One-On-One With Roy Bejarano of SCALE Healthcare

Bejarano: We have focused on an exceptionally large market that is growing rapidly, US health care services, and we have brought to that market for example, the many management services organizations (MSOs) that have emerged our history of succeeding as operators, founders, investors within the same market. That history has informed our view of what the market was really missing, which was a fully built-out consulting and services solution designed to meet the precise needs of the market reliably and nimbly. We have built broader and deeper capabilities focusing on delivering faster, better and cheaper alternatives. My history as an operator and a consumer of third-party services has taught me that faster, better, cheaper is usually hard to resist. Lastly, we really do take our values seriously, we view the entire market as a community of long-term relationships, and we try our hardest to act accordingly.

Consulting: How long do you think you can sustain it?

Bejarano: For many more years! There are many directions to take this, and we are more excited for the future than our past.

Consulting: Starting a firm at the start of the pandemic seems to have had little negative effect on SCALE'S success. Why do you think that is the case?

Bejarano: Thankfully, we were there to help many groups deal with the pandemic, including the City of Boston and its need for emergency shelter for homeless patients. We were there to help many groups respond to the unprecedented volume that returned as soon as practices returned to work during the later stages of the pandemic. We were also lucky in that we were very small at the time, so adjusting was less difficult; luck has a great deal to do with everything. We were also viewed as a trusted partner by our community, the tough times strengthened our relationships.

Consulting: Briefly describe the SCALE story and your industry focus.

Bejarano: SCALE was born of my partner and my history as entrepreneurs and operators in health care services, particularly regarding MSOs. We initially built Frontier Healthcare, an ASC management company, into the largest-of-its-kind in New York and expanded the business by merging with Physicians Endoscopy through a sale to Kelso & Company private equity. At the time, we were the largest gastro-focused ASC management company in the country with +550 physician partners. I helped lead this national company, particularly in successfully pivoting the business toward a new direction focused on full practice management MSO, via the purchase of CDC, a 65-physician group in Maryland and Washington DC. I learned throughout this process just how much unmet demand there was for real management solutions in the MSO space across the country.

Consulting: Looking at the health care market broadly, what are some of the opportunities you're seeing that you're most excited to capitalize on?

Bejarano: We see opportunities to be helpful in all the core functions that take place within consolidating MSOs across the country, from RCM to finance, marketing, compliance, payor contracting, data analytics, recruiting and more. We also see opportunities to expand into new markets for us including health systems, long-term care facilities and med tech. We will also be hosting our first health care services industry conference this coming year as we continue to invest heavily in SCALE Education which includes our subscription content business.

Consulting: Talk to us about the health care industry. What do you see changing in the next 5-10 years?

Bejarano: Well, I truly have only spent considerable time in one portion which is health care services. So, in terms of that market, you will see the industry start to act with maturity, which means larger companies — much larger than we have been used to, buying resources — creating value, forming partnerships, which will seem ground-breaking. Historically, we have grown up with large local health systems that, in truth, were only large relative to small practices but were far from national or even international competitors. Their focus was on serving their local catchment areas to the best of their ability, but beyond that they lost interest.

Today, we are looking at national competitors in every clinical specialty, every site of service, every payor market, and, of course, in the business and technology third-party business services that support these national entities. This large ground swell of national competitors is highly opportunistic, willing to take on exciting partnerships, try new solutions across departments, including the concept of value-based care, but beyond value-based care and inclusive of other transformational disciplines, such as data based marketing and improved internal risk management. All the departments within health care services are redefining what it means to be best in class, and that is exciting. The investment capital deployed into the market continues to be breathtaking.

I think we will see the most innovative solutions in health care delivery over the next 10 years, this will be a golden era for health care in which the right companies introduce transformative change. I believe that will primarily come from health care companies, as opposed to technology companies.

Consulting: What would you define as the biggest challenges ahead for the health care industry and/or MSOs?

Bejarano: Beyond the well-publicized mismatch between more expensive labor, shortages of staff and fixed reimbursement rates, the industry will continue to struggle with complexity. There are many MSOs that are wrestling with 100s of SKUs, infinite pricing alternatives in the form of complex billing codes, mountains of data, very difficult payor relationships, unsettled compensation arrangements, highly-demanding clinical staff (which they should be), highly-informed patients that have often many alternative options, technology-based solutions that require ever more expertise, and a challenging regulatory environment.

Consulting: From a talent management/growth standpoint how are you managing such rapid growth and keeping talent onboard and happy?

Bejarano: We hire every week, it seems. We are focused on making our talent happy. We believe it is possible, so we at least try. We are not a cynical organization. We think that happiness for our talent will come from really rewarding work, variety in the work if they want variety, and successful results — smiles from our customers are the best source of happiness for us — fair and equitable compensation, and access to everything in our business with no closed doors. We're really focused on the long-term vision for our future. We aren't building for tomorrow, we are building for 2040.

Consulting: What do you see as the overall state of the advisory market?

Bejarano: It seems challenged to me. An industry full of good people, and yet the pricing seems off, the quality seems off, the delivery times seem off — that is just the feedback I hear out there that predated our entry in the market. I think there is much to work on here as an industry and we are keen to be part of the solution. Notwithstanding, we balance this view with the knowledge that there remains much to gain from third-party consulting done right, ignoring the negatives that certain consulting firms bring to the table. Companies' CEOs and Boards still have a vested interest in perfecting how they use consultants and which ones they choose to work with. Getting that right could yield meaningful value but getting that wrong could yield missed opportunity plus the costs referenced above.

Consulting: Thank you Roy, and we wish continued good fortune for you and the firm in the coming years.