Why This Acquirer Gives You a Seat at the Executive Leadership Table
Paul looks back at his conversation with Guy Sansone of H2 Health, covering how former owners join the executive leadership table, pediatrics and ABA, de novo growth, and payer alignment.
Full transcript
Generated from the episode audio and lightly edited for readability.
Good afternoon and welcome to another episode of the Martin Rehab M&A advisory. Today we're going to take a look back at a discussion that I had last week with Guy Sansone and we're going to find some opportunities for action that you can take in your practice today. As a quick reminder, Guy is the chairman and CEO of H2 Health and he comes into the industry with a wealth of executive experience as well as experience in the physical therapy industry. You know, this is another great example of how unique these newer acquirers and newer large companies are that have come into our industry.
Guy was the founder of H2 when they acquired the business from H Heartland Rehab. So, they started big is what I'm saying. I think there was 30ome clinics when they made that acquisition. But make no mistake, he has taken this company in a very unique path from some of the other newer acquirers in the industry. What is so unique about this company is that as a former owner in this company, you literally get a seat at the highest level executive leadership table. That's how he described it.
And this is very rare. Again his statement was we are a real partnership. Well why do we see this as so unique? You know when I described a real partner what guy means by that is that his executive team are interacting and making big decisions by physical therapy business owners who they have acquired who now have a seat at the executive leadership level. So this is just not a title but they are actually coming together and making big decisions for the company moving forward and I think that is very unique in this industry.
In many cases what we see are partnerships where a partnership is formed at the local level. Company comes in buys my company buys a majority interest in my company. I now have a minority interest. The acquirer has a majority interest. We then continue to operate that company moving forward. My equity grows as this company owned by the new acquirer and by me. We as a we grow as that partnership grows. What's different about this model is you basically can take a part of the value that they pay for your practice and exchange it for equity in the parent company in H2 Health and you will then get a seat at that executive leadership table.
So I think it's very important that we kind of discern the difference between a partnership at a local level versus a partnership at the parent company level and actually having a seat at that executive leadership level. Another unique aspect that we are seeing from a few companies in the industry and certainly H2 health is a commitment to pediatrics. In fact, H2 Health has made an investment into ABA. ABA is described as applied behavior analysis. And this is a rapidly growing industry that is focused on children who are on the autism spectrum.
The other big point that Guy made and that I would make for you and your company is he talked about alignment. Talked about alignment with partners, meaning companies that they have acquired by bringing them up to that executive level as well as with staff of those acquired companies. And again, this is why H2 Health is very unique is that they are actually able to show proof of the fact that staff within the companies that they have acquired have opportunities to continue to grow and prosper for now being a part of H2 Health.
And when you can present this as an opportunity to your staff that you have transferred your company, you are looking now to join a larger company, but that it's going to offer them opportunities for growth. It becomes a celebration not just for you, but for them as well. Another point that guy made was that they're actually going to do 26 new startup clinics as they call them denovos. And we truly believe that because we're seeing some of these large companies and the newer large companies having such a focus on new startup clinics that for you to be real attractive to an acquirer, you have to show that ability.
So my question for you is how many denovos or startup clinics do you have planned for this year? You know another unique point that we dis that we discussed with guy was how we can align ourselves with insurance companies. Now they have done a deep dive into a capitated contract and that is something that you know we saw many years ago some successful some not. I think these in the newer capitated contracts are being viewed very differently and I think anywhere that we can see that we are not simply going to the insurance company and asking for more because we are continually seeing cuts to our reimbursement.
So, we have to do something different. And I think yes, we have to keep fighting, but what we also need to do is to consider what the insurance companies want and need. And as Guy described, we really need to be creative to allow both sides to win. And we are hearing that from a number of companies some of the smaller newer acquirers that they are utilizing some unique strategies in aligning with insurance companies in order to in the end get greater reimbursement than we have today.
You know guy had so much to offer and he knows this business inside and out and he sees it from a very different perspective. And we can all grow from that. I hope that you enjoyed the conversation I had with Guy last week and I hope that you can take some of the things we've talked about today and put them into action. If you have any questions about our discussion today or last week, click below. Let's talk. Thank you.
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