Building Recession-Proof Healthcare Businesses: Wisdom from Gil Messer

We're about to embark on an enlightening journey with our guest, Gil Messer. As the Chief Operating Officer at the Dermatology Specialist, Gil's experiences in the healthcare industry are truly inspiring. From his early exposure to healthcare due to severe asthma, to his instrumental role in expanding CityMD from 20 to 120 locations, Gil's passion for improving access to quality healthcare is evident.

Throughout our conversation, we uncover the strategies Gil has implemented to navigate growth and analytics in healthcare. We discuss the importance of understanding all facets of the healthcare business, and how Gil has used robust analytics and data to guide site selection, focusing on density, insurance mix, and accessibility. Hear about how he has used his knowledge and expertise to maximize operational efficiency, and the lessons he's learned along the way.

We conclude our chat by discussing the economic aspects of healthcare. Gil shares his valuable insights into how to build a recession-proof business, and how to make it attractive to PE partners. We discuss the importance of having multiple sites, advanced technology, and a robust infrastructure not reliant on any one key person. We also delve into historical cycles and economic trends, providing invaluable advice for any healthcare professional or investor wishing to build a successful business from the ground up. Don't miss this fascinating conversation with our guest, Gil Messer.

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Transcript

Speaker 1: 0:00

You can't focus on timing the market correctly, but you can focus on building a good business regardless of the environment, and so you just focus on the fundamentals of your businesses. It's going to thrive in good times and it's not going to get destroyed in bad times and, from an investor standpoint, I think that they are more willing and rougher times, in higher interest rate environments to pay a premium for a solid business with good fundamentals than, and less willing to pay, even at a discount, a business that doesn't have the strong fundamentals and a solid platform.

Speaker 2: 0:48

The goal of this show is to help health care organizations scale by leveraging real estate strategies and interviewing high-level healthcare executives who are actively in the trenches in order to pull out lessons learned along the way. If you'd like a free site selection analysis from our team, or you'd like to learn more about how we're acquiring real estate through our fund on the blockchain, visit us at wwwreuniversityorg and drop us a line that's reasnrealestateuniversityorg.

Speaker 3: 1:14

Hello and welcome back to another episode of Helping Healthcare Scale. I'm your host, Austin Hare. I'd like to welcome our guest today, Gil Messer. He is the Chief Operating Officer at the dermatology specialist and they got started in 2019 with nine locations. They've already grown to 41 locations and there's a large dermatology group in New York. They've got locations spreading across and to Delaware. So, Gil, thank you for coming on the show today.

Speaker 1: 1:39

Awesome. Thank you for having me. I'm glad to be here.

Speaker 3: 1:42

All right, let's dive into it. I would love to get your story. There's always something that you can trace down to childhood that kind of got you on this path. So was there, how was your childhood experience?

Speaker 1: 1:56

Yeah, I would say that how I got down this path probably really started in the economic downturn of 2009. I was a finance major at William Mary and the banks where I thought I was going to go were really not hiring, and the only place that was hiring was healthcare, and so I figured I would get into it for a year or two and then jump over to a bank, and so I joined a Bonsi course working for the SCP of Recycle, and very quickly I realized that I actually loved healthcare, and I think it brought back too much childhood of a kid that dealt with several health issues as a younger child and bouncing around different specialists, et cetera. It drew out a passion for me, and so it's nice to be able to do good for the community while still developing and growing a business, and so I started at Bonsi course, started following in love with it.

Speaker 3: 2:54

What was it? Can you tell us a little bit about what it was in your childhood that got you interested in this space?

Speaker 1: 2:59

Yeah, I would say that I was. I had severe asthma as a child. I was in and out of hospitals and I grew up in a small rural town in North Carolina and there weren't many specialists and so I'd have to travel hours to see a specialist to try to manage my asthma. And so my parents did that, but it wasn't easy for them. Obviously, and luckily I mostly outgrew it post puberty asthma and don't struggle with it as much. But I think those experience really started hitting home when I was working at Bonsi course and we started expanding into some under-served areas like Richmond Community Hospital. I started having the feeling of helping others where my parents were looking for that help because there was no access. And then I think that really played into why I ended up at CityMD and ultimately here, which is a unique path, but I think it really goes down of breaking down those barriers of access and allowing people to receive high quality specialty care, regardless of their zip code or social economic status.

Speaker 3: 4:07

Yeah, that's cool. It's a great origin story. I feel like it's so important to lend those so we know what makes you tick, and everybody's got one of what got them in or what got them interested in it early on. I know we were talking off camera when you're with CityMD. They essentially went from 20 to 120 locations. What years were you with them, and can you just talk to us about your experience there?

Speaker 1: 4:26

Yeah, before I answer that, I think I would get back to the point of how I got there and what drove me to CID-EMD. So I was at Bond Scores and I had this early desire to further expand and learn more in the healthcare space and went into Deloitte Consulting and worked with large health systems across the country you named the academic medical center probably did it and then I stumbled upon Dr Richard Park, who's the founder of CID-EMD, and he talked about creating access for the single mom who had two jobs and had a sick kid and the only place she could take them was the emergency room, and how that wasn't the right place for them and that they could do better and get that mom, who didn't have much spare time, high quality care even later in the day or on the weekends, and I think that really resonated back to my childhood, and so that's when I decided to leave consulting and take a leap on a smaller urgent care chain in New York City, and we were lucky that his vision resonated with almost everyone and we were rapidly expanded to 123 locations. At that time I was into two states, new Jersey and New York and I think that vision is also one that brought me to the dermatology specialist. But what was it like?

Speaker 1: 5:45

Through that growth, I think, on top of having an amazing founder with a strong vision, we were blessed with two mentors of mine and action operators, dr Dan Frogel and Dr Jim Camposano, who are chief medical officer and the CEO, who I learned under. They had the ability to understand the clinical side, the patient side and the staff side, and how to maximize the business while adjusting the needs for all of them, since we learned to really move as fast as possible, developed strong analytical capability almost on the fly, learned to get about needing 60% of the information to make the decision and then being willing to, if we made the wrong decision, to quickly acknowledge that and pivot, and so I think a lot of it was. To a lot of people on the outside that looked like we were almost a little bit of cowboys shooting first in the naming, but realistically we actually had some of the most robust reporting and insights and had the perspective of all of our stakeholders in mind.

Speaker 3: 6:49

A couple of questions. Number one I think you were mostly growing by the acquisition right. You weren't doing both of the stages.

Speaker 1: 6:56

No, citymd is mostly at that time is mostly de novo, oh okay. In Tuckins one of the big ones is like stat health, which Jim Camposano and I led. I should believe 16 facilities out in Long Island, but predominantly probably out of the 123 sites. When I left I want to say probably 98 of them were de novo sites oh, wow, okay.

Speaker 3: 7:18

All right. So then back to your analytics. Can we dive a little bit more into exactly what you guys are doing?

Speaker 1: 7:24

Yeah, when you start scaling that fast in such a short period of time, it's easy for your operations to break and we realize really on, we have to identify what are the key factors that are key drivers of our business and how do we get all of our people aligned with those drivers and maintain quality. So there's standardization in the exam room, so everyone looked the same, but realistically is then it's what are core drivers of business? To incentivize the managers off of and the providers and make it simple. But then the other big part was how do we capture from the systems we use the key details that are tone off if that site is running well, is running poorly or is starting or is about to really ramp unexpectedly. And so we were able to copy we copied real time about every five minutes our EMR, and so we were able to then use electric what's the name of Electron medical record. And so we were able to capture every five minutes everything that's happening in it, so we're able to track the check in who's checking the patient and who entered the insurance.

Speaker 1: 8:27

What time did they enter insurance, when did the person move to which status?

Speaker 1: 8:30

Which medical assistant or scribe brought the patient back?

Speaker 1: 8:33

Who entered the note all the way through each step and then we were able to see what was being entered and identify if it's moving at the right pace, if there's air rates happening where certain things documented, and so we're able to use our EMR to really be a second set of eyes to develop robust executive reporting, which we use Domo as a platform to visualize it, to quickly identify sites that had opportunities to improve, that were ramping above expectations.

Speaker 1: 9:01

So we probably need to start hiring in ads or to it seeing sites that might be potentially contracting so we can start understanding why is it contracting, et cetera. So it was as simple as I know who, who checks you in to and every single person that touched that patient through their life cycle in our brick and mortar and then, post brick and mortar, every single person that touched it in their care, follow up how long they spent doing it and what actions they took and how. You could report off of it and did it follow our standard operating processes and if it didn't, we would flag it and we could report on it.

Speaker 3: 9:34

Wow, All right. And then, in terms of analytics of the site selection process, I know that the I think it was like urgent cares and like big banks and that sort of thing we're really moving into taking these prominent retail locations around the same time. So is that really your strategy? Is just finding the place for the best street visibility?

Speaker 1: 9:55

Yeah, I can't really speak as much to. At CityMD I was not involved in the site selection. That really went with one of the co-founders, dr Ndall Shammi, who led strategy as well, and out of his 123 sites I think he hit 122 of them. So great track record and he used a different mix of stuff to drive it that I'm not informed enough to truly upon on. But I can say what we've done. At the dermatology specialist, we continue the focus on analytics, so we have about 21 key criteria. That goes into our reporting warehouse. We use Power BI currently now to do the reporting off of I didn't catch that you use who. Power BI is our analytics tool and so we have about 21 different factors that we bring in and so when we're looking at different sites and areas, we put it in there and it runs a model against it and we know if the location is going to be good or not. It's shocking that it could be a heavily competitive area with multiple terms and still be very attractive.

Speaker 3: 10:55

Yeah, in that situation, what makes it attractive?

Speaker 1: 10:58

Yes, density insurance mix. So a perfect example is most germs don't take every insurance. We at the dermatology specialist believe in access for everybody with skin, regardless of their insurance.

Speaker 3: 11:11

And it's coming hard right now too, because a lot of these reimbursement rates are going down when we're in an inflationary environment.

Speaker 1: 11:18

Yeah, I mean it can be challenging, but I think that if you run lean business that is strong operationally, you can still make even some of our worst payers an attractive model. And so in a heavy competition area, a lot of those providers probably don't accept every insurance. Some of them might not accept any of those insurances and they're on the second or third floor and they don't have any availability. So those people, while they might have a lot of germs in the area, they still don't get access. And so we come in that area and we are on retail for open seven days a week and most of our sites with extended hours, and take all insurance and we're now suddenly providing them access that they actually didn't have, even though there were several germs in the area. And vice versa.

Speaker 1: 12:04

There can be areas that look like massive white space where you think, oh, there's no competition, there's people, we run it. We realize it's absolutely a terrible area and we shouldn't go into that white space because the individuals in that area aren't a fit for us. I think most of our site selection now is driven strictly by our analytics and then the final step is the boots on the ground to verify what the reporting says you can't fully be 100%. They're still a part of experience and firsthand seeing it to make the final decision.

Speaker 3: 12:38

Okay, yeah, fascinating. Yeah, let's loop back to your CD&D. So how did they finish up there and how did you switch over to the germatology specialists?

Speaker 1: 12:49

Yeah, so we had. It was a great run and probably the best learning experience of my career. And we merged with this other group out in New Jersey which was Summit Health and they were a multi-specialty group. Then we were an urgent care only platform and there's a lot of synergy between the two and I was working on the merger group and when we're diving into it I realized that it was going to be very exciting merger that was great for the company and the one that didn't excite me. I didn't want to get into, spend the next year and a half doing integration nonstop and I want to get back to what I love, which is just pure growth.

Speaker 1: 13:32

On DeNovo, and when I looked at my role within the organization and where it was going to what I wanted to do, I thought it was the right time to take a step away, to then take a lead, to be able to lead a growing organization, not be number two in ops but be overseeing all of ops. So with that merger when it closed, it felt like the right time to step away and so I stepped away and took some time off and looking for the right opportunity. And then I met my current, the current CEO and founder of the dermatology specialist, dr Bobby Bucca, and he had a similar view of access to healthcare that Dr Park had about ensuring everyone had access to high quality healthcare. He wants to ensure everybody with skin has access and we did similar things that we did at CityMD. We're opening in underserved areas in the Bronx and the Queens, but we also open in higher end areas that are served pretty well, which is Upper East Side, et cetera. But I think that same thing that I struggle with in my out hood of access and quality care being available in a small rural town, that same thing still happens in major metropolitan area like New York City and parts of the Bronx and Queens, and so CityMD addressed it from urgent care and really brought ER diversion to life in those areas and active as a primary care for a lot of patients.

Speaker 1: 14:52

We're doing the same but with skin and it's one of the most underserved specialties out there and it's one of the fastest growing demands as populations continue to age, have more and more skin exposure, which means more and more skin related diseases, et cetera. So the demand is increasing but the supply is extremely limited and I think we're bringing that access that's sorely needed to all New Yorkers and all Delaware and soon several other states.

Speaker 3: 15:24

I love it. So what's the journey been like, Because I know you started. What year did you start actually with dermatology specialties?

Speaker 1: 15:31

Started in March of 2021.

Speaker 3: 15:34

Okay, and since then you guys have grown from 13 to 41 as an over tripled, I guess.

Speaker 1: 15:43

It was one that's been a wild ride and a lot of fun. I'm extremely grateful for Jim Camposano and Dan Frogo for learning under them at CityMD, because those babels will apply, with all the things I learned there, to this, and so I joined and took it over, and we're 13 sites coming off of COVID, which was very hurtful for a lot of dermatology practices. So not only were they hadn't yet grown, yet they've lost a lot of their staff. Some providers chose to move to Florida or other areas where it's easier practice. New York was locked down and so it was a shaky foundation, but the leadership was still strong and the vision still resonated. So I came in and the first thing was about relaying the foundation and solidifying that foundation. So I adjusted most of the operations, brought in some people from that I knew from the outside, promoted the strong individual team and built out a new site level management team and focused on the first six months of building that team out and laying correct standardization and processes across all sites.

Speaker 1: 16:51

Once we had the foundation, then we could ramp. At the same time, we were re-garing up our provider recruiting aspects and we were the CFO. Jamie Rickson and I were working closely to build out the analytical capability. To really have that solid foundation took about six to seven months, and then we had what we believed was the strong foundation that support what's been close to media or growth. I think we could have gone done a little bit more growth in that period of time, but we were limited by the number of providers. We won't sacrifice the quality of care just to grow, so we balance. We always have to balance. Do we have the right providers and the strength of our providers in-house to open another site, or do we need a pause a little bit, recruit a few more and then expand, since we are a de novo business?

Speaker 3: 17:42

Yeah. So I know one of the biggest challenges is definitely staffing, and especially we're talking off camera how Durham has the least amount of residents per year. So I'd love to hear what your strategy is there to continue that growth.

Speaker 1: 17:58

Yeah, so it's interesting. I think there's about 12,000 active dermatologists and give or take across the United States and about 500 germs come out a year out of residency. With that in perspective, I am internal medicine and family medicine. There are about 240,000 active providers and they produce about 18,000 residents a year. Durham has one of the least number of active providers and one of the smallest number of residency classes coming out of a major specialty, and so the supply obviously is limited, and so one that's a limited factor. What about the next?

Speaker 3: 18:33

six, like how many are retiring every year? 500 are coming out.

Speaker 1: 18:37

Yeah, right now it's not. We're still able to. It's a net surplus that's coming out. But I think you're starting to see that age get pushed up. There's a lot in their 50s that are considering it, but they're in the next five to 10 years I think you're going to see a heavy cliff come about. But I think the average age of dermatologists isn't as old as some other specialties the goptomology where is at a greater risk, but yeah, so they also have.

Speaker 1: 19:02

Another factor on the supply is that dermatologists, once they establish their panel, they are relatively highly compensated compared to other specialties, and so for the incentive for them to move and another organization to take that risk and pay them what they're currently earning on established panel is a large financial commitment that a lot of places can't make or won't make. So you really will, focusing on residents and then established providers who are moving to the area due to a life event. So that's how we get our doctors and we build strong relationships with all the residency programs. But we view it as how do we help them, educate them on the business side of dermatology, even if they join us or don't join us, even if we know ahead of time they're moving to Florida or California or another site where we're never going to be. We still think there's value of building strong relationships and those residencies and teach them the business side which they don't get in med school, and so that's one of our big differentiators on recruiting. But then we also supplement on about a 2.5 to one ratio of advanced practitioners, so MPs, pas to MDs ratio. We believe that's the best ratio for maintaining quality. And then we recruit those MPs and PAs into our fellowship program, which is about a four month intensive Derm Fellowship where for four months, 50 hours a week, you are doing didactic, you are and also shadowing and learning from all of our doctors.

Speaker 1: 20:38

So we self produce all of our advanced practitioners to support our sites as well. And so those are the two ways that we grow our base, because we're de novo, so we're not doing acu hires or anything like that, and so we have to really self produce the talent and then recruit the talent coming out of med school and residencies to continue to enable us to grow. But at the same time I think we provide most of these people, most of our providers, a pretty damn good work life experience we have after hours taken care of when they have the clinical support at every site. They don't have to worry about billing we take care of all that for them. They don't have to worry about recruiting patients we take care of all the marketing and recruiting. So they ramp. They really only have to focus on clinical care and everything else is taken care of. So I also think we have a strong platform, which is also a great recruiting tool.

Speaker 3: 21:33

Yeah, it sounds like it. So let's switch over to macro for a second. Everybody's talking about the silent recession, or the recession that's coming, or the recession that we never had, or whatever. There's a lot of conflicting opinions out there, but what are you guys seeing? Because, for instance, cosmetics is like a very much elective procedure right Versus like other more necessary procedures. I guess, what's your take on the economy and what are you seeing in your clinics?

Speaker 1: 22:03

Yeah, I think that from answering on a couple levels One is the consumer aspect and the other part is the actually the employee and the inflationary aspect of employee salaries Probably start with the employee component. What we've seen in the last four months is the number of offers existing staff are getting from others has dramatically dropped and the demands of starting pay has come back to more reasonable numbers. From that you can potentially see that there may be some slowing in the economy. I see more applicants for every role that's open than we've ever had. So when we open for a medical assistant position we used to be lucky to get four, and now we're getting hundreds on it, and so the applicants are increasing.

Speaker 3: 22:49

What did this happen?

Speaker 1: 22:51

I would say the last three months. We've already started seeing the three months. We started seeing that we're getting being able to get more, be more selective of who we hire and we are facing ridiculous starting salary requests for people with no experience or limited experience. There's a point during the pandemic where you could be two months of medical assistant experience and they had some urgent cares offering $32 an hour. It's not a sustainable model. So I think we've seen the from an employee standpoint, some, while it's still a tight market, it's not as tight as it's been and on top of that, we're not seeing the inflationary pay demands that we were facing, which is indicative of potentially somewhat slowing of hiring, which would lead to economic slowdown.

Speaker 1: 23:35

From a consumer standpoint, our company is predominantly focused on medical dermatology, so we about 95% of our business is medical derm but which is insurance based. So that is more resistant to a recession and we've seen that demand continue to increase at an extremely fast pace Even in a recession. I think we will continue to see that demand increase. I'm not worried about that vocal business. 5% of our business is cosmetic. I think derm is unique that there is a range of services that can be offered in the site and they're which allows them to step up and step down. For instance, in a slowing economy, somebody that might have plastics worked on might not have discretionary cash to do that $30,000 procedure but they would choose to step down into a derm and do several laser, potentially filler, et cetera, which might only cost them five or 6,000, which is a lot less than they would have got the derm.

Speaker 1: 24:38

So we have people from derm that are stepping down from plastics, patients that are stepping down into derm filling some of the void in the higher end that we're seeing of our existing patients. They're seeming to step down from the higher price procedures to some of the lower price procedures. So we are seeing some step down of patients into the, into what procedures they're getting, which is indicative of slowing of discretionary cash, which usually is a sign of over recession. But again we're also in a high inflationary, so it could be still a strong economy but the wages just haven't kept up, for those individuals will compare to other costs and so they just have less discretionary. But we are seeing some slowing. But from my book inside of the business I think we're pretty well protected. So concern, but not overly concerned If I was a pure cosmetic dermatology or a medispa, I think I would be a lot more concerned about some of the drop in consumer spending.

Speaker 3: 25:45

Okay, yeah, in the next sense sounds like you guys are pretty protected in that situation. So, and then to pivot a little bit, one of the topics I think a lot of listeners might have an interest in is just how to make yourself more attractive to a PE biorep partner. So can you give any insight into that?

Speaker 1: 26:04

Yeah, happy to talk about my experience and what I believe makes a person attractive. So first is, what is the person seeking? Are they just looking for an exit to retire and work a couple of years? Probably not a PE play. You're looking to be acquired by a larger dorm group. So your focus then should be a larger platform and try to negotiate your best deal possible. It's going to be strictly based off of what you truly generated. They're going to take your last couple years of financials, may give you a little bit of credit for here and there and do some addbacks and adjustments, but mostly it's what you produce and try to negotiate the best. You're going to get three to six times what your your your as a single practice. If you're starting to look for, if you're retiring that's, if you retire you just want to join a larger platform. So you only have one site, maybe one or two providers, and that that you're going to.

Speaker 1: 27:02

Your play is to go to a larger platform. If you're looking for a cash out scenario, then more security. If you're looking to actually go more, the private equity vote is you got to be start building that platform that they can then leverage to rapidly grow. So what does that mean? You have multiple sites already. Those sites have several doctors plus some advanced practitioners. You've built out your some of your operational support because growth requires a lot of support and costly and that you have something that differentiates you. Why do people come to you? Why do I believe that I can take you and put another five sites of yours up and they'll be just as successful? And that's more about. If you're a star doctor and most of businesses driven off of one doctor and their name for the, that's less attractive because that's not scalable. When I moved to a new market with you, if I bought you, nobody knows who that star is anymore. So it's really about building out infrastructure that's not dependent on one key name or one key person that already has operational foundation, that has several sites, so they can believe that you've done it and you can continue to do it if they capitalize you.

Speaker 1: 28:18

And and then it's about picking the right partner. Sometimes it's about not taking the highest dollar but picking the right firm that will allow you to achieve your desired goals. So, for instance, we're lucky enough that Regal Healthcare Capital is our backers. They're physician founded and physician led. They focus not only on, they allow our doctors to still be doctors and they know what it is like to be a doctor. But they also and they also understand the business side of it. And so when we say at certain times, hey, this is going to be XYZ for patient or quality, et cetera, they can understand that and they support it. And so they bring both the size to it and allow us to pack. Bobby, when he joined, took them on as partners. They weren't the highest offer, but they were the right partner. So it's also about choosing the right partner and group, not necessarily the highest dollar, because choosing the right partner at this stage, when you first take on private equity, you gotta realize you have two to three more turns, probably until everything is said and done.

Speaker 3: 29:23

Yeah, it's not the final price. Like you're, I don't know anybody who really buys for 100% cash. Like most of the time, you're getting shares, exactly.

Speaker 1: 29:30

You're actually you got another turn or two. You want that right partner.

Speaker 3: 29:33

Yeah.

Speaker 1: 29:34

If the right partner is going to help your second turn be even more profitable and better outcome for you, and you also have to work with them a lot, and so if it's somebody you can't work with, it's going to become this contentious relationship that no one's going to benefit from.

Speaker 3: 29:51

Yeah, yeah, I love that. So, yeah, I think that's really helpful. Now, talking real estate again, you guys preference is between buying and leasing. I think it's to at least right, correct. Can you talk a little bit more about that?

Speaker 1: 30:08

Yeah, I think that I think if you're privately held and without backing, but you're a doctor, owned or led, there's a lot of advantages of buying the property and the leasing it back to your company.

Speaker 1: 30:19

When you become our side, that's probably not the best use of capital to buy the property and lease it back. First of all, who's buying it? You don't want a corporation to own a lot of property. We're not a real estate holding company where a care provider. So I think when you transition into the more of a corporation, it starts looking at what's the best for the corporation Asset, which is to lease and not become, and it's not the by putting the outlay of a lot of cash, is not to buy a place and then renovate it to fit your site. It's just the worst use of cash. It's better to lease and then to and be able to use the savings there to then lease several more sites. We had to argue on it is. We try to negotiate the best leases possible on it with lending the average rent and some T I for it and strictly lease only.

Speaker 3: 31:11

Yeah, that's cool and it makes sense. And my view is that If you're only ever looking to do a single location, sure, absolutely by the real estate. If you're looking to scale, quickly.

Speaker 3: 31:22

It makes less sense, that it doesn't make any sense really to buy it. As you're ramping up and specifically like to define quickly, I think there's plenty of groups who are happy doing 1 location a year or less, maybe 2 long term goals to have like maybe 10 locations or so. And yeah, in that situation it makes sense to try and buy the real estate every time. But we're trying to grow faster than that. Like more than 2 locations a year, it's going to be really hard to be able to have the bandwidth. A there's capital. B there's balance sheets that the banks look at, like your global debt, and see there's your bandwidth. A lot of people think real estate is passive income. Now, it might be passive error on a spectrum it's more passive than business but it's not nothing's really totally passive in that sense. It does take bandwidth and yeah, I think where you guys are writing that sweet spot manual locations you have the rapid growth you're trying to do. Yeah, just totally ties up your time and resources. It's all situational but yeah, I get it totally.

Speaker 1: 32:13

I agree with you. If you're going one side a year and or you only want one side, makes a lot of sense to buy because you're going to run back to yourself and so you're paying yourself off it after you buy it and that assets going to continue to appreciate and value, so you're winning on both sides. But yeah, so if I was, we weren't growing as our speed and I believe on the company, I probably would buy more than. But yeah, it doesn't work in our current model.

Speaker 3: 32:38

Yeah, no, totally Okay. Is there anything that we didn't get a chance to talk about that you'd like to add?

Speaker 1: 32:48

Yeah, I would say that it's interesting that you always hear that history repeats itself. I've been in this and the healthcare realm long enough that I'm now starting to see a lot of things that I saw early on in my career, where I was the note taker to be realistic wasting my level in seniority. I was the note taker and it's starting to come back around and you're seeing those things play out again. So remembering the past is critical to making the right decisions in the current and in the future and how you prepare for it. And if you're a young company that didn't go through a downturn before and never experienced it, work with somebody that has gone through it.

Speaker 1: 33:40

Healthcare is a small world. It's easy to connect with people that have been through different types of economies and experiences, but everything today some variant of that happened in the past, and reaching out to people in your network or others and hearing about how they address that variant will only help you be a better operator and improve your business. You can learn from the successes of others and their mistakes, because we've all gone through something that's probably similar.

Speaker 3: 34:14

I want to point out that you mentioned that because there's this book called the Fourth Turning. It came out in 1997 and they talk about the secular ones which are like every 80 years, and the generations which are like every 20 years, and so every secular, you repeat yourself or history repeats itself somewhat. Obviously, there's advancements in technology, but, like we had the Revolution Award in the 1770s, 80 years later or generations later, one secular one later was the World War II in 1944. And then now we're getting into the 80 year part again and the question of what's going to happen. I don't know, but they accurately predicted like a financial crisis, is it? The book was written in 1997? You can check it out. They very accurately predicted a financial crisis. They said between 2006 and 2010. The spot on. And then they predicted a series like if they gave three different options for between 2019 and 2023, they'll either be like a war or a pandemic or something.

Speaker 3: 35:09

Maybe, you had it. And so it's crazy, like how much insight there is to your point about studying the past and how much history repeats itself. It was warned about, it says it doesn't repeat itself, but it rhymes and we're talking. I was thinking about that too. It's man like we. We've been through so many it's.

Speaker 3: 35:25

I feel like I've been through a whole lifetime of economies, like in healthcare, I really say just in the last three years, because, like we had a huge dip in during COVID and then it went like way too frothy up through 2022. And now it's like getting hammered again. And so it's like you've seen this whole cyclical start of this circular cycle go through it and I was thinking like, yeah, as you get more battle wounds, you learn that these things, like it keeps happening like that, and so it's always when you think it's the absolute worst, that like it turns around, or, on the flip side, when you think these are going to go to the moon forever, that it crashes. Like I remember, and it was like it was early 22. We were starting to see massive correction to the stock market and I was having a conversation with people just like saying my personal belief is that where the public markets go, the private markets follow, meaning. We just saw a huge correction in the public markets and it seems like the private markets are going to start to correct in their valuation and blah, blah, blah. And I was surprised how many people like no, we're good, like we're. It's never been stronger. It's only going to get better. All the money from is leaving the public markets. I just got hammered and now they're coming over here because they see how good it was, but it's you can't. Nothing goes up forever. And so what, I'm just it's okay. When are we? You got to keep working at it, right, because eventually you're going to start to see patterns, similarities, and so I saw this two years ago, or a three year in your case is all this 2008. And you can get a few more. I think we're about to make a turn.

Speaker 3: 36:46

So right now, we're definitely still declining because of capital being ridiculously high. It's just putting pressure on everybody. Like we're obviously not going to get back to those valuations we were anytime soon. But the question is like how much further are they going to go down before they inevitably start to hit it? Like in the public markets, it's always overbought or oversold. There's never a lot.

Speaker 3: 37:07

This is like the true, exact point where it's, you know perfectly supposed to be like the whole invisible hand, perfect market theory, as in, like I think it's been debunked and so it's okay.

Speaker 3: 37:16

Where are we in this cycle of being like overbought and oversold, and so I personally don't think you can just afford to sit on the sidelines, like you guys are not, but it does mean you got to sharpen your pencils and look at a lot more deals and be a lot more selective about what you actually choose, because there always are deals to be had. But it's way more difficult now for us we're looking at, for looking at as many deals as we have been for real estate purchases, for only able to close on one out of every four, like one fourth as many as we were, and so it's a lot more work for the same pay. We're doing a really sustained amount of work for less pay, right, and so, yeah, it's just we don't want to sit on our hands, but I guess my belief is that eventually it is going to come back, and so if you just keep making the right decisions and positioning yourself correctly, then, yeah, you might take it on the chin for a little while, but when it does come back, then you'll be.

Speaker 1: 38:06

You'll be that guy that positioned himself well 100% agree and I think one of I don't recall whoever told us to me, but it's stuck with me you can't Focus on timing the market correctly, but you can focus on building a good Business, regardless the environment, and so you just focus on the fundamentals Of your businesses. It's going to thrive in good times and it's not going to get destroyed in bad times. And, from an investor standpoint, I think that they are more willing and rougher times and higher interest rate environments To pay a premium for a solid business with good fundamentals Then, and less willing to pay, even at a discount, a business that doesn't have the strong fundamentals and a solid platform, and so you might not be as attractive. You focus only on that during the best of times, when it's overbought about, ready to pop, but every other time you are more attractive if you focus on just building a strong, fundamentally strong business and less worried about the valuation at any given moment, because if you build it correctly, you're going to win long term.

Speaker 3: 39:31

Yeah, yeah, no, I love it. Cool yeah, and just in wrapping, hey, real quick for everybody listening. If you're a multi site, help your group looking to grow and we have a program especially for you where we buy or help by the real state and select sites that help you opposition the competition. In closing, gil, it was great having you on what's a good resource, by the way, for anybody who Want to reach out and touch, learn more about what you're doing, etc.

Speaker 1: 39:54

Yeah, first off, thank you for having me on Austin. It was great to have this conversation and if you're free to reach out to me, I'm on LinkedIn. There's not too many Gil masters out there, it's not as common names. Feel free to reach out and I will get back to you. I've been fortunate enough that to reach out to a lot of people on LinkedIn and they responded. Now we met, so now I try to pay it forward as well.

Speaker 3: 40:15

I love it, man. All right, yeah, thanks very much.

Speaker 1: 40:19

Thank you Awesome.