcare Success): That's been my 30-year...

Louis Oster (ECG Consultants): We've all probably experienced it personally, too. It's terrible. It's terrible.

Stewart Gandolf (Healthcare Success): It's getting better, but even with call centers, even with AI, I do… By the way, off topic for now, but I think AI phone agents are going to help a lot. I do. Because it's been so awful. This, to me, is the most exciting time ever for what we do because of this one issue. It's shockingly important.

It's funny you knew that. I can't believe we never met before.

Louis Oster (ECG Consultants): Old friends.

Stewart Gandolf (Healthcare Success): Yeah, we are now, that's for sure.

Any most reliable sources as you're working with different portcos? Any specific sources of reliable organic growth? And you could do, obviously, paid advertising, but you could do other things as well. So I'm curious of some of the things you see.

Louis Oster (ECG Consultants): I see paid advertising and branding as just sort of an underlying work stream around it all that's wrapping around. Going back to new patients, the first thing I want to focus on is provider capacity.

So to use a metaphor, if I go into a restaurant and I see half the floor tops only have two chairs at them, we know they're not working at capacity, right? And so I'm doing the same thing with provider capacity. Are they meeting bookable hours? Are their templates utilized properly? Are they smart templates? In other words, is there a new patient access?

And then I'm looking at one of the things I really like to do, I think a cost-effective way to test new markets or sub-markets more specifically, is going to an underserved sub-market with your own market. But try to find an entry point where you don't have to buy and build out space. Try and partner with somebody else in a primary care clinic. If you're a specialist, embed yourself in that clinic. You have existing referral sources. You might be in a larger medical community. And I think those are really cost-effective ways for new patient acquisition.

But once you're acquiring those new patients, you need to monitor that. Are those patients converting? Are we keeping them long-term? Are they converting to procedures? What's happening with those new patients?

And we also want to make sure it's not happening at the cost of existing patients. So that's where provider capacity, I think, is so critical to growth. It gets back to, again, those tables in a restaurant. Let's say you bring in all those people, but you don't have somebody back of house to help the chef. Well, now you have a problem with your delivery again. Putting together a holistic approach to customer acquisition.

Stewart Gandolf (Healthcare Success): I couldn't agree more. And when we talk, one of the things we talk about a lot with prospective clients and current clients is the minimum daily requirement. In other words, we feel like... every location should get some level of marketing love. But there's always some that have more capacity, more availability. And the ones that already visit, I'm like, well, do you want to be there or not? People are looking. You usually do. But if you're going to invest more where you have more capacity for sure.

Can you think of a...

Louis Oster (ECG Consultants): Can I have one more point too? So when it comes to branding, a lot of times in provider services, you have a physician that is really well known or a couple of physicians that are really well known in the community. You have to figure out how to leverage them and grow with them, but make sure they're benefiting from the greater growth, the global growth overall.

Stewart Gandolf (Healthcare Success): Absolutely. And it's funny, going back years ago, we used to spend a lot of time working with smaller groups before we started working with the really large ones. But we would always have, like, I have a new nurse practitioner, a new PA. How do I get them to be used? Because nobody wants to see them. They just want to see the guy. And it's still the case, right? And they still have, like, there may be two or three senior doctors that have all the reputation, and you have to strategically build that. You have to be thoughtful about it, right?

Louis Oster (ECG Consultants): And there's ways to be thoughtful. And I think, actually, a lot of physicians are good at it once they can accept that they're going to be offloading some of their patients that they care about to a nurse practitioner or a PA.

But remember, they've hired that nurse practitioner or PA, so they have a stake in it. They recognize that it's a quality provider, and that makes it a lot easier for them to hand off those patients.

Stewart Gandolf (Healthcare Success): Can you think of one just really compelling example of organic growth and some of these things where it really worked and shot off the numbers quickly?

Louis Oster (ECG Consultants): Oh, gosh. I think it's when you look at a broader multi-site, new patient, physician capacity. So it's bringing in everything with that. It's access. And access isn't just getting on a physician's schedule. It's getting on a physician's APB schedule. It's the phones. It's geographic access.

I think that if you can find ways to enter markets without having to build new space, you're in a cost-effective way to grow.

Stewart Gandolf (Healthcare Success): I love that. That's a good point.

Louis Oster (ECG Consultants): So when you're multi-site, you have to make sure you're not just shifting patients from site to site, that you're growing the whole pie. And that's where, again, you get back to looking at procedure rates. You're looking at new patient rates by provider. You're looking at revenue visits by provider on an annual basis to make sure that you're just not shifting business around, but you're concentrating it in the new growth areas.

But again, it's a holistic approach, and so that's taking operations. So what I'm talking about largely right now is operational efficiency. Pair of contracts can be a huge lift. One thing I heard today that I think was fascinating too is folks talking about concierge medicine. So concierge might have a cash pay and insurance pay component to it.

Well, think about partnering and aligning yourself with health systems. I think private equity and health systems are afraid to align themselves together, and there's a lot of opportunity there on the new patient or just general patient acquisition front for both groups. And so I think that hospital alignment can be an incredible benefit. I said payers.

And then new provider growth. How are you bringing in new providers? Are you recruiting them? Are you growing them internally through training? I think it's wonderful when companies can train their own providers because they're more likely to stick with you, they're going to be loyal, and they're going to practice in the way you want them to practice medicine.

And so when you bring all those ingredients together, that's how you bake the cake for transformational change.

Stewart Gandolf (Healthcare Success): That's super true. And it's funny going all the way back to one of the original DSOs, Pacific Dental, are friends of ours, and we worked with them and they had four locations. Now they have over a thousand. But they've really, we've been around for a while. But they really are good at building up their own providers into the business.

And it's like, it's completely different than de novo. Well, I'm sorry, completely different than an acquisition.

Louis Oster (ECG Consultants): Yeah. And when you think about the time to recruit too. It might take from a lead to when you sign a contract, let's just say six months to sign a provider, and then another 90 to 120 days to have them licensed, credentialed, and start. You could be looking at a year.

So you need good triggers internally to know when it's time to recruit, given it could take a year before someone's on site. Growing those internal capabilities allows you to reduce that timeline significantly.

Stewart Gandolf (Healthcare Success): Terrific. When you're looking at a multi-location provider, are there two or three metrics that you think you want to look at usually pretty quickly? Like what are some of the most important levers?

Louis Oster (ECG Consultants): Well, I mean, I hope to have P&L by site. P&L on top line.

Stewart Gandolf (Healthcare Success): That helps, for sure.

Louis Oster (ECG Consultants): To state the obvious. Yeah. But after that, I'm going back to new patients and individual provider level productivity. So I want to see provider level productivity to make sure that I'm just not moving patients from site to site. And I want to see provider level productivity to make sure the providers are improving. And I want to make sure that they're seeing new patients and they have access to new patients.

And then if there's any of those well-branded physicians that are pulling in more patients, I want them to see what our strategies are for offloading those to APPs.

Stewart Gandolf (Healthcare Success): So another thing that we had talked about before, which is always still important with multi-location providers, is physician alignments, getting the doctors on board. And that's sometimes what I see is the older the business is, the more likely it is to happen. I mean, some just still run in democracy like they did in the old days. Others, not so much. But how important is it in your experience? And are there any tricks for that?

Louis Oster (ECG Consultants): Obviously, compensation and economic alignment is really critical. But when you go beyond that, I think what you're talking about is trust. Trust takes time. It's something that has to be built.

It's that when we do see organic growth, the providers experience and enjoy the economic benefits of that. So it takes time to build trust, trust in the entire process, trust in the entire machine that you've built. Everybody needs to be aligned around what we are, what we're doing, and not debating the strategy and tactics, but moving on the strategy and tactics. So I think it's more cultural than it is material.

Stewart Gandolf (Healthcare Success): Very good. Anything in this category that you think is widely underestimated? I was just talking at the beginning about marketing being underestimated, but maybe that's it, or maybe there's something else that you feel like. the power of, like, you have to really convince them, no, no, no, pay attention to this, this matters.

Louis Oster (ECG Consultants): Yeah, well, I said time. They underestimate time substantially to make change. I think you have to experience, organic growth is going to be hockey stick growth. It's going to look slow for a while while you're putting the parts together, and then you'll see it accelerate. It'll be gradual and then sudden.

So I think you have to, you know, appreciate the time, and the time is because of complexity. It's a highly regulated environment. You have these interesting supply-demand dynamics with providers.

And then you have a complicated operation. And so it takes time to put all those pieces together. Oftentimes what the CEOs and company officers feel like is they're playing whack-a-mole. They fix a revenue cycle problem, but now I have a problem with labor. And so they're playing this. And so it really takes time to put all this together and keep making a little bit of progress every single day.

Stewart Gandolf (Healthcare Success): That totally makes sense. As we're wrapping up here, if you had one piece of advice to give as we start thinking about organic growth.

Louis Oster (ECG Consultants): Yeah. You're not going to be able to be successful pulling one or two levers. You have to pull a number of levers.

Stewart Gandolf (Healthcare Success): Terrific. Louis, that was awesome.

Louis Oster (ECG Consultants): Yeah. Thank you for having me. I enjoyed it.

Stewart Gandolf (Healthcare Success): I appreciate it.

Louis Oster (ECG Consultants): Yeah. Thanks, Stewart. Thank you.