Hello, everyone. Thank you so much for joining us today for understanding orthopedic practice models. Oops, that is the wrong title. Apologies. We're here actually talking about private equity and PSAs. So just a couple of housekeeping notes to get us started here. Everybody is in listen only mode. So definitely feel free to utilize the chat function or the Q&A. Q&A is great for asking questions, but everyone will have the ability to chat with everyone. Just make sure that you are selecting the right option when you're chatting so that it's not just only going to one person or the panelists. So I also want to share that we're recording this session. This is going to be available in the AAOE Learning Center after the session concludes, and you'll be notified via email once that is available. And I also want to mention that this is part three in a webinar series. So the first two recordings for our independent and joint venture and our mergers and mega groups is already available in the AAOE Learning Center. So if you miss those and want to get caught up, you can check those out there. We're also going to be doing a conference session sort of as a culmination of this series, and that is going to be Sunday, April 28th at the AAOE Annual Conference, and that is going to be from 2 to 3 p.m. So absolutely looking forward to that as well. Without further ado, I am going to pass it over to Andy Colbert with Ziegler, who's going to be moderating today's session, and we'll be able to have an introduction from all of our panelists. Thank you so much, Jessica. Thanks, AAOE, for hosting this and providing the forum. So this is Andy Colbert speaking. I'm one of the partners here at Ziegler. I've been in the industry about 20 years now advising and working with independent physician groups and helping them think through various strategic alternatives. I joined Ziegler in 2006 and been with the firm now 17 years, and I have the privilege of getting to work with independent orthopedic groups across the U.S. and really helping them evaluate various strategies around mergers, private equity, joint ventures, PSAs. It's been really fun these past couple of sessions getting to deep dive into some of the various growth strategies, and today we're going to double click really on two paths, one being the PSA route and the other being the private equity route. So we've got four really distinguished guests here today. So Andrew and Jarrett are going to speak to you really firsthand as individuals that were inside their groups as they moved into a private equity model, and then our two mics on the right side here are going to talk about their experience helping navigate their groups through a PSA process with a hospital. So a lot to get into. We've got about an hour here. Feel free to use the Q&A chat feature here to submit questions, and then as Jessica said, we're going to plan to reconvene on site in Chicago and obviously have a lot more discussion from there. We're going to start with you, Andrew, if you want to give an introduction on yourself and your group and just kind of a quick lay of the land. Yeah, thank you, Andy, and thank you AAOE for hosting us today. Again, I'm Andrew Carlson. I'm actually the director of growth and strategy at Growth Ortho, which is a private equity-backed MSO, and like Jarrett and as Andy kind of pointed out, I came from the original practice of Growth Ortho. So I was sitting in an administrative seat from about 2015 on and went through the transition in late 20, early 21 when Growth Ortho was basically created. So I had a bit of a unique perspective on coming from a group that had a lot of questions about this and look forward to chatting a little bit about that today, but again, thank you. Next up, we've got Jarrett. Hello, everyone. Jarrett Landman. I'm the VP of operations for Spire Orthopedic Partners. Spire is a large and growing private equity-backed MSO that supports nine practices throughout the Northeast, a host of ancillary services, nearly 140 physicians. Like Andrew, I lived through the transition going from an independent private practice now on to the private equity side working for the MSO and have kind of a unique perspective, I think, on what it takes to sort of navigate that transaction effectively, but also really understand when timing is right to start to investigate some of these alternative practice models. And so I'm just happy to be here to help support AOE in this talk. Great. Mike Doyle. Hi, I'm Mike Doyle. I'm with Heartland Orthopedic Specialists, and I was there through the beginning when we were in private practice and helped us transition into a PSA relationship with our local independent hospital in Minnesota. We're a one practice, nine physician group, and seven mid-levels currently. And I'm looking forward to this conversation with AOE and the others. Excellent. And Mike Baer? Yeah. Good afternoon, everybody. I'm Mike Baer. I'm the medical director for OrthoAtlanta, which is a 72-person private orthopedic practice in the metro Atlanta area with offices now not just around Atlanta, but also in Augusta and in Macon, Georgia. We entered into a PSA in February of 2020 with a prominent hospital system, and I look forward to being a part of this panel and talking about it in more detail. That's great. Thanks, Mike. Well, we got a lot to unpack today. I'm going to start with Mike Doyle with you, given most of us in the room here are maybe three to five years into our partnership. You're going on over a decade now into your partnership, and you started your conversations well before many other groups in the country were even thinking about affiliating. So maybe take us back to that point in time. You had a tenure with the group prior to that. What were some of the threats you guys were facing? What were some of the challenges? Did you evaluate other options? Did you think about merging with a mega group or think about other strategies? And ultimately, what led you down that PSA path? So yeah, part of it started our conversations that led to this started in about 2004, and we had a corporate retreat with the then five physicians that we had, and we had the discussions of is the practice bigger than the five people in this room, meaning do we want it to sustain, or are we just trying to make sure that we maximize the opportunities for these five during their careers? They made the decision at that point that they wanted to make sure that our orthopedics was provided in west central Minnesota for perpetual. So about two years after that, two, three years after that, we were struggling to recruit. We were struggling to make sure that we could be in perpetual as we wanted to get younger surgeons on board. So we looked at it. We looked at the three opportunities. We looked at, we either we sell out to the hospital and become employees, which everybody said they didn't want to. We looked at duplicating, and we were also the only orthopedic group in the state of Minnesota without any ownership of a surgery center at the time. Or do we duplicate all services? Or do we form a PSA? Or do we possibly just implode because we can't recruit? That was our kind of models. They wanted the PSA model because they wanted the arm's length discussions with the hospital, and to be able to have some more negotiating power as a group versus working individually as employees of the hospital. So that's kind of how we looked at it. You know, the private equity really wasn't too much discussion back then. I mean, those were kind of the models that we looked at. Ownership, I mean, employees are PSA or completely independent. And, you know, we made the decision. We had liked working with the hospital. That's why we didn't own a surgery center, but we just said we have to move on and have a more strategically aligned relationship. And that's what drew us to the PSA model. And what was the negotiation like with the hospital? Was there a financial transaction or was it more kind of a negotiation just around the the RVU rate? You know, walk us through what those dynamics look like. Sure. Yeah, we sold all of our assets, which was fairly simple. It's fairly clean cut. The surgeons weren't, you know, they thought everything should was plated in gold at times, but, you know, we had to go through the, you know, we had an independent appraisal agency come through, appraise the practice, all of our physical property that we had. We really had to, you know, look at what's the value of it. And so that was fairly clean cut because it was neutral. We both just agreed upon it. We actually didn't sell our physical location to them right away. We kept that building because they wanted, we signed a long-term lease because we didn't, we wanted to be able to get out of the situation so we can maintain ownership of the building, which was under a different entity anyways. And then we had the negotiations on the conversion factor. We actually spent a significant amount of time as all employees switched over to employment by the hospital. So that it actually took longer in time-wise to negotiate all the employee handover, the physical ownership of, you know, chairs and desks and x-ray equipment. That all actually was fairly simple. It was the people part that we spent a lot of time on to make sure we got it right. That's helpful. What would you say, about a year soup to nuts, give or take, or? 18 months probably from what, and we weren't, you know, we weren't under the gun. There was another group about a little over an hour away from us that they did theirs in three months. And we actually took our time because we wanted to make sure we did it right. And I think that was it. Some of it is we started the discussion because we just went and talked to the hospital and said, hey, this is, this is where we're at. This is what we want to do. If we want to make sure we continue to strategically align, we need to have good thorough discussions throughout the whole process. And did you look at other hospitals to potentially affiliate with as well, or was this kind of like a logical? This was a logical one. I mean, we're in West Central, we're a rural setting. We had one main hospital. We could have discussed with a couple others that we did work with, but we felt our alignment was strongest with this, this hospital. And we threw the pitch out there and they accepted the, they accepted the negotiations. That's great. Well, Mike Bayer, let's talk about your situation. Well, first off, maybe just help everyone understand what, what a PSA is and what does it mean to actually be in a PSA with, with a hospital and then kind of take us back through the evolution of your group's process, which was about four years ago now, I guess, beginning of 2020. And I think you inked it right before COVID kind of turned the world upside down. Yeah, we, we inked it in February and of course the world ended in March. So it was interesting timing. PSA stands for professional service agreement. Sometimes you'll hear it called a physician service agreement, but it really it's, it's the other is the proper way to do it. It's interesting in simple terms is basically our practice leasing our services to the hospital. We remain a private practice. In our case, we're what's called a global PSA. So we retained all of our assets from the standpoint of staffing and which is essentially our key asset. We did give up some of our capital assets, such as our MRIs and our PT locations, but the staffing, again, all the therapists remain employed by OrthoAtlanta. So a little bit different than what Mike was describing in their situation. We wanted in the PSA that we negotiated to protect ourselves in a net, in the case of a exit that might be needed. We thought that that was a critical component if we had to reestablish ourselves as a private practice to have as many of our original assets as possible. So we went a little bit different route in the type of PSA we formed. But it took us 18 months, just like it took him. So it, the devil's in the details in these negotiations and it, you know, you have to, you have to take it slowly. Otherwise you end up doing a lot of backward looking as you, when it's all done. And we're in year four and it's been great to date. So, so far so good. And what, what other options did you guys consider and what would you say was the main driver that led you to want to go down this PSA path? Yeah. So we started in 2016 and looking at what was happening around us in healthcare across the country. Private equity was starting to leak back into the system at that point. Mergers, big mega groups were happening in our adjacent state in North Carolina. There were some very large groups that were beginning to form. And a lot of the younger surgeons coming out of programs were going into the employment model. So we knew we didn't want to stay stagnant. We were adamant about staying independent or private. And that narrows your focus a lot. And so in order to take the next step to a PSA, you really have to have what Mike said is a hospital that you feel comfortable with, because if you're not comfortable with the hospital you're going to work with it, it will not work. It will not work. So alignment is the cornerstone of a PSA by far. And were there multiple hospitals that you kind of interviewed, or was Piedmont kind of the most logical choice? Piedmont was the logical choice, but we have several hospital systems in Atlanta, and we look at them all, and we actually have a presence in several of them. But we had been in the Piedmont system for 25, 30 years. But more than that, their goals long term aligned with our goals, and that's really what we were looking for. They really appreciated that orthopedics had moved outpatient almost 90-something percent, and they wanted to build that outpatient presence. And again, it had to align with what our vision was, and it worked. That's great. That's great. We'll come back to you in a little bit. Andrew, let's switch over to you. I think first off, give the audience an understanding of just what private equity is. I was afraid you were going to ask that. And what does it mean to be a partner with private equity? That question I was afraid of because it could be like a weekend course. It's quite complex. Essentially, private equity... Where do I even start? I think in reality, private equity is a capital partner. I think that's probably the best way to say it. What orthopedic practices across the country are looking at is the ability to stay independent, the ability to remain autonomous, not go down the hospital path. And having a capital partner in support of that initiative is probably the easiest way to share what private equity is today. We can go down the roads and the weeds, and hopefully people come to the conference at AOE and there's some sessions on this, but that's essentially what private equity is in orthopedics today. And now, take us back a couple years, similar timing to when Mike's group was going through this. You were down at Bluegrass and you guys were evaluating your options. What led you to A, want to go the private equity path and then B, start your own platform, if you will, as opposed to joining one of the existing models? When our physicians were contemplating this, there were a few entities nationally that had been formed. But our physicians felt, much like many orthopedic surgeons, that they wanted to structure something that was specific to them and their practice. There was a PE-backed MSO north of us that had just formed maybe a few months before us. But in reality, I think our docs knew that they wanted to structure something a little unique. So reversing back to 2015-16, the group had added physicians, continued to grow ancillaries, but they knew they had some retirements coming up. They knew they needed to recruit physicians. They knew they had a larger market share that could garner if they had the ability to grow. They had an ASC that was at capacity or really, until just recently, at 120% capacity until we moved into our new center. All of those, frankly, took capital to accomplish those goals. It's not cheap to bring physicians on. It's not cheap to grow. So they were fortunate enough to find an equity partner that was like-minded in them. And much like the Mike's have shared, it took about 18 months of diligence and structuring growth ortho today. And here we are, three to four years into it, and I can say the physicians are happy. They moved into a new ASC in Lexington just on Monday, a $25 million expansion. And each practice under our partnership has grown, has seen benefits. And I think the physicians are quite happy today. That's great. And you've kind of moved from being exclusively focused at the practice to now being kind of partially or more at the MSO kind of growth ortho level. Maybe just give us a flavor for what the strategy and vision for growth ortho is and where you guys are spending your time these days. Each private equity-backed MSO has their different flavor. The name growth ortho, a patient generally will never see. But in the name is growth. And that's what we're trying to do with our practices today. So I'm the director of growth and strategy. I do physician recruitment. I look at ancillary development, geographic development and growth. And generally speaking, it's an exciting path that we're going down. And again, each of our practices, the organic growth has been tremendous to see. Our physician volume has increased by 33%. And that takes investment. And growth ortho, I think if you looked at what our strategy is, I think 85% of our focus is growing practices. It's in the name. And so that's part of my role. And yeah, I did morph from an administrator at the original practice into this role with a lot of questions through the way. I learned a lot in the last few years, probably much like Jared has. And admittedly, I was probably naive to it in the beginning. And I have a much better understanding now. I think Jared, myself, can say that we're advocates for people like us in the space. And we wanna make sure that the administrators understand their pathway, understand their role, and hopefully can also develop professionally through that time, so. That's great. Jared, let's pass the baton over to you. You know, you also were inside your practice, running it and kind of helped navigate through this private equity transition. Maybe just one slight difference from Andrew's group is you guys joined a pre-existing model. So kind of talk us through that, why you chose to join an existing model versus trying to go build your own model and kind of how that works once you're kind of coming into something that's already pre-existing. Sure. So I think, you know, you're getting into a concept that we talk about in private equity called platforms. And there are, gosh, and I lose count and Andrew probably knows better than me, somewhere between 14 and 18. There we go. I knew the number was close. Platforms right now in the space, in a space that's not highly consolidated as we currently speak. And it takes a unique sort of group to be that platform to which you build upon. And those are infrastructural pieces. Those are financial numbers that play into that. And kind of Andrew's original point that we could do a whole hour long session just on that piece of what it is to be part of a private equity platform. I think, you know, for us on the Sports Medicine North side, which was the legacy group I supported, we were a large and dominant presence in our current market. We weren't really trying to look to join private equity to avoid any sort of threat. We were trying to figure out where the opportunities on the horizon were over the one year, three year, five year plan, right? And try to make, you know, growth happen on a more meteoric level than on an organic level, which is what we did for years and years. And take advantage of what, you know, joining a PSA model or a private equity model does for you. It allows you to gain partners who help you grow the economies of scale with payer relevance, inventory costs, aggregation of services that everyone needs, HR, IT, call center operations, finance, and AP, and really take advantage of that to help drive down what's become a really difficult thing for independent private practices, which is a growing cost to doing the book of business that we do. And so we'd sort of looked at what Massachusetts looked like back in 2021. And we saw the rise of the major health systems, Mass General Brigham, you know, Beth Israel-Leahy Health, Optum moving in from the West. And while we were doing just fine at the time, we said, well, where will we be in three years? Where will we be in five years? And we never wanted to find ourselves with an arm twisted behind our back. We wanted to be able to make decisions that drove us to become better, to grow, as Andrew has mentioned, and do it on our terms. So that's really why we engaged with a number of different groups, Spire being one of them at the time. We went through a formal RFP process. And I think most important was to find a group that aligned with our mission and our values. And that's really ultimately how we decided upon our partner. And I think anybody who's investigating any of these opportunities at the end of the day needs to make sure that the mission, the vision, the values, all the things that you anchor to the private practice world are things that carry forward in your partnership. That's great. And since you've joined, tell us a little bit about kind of what's transpired since then. And, you know, has there been opportunity to kind of bring other groups around you into the playbook as well? Yeah, I would say we've really grown on a number of fronts. And, you know, just to give a sense, Sports Medicine North, legacy practice, I still currently support. We were a 15 surgeon group. And in the last 12 months, we've hired five surgeons, right? That kind of growth is not something we could have done as an independent private practice, because kind of as Andrew alluded to, and as the other players on the panel know, the way you do that as an independent practice is you go around to each of the doctors and say, how much are you willing to fork over so that we're able to hire doc X or doc Y? So, and you have the questions of cannibalization and other things and how quickly are they going to ramp and scale? Today with our capital partners, the answer is we're going to take the risk for those surgeons to ramp and scale, because we know with the track record you've had, Jared, we're going to get there. And so again, the ability to add new surgeons, I'm racing to open a de novo site in the next six weeks, right? Those are things that I couldn't do without the expanded infrastructure of the network that I have. I used to joke that in my old life, I was the CEO, COO, and COOK, because I used to flip pancakes at the staff breakfast, right? And so you wear a lot of hats as an administrator that kind of now being part of a larger organization, you know, I have partners to turn to when I have concerns about RCM or about investigating new facilities and growth. So again, that has really paid dividends in allowing us to reach the ends we're looking for in a much more expedited fashion. That's great. And what about from an ancillary perspective, how built out were your ancillaries pre-deal relative to where they are now? We were fortunate. I had ASC, it was wholly physician owned, it was part of our practice. And in Massachusetts, that's hard to come by because it's a pretty highly regulated state. We had a strong physical therapy group with about five offices tied to our legacy practice. We had one of the few physician owned MRIs in the state of Massachusetts. So we were a pretty complex organization to start. But now, again, with all of the various levers we're able to pull, again, we've been able to grow our physical therapy department. We've been able to really hone in on the metrics associated with these practices to be able to drive better efficiencies and results, both in terms of, you know, our billing and collections and revenue cycle, managing inventory. So, you know, again, we've really been able to not only grow, but also refine the practice that we had at present. That's helpful. One thing I wanna do is just pause to ask folks to fill out the poll. There is an audience poll question. If you click the poll icon at the bottom of the Zoom, there's three questions here. One is share your current practice model. The second is how much is market competition on your mind? And then the third is which attributes do you think are most important for your practice success? So if everyone could take a look at those and participate on those, it'd be great. We'll circle back to those. Mike and Mike, let's turn it back to you guys. We got some questions from the audience here, particularly around just how the economics of a PSA are structured. So I guess a couple of things we'd love you guys to comment on. One, is there an upfront purchase like in private equity where there's kind of like liquidity to the owners? And then secondly, that RVU rate, is it a fixed rate for all services? Is it negotiated based on different services? And then how often does that rate get adjusted or renegotiated? Mike, do you want to start with that? Sure. So when we did it, we sold all of our assets for that. So that was, again, like I said, it was just what we felt worked best for us. We didn't sell the physical structure of the building until several years later. And part of that just was purely a timing issue that we actually moved into a new wing of the hospital and we rented them our old building before we started our PSA discussion, while we were doing our PSA discussion. So it was just was an advantageous timing thing. Our work RVUs are unique by specialty. So we have an orthopedic conversion factor. We have a neurosurgeon conversion factor. We have a physiatrist conversion factor, primary care, a sports medicine conversion factor and a podiatric conversion factor. So those are there. Our work RVUs adjust annually. We utilize benchmark data to adjust our work RVU conversion factor. And we've actually renegotiated our total whole PSA three times since 2011 when we went into it. So we do usually have about a three-year window and we will renegotiate again going into 2025. So we start those negotiations here in late summer of 24 to make sure that we're ready for June 30th, 2025. So ours do fluctuate. It is unique to it. We do sit down with our hospital and work through that. But again, we try to use as much objective data as possible because otherwise we can get pulled into things. But it also, the hospital will come to us with asks, we want a higher conversion factor. They have asks on quality metrics. We participate to help make their lives simpler so they can get reimbursed more so we can make more. And is the benchmark that it's tied to, is that like a CMS driven benchmark or more of just an industry average of reimbursement? How do you tie that? Yeah, we utilize AAOE data and MGMA data also that we look at those to see how those, when we're looking at calculated conversion factors, total compensation packages. So we look at all, we work our view thresholds. So we're looking at all that data to help use that as a measure. So we use a blended metrics of all those data points. That's great. Mike, how do you guys do your calculation? It's pretty similar. So I'm not gonna repeat some of the stuff Mike said. We use the three surveys, the Salomon-Cotter and the MGMA and the AMGA to establish a baseline and then come up with a rate with the hospital system. Internally, we blend, so they do it by subspecialty as well. But when that comes into our world, because they don't manage that, we blend it into a single conversion factor that we use for all our physicians. And so we don't subspecialize it within the practice. And then the RVU rate comes through our compensation model as well. So we get paid a chunk of money by the hospital each month and then we run that through our own model, which is how we pay the physicians. And quite frankly, the hospital doesn't know and doesn't really care how we pay them as long as it's fair market value and not too high. As long as it's fair market value and all the other measures are met. And we negotiated a Q3 year term for looking at the RVU rate. We put a lot of guardrails around it so that they can't come in and say, we're not doing so well this year. We got hit hard. We got to drop you down to a certain level. If we meet metrics that we've established, they can't do that. And so we protected ourselves on both sides, but we left an upside as well. So we've only had one renegotiation and there's been no issue. Yeah, we also, we have floors just like Dr. Baird talked about too. So yeah, they can't, a bad year for them isn't a bad, doesn't mean it's going to have to be a bad year for us. You know, I mean, we have to meet our metrics. We have to meet our goals, but it's still, it can be a positive on that. When we negotiate our PSA2, we did name branding. We did some, you know, we still own that. We own the name of Heartland Orthopedic Specialists that we, and we have our agreement with Alomar Health. So we still own our name. So we put part of our administrative costs and such into name branding and other aspects of non-compete, not necessarily non-compete, but to keep us in line. We negotiated other administrative fees into that. So kind of like Mike said, they bring it in and then cut the pie up. We kind of tried to do it externally. So the doctors can't try to whittle away at that. And Mike Baird, does your model also kind of fluctuate annually based on different benchmarks or are you, is it literally just a fixed rate for the next 10 years? It's every three years, it's a fixed rate. Yeah. Okay. Yep. Let's hit some of these private equity questions that just came in. Maybe Andrew, why don't you spend a minute talking about, I know one of the things you guys really focused a lot on is a couple of things. One, you know, when everyone thinks private equity, they often think it's a great liquidity event for some of the longer tenured docs, but they always kind of question, what does it mean for some of the up and comers or the newer physicians or the yet to be hired docs? Talk a little bit about how the model has worked and evolved for some of the folks that were kind of on that partnership track and what it means for them. And then secondly, the concept of this second bite, and I know you guys put in your own kind of specific second bite board, which I think is pretty unique in the market. So maybe talk a little bit about that too. Yeah, I'm not sure if the entirety of the attendees can see questions, but leave it to Bill Sullivan to ask great questions on the webinar here. So it was really important for us in the beginning stages that the model that was created is not just going to benefit the legacy physicians. You had to have a pathway for the younger docs and even the physicians who weren't part of the practice yet. In order for independent practices to survive, you have to be able to recruit, you have to be able to bring in quality physicians behind the guys and gals retiring. So without getting too specifics into how we do that, because again, there are some fine details that are probably a little different from platform to platform. We wanted to make sure that the younger doctors in the practice had a pathway for equity early, did not have to buy in, and we can get into the weeds on that at some point in time. And we also wanted to make sure that physicians we were recruiting also had that equity opportunity. And I think what's been beneficial for us, and I'm glad to hear Jared's had success recruiting too, a lot of physicians coming out of fellowship today, some will hit the easy button, go to hospitals, appreciate that. But some still have that entrepreneur spirit. And being part of a private practice and that private practice model, yet having equity in a larger entity to hopefully have, again, maybe those bikes to the apple along the way or diversifying your equity over time, really spoke to our docs coming out of fellowship in the last couple of years. And I think that's frankly how we landed some of them. And so having a structure that benefits them was absolutely vital. And frankly, the only way this will work. So hopefully that helps answer first question. And we can get into the weeds at some point about that, maybe offline. The second component is the second bite. Obviously the way private equity works, there is a large liquidity event day one. And generally speaking, the older physicians probably have more opportunity in that initial investment. But we have models that really show the physicians who are coming out of fellowship over their points of their career probably have more opportunity and more bites of the apple along the way. And frankly, more benefit. However, you bring up the second bite board, if you will. And this is where having an advisor early in conversations really helps. And I think our physicians didn't know what they didn't know. So having an expert come in and kind of help walk through the process and walk through the fine details is vital to make sure that the partnership is struck and the marriage is struck and can withstand time. And that goes for PSAs as well, of course. But our docs knew that they got along pretty well with our capital partner today. But what assurances do they have to make sure years down the road that that partnership with new capital investment would still understand the independent practice of medicine? Most of our MSOs across the country will have employment agreements and operating agreements. However, our docs took a step further to make sure that physicians were captains of the ship. And I'm happy to say today that our practices, their physicians run the partner meetings. They're integral in any decision made across the practice and they still feel like they're in control, which is frankly the most important thing in independent practice right now with our docs. Orthopedic surgeons are the most vehemently independent in medicine and we wanna make sure that they have that autonomy moving forward. That's great. Jared, maybe talk a little bit about, from your perspective, we get a lot of questions around the use of debt and leverage in these transactions and how it may or may not kind of complicate or just influence the decision-making process if you go from an organization that had no debt to now having some debt. Talk to us a little bit about kind of how that has kind of worked in your organization as well as just the role that the private equity investor plays in the day-to-day management of the business and what you kind of keep doing business as usual versus have changed since the investment. Yeah, I would say that kind of similar in structure to Andrew's organization, our private equity backer, which is Kohlberg & Company, is truly a capital partner. They are not visible. They are not forward-facing. You don't see them anywhere. They are not involved in anything from a day-to-day operational standpoint and quite frankly, probably aren't involved at all on any of the corporate ultimate decision-making that we're making with respect to the practice. At least in our platform, we are 77% physician-owned. And so that kind of builds second question about how do you keep from seeing what's happened with Stuart? Really, any transaction events that we have downstream are going to be the decision of the physicians, not just the capital partner, because ultimately, you can't turn the reins of these physicians over to somebody who's not aligned in the mission and the values because the docs won't approve of them. They're the majority stakeholders in the organization. So that's a big piece of that. I also just briefly want to go back to the second bite event component of things because while statistically speaking, there is a level of inevitability to that second bite event, there's no guarantees, right? And so whenever you're choosing your partner and your partnership, you got to want that marriage to be based on more than just good looks, right? You need to understand what the business model is. You need to understand where there are synergies, alignments and opportunities in the new structure you're entering into that's beyond just a, you know, liquidity event at the time of acquisition and the potential future event downstream of that. So, you know, from our standpoint, you know, and getting back to the leverage component, you know, each entity will handle, you know, their business differently, right? Everyone wants to keep under a certain amount of leverage, you know, both because obviously the creditors and the cost of borrowing money these days is such that you can't take as much money as maybe you used to, but you want to also make sure the money that you're borrowing is being put to good use. And in our case, it's always been put to new ventures, new acquisitions, Novo Growth, which has been the focus of the organization. And we've done it, you know, in a really smart way. One credit I will give to Kohlberg as a partner is that in each opportunity where we've, you know, been able to invest in the new practice coming on board, they have reinvested in each of those steps. So they haven't just said, hey, we're putting in the initial capital, everything else you guys can lever on your own and figure out along the way. At each of the various rungs, they have reinvested dollars. And I think that speaks to the fact that they believe in our business, they believe in the overarching growth. And quite candidly, they're not necessarily ready to just jump out, just because we continue to grow and be successful. That's great. Let me I'll add one more thing on the liquid on the cost of debt and leverage. It's important to do your homework, do your diligence in both ways, they're going to do diligence on you, you do diligence on them. So Jared's point, having having a partnership that's frankly low leverage has its benefits, you know, cost of debt continues to rise. And that's a problem across any, any growing platform. And where you invest in growth should have a return, right? The $25 million ASC expansion that our practice in Lexington just opened up. Yeah, that makes sense to invest there, right? I mean, that's clearly a good investment. However, when you when you look at groups that are looking at the future, and have that second bite on the horizon, I think it's important to know who that future partner is. And to Jared's point, make sure physicians have a little bit of say and a little bit of comfort into into their future. And, you know, Stuart, I don't know all the ins and outs of what's happening in that in that entity, I just hear what's in the news reports. It's not a great story. You know, it's not something you want to hear again, and making sure you partner with groups that have the same culture and the same philosophies.

private equity

professional service agreements

orthopedic practices

negotiation process

work RVUs

second bite opportunities

growth strategies

physician involvement

strategic planning

regional growth plans

orthopedic practice models

asset sales

RVU rates

second bites

capital partnership

debt and leverage

smart investments

due diligence