Sax Healthcare Industry Update

On February 16th, 2024, SAX hosted our 9th annual Healthcare Industry Update. It was our first year back at the Upper Montclair Country Club in Clifton, NJ, and the event had nearly 100 people in attendance.The SAX Healthcare Industry Update is a quick glimpse at the latest challenges, concerns, and industry trends happening in the healthcare space. It’s the kind of information healthcare leaders, decision-makers, and investors need to shape their strategies for the coming year and beyond. This year, the Update featured four panelists: Brian Kern, CEO of Deep Risk Management; Wiks Moffat, Co-founder and Principal of Healthcare Compliance Network; Nelson Gomes, Executive Vice President of Business Development, Medicus IT; and Jerome Fusco, Managing Director of SAX Capital Advisors.

Overall, perhaps the biggest theme we’re seeing in the healthcare industry is continued consolidation and a keen added focus on data and cyber security. There are a number of reasons behind this, and as the trend continues, leaders and other professionals in the industry are seeing its repercussions, both positive and negative. Each panelist spoke specifically to the changes happening in their individual fields, all of which are affected by consolidations and other trends.

Debbie Nappi

Leader of Healthcare and Panel Moderator


Brian Kern and Value-based Risk Programs

Kern’s presentation focused on value-based care. In his role with Deep Risk Management, Kern is tasked with helping medical practices understand value-based risk programs and successfully implement them to grow their revenue while insulating against risk.

Value-based care is a broad category that encompasses a variety of practices, including:

  • Conservative treatment
  • Site-appropriate care
  • Coordinating the care continuum
  • Preventive care
  • Drug cost management
  • Cost and utilization management
  • Closing care gaps

In other words, value-based care is healthcare focused on improving provider performance and the patient experience. A lot of it is common sense, too. Value-based programs incentivize providers to provide quality treatment, and in a value-based risk program, providers agree to be financially liable for the quality and cost of their care.

In his presentation, Kern discussed fee-for-service, or FFS, billing and shared data showing how it can significantly increase costs. He also discussed how the current government caps on Medicare Advantage earnings for providers have left them dealing with increased costs and searching for solutions.

This is where value-based care enters the picture. Through examples, Kern explained how value-based care can not only reduce healthcare costs for payers, but that it’s fairly easy to implement at the provider level. Price transparency stood out as a highlight among strategies to reduce costs as consolidations continue, as well as site neutrality and non-compete agreements for physicians. Wrapping up his presentation, Kern cited the following as trends to watch in 2024:

  • Price transparency and its impact on care coordination and fee-for-service rates
  • Site neutrality
  • Non-compete agreements
  • Discussions surrounding whether value-based care can survive risk adjustment
  • Which health tech companies will survive the current market landscape
  • Where smart and dumb money will go next

Brian Kern


Deep Risk Management

Wiks Moffat and Compliance in the Industry

Wiks Moffat discussed the current state of compliance in the healthcare industry. An industry pioneer with more than 25 years of experience, Moffat has managed compliance projects for practices large and small in a variety of specialties.

Currently, the following are key compliance topics for 2024:

  • Increased enforcement across the spectrum
  • A lack of state and federal government funding due to budget shortages
  • Financial pressure on commercial payers
  • A shift toward value-based care
  • Ongoing integration of artificial intelligence in healthcare practices
  • Acknowledgement that healthcare compliance is vital and non-negotiable

Addressing the first few points, Moffat noted that his firm has recently increased the number of audits they conduct, particularly chart audits. He anticipates that this will continue, as the government is about $36 trillion in debt and as individuals continue to feel the financial pressure, there is significant public support for healthcare compliance action. He also noted that this is working—on average, the government gets back $11 for every $1 spent on healthcare compliance audits.

Moffat was also careful to note that the bulk of the issues found in audits aren’t overt fraud, waste or abuse, but legitimate errors.

This dovetails with another key topic, recognition of compliance’s important role. Not only are people, both healthcare professionals and people outside the industry, more aware of the importance of healthcare compliance now than they were 20 years ago, but this is especially pronounced among private equity and financial communities.

Calling back to Kern’s presentation, Moffat discussed how the shift to value-based care brings its own compliance challenges. He finished out his presentation with a positive anecdote about one of his firm’s clients. The client, a large practice with hundreds of doctors, underwent an AI audit. The audit found that the practice was downcoding and had lost a significant amount of money. Thanks to the audit, that client was able to correct the issue and stop losing money to inadvertent downcoding.

Wiks Moffat
Co-Founder & Principal
HealthCare Compliance Network

Nelson Gomes and Leveraging Technology to Transform Healthcare Business

Nelson Gomes of Medicus IT is a passionate advocate for leveraging technology to enhance patient care and improve healthcare businesses.

In his talk, Gomes discussed adaptability in healthcare. Specifically, he spoke about how consumers are driving healthcare more than ever before and how industry drivers are outpacing responses when, instead, they should be ahead of them. The five drivers in healthcare are:

  • Regulatory
  • Threats
  • Crisis
  • Market
  • Competition

Although companies should always be attuned to the changes in their environments, this is especially true when it comes to tech. He also discussed the importance of recognizing the gap between industry drivers and healthcare companies’ responses, urging proactive responses to trends as soon as they appear to be gaining steam. He also discussed the need for companies to use their tech investments to differentiate themselves, citing examples like allowing clients to self-schedule appointments via apps and ways practices adapted during the COVID pandemic to continue seeing patients despite crisis-related restrictions.

Just like COVID and other crises drive changes to the healthcare landscape, so do threats. Gomes discussed tech threats that demand security responses, illustrating this with an anecdote about a hacker at an event he recently attended who picked up signals from all the pacemakers in the room, illustrating pacemakers’ vulnerabilities—and the vulnerabilities of similar medical devices and systems.

Gomes finished out his presentation with a discussion of how best-in-class healthcare companies allocate their time, money, and effort: 65% to running the company, 20% to growing it, and 15% to transforming it. Through easy-to-read graphs, he illustrated the ROI for each of these efforts and how the COVID crisis forced practices to shift how they allocate these resources to ensure continued profit and growth.

Nelson Gomes
Executive Vice President of Business Development
Medicus IT

Jerome Fusco and the Importance of Alignment

Jerome Fusco, SAX Managing Director and Service Leader for Investment Banking, finished up the Healthcare Industry Update with a brief discussion about the things private equity partners and healthcare providers need to consider as they create partnerships in 2024 and beyond.

In recent years, private equity lenders lost a lot of money in healthcare partnerships. This occurred for a variety of reasons. It’s also why alignment is key for any proposed partnership—not just in financial goals, but in terms of values and the strategies the partners will utilize moving forward. He predicts that transactions in the healthcare space will move more slowly in 2024 due to an increased emphasis on diligence, which is something private equity lenders should keep in mind when seeking and planning partnerships. Additionally, he predicts a greater emphasis on alignment in deals as well as a greater use of equity, a trend continuing from last year.

Increased interest rates are one of the most significant drivers behind this change. They’re impacting just about everybody, and in the healthcare space, they’re slowing transactions down. He noted that for the first time, the USA is spending more on interest than on defense, and defense spending hasn’t gone down.

Jerome Fusco
Managing Director-Investment Banking
SAX Capital Advisors

Questions and Answers from the Audience

After Fusco’s discussion, all three panelists participated in a question and answer session. During this session, attendees asked questions about a variety of topics, such as patient attrition in mergers and acquisitions, coding errors, compliance and due diligence, how the multiple necessary levels of security can impact insurance coverage, and how smaller practices can grow and compete. The panelists finished out this session with tactical advice for attendees, such as following the population to capitalize on rapidly growing states, putting your practice into a defensible position in the event of an audit, and developing plans for mitigating data breaches. As Gomes put it, you’re going to have a breach. The more important issue is your plan for mitigating it.

The healthcare industry is unique in many different ways. If you are part of this industry, it’s crucial that you stay on top of the evolving legislation and best practices. It’s also crucial that you stay on top of your business’ finances, investments, and growth strategies. SAX can help you with that. Contact our team today to set up your consultation with us and ask any questions that are currently on your mind.

Debbie Nappi Leader of Healthcare and Panel Moderator SAX LLP
Brian Kern CEO Deep Risk Management
Wiks Moffat Co-Founder & Principal HealthCare Compliance Network
Nelson Gomes Executive Vice President of Business Development Medicus IT
Jerome Fusco Managing Director-Investment Banking SAX Capital Advisors

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