REPLAY: How This Acquirer Frees Up Their Partners to Focus on Clinical Excellence
Steve, CEO of Bay State Physical Therapy, joins Paul to talk about his provider-led partnership model and how taking HR, billing, and accounting off owners' plates lets them focus on patient care and growth.
Full transcript
Generated from the episode audio and lightly edited for readability.
Good afternoon and welcome to another episode of Paul Martin's Crucial Conversations. Today we are so excited to have with us Steve Wendor. Steve is a physical therapist and a chiropractor and he is currently the CEO of Bay State Physical Therapy. Bay State is a private equity-backed physical therapy company that is based out of Randolph, Massachusetts. And Bay State currently has 90 plus clinics in Massachusetts, Rhode Island, Maine, and New Hampshire. Steve, it is great to have you here with us today, Paul. Thanks so much for having me.
I really appreciate it and great to see you and happy new year. Happy New Year to you and it's I know our audience is always on the edge of their seats wanting to know folks like you and you especially and kind of how you perceive what's going on out there as well as what you guys are looking to accomplish, you know, in this pretty incredible market that's out there. Yeah, the market's it seems to be changing every day with, you know, big announcements and, you know, I think it just, you know, lends to, you know, physical therapy is really getting the attention it should that it deserves and it's an exciting time.
It's we're having a lot of fun up here in New England and you know, we're on a nice growth trajectory and just really enjoying it. Awesome. Awesome. Well, you keep those clinics nice and warm through this winter. That's right. You know, Steve, our clients often ask us three, let's call them big questions when a new acquirer enters the market. Sure. I know you guys aren't brand new, but you are certainly younger and newer than some of the legacy companies out there. Sure. And the first question that they ask is the strategy for Bay State to for becoming to become a successful company in this industry is it different from the strategies that the larger legacy companies are following?
Yeah. Well, I think so. You know, first of all, I'm a physical therapist, so I think having a provider-led organization is different. You know, some of the bigger players in the marketplace, they're business people. And you're a PT, I'm a PT. You know, the folks we're talking to in your audience, they're all PTs. And so I understand what happens in the trenches and understand healthcare. I think the second thing that really differentiates us is our manager partner model. You know, we have the opportunity for you know, staff that has grown through the company to become partners and certainly when we're looking to acquire, we're looking for partnerships.
We're not looking for acquisitions and then, you know, kind of displacing people. We're we're looking to join with people. So, I think that's a real differentiator for us and it's been, you know, very welcomed. So, these are long-term relationships with PT chiropractor to PT AB chiropractor as well. And looking for those longstanding relationships where you have a partner going forward and they have a partner going forward. Is that is that accurate? Absolutely. Yeah. And so, you know, our model is again very unique. We're interested in long-term relationships.
We're we're looking for folks that align with us culturally. You know, we're a patient first type company, meaning, you know, we're not a 9-to-f5 outfit. You know, p folks who join us have to understand that it's patient first. It's all about access. It's all about their experience and it's all about outcomes. And and so if we get alignment with folks that are that are interested, then things work really well. So Steve, what are some of the characteristics of a company that you believe would thrive by joining your company and becoming a partner?
Yeah. Well, the first one is to make sure our cultures align, right? They have that same, you know, patient first attitude. They're they're aligned in the fact that they believe PT should be at the top of the funnel taking care of muscularkeeletal injuries. You know way before patients are you know sent for MRIs and surgeries and put on opioids and so if they have a strong philosophy there that those are you know characteristics that we're looking for and believe that you know having access and experience you know patient experience and outcomes are you know most important u but you know I think you know a good candidate for us is you know someone who really wants to grow but is just so bogged down with the day-to-day-to-day aspects of running a small business.
And you know, if we can take things off their plates and come with resources and allows them to grow, then it's a it's just a great match. Steve, so what are some of those things that you can take off their plate? If you look back over your last couple partnerships, what are some of the, you know, big items that you can kind of pull off the plate of a former owner? Yeah. So a lot of the you know partners that we're talking to are so bogged down in HR issues right so we have our own HR department here you know paying bills you know you know accounting finance marketing we just you know have a you know fully built out platform that allows us to scale those things and now these folks can really focus on patient care growing their business and expanding their business you know so when we take on a partnership with somebody if they have one or two offices, our idea is to say, how do we get to office number three and how are we going to get to office number four?
And so by, you know, kind of taking away some of the day-to-day headaches that they have, it really allows them to, you know, play offense as opposed to just trying to put out fires, you know, that they got to deal with on a day-to-day basis. And you know, we have a number of recent partnerships that, you know, had it just worked beautifully. These folks are so happy that they've come on board and and are growing great. So, it's working. Yeah. And it's interesting what you said and it doesn't surprise me being a physical therapist and a chiropractor is that you said you know maintaining this the continued level of clinical care kind of the way they do it.
But and maybe a choice of a better word here might be not this word, but you know, kind of plugandplay on the things that most business owners in private practice really don't like doing. You mentioned HR, you mentioned billing collections, you mentioned, you know, when you're going through a startup, how you guys can help with leases and those kinds of things. So yeah, I think that's a refreshing look for someone in the future as opposed to I'm selling my business to no, I'm going to partner and I'm going to take some of the things that I'm may not be great at and leave it up to those who are really great at it and do what I do best.
Exactly. We, you know, our preference, vast preference is to partner with folks. We're not looking to buy somebody's business and then what, you know, who's the who's the leader there? We're we're looking for, you know, folks who want to partner in, become leaders in their regions, and help us grow. You know, our big vision is to really build an access network in New England so that we can, you know, really make a difference. So, so as we're as we're doing that, you know, the goal really is to talk to, you know, insurance companies and health systems and start to move ourselves up that food chain so that we're, you know, seeing patients a lot sooner because we know as PTs, if we see them sooner, the their results are going to be better.
They're going to have less you know unnecessary surgeries, less opioids, and certainly the c the downstream costs for healthcare are going to go down. So our value prop is amazing. And it's you know it's not an easy task to do and we're just really proud of the accomplishments we've made so far and you know certainly looking for folks to join with us and you know join our vision. So the third big question that our clients typically have is for you is your approach to acquiring a company and we're talking about the nuts and bolts, the structure, the process that they go through to sell the business to you guys.
How would you say that it's different from the approach that's used by some of the larger legacy companies and who would be served best by that approach? Yeah, again I think the our approach is different in that we're looking for partners. We're not just looking to acquire an entire business. We're looking for folks to stay on with us. Even if it's towards the end of their career so that they have an exit, but not to leave the business. That's not what we're looking for. So that's, you know, very different.
And certainly, you know, we're not just buying anybody. We're looking for a cultural fit. They've they've got to be they have to have that, you know, kind of patient first attitude. They have to have you know they have to be growth oriented. They want to have to want to grow with us personally and professionally and so you know I think that makes us different and our manager partner model is just different. So we can create opportunities for their staff to grow with us. So if we you know come to a region let's say you know in New York and you know you know acquire a practice there we want to give their staff an opportunity to become managing partners as well.
And so it's I think it's, you know, very different in the marketplace. It's it's worked really well up in New England and we're looking to expand it. Yeah. So as you look to some of the former owners that are currently working at Bay State, what do you think their observations would be about the culture of Bay State? How would they describe it? So I mean I think our culture is patient first. I think it's fun. I think it's very growth orientated and I think they would say we move quickly.
I think that's our culture. I know you know the folks that we've partnered with particularly would just you know kind of say these guys do what they say they're going to do that there's a tremendous amount of integrity. And again, you know, we have those folks that are just you know, had one clinic and now I'm thinking of two or three of our newer partners are we're opening their second and third clinics. And it's just it's really exciting because they're growth orientated and they couldn't kind of get out of their own way u because they were so busy playing whack-a-ole with all the issues that were coming up in their in their neck of the woods.
Exactly. And now we're, you know, we're growing and it's just really exciting. Yeah. You know, two things that you said there struck me. First of all, you were able to do that very poignantly, quick, decisive, very decisive. We find that those who really know what their culture is, they're very decisive about it. But the two things that jumped out at me that you said was having fun. And look, studies show that when you're having fun, you learn better. And we find that many of these former owners, they want to become former owners because they want to learn.
They want to grow. They're not retiring. They're not hanging it up. Exactly. So, that was interesting. And in the second was you do what you say you're going to do. And boy, that goes a long way. Not in just physical therapy industry, but any industry. Absolutely. I mean it's one of our core values is integrity. So that's awesome. Awesome. Yeah. So how do you think their view of you know kind of you know every seller has a view of you know what the future could hold for them?
You know what's this going to look like? How do you think that view has changed since they've actually joined your company? Oh, I mean, I think, you know, I think they're really pleased because everything that we kind of portrayed to them, meaning taking the billing and collecting off their plate, taking the HR issues off their plate, you know, giving them the ability to grow, those things are happening. So, I think they're thrilled. And again, I'm thinking of two or three in mind that are that are recent partners that are just, you know, they're ecstatic.
So, you know, I think, you know, it's also nice to take a little off the table after you've worked, you know, 15, 20, 30 years, to put some in the bank and, but still maintain a, you know, a real strong income and have an opportunity for another, another payout when the time is right that they're going to retire. So, I think for a lot of folks in that in that range that are, you know, are looking to derisk a little bit, it's a great opportunity. Yeah.
Awesome. Awesome. So, you know, this is a question we also get pretty frequently, which is, you know, how does a company like Bay State and a leadership team like Bay States, how do you determine what geographies you will or will not grow in? And whether it's startup or acquisition, how do you determine geography? Yeah, that's a great question, Paul. I think, you know, there are a lot of companies out there that'll just buy anything anywhere and that we are not that company. You know, we're concentrated in New England.
Certainly, we are looking at New York and New Jersey and Delaware and Pennsylvania as, you know, extensions. We believe having density is important, but you have to start somewhere. So, as we enter new markets, our goal is to really create some local density. So that's how we look about look at it. You know, the other day something came up in, I don't know, Texas or Arizona, like, you know, because we're going to get calls just like anybody about, you know, deals that are coming up. It's like, no, it's that has no interest to us.
So, we're not out there just trying to, you know, put dots on a map that don't make any sense. We're really trying to build density. Sure. Absolutely. So, what advice would you have, Steve, for a business right now and an owner that's preparing for this market? What do you think is most important for their preparation to enter into this market? That's a great question. Certainly to call you to make sure that you know all of all of their boxes are checked. But you know when you go to market you know what we're looking for beyond you know the first thing we're looking for is the people and to you know make sure there's a cultural fit after that you know they've got to their numbers have to make sense right so they have to be buttoned up from a you know from a reporting standpoint to be able to show hey this is what we've done over the over time you know we had a blip with COVID this is where we're at this is where we're growing and you know so the reporting is really you know the financial reporting is really important.
So Steve do you find that if you're working with a company and there are delays that come up delays in getting the right financial information or a delay in getting the right operations data? Delays in the process that you may have to take another company and put them in front of that company in terms of timing. How important is it for these companies to come to a business like yours? Let's call it delayfree. Well, I think it's very important. You know, the more prepared they are, the more buttoned up they are, the easier the process is for everybody, right?
There shouldn't be any surprises for anybody. And so if you know if they've got their you know you know kind of their boxes checked, it makes their life easier. It makes your life easier. It makes my life easier. And yeah, there's you know we're out there you know obviously we want to grow. But again for us the most important thing is cultural fit. And so if we have that you know I I'm hoping we'll be you know patient. But it it's dependent. I would say it's it is important though if you're going to go to market, you know, have your ducks in line.
Understand that, you know, someone that's looking at you is going to want to know why was there a dip here? How come things grew here? What were you doing differently? And and have, you know, reasonable, you know, answers to those types of questions. Sure. Sure. Well, Steve, look, I really appreciate you spending the time with us today and I am really confident for our audience that you've provided them with a lot of great information. If they have questions, certainly and if they're directly for you, Steve, we can certainly pass those along to you.
So feel free to click below and, send us an email or give us a call and we can answer questions. And Steve, I really appreciate your time with us today. Paul, I appreciate you having me on and for those in the audience, Paul's been a someone that I've looked to for advice over the years and has provided great counsel and has been a you know, we've utilize some of his services and is obviously you know, someone that's you know, kind of an icon in our field.
And I I'm just flattered that I was asked to be part of this and I really appreciate the opportunity, Paul. Seriously. Thank you, Steve. I really appreciate that those kind words. And we'll be talking to you again soon. And for the audience out there again, click below if you have a question and let's talk. Thank you. Thanks, Paul.
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