Jamey Edwards, CEO of Emergent Medical Associates, speaks with GrowthCap CEO, RJ Lumba. He discusses how his company is positioning itself in the evolving healthcare environment.
RJ: Jamey, thanks again for taking the time. I thought we could start out with some background on your company – Emergent Medical Associates.
Jamey: Sure. Emergent Medical Associates is a medical group. We provide ER and Hospitalist Management services for hospitals. We’re really an outsourced full-service solution – what we do is much more than staffing, there’s a lot of performance improvement, strategy consulting and ongoing leadership activities that we provide at each one of our sites. I think one of the things that made us really successful and different from our peers is that we understand healthcare is local and each client is unique. So we don’t have an EMA process and tell a client to fit into our process. Instead, what we’ve built is the EMA toolkit. Every site is different and requires a different approach given geography, local politics, and local patient population. So while our toolkit is standardized, it can be customized to fit the local need so it scales very well. It’s our unique approach and mindset that I think has made us really successful.
Moreover, we have focused on the fact that the ER is but one part of a broader hospital ecosystem. And that for the ER to run well, lab needs to run well, radiology needs to run well… and because the ER impacts so many other systems in the hospital, we can truly serve as an agent of change throughout the entire system of care. We’ve been able to help keep hospitals open in our area that previously would have had to close, and increased access to care in the areas that we serve. We are patient focused, but understand we are partners with the hospital and the broader community. We’ve grown largely not as a result of any concerted business development effort, but as a result of the fact that when performance matters in a hospital, CEO’s have wanted us there.
RJ: Sounds like you are having great results with your clients. Can you tell us how the company has evolved since you joined?
Jamey: I’ve been out of the investment banking world for 8+ years but I am still active from an M&A and private equity standpoint, in fact we’re starting to get really active, which is fun and exciting. When I first joined this organization, it was generating $18 million in annual revenues, and it’s now topping $85 million in the core businesses alone. And then we’ve developed some side businesses which when added pushed us over the $100+ million mark in revenue. We also have a minority interest in another company that’s a $200 million business, so we’ve built a mini healthcare services conglomerate with a number of complementary businesses.
RJ: How did you become involved with the company?
Jamey: Well, my uncle was the founder of EMA and I had been consulting with him since graduating from Cornell as an undergrad. He’s an emergency room doctor and was one of the first to graduate from ER residency programs when it first became a specialty. I simply started helping with business issues utilizing my investment banking skillset. I would financially model out his contracts and build strategic presentations for him. I helped him move out of his home office into our current offices, which have expanded significantly. What he and his partners did really well, better than anyone else I have seen, was manage emergency departments of excellence, and they realized that I could help develop the business side of things. Eventually he said, one day you’re going to come work with me, which I didn’t really consider or take seriously at the time as my banking career was on a great trajectory. But lo and behold, I was getting married, sitting in my seat at Lehman Brothers and things were going really well. He called and said “hey we have a great growth opportunity here and we’d love for you to come help us manage it.” So I left to be CEO and it’s been an amazing ride. We’ve grown the business substantially. As a first-time CEO, it’s been a great learning experience for me. I’ve learned healthcare from the ground up, while helping build a business including all the infrastructure, strategy and a first rate leadership team.
RJ: What do you think has been the key factor behind your success as a CEO?
Jamey: For me, it was leveraging the skills I learned as a banker in terms of quickly understanding how a company works, putting it down into a framework and figuring out how to communicate how a company should operate, what its goals are, what its mission is, and what its story was. For me, business is all about storytelling, and if I’m here trying to build a business, I need to be a good storyteller so I can
“We are honored to have the community trust and to have hospitals who believe in the work we do everyday. It is our pride and dedication to these partners and our community that we feel separates us from our competitors.”
build the right culture so that my employees and my partners and hospitals know what the business stands for. So for me, investment banking was really about learning how to tell a company’s story in a really effective way and then translate that into written materials or a financial model. A financial model at its essence is really a company’s story in numbers. That storytelling skillset is universally applicable and it enabled me to convert into an operational role and build a cohesive vision for our company that people could rally behind.
RJ: What are your key areas of focus in terms of business strategy for the company?
Jamey: There used to be a point in time in our growth, where there was no contract we didn’t like, no matter what the contract was. If it defrayed some of our corporate overhead, our attitude was “let’s do that,” because we had to build scale in the business. I think what we realized is that, while it was great at the time, as we’ve transitioned from an entrepreneurial company into a more professionally managed organization and needed to have stricter criteria the goal at the end of the day for our future growth is to rationalize our site mix and to improve its overall quality. So we’ve actually resigned some contracts, which were some of those bottom twenty percent-ers, which ended up needing 80% of our efforts while driving 0% of our profits. So for us, it seemed to be a natural route, and what we’re trying to do now is improve the quality of our portfolio and we’re now set on building system level relationships and pursuing more strategic partnerships with hospitals. We’ve been able to forge relationships with leading healthcare systems like Providence Healthcare Systems, Life Point and HCA, among others. The goal is to have strict criteria around our growth, whereas before we grew more organically and with little M&A activity. Right now, we’re looking to be much more acquisitive, and we’ve realized that the market is growing rapidly and we need to be on top of it.
RJ: How have regulatory and reimbursement changes affected your business?
Jamey: Healthcare reform has brought a lot of change to the industry, and it’s only going to start getting more pronounced in the upcoming years. The ER, regularly, is the only medical practice that can’t choose its patient base, i.e. whether you can pay or not, you come to an ER, you get treated and cared for. You get what is known as a medical screening exam, and before you leave the ER you need to be in stable condition. That’s dictated by federal regulation called COBRA EMTALA, which drives our service. As a result, since we can’t choose our patient population or payer base, we’ve had to become efficiency experts. The trend in healthcare right now is “do more with less” – see more patients and get paid less. That’s the prevailing wisdom of today in terms of what our government is asking of the healthcare system currently. As a result, it’s become a volume business. Our belief as a company is that quality shouldn’t have to be sacrificed, and so we’ve had to really develop what we call the efficient continuum of care model.
This model at its core focuses us in on how can we be the low cost, but highest quality operator that increases access to care in a way that is really best for the patient population and best for the hospital. As an example, if you are a pediatrics group you can close your practice and say, we’re only taking people who are insured at the following insurers, or we are cash pay, and you can get reimbursement from your own insurance company. We can’t do that. We typically will collect 35 cents on every dollar that we charge, and therefore when you’re dealing with those types of economics, you need to be the most efficient provider in the marketplace. Our managing partner Dr. Mark Bell’s slogan is that, “efficient care is the friend of quality care,” and we live by those words. People being treated and cared for without long length of stays and without having to wait a long time to see a doctor is simply good medicine.
RJ: What are the primary areas for continued growth in your business? Are you going to continue to acquire similar type businesses, or devote more to the business development effort?
Jamey: I think all of the above, RJ. What we’re seeing is that a lot of the RFP’s in the marketplace are now multi-specialty. Hospitals and healthcare systems are realizing that they can scale their outsourced hospital contracts and manage them easier if they have one group managing their ER, hospitalist group, radiology group, and anesthesia group, or some combination thereof. We have a division called Benchmark Hospitalists where we staff our hospitalist practices for partner hospitals. We’ve developed a few integrated care models where we are the ER and Hospitalist group for the same site, and they tend to be efficient, high quality practices. The barriers in politics that are associated with having different groups service each one of those specialties are broken down in a unified continuum of care model. It becomes a much more collaborative atmosphere. So, you might see us expanding into other specialties; you’ll definitely see us growing our ER and hospitalist practices, both organically and through acquisitions.
RJ: You’ve alluded to the different ways that EMA differentiates itself from other folks. Are there key highlights we could give people about what truly differentiates your business from others?
Jamey: We understand healthcare is local. We understand that despite trying to be an efficient, cost effective operator, the best quality medicine should always be practiced. To us, any ER group should provide the best clinical quality. We believe that in the era of the Affordable Care Act and the ever increasing complexity of medicine, EMA differentiates itself through the operational and financial aspects of what being a true partner to our hospitals means. We have a stake in our hospitals’ futures and we don’t take that responsibility lightly. For us to succeed, a hospital needs to be successful as well. We have a global perspective which we call our “Ecosystem Approach” on improving all of a hospital’s operations and not just its emergency department. We view the ER as an agent of change and performance improvement throughout the entire facility. I think another part of our success is that we are hospital owners. We own a minority interest in a hospital company here in Southern California called Avanti Hospitals and having that minority interest has allowed us to adopt a hospital ownership mentality. It’s really allowed us to see what the problems are that our client hospitals face, and how we can better partner with them to succeed. We’re the only group in the country with that unique understanding.
We’ve also been able to put a return on investment on the ER, even though some of our ER’s aren’t subsidized, per se, we’ve been able to show how when the ER improves its operations, and patient flow throughout the hospital improves, a meaningful impact to the hospital’s bottom line results which improved services and increased access to care in the community. We are in a lot of ways a safety net. Some hospitals we serve might have had to previously close if we weren’t able to come in and help them drive better performance. We are honored to have the community trust and to have hospitals who believe in the work we do every day. It is our pride and dedication to these partners and our community that we feel separates us from our competitors.
RJ: Lastly, are there any new businesses popping up in the field of healthcare, related or unrelated, to EMA, that you find particular interesting?
Jamey: Yes, we believe in telemedicine and have invested in The Language Access Network (“LAN”), which initially looks like a language interpretation services business that’s not clinical. But Language Access Network’s policies and procedures are 100% focused on healthcare. It’s the only U.S. language services company with a Chief Medical Officer. We know that communication is fundamental to every patient provider encounter, and if you have a Limited English Proficient (LEP) patient or a deaf or hard of hearing patient, which is one in five Americans and growing, they have the right to an interpreter. Many hospitals are ill-equipped to provide interpretations services and LAN helps solve that problem.
Defensive medicine costs, the risk of a poor outcomes and decreased patient satisfaction arise from the communication barriers that currently exist. So being able to empower a patient and provider to speak in their primary language is paramount. You know, the hospital is a scary enough experience when you speak English. But imagine being on a gurney in an ER and not speaking English or being deaf or hard of hearing. Our goal is to reduce the anxiety related to the process and then improve the outcomes related to that patient population. It’s an interesting technology and all done over videoconferencing. Another one of the big problems in the healthcare system is not having access to all the specialties that patients need. Being able to deliver that and build scale into our national healthcare system with telemedicine we think is a huge opportunity.
RJ: We’ve been speaking with a telehealth company in the northeast and have seen growing interest among investors in the space.
Jamey: Telemedicine is an incredibly cost-effective and high quality way to get patients the treatments we need. Telemedicine is really just the new medicine as far as we are concerned. Another area of interest is population health companies that understand the value of data, and who are able to assist patients to become well informed consumers of their healthcare. In our country, we’ve got a bit of an entitlement mindset when it comes to healthcare. Healthcare is something we’re entitled to receive. But not everyone is altering their behaviors that well. So why should a healthy person who works out regularly and eats healthy pay for the cost of someone who drinks, is obese, smokes and doesn’t take care of themself? Those are the issues we face, and changing consumer behavior, to me, is the biggest part of improving our healthcare system. So seeing companies pop up around that area is exciting, where they’re giving patients information about their cholesterol and what they eat, for example companies like FitBit, Shine, and other tracking technologies. Being able to track one’s activities are great for a broader wellness discussion. The healthier we are, the better our health system will be able to handle all of our needs.
RJ: Jamey, thanks so much for taking the time. This has been a very informative conversation that I am sure our community of CEOs and investors in the healthcare space will appreciate.