Surgical Precision: Lowering Costs and Elevating Care
Matt Searles is the CEO and Managing Partner of Merritt Healthcare Advisors, one of the largest privately held surgery center companies in the US. As an owner-operated, industry-leading firm, Merritt Healthcare has developed, managed, and advised 24 ambulatory surgery centers. In his role, Matt has managed Merritt’s investment banking business, acting as a seller-side advisor on over $3 billion in transactions involving surgery centers, surgical hospitals, and physician practices.
Here’s a glimpse of what you’ll learn:
- [1:27] Merritt Healthcare’s humble beginnings and gradual success in a heavily regulated state
- [4:46] How Merritt Healthcare strategically capitalized on overlooked opportunities for growth
- [5:51] Matt Searles shares the key to Merritt Healthcare’s success: clinically led, quality-focused services
- [12:14] Merritt Healthcare’s goal of expanding partnerships with health systems while maintaining a personal touch
- [16:41] What to expect from future episodes of HealthTalk Insights
In this episode…
With the healthcare system in flux, it’s more important than ever to identify value-driven, safe, and cost-effective care. How are leading healthcare centers cutting costs without compromising on patient care?
Investment banker Matt Searles recognized an opportunity to transform healthcare by developing ambulatory surgery centers with a strategic, patient-driven approach that prioritizes clinical quality over short-term financial gain. He emphasizes fostering strong, collaborative relationships with key partners and physicians to enable independence and patient satisfaction. Focusing on quality healthcare ensures long-term success and high value.
Welcome to the first episode of HealthTalk Insights, where Matt Searles, the CEO and Managing Partner of Merritt Healthcare Advisors, is interviewed by guest host Chad Franzen of Rise25. Together, they discuss Merritt Healthcare’s trajectory in developing ASCs. Matt also describes how the firm adopts a personalized approach to healthcare, how Merritt capitalized on growth opportunities, and its commitment to clinically led, quality-focused services.
Resources mentioned in this episode:
Quotable Moments:
- “I hope that in doing well, we’ve helped, and I like to think we’re an important part of creating facilities that have been cost-effective for patients.”
- “Overnight successes take about 25 years, we’ve learned.”
- “We’re not Bitcoin millionaires; we created value.”
- “We’re committed to going above and beyond for our clients.”
- “We’re not going to change our approach. We’re not going to do it everywhere and anywhere; we’re going to be very, very focused on where we do it.”
Action Steps:
- Research and understand the regulatory environments in your area of business: Knowing the rules helps you find opportunities within them.
- Partner with like-minded professionals who share your values: It strengthens your position and ensures all members are working toward a common goal.
- Prioritize long-term success over short-term gains: It builds a more sustainable model and greater eventual rewards.
- Focus on service quality and safety, not just financial gain: It helps build a reputation for excellence that pays dividends in customer trust.
- Stay informed about industry trends and adapt your strategy accordingly: It ensures your business remains relevant and competitive in a changing marketplace.
Sponsor for this episode…
This episode is brought to you by Merritt Healthcare.
Merritt Healthcare is the industry leader in the development, management, and advisory of ambulatory surgery centers across the United States. They are an owner-operated firm committed to direct principal involvement.
They help partners maximize value while maintaining physician and patient satisfaction. Whether it’s operating guidance or business development initiatives, they are committed to going above and beyond.
To learn more, visit merritthealthcare.com.
Episode Transcript
Intro 00:04
Welcome to the HealthTalk Insights podcast, focusing on what is best for the healthcare consumer and how to impact positive change in US healthcare.
Matt Searles 00:19
Hi everyone. This is Matt Searles, the host of the Merritt Healthcare podcast where we feature top healthcare leaders. This episode is brought to you by our firm, Merritt Healthcare Holdings, which focuses on surgery center development across the United States. We are an industry leader in the development, management and advisory of ambulatory surgery centers in the US, and we are an owner operated firm really committed to direct principal involvement in all our projects. Our goal is to help our partners maximize value and maintain physician and patient satisfaction, producing the service at the lowest possible cost and the highest quality.
Whether we’re providing operating guidance or business initiatives, we are committed to going above and beyond for our clients. So to learn more, please go to merritthealthcare.com. Today I have Chad Franzen of Rise25, who has done literally thousands of interviews with successful entrepreneurs and CEOs. And we have flipped the script and he will be interviewing me.
Chad Franzen 01:11
Hey, Matt. How are you?
Matt Searles 01:11
Good. How are you?
Chad Franzen 01:12
Great. Thank you. Great to talk to you today. Thanks so much for having me.
Matt Searles 01:15
You’re welcome. Thank you for coming on.
Chad Franzen 01:17
Hey, I wanted to dive into a little bit more about your company and kind of its history. Can you tell me a little bit about kind of the origins of Merritt Healthcare and especially your part of it?
Matt Searles 01:27
Yep. I started Merritt Healthcare in 2001. I had an opportunity. I was four years post business school, and I had an opportunity to start my own company with some physicians, really focusing on the development of an initial surgery center in Connecticut. We, you know, at the time didn’t know what we didn’t know.
We were in a very regulated state. But, you know, as we fast forward, it turned out to be, you know, advantageous for us because I think that we were well received because we were, you know, putting these cases in much lower cost environment, maintaining quality. So, you know, we’re very friendly with the regulators who were, you know, very open to allowing this to develop, you know, mindful that most of these companies exist in states where there’s, you know, less regulation. But that’s where we started. And, you know, over the course of the years, a company started slowly, but we’ve developed 24 surgery centers.
Most recently we have several with Mount Sinai Health System. And these facilities have, you know, ranged from, you know, essentially the tri state era primarily, but we’ve also done them in Massachusetts and Maryland and, you know, have developed a, you know, a pretty solid footprint, really one of the only owner operated firms that remain. A lot of them have either taken on capital or sold, and we remained an owner operated firm. We also have a related business that we started in oh six, our investment banking business, which is, you know, quite busy as well. And we’ve worked in 35 states advising health care service companies on, you know, the sale of their entities to, you know, whether it be, you know, hospital systems, private equity, strategic companies, you know, across the spectrum.
But as you know, we stand here today we’re, you know, primarily focused on the surgery center side of the business for this podcast. And, you know, overnight successes take about 25 years, we’ve learned. So a lot of that development is heavily weighted towards, you know, the last, you know, 12, 12 years or so. But we came up, you know, again, really just focused on, you know, really direct involvement. And you know, the slow start, I think paid off just in terms of making sure that we were, you know, kind of focused on projects in a way that I think, you know, other other firms, you know, don’t provide the same level at times.
And so we wanted to have a different model, less development, but higher focus on those projects.
Chad Franzen 03:49
So you obviously, you know, you’re coming up on 25 years now. What. And that’s a pretty fantastic run with 24 surgery centers in operation. What had you been doing up to that point? Was it stuff like this or were you just kind of an entrepreneur?
Matt Searles 04:03
No. I graduated business school in ‘97, and I worked for a, you know, I would say a very high-growth staffing company, not in healthcare, but to me, it you know, it always mattered very little what the actual, you know, industry was. I was more interested in a good opportunity and, you know, good advice that I had gotten early in my life was, you know, bet on people, not ideas. And so we kind of took that kind of approach. And so I would not say that I was, you know, destined to be in healthcare. It was just the opportunity created itself, or presented itself, rather. And, you know, we started going down that pathway.
Chad Franzen 04:40
What did it look like when you decided to do it? How did the kind of the first one come about?
Matt Searles 04:46
We had done some research on, you know, different businesses that were, you know, in process, high growth industries wound up coming across, you know, the surgery center space was by no means new, but in certain states it was in its very early stages of development. There had been some folks that were developing in Connecticut at the time, which is where our first centers were. So, you know, I it’s interesting you don’t always need to be the first to be successful, right? So there were players doing it. But I think what a lot of them overlooked was, you know, their initial success.
They weren’t as focused or aware, for whatever reason, that there was an enormous amount of opportunity in specialties that they hadn’t worked in yet. And that really provided us the opening that we needed to to focus on these, to have the confidence to know that they would be as successful as any other and go from there.
Chad Franzen 05:39
So you mentioned, you know, kind of finding people who know what you don’t know and surround yourself with good people. What kind of people did you want to make sure you had in place as you move forward, kind of launching these centers?
Matt Searles 05:51
You know, we’ve always, I’ve always all the physician partners we’ve ever had have been fantastic. You know, and people like to pick on physicians, you know, for not being business people. But I think it’s not true. I think that if you put 100 people of any type or any persuasion or any career in a room, you know, 80% of them won’t be good business people. The truth is, the same is true of physicians.
But again, I don’t think that’s unusual in terms of, you know, general population. What I found is, well, it might not be the, you know, the focused on the business side of it. They’re fantastic partners, committed and motivated. And so, you know, the physician partnerships we had were great. But internally in Merritt, we’ve always focused clinically.
My partner Bill Mulhall is an RN. And we really put clinical clinical issues first. You know, there’ve been a lot of surgeries in our companies. And we’re not here to throw stones, but kind of come and gone focusing on financial. How do I maximize revenue?
You know what payment schemes are out there that pay us the most. And we never were really considering that, you know, if we were going to have longevity, we were going to do things right. We were going to, you know, be at the low cost provider. We weren’t going to take advantage of some of the idiosyncrasies that existed in the payment systems, like out-of-network reimbursements. We were going to go out and we were going to do this right from day one.
So we focused on what was right clinically. That’s really Bill’s focus and his team. And I did, you know, work on the fundraising and the business end. And my brother joined us a few years later. And, you know, we’re really able to execute that model and roll it out. And it’s been successful for us.
Chad Franzen 07:33
Great. So you know, 24 centers in operation. That’s — I mean my math may be fuzzy, but I think that’s about like one per year. After you opened your first one, how soon did you have a second one.
Matt Searles 07:46
So the first one opened in I guess. So 3 or 4. Next one was 05-06. Next group started really in 2011. You know my mindful.
These are long lead projects. So we’re working on the ones that opened in 2011-12. We’re working on those and, you know, 2009. So then it really ramped up from there. So I wouldn’t call it exponential growth, but the growth was, you know, much more dramatic after the first, you know, seven, ten years.
Chad Franzen 08:17
Was that based on demand or opportunity or just confidence? Like, I know we’re good and people will come if we build it?
Matt Searles 08:24
Yeah, I think that it was based on, you know, the research told us that there were still an enormous amount of cases being done outside these environments, in more expensive environments. And, you know, again, not here to pick on other delivery systems, but where these cases were performed before, ambulatory surgery centers tend to be a more expensive venue. Medicare pays them at a higher rate, commercial payers pay them at a higher rate. And that was the whole premise, just macroeconomically for why surgery centers worked. Right.
So they’re taking costs out of the system and, you know, topic for another podcast. But there were enormous amount of abuses in this space, too, that I think have largely been pushed out and ironed out of the industry. But Macroeconomically, we knew that as long as there were physicians doing cases in more expensive operating room environments, that there would be the opportunity to bring them out. And, you know, while I do think as we sit here in 2024, there really aren’t as many independent physicians available, right? There are 6000 surgery centers.
There won’t be 6,000 more, but there’s still a lot of opportunity to work with health systems to help them move cases into ambulatory surgery environments, which is what we’re doing now with Mount Sinai. And there most certainly are opportunities with independent physicians. There’s just, you know, the prevalence of them is much less because, you know, there are I think in 1970, there was one surgery center. Now there’s 6,000 or so, depending on how you measure that. And again, there won’t be 6,000 more. So it’s finding new and improved and smart, sustainable ways to grow.
Chad Franzen 09:52
Has there been a particularly memorable challenge that you’ve had to overcome during this journey?
Matt Searles 09:56
Yeah. You know, time and pressure. You know, I, I don’t know if I think of myself as a particularly patient person, but I think we understood that over the very long term, this could just put us exactly where we want it to be, both in terms, you know, professionally, you know, and just in terms of, you know, reputational and financial success as well. So there was some slow growth years there, both within the surgery center business and the investment banking business. But, you know, if we were going to manage these ourselves without going to work for somebody else, we’re going to do it with our own capital.
It wasn’t going to happen overnight. So, you know, I’d say that that first ten years was, you know, probably a really rewarding time. You know, I look back at that time really positively. But, you know, the success of the firm, you know, on a larger scale really happened from, you know, 2009-10 to now.
Chad Franzen 10:46
So during that time, has there been a memorable like high point or proud moment or even a breakthrough?
Matt Searles 10:52
Yeah. You know, I think as I look back on it. Right, We’ve done lots of centers. We’ve moved literally hundreds of thousands of cases into lower cost environments. We’ve done it safely.
You know, we have had a very, very strong quality and safety record, which we’re most proud of. But if you look at that, what has that done? You know, and there’s obviously personal motives. Right? I don’t want to sound like an altruist.
Right. We’re a for-profit business. And you know I recognize that. But in taking those hundreds of thousands of cases out of more expensive environments, this business has saved the system, you know, hundreds of millions. If not, you know, a billion or more in cost.
And we’re happy to have, you know, been able to look back and, and recognize that that’s I think there’s a lot of ways to make money out there that I don’t think are always value added. You know, we’re not Bitcoin millionaires. We didn’t buy low and sell high. We created value. And you know that we’re proud of that.
That yes we’ve done well along the way, but I think we’ve given much more back in terms of, you know, taking costs out of the system for consumers, payers and, you know, also have really helped a lot of physicians remain independent as well, which we were happy about.
Chad Franzen 12:10
What are you able to share some goals that you have moving forward?
Matt Searles 12:14
Yeah. So, you know, we are not going to change our approach. So there’s a lot of activity now with companies going out there trying to develop surgery centers with health systems, which is kind of the next frontier. And I shouldn’t say frontier. There are some notable companies that have been doing this for a while, you know, ours included, but at a scale.
I think we’re going to see it accelerate where cases are being pulled out of hospitals. So our goal is to do several handful of hospital system deals really, really well, to control it and own it ourselves and to maintain that course and path I think will be a larger company. I think a larger in scale, larger and larger and a lot of aspects, but still maintaining that fundamental, you know, goal of maintaining our ability to be directly involved in these projects. And certainly nothing wrong with raising money. Nothing wrong with working for somebody, but it just hasn’t been our focus.
So I think we want to continue that and try to replicate our success with health systems again. But again, not not the shotgun approach. Not going to do it everywhere and anywhere. We’re going to be very, very focused on where we do it. And that’s kind of our commitment to our, you know, current and future clients.
Chad Franzen 13:26
You said when you, you know, after you graduated from business school, you didn’t really you were kind of just a business guy. You didn’t really have a specific field that you were that worried about getting into. But now you’ve been in this field for, you know, 20 plus years. What have you found to be personally kind of the most enjoyable part of it? No, I’m not a clinician.
Matt Searles 13:45
But, you know, we operate very, very closely to folks that do provide that care. And so I, I like to think we’re an important part of creating facilities and venues that have been safe and more cost-effective for patients. You know, I always thought I’d hoped. I hope it did well in my career, but I hope that in doing well that we’re able to look back on it kind of proudly that we didn’t do anything to game the system. We didn’t do anything to hurt anybody.
And quite the opposite, you know, we’ve we’ve you know, I think we’ve I think we’ve helped, you know, and I don’t I don’t say that in an egotistical way. I just look objectively, you know, if these cases had not been done in our facilities, where would they have been done? And how much more expensive would they have been? I think we’ve impacted a lot of lives positively. Our physician partners and our hospital partners.
So those are the things I look at because I think that, you know, if you’re focusing on tomorrow’s dollar, your your focus of your organization, the eventual outcomes would be much different if you’re sitting back and saying, okay, I’m not going to worry as much about the time that it takes, and I’m going to worry more about the quality of the service. And I think, incidentally, it’s a hell of a lot easier to do when you work for yourself. There you go.
Chad Franzen 14:51
Hey, let’s talk a little bit about this podcast. I think this is going to be your first episode of this edition of the podcast. What caused you to or what motivated you to start the podcast?
Matt Searles 15:01
You know, I think that there’s a lot of amazing podcasts out there, a lot of people that you know really are adding value through their, you know, networking and interviewing. And we just wanted to be a part of that. Right. Because I conversely, there’s also, you know, a lot of misinformation out there. And I’ll give you a good example.
There’s a lot of regulation now targeting consolidation of healthcare practices. And the regulators are pointing to the private equity boogeyman. And, you know, and I hope that I hope that the regulators remember or realize, and I think that they will. And I think that over the long term, they get it right, that if they simultaneously want to make sure physicians stay independent, they can’t take away the likely, maybe only avenue. They have to stay independent, which is to become part of larger practices.
And we’ll get into this in another podcast, but to become part of larger practices that are able to sustain that independent physician position environment. Because the alternative to that are, you know, is employment and organizations and again, we’re not going to be about casting dispersions or stones, but we’re their alternative to independent is working for entities that are a lot more expensive and care delivery. And you know, that’s again, a topic for another podcast because I think there’s a lot of amazing things those organizations do, but they’re, you know, care delivery like that is very expensive. And so, you know, that was one of the motivations. We’re starting to see a real transformation of healthcare, and we’re starting to see a lot of misconceptions, I think, that are going to fundamentally inhibit the development of a system that works better.
Chad Franzen 16:35
Oh, I’m sorry, what are you most looking forward to regarding the podcast and what can maybe the listeners expect when they tune in?
Matt Searles 16:41
You know, I think that they’re going to hear people that actually work in the industry. You know, we are here front and center in a space that I am very confident, adds value and is going to provide a long term solution to the things that are wrong with our healthcare system. And I just want to have that voice to be able to articulate those and certainly welcome dissent and anybody that disagrees. But, you know, we’re going to keep it simple and which care delivery systems are the most cost effective and safe for patients. Let’s really examine what those are, and let’s examine who is promoting those environments in the most effective way.
I don’t think a lot of that’s opinion. I think a lot of that’s fact. And we’re going to, you know, we’re going to do our part to talk about it.
Chad Franzen 17:25
Okay. Sounds fantastic. Well, we will look forward to future episodes. It’s been great to talk to you, Matt. Thanks so much for letting me be a part of it today. All right.
Matt Searles 17:34
Thank you Chad. Appreciate it.
Chad Franzen 17:35
So long everybody.
Outro 17:39
Thank you for listening and we look forward to you joining our next podcast.