Scaling Ambulatory Care: Mount Sinai Ventures’ Strategic ASC Partnership
Brent Stackhouse is the Managing Director of Mount Sinai Ventures, the venture investment arm of the Mount Sinai Health System. In his role, he diversifies strategic investment portfolios to enhance Mount Sinai’s transition to population health management. With experience in public health and health information technology, Brent serves on Mount Sinai’s telehealth strategy committee and is a mentor for the Blueprint Health technology incubator.
Here’s a glimpse of what you’ll learn:
- [03:52] How Mount Sinai’s joint venture with Merritt Healthcare began
- [11:04] Health system leaders’ views on joint ventures versus private equity
- [19:15] The importance of alignment and trust in joint ventures
- [25:58] Key factors of financial sustainability and operational efficiency in ASCs
- [31:28] Addressing physician ownership concerns in ambulatory surgery centers
- [40:43] Future expansion plans for Mount Sinai’s ambulatory care network
- [43:39] The impact of innovation on the future of outpatient healthcare
- [52:43] Advice for healthcare leaders considering joint venture partnerships
In this episode…
As healthcare continues to evolve, organizations must find innovative ways to expand access and improve patient outcomes while maintaining financial sustainability. How are leading institutions leveraging strategic partnerships to achieve these goals?
Health technology expert Brent Stackhouse shares insights into his organization’s approach to transforming ambulatory surgery centers through joint ventures. He highlights the importance of aligning strategic goals with operational efficiency, physician engagement, and financial sustainability. Brent also emphasizes the value of long-term partnerships that foster growth, innovation, and a patient-centered approach to care.
In this episode of HealthTalk Insights, Brent Stackhouse, the Managing Director of Mount Sinai Ventures, joins host Danilo D’Aprile to discuss Mount Sinai’s journey in expanding its ASC portfolio. Brent explores the evolution of its partnership with Merritt Healthcare, the challenges of physician ownership, and the critical role of strategic alignment.
Resources mentioned in this episode
Quotable Moments:
- “When health systems are struggling financially, it’s crucial to find ways to partner with capital sources who can help accelerate growth.”
- “Ambulatory surgery centers are factories focused on delivering specific care efficiently with safety always in mind.”
- “There’s a terrible stigma around private equity in healthcare, often perceived as profiteering, which deters partnerships.”
- “Alignment of mission and culture is one of the biggest drivers in our selection process of who we work with.”
- “Communication is absolutely key, especially when strategies are set, and everything around the strategy changes.”
Action Steps:
- Explore strategic partnerships: Partnering with specialized management companies can bring in expertise, ensuring operational efficiency and safety while allowing health systems to focus on their core priorities.
- Invest in staff alignment and training: Ensuring that all stakeholders are aligned with the strategic goals of any new ventures is crucial. This combats differing motivations and priorities within hospital settings, fostering a cohesive working environment that enhances productivity and patient care.
- Enhance scheduling and communication systems: Developing robust scheduling systems that align with both the hospital and the surgery center can reduce friction and improve efficiency.
- Develop a long-term strategic vision: Clearly documenting and communicating the long-term goals of new ventures helps maintain institutional memory and alignment, mitigating the risk of conflicts arising from strategic shifts.
- Leverage a joint venture structure for financial and regulatory benefits: This structure addresses the need for nimbleness in financial matters and compliance with complex healthcare regulations, enabling sustainable growth in the healthcare landscape.
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 0:00
Welcome to the HealthTalk Insights, podcast focusing on what is best for the healthcare consumer and how to impact positive change in US healthcare.
Danilo D’Aprile 0:19
Welcome to HealthTalk Insights, the Podcast where we explore innovation and strategy shaping the future of healthcare. In today’s episode, we’re thrilled to feature Brent Stackhouse, the managing director of Mount Sinai ventures. Brent joins us to discuss how mount Sinai’s Ventures is transforming the ambulatory surgery center landscape through their groundbreaking strategic partnerships. We’ll dive into their collaborative approach to expanding access, improving patient outcomes and driving growth in one of the most dynamic areas of healthcare, whether you’re a healthcare leader, investor or simply passionate about the future of Ambulatory Care, this episode is packed with valuable insights. So Brent, welcome to the podcast. To kick things off, can you briefly introduce Mount Sinai ventures and the role you’ve played in the development of Mount Sinai’s joint ventures, especially in the context of ambulatory surgery centers.
Brent Stackhouse 1:06
Absolutely. Thank you. Danilo, it’s really exciting to join you today. Love the opportunity to talk about the great work that Sinai has done, and often in collaboration with Merritt Healthcare. So thank you for having me. Mount Sinai ventures started a long time ago. The company that was originally incorporated in 2008 it was a subsidiary of the Beth Israel Continuum Health System, which merged with Mount Sinai in 2013 I took over a portfolio of about eight joint ventures in 2014 and that program has grown organically over the last 11 years. We have about 20 active portfolio companies. I think we’ve had 36 over the life of the program. And Mount Sinai ventures does two things. One is we make investments in early stage, innovative companies that do business with the health system. And about two thirds of what we do are we build or invest in joint venture care delivery companies, so ambulatory surgery centers, diagnostic endoscopy centers, urgent care centers, and most recently, an anesthesia company. This has come at a time when health systems are thinking a lot about diversifying their revenue streams and trying to find ways to partner with capital sources, often private equity, but capital sources who can help accelerate the growth of the health system, when health systems are struggling financially, costs are going up, reimbursements coming down, and people are starting to think through, how do they achieve their strategic vision with these limited resources? And how do they identify what their priorities are that they should focus on, and what are the complimentary or ancillary businesses that are better served by partners who can really focus on that business, which therefore enables the health system to focus on their priorities, whether that’s cardiac care delivery or oncology or what have you, and not necessarily running a diagnostic endoscopy center very important to the health system, but doesn’t need to be its pure bread and butter when they’re trying to focus on bigger, more complex care issues.
Danilo D’Aprile 3:29
Well, Brett, that’s fascinating. And you know, obviously your success shows through your portfolio company, Mount Sinai Ventures. So congratulations on that. More particularly the partnership between Mount Sinai and Merritt Healthcare has clearly been a successful one. What initially sparked the idea for a joint venture strategy, and how did the collaboration come about?
Brent Stackhouse 3:52
So originally, the continual health system was making investments in ambulatory care companies in order to expand its footprint and to engage with their voluntary provider community. They had lots of surgeons who weren’t necessarily employed by the health system at the time, and so if they went and built a surgery center, it was a way to create connectivity between continuum and those doctors through that surgery center, while also expanding the footprint of continuum, most of those investments were small stakes. They would own 5%, 10%, 20% of the company. They were not building these to meet the strategic vision of the health system around care delivery. They weren’t in control. I didn’t have a majority stake. They were more sort of passive investors. Those businesses did exceptionally well. They were unbelievably profitable. They returned incredible financial returns to the health system. I was very lucky to inherit this portfolio. My predecessor was absolutely brilliant in the investments that he made. The ROI figures are staggering, and I was very, very fortunate to inherit those. When I came into Mount Sinai and took over this portfolio in 2014-2015 there started to be change in sort of the macroeconomics of healthcare, and you started to see private equity come into healthcare and start buying assets like these ambulatory surgery centers, and at a time where the return multiples were really significant, and so, because we had minority stakes, and because the Continuum Health System had merged with Mount Sinai, and these assets weren’t necessarily a part of, you know, the Mount Sinai portfolio in the in the eyes of leadership at the moment, there was a willingness to divest of those portfolio companies, because the returns were so fantastic. So why not sell the business when it seems like the offer being made was so high, and so I spent a number of years divesting of a bunch of those portfolio companies, continuing to make investments that were, you know, small in nature, financial in, you know, in the goal was financial and not strategic, until about 2018, and then at that point in time, we had a strategic planning session around sort of the ambulatory, the total ambulatory strategy for the health system. And a couple things became really clear to us. One was, it’s really hard and really expensive to build mower operating rooms at a hospital, especially at an urban hospital campus like in New York, where price per square foot and construction is really high, and the regulatory hurdles of building operating rooms for hospitals are pretty staggering. It is much easier and cheaper to build ambulatory surgery ORS second payers, both, you know, institutional commercial payers like the Aetna, the Cigna, the United the world, but also the self insured employers, which I think we started to see a lot of growth in terms of those organizations making demands on providers, started to look for lower cost of care. And we started to hear and started to see an unwillingness to pay for care in a hospital setting and a hospital outpatient department setting that could be delivered at an ambulatory setting for less and so things like prior authorization for anesthesia for a colonoscopy start to get denied cataract surgery in a hospital setting started to get denied. And so in reading kind of the direction of where payers were going, there became the sort of increasing concern that we needed to develop more low cost settings of care, for lower acuity care, in order to meet provider demand, and especially with the self insured employers in our market, we started to see offers being made, requests for proposals going out for those self insured employers to direct all of their care, specifically their surgical care, especially in orthopedics, to a particular provider in our market. And so they were looking for a deal, and they were saying, all right, we know x percent of our cases are going to be inpatient, y percent are going to be high acuity, ambulatory, but then there’s this balance of cases that are going to be low acuity ambulatory. And if we didn’t have the ability to sort of meet and be competitive, then there was a chance we’re going to lose a lot of market share among these self insured employers. So there was this concern that we need to grow there. The other big issue was our ability to recruit and retain surgeons, and this thought that ambulatory surgery centers provide a, you know, a legal means for our employees as well as our voluntaries, to have co ownership, to have skin in the game and to be a part of the team, not only conceptually, but also financially. And so if we started building ambulatory surgery centers, they could co invest with us, they could be owners with us, and that would have greater stickiness and be able to recruit doctors when a lot of our competitors in the market weren’t providing that opportunity, in order to be able to get the best and the brightest in terms of surgical care and procedure lists in our market. So payer strategy, sort of organic growth in terms of our ability to meet surgical demand and recruitment and retention of physicians were sort of the three things that motivated us to change our ambulatory surgery strategy, our joint venture strategy, and start finding ways to build surgical centers where it was aligned with the strategic vision of the health system, whether that’s growing our ophthalmological platform, growing our orthopedic care and doing it in our market, you know, in the shadow of our hospital buildings, whereas previously, We’ve been making just financial investments for the financial benefit of the health system in a small way, across a vast portfolio that was sort of scattered throughout, you know, the greater tri state area.
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