At fast-growing Allied Digestive Health, with 194 GI physicians, 75 nurse practitioners, and locations in New Jersey and New York, COO Sap Sinha is excited about the future.

“Private equity in general is looking at GI very specifically, and there are multiple reasons for it,” Sap says in this conversation with host Geoff Cockrell. One reason lies in the fact that colon cancer is the second-largest cancer or cause of death in the United States. Sap describes the current landscape, where Allied is investing in clinical quality and partnering with large institutions, as well as frontiers, such as genetics to detect colon cancer and helping obese patients reduce weight to manage non-alcoholic fatty and liver disease.

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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.

This is The Corner Series, a McGuireWoods series exploring business and legal issues prevalent in today's private equity industry. Tune in with McGuireWoods partner, Geoff Cockrell, as he and specialists share real-world insight to help enhance your knowledge.

Thank you for joining another episode of The Corner Series. I'm your host, Geoff Cockrell, a partner at McGuireWoods. Here at The Corner Series, we try to bring together deal-makers and thought leaders at the intersection of healthcare and private equity in the sectors where we see tons of activity. Today, I'm thrilled to be joined by Sap Sinha, the COO of Allied Digestive Health. Sap, if you could give a quick introduction of yourself and of Allied, that'd be super helpful.

Thank you, Geoff, for inviting me to this podcast. I'm excited that we can share the story of Allied and we are working on and GI space in general. I'm Sap Sinha, as you mentioned. I serve as the chief operating officer of Allied Digestive Health. I joined in 2021, March 2021. Once a private equity partner of ours, Assured Healthcare, invested in them with the view of growing them and modernizing the practice.

Since then, we were about 54 physicians. Currently, as of today, we are 194 GI physicians and 75 nurse practitioners. So as you can see, we have grown quite a bit over the period of time, and it's an exciting place we are at. And we are both in New Jersey and New York, which are extremely interesting states, highly heavily populated, interesting insurance market. And New York has been even exciting in the sense that it's a big state. People don't realize New York City is not just New York, there is Buffalo, there is Albany, there is middle of the states, upstate and downstate, and it functions at three different states. So it has been an interesting growth journey from that perspective.

Prior to Allied, I was part of SCA Health. Optum came through a private equity route in that also we were acquired by Optum. SCA is a large ESC provider. And prior to that, I was a senior principal partner at Boston Consulting Group working in their digital health practice, helping pharma, medtech organizations. So I've spent 12 years in consulting, worked very closely with them, and kind of made a pivot into provider practices and provider world because I felt that there was a lot of need for modernization, there was a lot of need for using technology. And so I've been very blessed in my career to get those opportunities. So I'm excited to talk to you and share any of my perspective that would be helpful to your listeners.

Sap, for a number of years in most provider sectors, but certainly GI as well, the outlook for acquisition through or growth through M&A activity, whether it's kind of whole platforms or larger add-ons or smaller add-ons, it was all tailwinds and there's more headwinds. How would you describe some of the headwinds versus tailwinds in the current M&A market for the GI space, and what do you think the prospects for the next 6, 12 months are?

I think it's still fairly active because there is a lot of dry powder still within even us, our competitors, and private equity in general is looking at GI very specifically, and there are multiple reasons for it. The one is GI as a specialty is becoming very important to our healthcare. The unfortunate news is that colon cancer is the second-largest cancer or causes of death in this country. And maybe through our diet, our lifestyle, whatever that reason may be, the age for colon cancer is just going further down.

So as you know, the US task force changed the age to 45 a couple of years ago. Now there's even discussion should be to start doing colonoscopy or some sort of screening at 40, and there is definitely a growth from that perspective.

The other piece of it is, again, through environmental or otherwise, we are just seeing a lot of chronic diseases growing in the GI space, so IBS, IBD, Crohn's, they are growing, especially in younger women.

We see that 70% of our UC Crohn's disease are women. Then we are seeing an absolute increase in non-alcoholic fatty liver disease, which is now being changed into a metabolic disease, it's being called in the GI space. And 25% of the US population unfortunately may have that disease, and 4 to 6% may have NASH, which is the last stage of that disease, which can lead to liver transplant.

So Hep C, fortunately for all of us, it has been cured, and that used to be a big reason for liver transplant. Now it is a NAFLD and NASH. So there is aspect of that.

And then other kinds of things, GIs are becoming very, very important. There is a whole talk of functional GI. There is a talk about gut health through microbiomes. Every Netflix documentary that comes out somehow gets more patients to us, which is great, it's advertising we haven't spent on and someone else is doing it for us. But there is just a tremendous amount of opportunity, and we have scratched the surface of using technology, using other kinds of ways of reaching the patient.

So as you know, many of our practices, there's just a shortage of clinicians, and that's no fault of anyone, but it's just how our medical education works and number of seats available, and our population has grown so much in the last 20, 30 years. We just don't have enough GIs. So we have admin of nurse practitioners, we are using telehealth in other ways. We are thinking of other techs and everything. And there are many companies that are coming in to help with some of these chronic elements.

So overall, Geoff, what I see is these M&A activities will continue. I think larger and larger cap will get into it. It has been, in the past, middle market. Only recently, let's say Apollo through GI Alliance and OMERS through Gastro Health have entered, but others are sitting on the sidelines seeing the opportunity in GI and being in get into it because it's still fragmented. There is opportunity in many states. Michigan, not much has happened, Colorado, not much has happened, North Carolina, South Carolina, New Hampshire, and others, so there is still white space which we can pursue.

One of the areas where I find a lot of sectors folks are trying to navigate their path is looking for opportunities to engage in value-based care, whether that is kind of risk-based contracting or other mechanisms. How do you think about opportunities for value-based care within the GI world?

Absolutely, and I'm proud to say our physicians have been on the forefront of value-based care. That is because we have invested a tremendous amount in clinical quality, which has put us in a very interesting kind of path.

I will take that question and break it down into multiple constituents. So one of the things that we are becoming exclusive or we are becoming a special partners with large institutions. So for example, Memorial Sloan Kettering based out of New York, we have a very tight partnership. We are actually going to start co-branding and advertise. So for cancer patients, if they need GI care, we can immediately see them, which helps them from a cancer perspective.

And then as you know or me understand Memorial Sloan Kettering is extremely busy institution. We have a pathway to get our patients into surgical oncology, which they specialize quite a bit, and get them into care, which is a value in itself to the patient and to insurances. So that's kind of the high level where we are not exchanging money per se, but there is a value we are creating through those kinds of partnerships in the market. Similarly, we have signed up with Moncology in the same manner.

The second part is we are a preferred gastroenterology provider for ACO REACH program. So as you may have heard that CMS through the CMMI, which is their innovation arm, has been trying to improve how ACO is done. It didn't really achieve the objectives it was designed to do. So the ACO REACH program is a way of empowering the primary care physicians to manage a set of patient population.

And to do that, we have partnered with organizations like Vitalize, which is a fairly large ACO REACH program coordinator, and their physicians, we are exclusive GI providers, and that is value-based care in the sense that it is actually, we have taken a rate cut to provide the care for the Medicare patients. And we are getting a slight bonus where every time we do things in outpatient arena, shift the site of service from, let's say, a hospital to an ASC and OBS, we get a bonus. So that has been very good from a Medicare cost utilization perspective, but more importantly for our physicians to do the right thing and then obviously get bonus for it.

And then finally we've got into what is called episode of care contracts with multiple insurances. These are in the commercial insurance space where colonoscopy for EGDs, for diverticulitis and others, they look at our total cost of care, and we get bonus from that. And then with United, we get bonus for utilizing in-network pathology, for example.

So we are very, very focused in how we can save cost through doing the right thing, which ultimately also benefits us, but more importantly creates a great relationship with payers where we have reached a point where some of the Blue Cross Blue Shield plans in our state are working actively with us to think about other value-based care programs, including looking at some of the general measurements, which are there, like using GIQuIC or others, and we have done.

And then finally we have scored very highly on MIPS. So we have had 100% MIPS score, and CMS actually bonuses us, which is all public knowledge, for our contract. So which they have been rate cuts, and we have had lesser for the rate cuts because we get a bonus, which somewhat compensates for the rate cuts which have happened. So value-based care is super important. It is generally people talk about it as lip service, but I'm proud to say our physicians have taken this topic very seriously and have moved the needle quite significantly where it's not just a lip service, but about 5 to 10% of our revenue comes from value-based care contracts.

One of the headwinds in provider-based businesses in general and GI in particular has been navigating kind of provider satisfaction with the downside being retirements at an accelerated pace or outright departures. Those can be material headwinds to a business. How do you navigate provider satisfaction because obviously happy docs are a good business, upset ones are not? How do you think about that and navigate those challenges?

No, that is a great question. So we have done it in a couple of ways. My background, as I mentioned, is in technology in terms of digital health businesses. So I'm not a technologist, I don't have a degree in technology. I went to Penn Med School and UV for MBA and undergrad economics, but I've always worked with tech companies to further kind of patient care or patient pathways.

So one of the things is we have taken a step back and looked at our patient journey and said, "Where are the inefficiencies?" So I'm actually sitting in health right now in Vegas, which is the largest healthcare tech conference in the world, and I'm talking to many of CD's other companies. So we have seen the patient journey and seen where are the deficiencies and really attacked by using technology, because what I believe is technology is not a replacement, which many tech companies, Googles of the world think. It has to augment our people. The best tech is when they augment and work with our people. So we have done a lot in terms of how patients seek, how including interact and call.

The other piece is clinical documentation. So our physicians, unfortunately with the advent of EMR, what has happened is they have become data operators. As you know, you would go to a physician practice and you would see the physician like [inaudible 00:12:51] walking in and hearing your things, but typing very fast and the physician typing very fast. And that really has an impediment on that patient-physician interaction.

We have introduced ambient technology. So we are partnered with a company called Suki, and where the physicians can talk to the patient face to face and the EMR is written. So it puts in the right sections and puts in all the plan of correction and everything. And then what the physician does is shows the patient, says like, "Is this what we discussed? Are you fine with that?" And then presses enter, and the EMR, all the things are done, and then they sign off. That's a great, great thing because if you ask any physician, and we did, we do a patients, physicians out of action, and we have a very high percentage. It's not that they hate healthcare, it's all the things which come with healthcare that they hate, right? For example, EMRs, and writing, and portal messages, which they get hundreds of portal messages because every patient now is on our EMR portal. So that's where we have...

The other piece we have added is all these prior authorizations, which take a lot of our physicians' time. We have, again, partnered with AI technology, or in some cases we have just said, we will partner with someone, we'll partner with all the, let's say, radiology. We'll partner with all the radiology companies, and we will send the referral to them, and you take care of the prior authorization or et cetera. We will just not be involved in that.

So we have taken certain decisions where it was not a super value add. So we have passed it out and said, "All right, we are not going to do any radiology internally, everything. Let people who are experts do that. This is not core to our GI business." And so that has helped in improving the physician satisfaction in terms of their day to day. We are assisting them and making those problems easier and easier. Is it perfect? No. There's always someone who would say there's obviously control shifts, which happens, or they don't want to use technology. We can't force anyone. We have seen by and large our physicians being happy. Even like colonoscopy, we use AI polyp detection. GI Genius, that has helped reduce fatigue.

And then finally we have developed a lot of ancillary programs, which is creating value for our physicians. And when you are getting compensated through all the work you're doing and you have trying to make their daily lives easier, it has been very satisfying for them.

Where we are still facing some challenge is the hospital side of things. The thing with GI is that GI has transformed in the last 20 years. It used to be that a physician would go to the hospital, they would see patients in concerts or emergency room, and then they would be transferred to the office. That doesn't happen. Now primary care physicians directly send the patient to that, if the patient even lands up. In ER, it's an extremely, extremely tough case. Many a times, actually patient lands up in urgent care and we get referrals from the urgent care. We hardly get it from the ER. But that has become a huge burden. And then retiring physician creates even more burden for doing call, and there is a lot of uncompensated care, which is becoming a very hard thing for the physician. So that's been our biggest challenge is how do we-

We are in the community, we are community-based practice. We want to serve the community without abandoning our hospitals, but how do we keep them that going? Because many of the younger physicians that are coming, and remember, they went through COVID. The ones who are graduating in the last three years, either fellows or residents, they had a very tough time during COVID, and they were working 24, 48 hours. They're burnt out. They just don't want to go back to the hospital. They want to join a community-based practice to be in the community. And so how do we manage and set that needle to encourage them and balance the call and everything which comes with serving the hospital?

So that's been a pretty big headwind for us in how do we keep serving the hospital? And we are in discussion with many of the hospitals to come to the table and think about this together because it's not like they are able to hire docs either. So that's kind of where the biggest challenge we are facing.

Navigating the health system relationships, it can be a bit of frenemies, they're strategic partners, a threat at some level, a competitor at some level. That can be a difficult dynamic.

Absolutely, and the difference is as much as... And some health systems are becoming very progressive. Health systems have built large infrastructure, and they want to fill that infrastructure, but that infrastructure, is it right for our healthcare? COVID aside, that was a one in the millennia obviously, hopefully, right? It happened 100 years before, and hopefully not in my lifetime again, but aside, is the hospital the right place to do certain things, right? That is the biggest question. And in GI, the answer is no, because things have moved on, and when you have GI issues, they become frail. So do we want to expose them to all the other things which are there in the hospital? So it's a challenging discussion and relationship, but surely for health systems are thinking about it, they're becoming more from a health or kind of critical care to actually healthcare, and those kinds of partners are the best partners for us.

Putting together the puzzle of provider alignment in the GI space can be complicated, more like a three-dimensional puzzle from structure, tax regulatory. One of the more difficult dynamics around that where it intersects with provider alignment is kind of strategies around how you think about surgery centers, how you think about anesthesia and other ancillary services. Do you guys think about some of those questions?

First and foremost, what we have, think about, so talking about provider alignment, you have to have a quality product. So one thing, our physicians, even the ones we acquire and partner and everything, they are stellar physicians, they are stellar in treating patients. We are very discerning on who partners with us because I cannot do it, I'm not a clinician, treat the patient.

So that has been a major focus for us, is first partner with the right physicians. Once we have partnered with the right physicians, we have taken certain opportunities. So even let's talk about pathology. So most practices, large practice of our size do anatomical pathology. But we have got into further elements of anatomical pathology where we're doing a lot more special states, immunohistochemistry, and then we've expanded services like stool testing, asking our providers, "What do you do on an often basis, and how can we make this better for you?"

So stool testing is sent out to outside labs, and they have kits, and they have three different vendors, et cetera. They said, "You know, if we could have stool testing, it doesn't make so much money, that's fine, but it would really improve our patient interaction. And to be honest, it will improve... We are doing a lot of it." So we have got into stool testing now.

The next frontier we are scratching is genetics because genetics has a huge role to play in GI from a cancer detection and otherwise. So we have expanded the scope. So we've taken pathology, everything is being done, asked our physician what more we could do, then we have built the services, which increases alignment, right? Because the physicians are telling us, this is what I need rather than someone else from the outside, from a business or administrators or anyone saying, "This is what we are providing. Take it." Right? So that has been very, very deterministic and prescriptive by us, then we will have physicians on every level of our decision making.

Then this other pieces is I talked about some of the answer is we treat a lot of obese patients because non-alcoholic fatty and liver disease to cure it is to get their weight down. We have created methods to identify those patients in a very succinct way. So we have been able to create a revenue and treat the patients, which has been very helpful.

So that's been our maybe secret sauce or method is don't forget who actually is seeing the patient, and more importantly the relationship. The patient is not with an ADH. ADH is an umbrella brand. It's with the clinician directly. So keep that sacred. Our NPS scores are 88, 89 on average. Some of physicians are 95, 96. Just for context, Costco, my favorite brand is around mid-80s. So very proud to say that relationship has been maintained, which makes physicians happy, and that has created an alignment to move forward.

Sap, I think we could talk for a while, but let's call it a wrap there. It's been super fun to hear your insights. I think super highly of your company, and-

... are providing me a platform to share the ADH story, which is my physicians and the patients ultimately, and I'm very proud to be part of the organization.

Thank you for joining us on this installment of The Corner Series. To learn more about today's discussion, please email host, Geoff Cockrell at gcockrell@mcguirewoods.com. We look forward to hearing from you.

This series was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this series, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in this installment. The views, information, or opinions expressed are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This series 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.