Can Private Equity and Patient Care Co-Exist? A Behavioral Health CEO’s Perspective

Stewart Gandolf (Healthcare Success): Hello, and welcome to the Healthcare Success Podcast. Today I have another fantastic guest. We just seem to be getting great guests all the time, and it’s so much fun for me. So today, you’re going to get the bird’s-eye view of, the founder and CEO of SUN Behavioral Health. Steve Page is with us today, and we’re going to talk about a topic that is often misunderstood, which is the whole idea of private equity in healthcare. And the tentative title we have for our podcast today is “Can Private Equity and Patient Care Co-Exist?”

That’s not beating around the bush. Welcome, Steve.

Steve Page (SUN Behavioral Health): Thank you. It's great to be here. I'm looking forward to the conversation.

Stewart Gandolf (Healthcare Success): I think it's going to be fantastic.

We were talking offline, for our listeners to know that, about private equity, and our agency does a lot with private equity-based companies.

We also work with nonprofits and other types of organizations up and down the spectrum of healthcare, but we're very used to and comfortable and like working with private equity.

They’re our partners on many projects, and Steve suggested this topic, and I thought it was fun because there's obviously a lot going on around this topic.

So, Steve, I think we should start off with your first question, which is, why is this a thing? And you can give it a little context if you want.

Why does for-profit healthcare seem to generate such strong reactions? And you can take a step back or two if you think that's appropriate, whatever you think we should talk about here.

Steve Page (SUN Behavioral Health): I'll hit that, but let me just, just quickly, so people have my perspective, we are a private equity-backed portfolio company, and so we live it. But I came from, you know, I was a guy with an idea that needed money.

And so my perspective was driven by the fact that this is the group that gave us money.

And I give them a lot of credit for that because when I started SUN and I had prior experience that gave me some credibility that I could do this. But my idea was that we were going to start psychiatric hospitals. So here I was with a blank piece of paper said I needed a lot of money. It’s going to cost a lot of money to start a hospital.

And will you fund this idea? It's going to take a long time, by the way, more than a typical private equity lifespan.

And so I really appreciate the thoughtfulness and the partnership that I've had. And so that's part of it is I just, I hear it all the time, the profits over patients mantra.

I just think it's lazy. I don't think it looks at the whole picture. It's not that there's never problems. I don't want to whitewash things when they do go wrong. But from my perspective, it's just a really important capital source.

I never would have been funded without it. And so the government wasn't going to fund these startup hospitals, nor was I going to be able to raise the money just through philanthropy to start a business like that. It's just too expensive.

So anyway, that's my perspective on, you know, why do we get such strong reactions? Look, healthcare feels different because it's different. It is. When someone's sick, when they're in crisis, it's uncomfortable to talk about profit. So I understand the instinct.

My perspective is capital is not the enemy. And I think of it as, who are the actual caregivers in that room? And it's not me. It's not our investors. You know, these are folks that have come to their work because they care for people. It's just, that's how they're wired. And I can give you just incredible examples of the integrity of the people that are doing that work.

And I feel like that needs to get separated out. Those are the folks that are making the admission and the discharge decisions and all the really critical care decisions. And I think it's important to understand that some of what is going on is around system and structural problems.

And then, of course, there is profit motive. And so that behavior we can address separately. But I think it's more interesting to pull it apart.

And so that's how I think about it. But starting with, you know, our caregivers, let's just pull them aside because I think they're doing God's work. And I truly mean that. They don't have those levers of, you know, kind of short-term thinking and cost-cutting, and it's just not in their day. It's just not in their, it's not part of their decision-making, certainly not with us.

Stewart Gandolf (Healthcare Success): I really appreciate that. You said in our notes, we talked about capital is not the enemy, misaligned incentives are. And so I thought, I just spoke yesterday at a medical device conference, and this topic came up in conversation a couple times.

And I've spoken for hundreds of venues over the years, and I don't do this every time I speak, but a lot of times, especially when I'm working with providers or different people in the business side.

And I say, “Hey, if you had a blank slate, would you design our healthcare system exactly like it is today?”

And I've yet to have anybody say yes, not once. Right. So I'd love you to like chime in on the misaligned incentives for a moment before we dig deeper, because that is really challenging the way it's sort of evolved.

And, you know, it's like the model of you build a house and you add an extra house or build an extra room, then you build an extra room, and nobody’s thinking about plumbing or access, and then somebody really wants another room over here.

I’d love to hear your thoughts about some of those things.

Steve Page (SUN Behavioral Health): Yeah, and a lot of people will talk about value over just volume, and I think that’s exactly right. Another way to think about it is I think our incentives as a system today are set up to drive overspending. And I think it’s actually a really important missed area here, where, regardless of your capital source, whether it’s government or a not-for-profit or a for-profit, if you’re spending too much money, it’s going to cost us one way or the other.

And whether it’s investors that are feeling squeeze because the investment’s not going well or the government is taxing us and making us all feel the pinch, overinvestment’s a problem.

And I think, because of the way our system’s designed, I think of it like an arms race. So think about, if you're a hospital in a hospital system, and you need to figure out how to keep the lights on, for profit or not for profit, it doesn't matter.

You need to attract commercial payers, patients with commercial insurance. It's just a fact. That's where you are making your margin. You're probably losing money on Medicare, and certainly before supplemental Medicaid payments you're losing money on Medicaid.

The reality is, though, commercial is where they make most of their money, and so how do you attract commercial patients?

Well, you need single rooms, and you need the latest gamma knife, and you need all of these things. You need a huge lobby with somebody playing piano, and the fireplace crackling in the background, but does that stuff change patient care. I mean, I would say there are no evidence-based studies on that.

So that, I think, if I was a policymaker, I would be thinking about, okay, is the way I've designed this driving people to think about how do I deliver care, you know, the highest quality care as efficiently as possible?

So I'm talking about value. Or am I really requiring people to kind of load up on the latest, fanciest, shiniest new building to survive?

And right now, it's clearly the latter. And I think that's a really big part of at least why healthcare services are so expensive and increasing.

It's survival.

Stewart Gandolf (Healthcare Success): So that is, you know, such a common theme, by the way, you know, having talked about this stuff for years.

And I think what comes to mind to me is a couple things. One, perverse incentives and the law of unintended consequences. Those two things are happening. No one would plan it to be this way, but all of a sudden we turn around and look and go, “Wait, how did we get here?” Nobody really planned it that way.

So let’s go back to the initial question, which was about strong reactions. Before I move on to some other questions, do you… you have to remember, most people don’t live healthcare every day like we do. So they’re not in it. And headlines grab attention, so certainly social media, our politics, everything seems to be more in that category today.

But do you have any other thoughts on this, and why there is such a visceral reaction, or is it just the basic idea that healthcare, they should be separate things?

Steve Page (SUN Behavioral Health): My perspective is that all the stories don’t get shared equally. So there’s a kind of an echo chamber happening. Now, there are some stories—there are—that I can’t defend.

And so how do you fix those? We can probably take those in isolation. I would just say that a lot of that is coming from bad decisions. People make a bad investment. They need to squeeze the cost. They got to try to make it work. Maybe they add some debt to try to kind of find their way out of this investment.

But governments make bad decisions. Not for profits make bad decisions. It's not as well reported. All three, depending on all those provider sources, have failed hospitals, have failed services. Staff get let go.

I don't think it’s reported evenly, but there are some things that are happening in terms of for-profit healthcare that I think we could clean up by changing the incentives.

The thing that I really like about for-profit operators being in healthcare is the innovation they can add to the system.

That is happening all the time, all over the place. And so I guess I want to be careful not to highlight or over, you know, kind of throw the baby out of the bathwater.

This is not that there aren't issues, but I think the overwhelming majority of, you know, for profit, quite frankly, not for profit and government are driven by people with the right motives, the right integrity, and trying truly to do it the right way.

So I think it's more about the way it gets reported, the proportion of the stories that get reported, that's frustrating.

And I can... And speak to some of it that's happening directly in our space, if that's interesting. But it's certainly the case as we look at it, kind of living it.

Stewart Gandolf (Healthcare Success): I would love to hear that.

Steve, one of things I like to talk about is my listeners love to look over your shoulder and see your world from your point of view.

Steve Page (SUN Behavioral Health): So, sure. Yeah, so, one of the examples, just in terms of reporting, there's a large, the largest for-profit provider in our space, behavioral space, psychiatric hospital space, has had a lot, just a tremendous amount of trouble in the press.

And, you know, maybe some of it was self-inflicted. But when I read an article by The New York Times, which, a series of articles, which, I'm a subscriber, I think they do fantastic journalism.

When they wrote an article on our space, I was shocked. I was shocked at how little investigative journalism occurred.

I really couldn't believe it. It could have been written by BuzzFeed—somebody that is not, does not hold themselves up to that standard.

And I only know because I'm in the space and I don't work at that company. I never have.

But I do know they told half the story. And that was like, I couldn't believe it. It really was, it really shook me because what we do, this is a lot of it is in the US psych hospital services, which our psychiatric hospitals are locked. Your admission criteria is, you know, at risk to harm yourself or others.

And it is an incredible responsibility to hold somebody in a locked facility. Incredible. Now, there's a reason for that.

Obviously it’s safety. They're at risk to harm themselves. The other side of it, though, is civil rights. So it's just an incredible balance. Now, we don't, certainly as a corporate CEO, but even as a facility administrator, you don't make that decision.

You're not making admission and discharge decisions. You don't have that authority, you don't have that license. Those are physicians, and they're making that decision with, obviously, their license on the line, but with the best information they have from their interactions with the patients, from the team's interactions, from the assessment.

They have to make that decision, and it's incredibly complex and important, and they do it every day over and over, and I think the story had none of that.

I mean, it was literally a listing of all of the grievances that the patients had, but never anything about the other side of it, and so that was telling the civil rights side of it, which is hugely important and consequential.

But so is patient safety. So it was a bit shocking to me. So that's the kind of thing.

Now, would you do that if it was a not-for-profit? No, that story wouldn't have happened. And so they went, it blew up and they're getting investigated and costing literally hundreds of millions of dollars in costs.

They're a big company. And so the scale is that. But they no doubt had some issues. I mean, my guess is there were some real issues in there, but I was shocked by the one-sidedness of the story.

So, yeah, I mean, it happens. There's definitely real bias. It's just a fact. Again, I feel like The New York Times is a great source, but not in that case.

Stewart Gandolf (Healthcare Success): Yeah, it's disappointing.

We talked a little bit offline about the alignment with patient care. And there's definitely, just based upon what just said, people believe it's inherently misaligned with patient care.

I'd love to get your thoughts about that because obviously you don't feel that way. I don't feel that way. But like what, expand upon that feeling because, you know, from your point of view.

Steve Page (SUN Behavioral Health): I mean, I think people forget who's providing the care, you know, so the individuals providing care, I mean, the people we're hiring to do the job we're asking them to do are extraordinary people.

I mean, truly, it is a very hard job and it is not particularly well paid, even licensed. And so obviously we've got both licensed and unlicensed folks who are in a variety of jobs, but that's who's actually in contact with patients and making those, you know, some physicians are making admission/discharge decisions, but all those care decisions are happening by people that are just some of the best people that you can imagine. And if you think about, who is that person you know in your own network who would give their shirt off their back to somebody in need, that's who comes and does this work.

So that's the person. So the issue then becomes, are they getting the resources they need to do their job? And that then does speak to, who's the owner? Is there enough funding here? Has it been well thought out?

And quite frankly, that can get tight. You can be, it could be for-profit that's over-levered or made a bad decision or just trying to, you know, increase profits.

It's true. It could also be, you know, government that has lost its, you know, a lot of its reimbursement legislators have pulled money. Or it could be a not-for-profit that's running without a margin and struggling too. So It's so payer-source dependent or funding-source dependent, but of course it is. There is some alignment. I'll just speak to the for-profit piece.

You know, nobody's designing a business with the intent that it fails. And so those are the scenarios where the business is failing.

It happens, but it's more poor management, poor investments in those situations. Then, and so somebody gets, so those caregivers maybe get lack of resources. Maybe they're understaffed or there's some reason now that they're not able to act as they would normally without, you know, with full resources and a full team to do their job.

I think I come down to who's actually making the decisions, who's providing the care. And these are pretty incredible people. So I just, they've worked. at all of these sources of, you know, our people have worked at government, they've worked at not-for-profit, they've worked for for-profit.

I mean, they're looking for a place to to do the work they love.

@22:13 - Stewart Gandolf (Healthcare Success)

So I just comment on that, you know, working in healthcare, so many, it's really easy to forget just how hard these jobs are, you know, long-term care, psych hospitals, some of these places people will work.

And the long-term care, there's a lot of times people are asked to spend, you know, the hours between midnight and eight making less than they could at McDonald's, that's a tough job.

And so, and in psych care, you're talking about, by definition, especially where you're talking about, whether in danger to themselves or others, that's a high-stress job.

And recruiting is not easy these days for cushier jobs. So I think definitely you have people that have a heart for it, otherwise they wouldn't be doing it.

Another thing that comes to mind is, this is, I didn't make this up, no margin, no mission. That term's been around for a long time, right? And that's accepted in the hospital world, the acute hospital world.

I think we forget that. I don't know if you have any comment on that, but that's like, this is, I didn't make that up. That's been around for a while.

Steve Page (SUN Behavioral Health): Yeah, absolutely. We lose sight of it. And regardless of your funding, if you're not going to figure out how to, you know, design your services to generate a positive margin, you're just not going to be around long. You're going to, one way or the other, you're going to run out of source of funds. So it's no different.

That's right. It doesn't, it really doesn't matter what your capital source is.

Stewart Gandolf (Healthcare Success): Yeah, for sure. So let's talk a little bit about the common, you've alluded to them. haven't specifically named them, but the sort of common criticism of PE and which of those do you think have merit, which do you think are just misunderstood?

I'm curious what you think there.

Steve Page (SUN Behavioral Health): Yeah, I mean, I think, I think there are probably three that come to mind. You know, cost-cutting harm's care, short-term profit focus, and then excessive leverage, so too much debt.

And I think that you can come up with examples of each of these. I think for the most part, what you're going to find, those were all poor investments, right?

Nobody is over-levered on purpose, for instance. You know, cost-cutting is typically, you're trying to save something that hasn't worked very well and trying to salvage an investment or keep it alive, quite frankly, from going bankrupt.

And so, I think you can find at least the cost-cutting in, you know, that can be an issue everywhere because it's for the most part, we're third-party reimbursed, whether it's government or third-party payers. Those can change, and you can find yourself upside down.

But the short-term profit focus, you do find that—and again, I think of that as a poor investment strategy. People do try to do that. If you’re an investor, all my initial training was in investing. That’s not a long-term investment strategy. You can try, but you’re probably not going to be successful. Business is long term. So when it’s time to sell it to the next investor or strategic buyer, that’s when that happens.

You can’t build a business for short term. You’re never going to catch that. So I can't say it doesn't happen, but it's, it really shouldn't be happening.

I don't know who's doing that. There's really no smart way to do that. You get lucky, I guess, but it, I don't, I don't, I'm not saying that from our investor group. I told you, you know, they had been in for a while and they committed to it, to a path that was going to take some time.

The one thing that I will highlight that, that I have not seen go well, and I wish was a little more, done a little more prudently, which is sale lease backs.

Those have not gone well for healthcare. And I've yet to see one, maybe you know one, a group. So a full portfolio of sale lease backs, you know, not individual. We lease three of our facilities. I'm not, I'm not opposed to leases.

It's the extracting all of the value out of the lease and moving on. And that, I haven't seen work for the, it's worked for the selling shareholders. I haven't seen it work for the little stub company that remains. So that's one I really do wish people would be more prudent about, more thoughtful about the long term of that business.

I don't know that, it's not the others don't have merit. There's, of course, examples. It's the only thing that I can say I wish that would change.

Stewart Gandolf (Healthcare Success): That's interesting. It's a fun fact that you didn't know and very few people who know me know. It took a few short years between my marketing career working commercial real estate. And I've seen the sale lease back model before.

And I could see, especially for, you know, long term care and psychiatry and other kinds of facilities, the value to take the cash out that makes it harder.

You have a gun. And then on that note, you mentioned also something else, which is the change in reimbursement is if you leverage yourself big time and then changes in reimbursement happen, all of a sudden the spreadsheets don't make sense anymore.

Maybe a little more padding in there would help? I don't know.

This is an aside, without getting too political, but we've definitely had some changes with Medicaid, and it seems to be beyond the difficulty of it, the uncertainty of it.

How does your industry handle that? Is it common for PE-based businesses to manage that risk before it happens, or do you just have to deal with it once it does happen?

Obviously, if you're going invest in this space, you know that Medicaid is part of it. But it's challenging, too, right?

Steve Page (SUN Behavioral Health): It is challenging. I mean, I'd say two things about that. One, I think, to your point, stay under-levered, right? You don't want to not be able to manage fluctuations in reimbursement. So, I think that is fine, but you just be careful about how much you take on.

And then, so fundamentally, the strategy that I’ve always had and our investors, by virtue of investing, bought off on it, is provide essential services at the lowest cost in your local market. And if you’re doing that, you should be okay because if you’re providing essential services, they’re essential.

And the way I think about it is, if our patients didn’t come to care with us, or our peers, because we’re a lower cost than they are, then they will be more expensive to the system. And that’s just because our patients are less costly to the system when they’re in treatment.

And that’s how I protect the business. I can speak a little about who we serve if that’s helpful. So with mental illness, we’re covering 5% of the population. But that group accounts for 40% of spend. Most of that spend, though, is not with us. Most of that spend is medical. About 80% medical.

So when they’re in treatment for mental illness, staying on their meds, staying out of institutional care, in their home, doing whatever they’re able to do in terms of productivity depending on their mental illness, whether they’re able to maintain a job or however their life is structured, they’re as least costly to the system as they can be when they’re highly functioning. The great thing for them is that’s the most pleasant state for them and their families, so it’s kind of a win-win.

 And we’re doing it a margin that makes sense for us. We’re able to keep doing it. So it kind of wins all the way around. If reimbursement changes and they decide, “we’re not going to continue doing that,” the cost to that population increases.

The challenge of keeping patients that have a chronic illness in recovery is hard. Often the medication’s quite uncomfortable. It may have life changes that make it hard for them to stay in treatment. And so they end up back in crisis. Again, more costly than staying in recovery.

So that’s how I think about it. Essential services at the lowest cost in your community. And you should be okay.

The changes in Medicaid are for real. There’s a lot happening out there. It’s a fascinating topic for me. If you want to spend a minute on it, I’ve got lots of thoughts on it.

Stewart Gandolf (Healthcare Success): Sure. We have other things to talk about today, but I think the biggest thing there is the unintended consequences, right?

I'm assuming nobody wants patients to end up in crisis. But before we pivot on, if there's anything else you want to say about that before we move on, this is your floor here.

Steve Page (SUN Behavioral Health): Yeah. I mean, we are obviously operating under the existing reimbursement environment. The services are designed around it. Congress set it up this way.

And so the changes that are coming are interesting to navigate. I think there will be a lot of effort to delay those changes, but to the extent they happen, I think that there’s a smarter way to do it. I think that there’s a way to pivot us as providers into more value-based reimbursement. If you’re going to pull so much reimbursement out of the system, you should do it by demanding quality along the way.

Instead of just taking a trillion dollars out of the system, you could try to move the carrot so that you actually move care. It would be a more effective way to get providers to move in a direction that lowers total cost and keep them able to function and transition, I should say, to a new model because it can happen over time.

Stewart Gandolf (Healthcare Success): I love that insight. I think that's a good point. I'm sorry, we did cut you off. Go ahead.

Steve Page (SUN Behavioral Health): No, that was it. You will see how it comes down. I think there will be a lot of conversation about how it goes into effect.

My guess, that conversation is not done, but I do hope they think about, I think they're not wrong thinking about value.

That's not wrong. What is challenging is going from the current fee-for-service environment to value. We think a lot about that. We think we're on that path, but I think that the overall system could use some support in doing that rather than just cuts.

Stewart Gandolf (Healthcare Success): That totally makes sense. I think we will agree that healthcare, almost every setting is not easy. It's typical everywhere.

And you signed up for probably one of the most challenging. Well, let's lighten the conversation a little.

Like you're a responsible PE-backed provider. And obviously we know lots of other ones. What do you think are the common traits? What are the ways to behave and be successful and be a win-win for everybody?

Steve Page (SUN Behavioral Health): Yeah, you know, it's fascinating. I didn't interview with a single private equity group that wanted to see us really crank on, you know, all of the levers of profit and forget about quality care.

Not a single. I mean, the opposite. So much of what they're focused on is, are you providing quality care?

How do you measure that? They're worried about those risks. And rightfully so. You know, incidents, nobody wants them. We all want to avoid them. So having a robust compliance and clinical team, making sure that you're providing evidence-based care and you've got enough resources to do it in the right way, everybody is behind that.

So I think that, I think people often miss, as you go into these investments, I don't, I've yet to see anybody that doesn't have their  integrity in the right place and is willing to cut any corners. I just don't see it.

So what does it take?

I mean, it's, I think it takes a very thoughtful business model. I mean, it's not easy. This isn't, this isn't an easy space to figure out how to both provide a service. Essentially what we're doing as an entrepreneur is you're providing a service that doesn't exist today in a way that kind of meets both quality and a positive margin in a kind of over the long term, you know, financially sustainable way.

You know, it doesn't exist. You know, by definition, that's going to be pretty hard. If you're, kind of a me too, it's going to be a harder business model.

So I think having a really thoughtful business model, I think having a very, I haven't talked about culture at all, but spending real time trying to push what are the behaviors that you want in your organization and walking that walk is also really important.

Stewart Gandolf (Healthcare Success): Yeah, for sure. Does nonprofit status guarantee patient first behavior? We've been talking about PE. Does it automatically happen? We've talked about nonprofit or government.

Steve Page (SUN Behavioral Health): Yeah, you know, I really don't, I just don't think it's a, it's capital driven. I don't, you know, it's interesting in that when we start hospitals, we’re talking about the hospitals that exist and are there needs for additional psychiatric beds? And I think very often, they will admit that this service is not their strength.

And you see what they’re doing and how that care is being provided. It just doesn’t exist. Often, the for-profit system that’s coming in to provide that service has a better model. It’s true. Is it perfect? We can’t do everything. There are some areas that the medical hospital in particular, if it’s for-profit or not-for-profit, it doesn’t really matter, can handle that we can’t. Med-psych being probably the most obvious example. As we don’t have an ICU as a freestanding hospital.

There are definitely things that you're seeing on a for-profit model that are actually just better. People don't like to think about it that way for whatever reason. The reality is we can figure out some nice solutions too. And I think that's happened in a lot of ways.

I think the level of incidents you see at a freestanding hospital are statistically lower. And they're low. And I'm talking about seclusion and restraints as an example.

They're lower not so much because we have better caregivers or people with better hearts or anything like that.

It is size. A larger hospital has more staff, more staff, more trained staff to de-escalate, more space, quite frankly, for patients to decompress on their own.

It lowers that acuity. And... ... And you see it in our numbers. Broadly, and I'm speaking broadly, of course you have large not-for-profit psych hospitals too. So for the most part in our space, not-for-profits are running units within medical hospitals and they average across the country 30 beds.

And for-profits for the most part are the ones that are operating the independent freestanding hospitals and they average 100 beds.

And it really is just scale. And that scale provides a safer environment.

Stewart Gandolf (Healthcare Success): That's fascinating. You mentioned that governance structures matter more than ownership. How come?

Steve Page (SUN Behavioral Health): Yeah, I mean, the way that, quite frankly, our private equity group, probably the largest contribution is around compliance and asking those questions and making sure that we're careful to set up rigorous compliance structure.

Obviously you get that also from the Joint Commission and from CMS. So it's not just that, but more broadly, they're thinking about it. And so that stuff's trained and intentional. And I didn't arrive with it. I appreciated the input. And I think that that's more, that isn't a for-profit, not-for-profit thing.

I think it comes from just good governance.

Stewart Gandolf (Healthcare Success): And then how does capital, or can capital improve access in underserved communities?

Steve Page (SUN Behavioral Health): Yeah. I mean, that's the thing that I think, I don't want to throw out capitalism in healthcare. It can be a very creative source of capital.

And so the reason I think it sometimes provides solutions is you've got a lot of people that are quite smart and risk-taking and willing to put some capital out there because they've got an idea and allow them to try to solve some of these problems.

And so I think it's really about ingenuity, letting that in and seeing if somebody can figure out some of these really challenging problems.

Stewart Gandolf (Healthcare Success): That's for sure. We have some challenging problems out there as well. And then we talked about this a little bit, but if you have anything else to say about just protecting the clinical integrity in a for-profit model.

You've already talked about what the result is, but I'm assuming you have safeguards and checks and balances. So I'd love to hear more about how that works, and especially for our audience who may not have any idea about these things.

Steve Page (SUN Behavioral Health): Yeah, so for me, I don't serve patients, right? I'm not even licensed to, so I couldn't if I wanted to. It's not my seat either.

So for me, integrity comes from building a culture, living a culture, you know, hiring, retaining staff that are living that culture and moving people on that don't.

And so culture is behavior. So, you know, it's our values and making sure that everybody in the organization knows what they are and why we do what we do.

I didn't start with this, but, SUN is an acronym for Solving Unmet Needs. And it's really at the core of who we are. And I think hopefully everybody in our organization knows that. It's right in the name. And so, and we do a pretty good job, I think, of pushing it out.

And what it means to us is we restore lives through solving unmet behavioral health needs. And that's, it's how we frame everything we do. And so I think it starts there, that we've built our values. Our values came from line staff. A number of years ago, we pulled a group to an off-site and thought about what are the behaviors we want to see, and they created the values we live today.

So I think that's really how you build clinical integrity in the middle of the night when nobody else is around, and we need to make sure that the folks that are interacting with patients know who we are, what we expect, have the tools to do their work.

I don't know another way to do it.

Stewart Gandolf (Healthcare Success): So you just mentioned, it's funny, I'm glad you came back to values. You alluded to it earlier. And just as an aside, I feel like I finally understand values at this point.

Steve, at a really visceral level, we just went through a process, because we had values before that we subscribed to, but when we were going through this process again, because we felt like we needed to re-look at our own values as a business, the consultant said, no, no, no, your values are not what you ascribe to be. Your values are based upon who you are already and like the ones you admire most about yourself and your team.

And that was transformational. And one thing that I said right there is very close to one of our values, which is the pursuit for excellence, even when nobody is looking.

That is such a really critical thing. And because it's really easy to not do that for people and to hold people that standard that like, what am I going to do? Nobody can see you, especially in today's world. So I just think that that's something I would put an exclamation point on.

That is so important. And for, I love your story about it. I didn't know that about SUN. And that's great to know. And I can see how that vision just populates through everything if you just constantly remind people. So I love that. So thank you for that.

So the last part of our pre-design questions here is about policymakers focusing instead of just the ownership structure or label. Like, what do you think today? Like, if you had the magic wand, remember I said earlier that nobody would design the system like they are today?

Like, what changes should they be making instead?

Steve Page (SUN Behavioral Health): Yeah, I mean, obviously it's value, but let me say it a little more cleanly, maybe. So, here's behavioral health.

The U.S. spends about two and a half times what other peer countries spend in healthcare. You can read about that all the time, right? Why do we spend so much?

A little bit of perspective that may be helpful is that we spend less in social services, and both impact behavioral health.

So, when you combine healthcare and social services, we spend about 40% more than our peers; so more, but it's not quite the dramatic 150% more that you see all the time in the press.

What it tells me is maybe the difference isn't how much we spend, it's how we allocate it. You know, there's kind of been a push towards, housing is healthcare, food is healthcare.

I think it could go further, it could be done really much more thoughtfully, but I would broaden the spectrum of what is health, what is creating a healthy population beyond just the clinical services that we think about.

So that's one. And I think anything, and I mentioned this before already, anything that can drive success in terms of value—so meaning, you know, providing, great quality, improving population health and reducing total cost. Those are kind of, that's value to me is it should be paid for over pushing for more and bigger and spend. It's just one more side.

So every time I see an article that says so-and-so built a $300 million hospital and they're all celebrating it, I just cringe.

I'm like, OK, I mean, maybe. But did it have to be $300 million?

What are we celebrating? Is it the size or did they use that money as efficiently as it could possibly have been used to extend the greatest benefit to healthcare and in our society?

And so I think it's, can we can we flip that? Can we stop with the arms race and start thinking about value?

Stewart Gandolf (Healthcare Success): Terrific. Any final words? I've enjoyed this tremendously.

Steve Page (SUN Behavioral Health): It's really it's been great. I think you've I think you've kind of tapped it all. That's all I know.

Stewart Gandolf (Healthcare Success): I enjoyed the time. Thank you, Steve. I really appreciate it as well.