Pegasus Knowledge Center

As the healthcare industry continues to morph and become more complex the trend for many Healthcare Practices is to merge with larger organizations. From an outsider's point of view the practice is giving up their individuality, freedom, and entrepreneurial spirit; however to the healthcare practioner the decision is more about increasing personal income, and decreasing non-revenue generating activities. In order to accomplish these goals some practioners are willing to forego their independence and relinquish control of their practices so that they can take advantage of the economies of scale and dramatically reduce their operating costs by joining Accountable Care Organizations, Hospitals, and other forms of consolidated Healthcare practices.

There is a growing awareness in the healthcare community that there is another alternative that is just now becoming available to them, which will allow them to maintain independence, while still enjoying the benefits of the economies of scale of a much larger organization.

A few thought leaders in the Healthcare Services Industry have realized that the medical practice of the 21st century requires far more from their Revenue Cycle Management (RCM) service provider than the traditional billing services offered by the vast majority of billing companies today. As the CEO of Pegasus Blue Star Fund, a private equity fund specializing in Healthcare Services Investments, I have over 20 years of experience investing and managing Healthcare Services companies in the areas of Cancer treatment centers, Surgery centers, Practice management, Medical Group Purchasing Organizations, EHR, Medical Revenue Cycle Management, Patient Portal, Claims Optimization, Claims Authorization, Patient collections, Bad debt collections etc. One of the most significant new services that I have seen offered in all that time is the recent introduction of Group Purchasing Organizations (GPO) that deliver the purchasing power of a large scale organization to small, disparate medical practices. The power and success of these GPOs leads me to predict that the future RCM Company must be able to provide economies of scale to their clients that will allow them to have cost structures comparable to the large Healthcare organizations that they are competing with. Orion HealthCorp is leading the race to deliver the full value of a large national organization to their clients nationwide. Orion CEO, Dale Brinkman, is quickly expanding the services provided by their GPO from vaccines to many forms of insurance, office supplies, medications, medical equipment, and computer equipment.

A few thought leaders in the Healthcare Services Industry have realized that the medical practice of the 21st century requires far more from their Revenue Cycle Management (RCM) service provider than the traditional billing services offered by the vast majority of billing companies today. As the CEO of Pegasus Blue Star Fund, a private equity fund specializing in Healthcare Services Investments, I have over 20 years of experience investing and managing Healthcare Services companies in the areas of Cancer treatment centers, Surgery centers, Practice management, Medical Group Purchasing Organizations, EHR, Medical Revenue Cycle Management, Patient Portal, Claims Optimization, Claims Authorization, Patient collections, Bad debt collections etc. One of the most significant new services that I have seen offered in all that time is the recent introduction of Group Purchasing Organizations (GPO) that deliver the purchasing power of a large scale organization to small, disparate medical practices. The power and success of these GPOs leads me to predict that the future RCM Company must be able to provide economies of scale to their clients that will allow them to have cost structures comparable to the large Healthcare organizations that they are competing with. Orion HealthCorp is leading the race to deliver the full value of a large national organization to their clients nationwide. Orion CEO, Dale Brinkman, is quickly expanding the services provided by their GPO from vaccines to many forms of insurance, office supplies, medications, medical equipment, and computer equipment.

This type of economy of scale can only be provided by large players, with tens of thousands of providers, and hundreds of practices nationwide. Even Healthcare Organizations with multiple hospitals, labs, and testing facilities in a geographic region, such as New York, cannot provide the scale of a large national RCM company like Orion HealthCorp, because they have only limited geographic impact and a far smaller purchasing base to draw from. From the view point of the small to mid-sized healthcare practice, the GPO offered by a large national RCM company provides far more advantages than those offered by joining a larger Healthcare Organization, which they have little or no control over. The RCM company not only provides the economies of scale that allow the individual practioner to acquire insurance, pharmaceuticals, office supplies, etc. at price points that are comparable, or lower than the regional organizations can; they also offer Business Intelligence, Practice Management (Accounting, Payroll, HR, IT, and Administrative support), Electronic Health Records, Patient Portals, and Compliance, Security, and Practice Audit assistance. This powerful combination of services allows the small and mid-size practices to exercise the purchasing power of a very large organization while maintaining their independence. The ancillary services that are provided along with the GPO and billing services allow the healthcare practices to extricate themselves from the non-revenue producing administrative activities so that they can have more time to practice medicine or to spend with their families.

Perhaps the most important component of this quantum change to the healthcare practice is the fact that the quality of patient care is increased. The increase in quality for the patient is a direct result of the improvement in patient information provided by the Electronic Health Records and the improved diagnostic tools available in a medical business intelligence system.

The cost of operating the medical practice is reduced by the economies of scale provided by the GPO and the high quality RCM and Practice Management services provided by the professionals employed by these large national Healthcare Services companies, like Orion HealthCorp. The combination of reduced costs, higher quality of patient care, and the retention of the autonomy of the small practice provide a powerful alternative to merging or selling a healthcare practice to a larger consolidated organization. I personally believe that ICD-10, Obama-care, and the rapidly rising costs of operating an independent healthcare practice will force the majority of healthcare practices to join Group Purchasing Organizations in the next 18 months or face large reductions in personal income due to the rapidly increasing costs of doing business. Joe Seale, President of Orion corroborates my prediction by indicating that the number of new practices joining the Orion GPO has been increasing by more than 5% per year and current forecasts indicate that the positive trend will only increase in the coming years. The next two years will prove to be very interesting as small practices are faced with the reality of competing in a market of sinking reimbursements and increasing costs. These practices will be forced to decide whether to give up their independence and join larger organizations, or join large GPOs and leverage the expertise and technologies that are provided by the very large RCM companies, like Orion HealthCorp.

Paul Parmar is a thought leader in the Private Equity Space. His primary focus is on transforming industries by creating new business models and optimizing the key business processes in each business and leveraging the appropriate technologies. Although he has successfully owned and managed businesses in several industries (the Healthcare, Private jet industry, the media and entertainment, and Real Estate development) his passion is clearly in the healthcare industry. His Healthcare investments are in the areas of Cancer Centers, Free Standing Surgery Centers, EMR, Patient Portal, Practice Management, RCM Services, RCM software, and GPO's for Physicians. Most recently he has turned his sights on dramatically reducing the cost of healthcare by investing in medical practice management. Mr. Parmar's most recent investments in healthcare are focused on optimizing the business practices, improving the financial transparency and lowering the cost of operations for hospitals and large medical practices.

Pegasus Blue Star Fund is a private equity fund specializing in Healthcare Services Investments, with 20+ years of experience of investing and managing Healthcare Services companies in the areas of Cancer treatment centers, Surgery centers, Practice management, Medical Group Purchasing Organizations, EHR, Medical Revenue Cycle Management, Patient Portal, Claims Optimization, Claims Authorization, Patient collections, Bad debt collections etc.