Honesty and trust are two of the most important elements of any strong relationship. The same is true for the business relationship between private practice physicians and investors, according to Andrea Balogh who joins host Kayla McCann Marty for this episode of Across The Table.

Andrea is the Chief Growth Officer and Chief Legal Officer at Integrated Oncology Network (ION), where she’s responsible for developing and executing the company’s growth strategy. She also spearheads ION’s business development, market strategies, and marketing and payer strategies teams. 

With more than a decade of experience in the healthcare private equity industry, Andrea believes three behaviors are essential to successful partnerships: open conversation, physicians and payers staying in (and respecting) each others’ lanes, and the alignment of goals and practices.

Tune in to the episode to learn how to develop strong partnerships and how investors can optimize their business relations and track trends in healthcare. 

Featured Guest

Name: Andrea Balogh

What she does: As the Chief Growth Officer and Chief Legal Officer at Integrated Oncology Network, Andrea is responsible for creating and executing ION's growth strategy across the United States, as well as leading their business development, market strategies, and marketing and payer strategies teams. 

Organization: Integrated Oncology Network

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode 

• There are three ingredients to a successful acquisition. At ION, Andrea emphasizes the value in physicians having a close, community-based environment where they can deliver care at the right time and place. 
• Honesty is the best policy. There is no better business practice than honest, open communication.
• The future of the private healthcare equity industry is shifting. Take note of the move toward comprehensive care in the independent practice setting and how it is shifting to larger scale practices and partnerships.

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This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

You're listening to Across the Table, a healthcare private equity podcast brought to you by McGuirewoods. Across the Table brings you inside the conversation with the specialists and professionals of the healthcare private equity industry.

Hello, everyone. Thank you so much for joining us for another episode of Across the Table where we talk with key deal makers and operations team in the M&A space, specifically focusing on private equity-backed companies. Today, we're fortunate enough to have one of our dear friends with us who's the Chief Growth and Chief Legal Officer of Integrated Oncology Network, Andrea Balogh. Andrea, thank you so much for joining us. We're delighted to have you. If we can just start, maybe introduce yourself to our guests and tell us a little bit about your background.

Sure. Thank you very much for having me today, Kayla. I'm really excited to have this session. I'm Andrea Balogh. I'm the Chief Growth and Chief Legal Officer for Integrated Oncology Network. I've been with ION for about five months now. I joined the company. It is a private equity-backed management organization that partners with specialty position specifically in the oncology space around the country and really our mission is to help our physicians stay independent, not to get in their way of their clinical practice, but really help them grow in each market and figure out on a market by market basis, what is the best strategy for them not just to survive but really to thrive in today's healthcare market. That's what I spend the majority of my time on. It causes a heavy focus on acquisitions, but also de Novo growth hospital partnership's alignment with primary care physicians and really looking at ways for physicians to stay in an environment that they're the most comfortable with.

I started my career. I actually started as an M&A lawyer many a moon ago in Manhattan. I was a deal lawyer, did a variety of transactions, but really what I discovered in that process is the part of M&A that I like the best is what happens after the deal closes. I spent a lot of time early in my career talking to CEOs and CFOs about their aspirations for different transactions and learning about why they were going after a particular target. That I discovered was what really intrigued me, is what happened after the deal closed. How did they integrate that into their organization and did those aspirations actually come true and really grow the organization in a way that they wanted to grow?

I made the leap in-house, and I've been in-house ever since. I've done a couple of different private equity-backed portfolio company opportunities. I started in the payer space and then moved over to the provider side. Was in women's healthcare for the last 10 years until that transaction that that company was sold and moved over to ION because I really saw an interesting opportunity in oncology to be able to create a true community, community-based environment for our physicians and a community opportunity where physicians can be close to their patients delivering care at the right time in the right place with the right providers.

That is really our mantra and the mantra that I have created for our organization is how do we do that. How do we create that triple aim for our patients that we know delivers the best care, also does it in a way that is the most economical for our payer partners, and does it in alignment with our hospital partners as well. We believe that we are best served when we are friends with everybody, if you will, in the healthcare ecosystem rather than trying to fight others. I think there's room in healthcare for everyone to have a place, and that's what I've tried to do at ION.

Thank you so much. I think that your experience both in-house, externally, on the operations and growth side really inform the way that you view acquisitions, the way that ION looks at acquisitions, and so I want to speak a little bit just about acquisitions that you're really excited about, the things that make you passionate. I use the term acquisition very broadly in the term of what we think of as true mergers and sales, but also opportunities of strategic joint ventures, strategic partnerships, like you were saying, the ways in which you can work together to make an overall better healthcare system. Can you speak a little bit to what is exciting you lately about acquisitions? What are you seeing in the market, in strategic partnerships that you think is a real future area of growth?

That's a great question. I'll talk maybe initially about our market in California because that is our largest growth market. I think what excites me there is we've got two main hubs, one in north central California in the Fresno area, and then we've got a cluster of practices down in the San Diego area. What I'm really focused on is creating that one unified practice and really filling in the geography, if you will, between Fresno and San Diego, looking at different parts of California and finding where there is the greatest need for patients and the greatest opportunity for us to find those diamond in a rough physicians that are still independent, still really believe in the mission of why they went to medical school, which is to lean into a community, and provide the best care that they possibly can.

But oftentimes when you find those physicians, they're struggling. They can't keep up with legal requirements around privacy and security. They can't keep up with technological requirements around EMR. They can't keep up with the patient volume. They don't have a way to really properly communicate with payers. They don't know the right way to align with hospitals in the area, and I think that's where we add a lot of value for them. We can bring marketing to the table. We bring payer expertise to the table. We bring technological expertise to the table. We bring compliance expertise to the table. I think all of those things are the things that doctors desperately crave because that's what allows them to go back to the notion of, "Why did I go to medical school? I didn't go to medical school to figure out how to bill my claims with Aetna or Blue Cross. I went to medical school to take care of people." That to me is the secret sauce of why private equity and physicians can marry together in a way that benefits both organizations.

We're not clinicians, but we are expert business people. We know how to run a business and we know how to grow businesses. I think if we each stay in our "lane" if you will, it creates a win-win for both parties because we know that it is important for us to invest our dollars in building out a first class payer contracting team that spends their days really not just looking at contracts for payers but building those relationships, figuring out who the key payers are in the market, and then figuring out how do we partner with them appropriately. What is the value proposition that our physicians bring to the table? How do we then align those two and create a win-win? We save them cost, but we never compromise care. We end up then working on a situation where we are sharing in the fruits of our labor. We're lowering the cost of care, improving the quality, and making it a better experience for our patients overall. We work heavily in that area.

We work on hospital partnerships. Oftentimes, physicians, they have privileges at the hospital, but they don't necessarily have a relationship with the senior most officials in that hospital. They're medical directors, maybe they deliver or they perform surgeries or they do various procedures, but they've not had the opportunity to sit down with that senior executive team in the hospital and say, "Hey, how do we align together?" I'm having several of those conversations now that says, "What do you do really well and what do we do really well and how do we bring those together? Let's not step on each other's toes or shoot bullets at one another. Let's figure out how we both come to the table and create that win-win for the patients in the community."

My favorite deals are those doctors that just want to spend their time with their patients. They want to deliver what they know is right. That's where I think we have to go as management organizations. I think there's a lot of concern from physicians. They hear private equity and they'll come up with two friends. "Well, my two friends partnered with private equity and it all went downhill so tell me why you're different." We have this conversation with lots of folded arms that says, "I'm not listening to this." What I try and do with all of our transactions is take a step back with those physicians and say, "Tell me the negative things that you actually heard because I want to tell you how a lot of that is a misconception of these transactions."

What they're hearing is things that just aren't really right. I think they're taking all of that negativity and going, "I don't need this." When you turn the conversation around and you talk about things like clinical excellence and clinical quality and really giving time back to those doctors to do the right thing for their patients, that's when they get excited and that's when I get excited. And so really bringing that message in almost an evangelistic way to our acquisition targets and to our various strategic partnerships is what gets me out of bed in the morning.

It's not just California. We have markets all over the country that we're doing the same thing. I always start the conversation with physicians to say, "What's the right thing that we should be doing in the market? Don't tell me what you're doing, but what do you think is the right thing? If money wasn't an object, what would you be doing right now? What do you think your patients need because I'm going to take the money issue off the table and I'm going to solve for that. Tell me what you'd like to do." Then we'll talk about things like outpatient surgical centers or building laboratories or looking at specialty pharmacy opportunities or just figuring out a way to align with the physicians that they talk with every day down the street.

But they don't know how to bring that conversation together. I say, "All right, so money is now off the table. What do you think about adding this service line? Well, that sounds great, but how would we possibly have time or the knowledge on how to if I've got a medical oncology practice." For instance, "Boy, we'd love to have radiation oncology, but we don't know the first thing about radiation oncology. We know you have to have a vault and you have to have a physicist and you have to have a dosimetrist and you have to have a radiation oncologist. But all those people are expensive. We don't know how to manage them. We don't even know how to bill for that."

Then we go down that conversation route and I say, "Look, let's do that. If we think the volume's there, let's do that. Not only will I bring the capital to do that, but I will bring the clinical expertise on finding those right doctors, setting up that clinic for us, finding the space, building the vault, bringing in the LINAC machine, and then adding all of that talent because I've got a world-class recruiting team inside of my management organization." That's when doctors start... You can see the twinkle come back into their eye and say, "Oh, I didn't know this could work."

Then I say, "All right, so then if we add that, what else should we look at in the market?" They say, "Well, it would be great if we had a breast surgeon." "You know what? We have breast surgeons in several markets. Let's talk about who you know that you might think might want to join us." We'll go down that road and the spark in the eye gets bigger and they say, "Wow, we could have our own surgeon." I say, "Yep, we could absolutely have our own surgeon. Well, then we need imaging. All right, then let's... You know what? I have five imaging centers around the country. Let's build an imaging center. We'll bring in a mammography machine. We'll do 3D tomosynthesis if we're talking about breast and we'll build a program that is centered around what you believe the community needs." That's when we both get really giddy in those conversations. That's where I think the promise of private equity comes in and that's where I think really the future of the independent practice of medicine is going.

I think that you've hit on so many things: payer relationships, hospital relationships, managing internal physician expectations and relationships. All of those things are things that we see very consistently as material challenges that acquirers of all kinds but particularly private equity acquirers and partners have to overcome, like you were saying, as a threshold matter. Have you found certain strategies or certain recommendations that you would provide on dealing with these different challenges? I know that's something that many of our listeners are very interested in.

I think it is important, whether if you're starting a platform, that you're coming in not just with the PE team. That you have identified some senior leaders that are going to be running your management organization on a go forward basis. Where doctors are the most leery is where they're just meeting the private equity team and they're saying, "Yeah, but you guys are the ones that are going to come to the table and do the initial deal, but who am I going to work with on a go forward basis? Who am I going to go to when I need my drug contract or medical oncology negotiated? Who actually, if you're telling me you're going to add a new service line, who in your organization knows how to do that? Because I don't know how to do that. If you're telling me that this is the way you're going to 'repair my income,' who is it that's going to sit side by side with me?"

Because that's where, if I'm the doctor, I'm the most skeptical. I think really if you're thinking about a platform opportunity, you've really got to think about making those initial investments in a management team that is going to carry you forward. Because doctors have heard private equity before and they understand that they come with a liquidity opportunity. But if it's just that and there's no clear path to income repair with something more than... A physician I was talking to recently said to me, he said, "Well, tell me what your bag of tricks is." I said, "I don't have a bag of tricks. What I have are thoughts on how we can grow successfully in the market that are going to take time, that are going to take money and that are going to take expertise that I have inside of my organization." I had the doctor call me back the next day and he said, "You are the first person that actually didn't come to me with some trick around billing or some trick around pre-authorization or some other trick."

He kept using the word trick as to how you are really going to help me grow. Because for many physicians, even the older physicians are most concerned about creating a legacy, whether it's for their community or for the younger physicians. They built a practice. They did all of the risk taking and the blood, sweat, and tears to build it to a certain level. They're thinking about, "Okay, I want to retire in 3, 5, 10 years. What's going to be left for these young partners that I brought in?" They really do care about that. They care about what the deal itself looks like. But if you really sit down and you spend the time talking to them about the future, that's what they're concerned about. They've heard things like the world is going to value-based care, but they don't know what it is. They assume that that is some HMO contract that's capitated that they can't possibly make money in.

They want to hear that you've made investments in payer contracting, that you understand that an approach to the market needs to be multi-pronged, and it can't just be a billing trick or an authorization trick or something else that you think is going to do some quick income repair. I think being honest with physicians about what the transaction looks like, making sure upfront, too that the doctors really understand the deal and that if you're looking at a large practice, that you're not just channeling that conversation to the two senior leaders that have reached out to you for the possible opportunity. But that you are really pushing and saying, "Look, I need all your partners at the table. If you've got 10 partners, I'm not going to rush to cut a deal with the two of you because I need to be able to look across the table at the other eight partners and say, 'this is how the transaction works. This is the liquidity opportunity for you right now. This is our expectation in terms of how we will work together on a go forward basis, and this is what we're going to build together.'"

I think a lot of these deals stumble when we as business people make the assumption that those key physician leaders are trickling our entire message down to the broader partnership. We have struggled. I've struggled in other organizations where I've made that assumption incorrectly. Then I've had physicians after we've closed say, "Oh, I didn't understand what was a captive PC. What do you mean you control my practice? I don't get that. That's not what I was told." As I look at acquisition strategy on a go forward basis, it is heavily focused on yes, getting my foot in the door to have that initial conversation, but then immediately pivoting to make sure that we've got everybody at the table and we've got key administrative people at the table as well.

Key administrative people, a practice manager, a CEO of a practice, whatever they choose to call themselves, they will torpedo a deal faster than a doctor will if they don't feel that there's a future opportunity for them. I think that comes into play as your platform starts to mature and you've got a really mature management company that you are operating. There are lots of assumptions then that the administrative team of a target is going to make. "Well, they have a billing office in Nashville and they're not possibly going to want my tiny little billing team here. Let me figure out a way to tell the doctor this isn't a good idea." Who's the doctor going to listen to? Are they going to listen to me who they've just met, or their administrator who's been with them since they came out of residency? I think we know who wins that conversation.

Really broadening your approach to the group and figuring out how you answer everybody's question. The number one question everybody has is, "What's in it for me? What's my opportunity beyond my big payday to grow? What's the opportunity for my younger physicians who I put my reputation on the line to bring into the organization? What's their opportunity? What's the opportunity for my staff? How will you support them? Be honest with me. Tell me what's going to change."

I think if there's any piece of advice I ever give anybody, be as transparent as possible, be as honest as possible. Don't tell them that income repair happens overnight. It takes time to build a market. Be honest about if you're looking at a small target to start in a market with, be honest that you've got to grow in order to gain leverage, for instance, with payers to improve reimbursement rates. It's not going to happen overnight with a four-physician practice or even a 10-physician practice if there are 30 other 10-physician practices in the market. Payers just don't play that way. I think honesty is really important and if you're not honest, you're not going to start off on the right foot. If you haven't started off on the right foot, you are going to be behind the eight ball from the moment the deal closes and it just isn't going to go as well as you would like it to go.

Absolutely. I think those are all spot on, and I think anyone of us that's been involved in deal making know that there have been pitfalls over time in different transactions as a result of different elements that you identified so I think those are perfect recommendations. As we wrap up here, I really want to end with one culminating question, which is what are the exciting healthcare trends that you've been looking at lately? What are you interested in, whether it be political reimbursement, consolidation? What makes you really excited about the future of healthcare, whether it be in your personal market or in others?

I think the number one thing that excites me is the notion of comprehensive care in an independent practice setting. That message resonates with both physicians and payers and the opportunity to align with hospital systems and create true strategic partnerships that bring value to the hospital, to the practices and to the patients. I think that we are seeing a shift now where hospitals are understanding that they're not the best employers of physicians, that independent practices can and do a much better job with that, and that their future needs to be in what they're good at. Our future as partners to independent physicians allows us and creates the opportunity for us to lean in a multitude of ways and really reach our communities in the ways that the doctors know best. I think the thing that's exciting for me is it's allowing doctors to go back to why they went to medical school, which is to take care of people.

I think that there's just tremendous opportunity now for physicians to, it's not going to look like what it looked like when a lot of them went to medical school where they're hanging out a shingle and it's a small practice, most of them will be part of larger practices. It's just where the world is now and what the requirements are to be able to thrive. But I think if there's anything about these larger practices is when you align in a way with a practice that allows doctors to be doctors and business people to be business people, really great things can happen. And great things happen for our physician partners, but even more important to me is great things happen for patients in the community. That to me is the whole ball of wax, and that's why I get up in the morning.

Well, thank you so much. This has been absolutely insightful. I know that all of our listeners will enjoy it, and many of them will resonate heavily with everything that you've said with the things that they have every day going on in their businesses and then also potential growth opportunities. Andrea, thank you so much for joining us. All of the listeners who tune in to Across the Table podcast, please join us next month for our next series. We look forward to having you, and thank you so much.

Thanks very much, Kayla.

We appreciate you joining us on this episode of Across the Table. To learn more about today's discussion or to contact us, please visit our website at mcguirewoods.com. We look forward to hearing from you. This podcast was recorded and is being made available by McGuirewoods for informational purposes only. By accessing this podcast, you acknowledge that McGuirewoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuirewoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state, and should not be construed as an offer to make or consider any investment or course of action.