The story behind the Pinnacle GI Partners deal & how the platform will stand out in the crowded Midwest

H.I.G. Growth Partners partnered with Rochester Hills, Mich.-based The Center for Digestive Health Dec. 1 to create Pinnacle GI Partners, a new investment platform in Michigan.

Here, Partha Nandi, MD, president and practice CEO at Pinnacle GI Partners, and Scott Fraser, board member Pinnacle GI Partners, elaborated on the deal and offered guidance on the future of the practice.

Note: Responses were edited for style and content.

Question: What drew H.I.G. to invest in the gastroenterology space?

Scott Fraser: H.I.G. Capital has a deep knowledge of the GI space and has been actively following the sector for over a decade with previous investments in GI endoscopy ASCs that were part of the Nashville, Tenn.-based Surgery Partners portfolio prior to trading to Bain Capital and a successful IPO.

We have been impressed by the GI sector's growth across diversified ancillary clinical lines including ASCs, pathology, anesthesia, clinical research and infusion services. That growth has been a bright spot during the COVID-19 shut down and recovery. Increasing GI disease prevalence rates as well as the recent screening guidelines for colorectal cancer screening starting at age 45 also present an opportunity.

Additionally, there is market fragmentation of GI groups in some states, like Michigan, which has a large over-50 patient population and is underserved by gastroenterologists compared to national averages of the number of GI docs per 10,000 lives.

Q: How will the investment benefit The Center for Digestive Health?

Dr. Partha Nandi: The Center for Digestive Health began 28 years ago with a simple premise: to provide the highest quality GI care in the country. We have grown from a two-member group to 19 providers in seven locations, serving the Southeastern Michigan region. We want to continue this growth to provide excellent care for our patients and a terrific environment for our physicians and providers. Our partnership with H.I.G. and Pinnacle GI Partners will enable us to partner with our gastrointestinal colleagues to accomplish this goal. By further professionalizing our already robust organization, we can provide a platform where innovative, cutting edge treatment can take place throughout Michigan and the region. In addition, we can help foster the continuation of independent physician practice in this region, the same practice that has helped our families and neighbors for the past three decades.

Q: How will Pinnacle GI Partners stand out in the space?

PN: In my opinion, ensuring the delivery of excellent healthcare is best done on a local and regional basis. In addition, payer and employer relationships can vary by region, affecting the delivery of care. Pinnacle GI Partners is committed to leveraging the best practices of The Center for Digestive Health throughout Michigan and the Midwest. This regional focus will help us partner with participating payers and major employers to deliver innovative care for our patients in an optimal environment for our providers. This approach will make Pinnacle GI the premier partner for GIs in Michigan and the Midwest. We will work closely with our physician partners to serve as an experienced resource, providing broad-based strategic, operational, recruiting and financial management services.

Q: Three years down the road, what does Pinnacle GI Partners look like?

SF: We see Pinnacle GI Partners growing substantially in size to support the administrative and practice needs of its partnered GI groups both in Michigan and the Great Lakes region. There has already been tremendous interest from other GI groups in Michigan to join Pinnacle GI Partners as an affiliated practice to create a healthcare delivery network of care centers and ASCs and interest from large employers like regional auto companies to contract directly with our affiliated providers.

Q: The Midwest now has competing PE-backed platforms. How will these coexist?

PN: Pinnacle GI Partners' expertise, both in-house along with a robust network of third-party relationships,will be a differentiator along with our local and regional focus. I, along with our core physician leadership, have devoted our entire careers to the communities we serve. We will be very well equipped to help our partner physicians navigate the unique challenges and wonderful opportunities that will be present in our region.

SF: We appreciate that the two largest GI platforms, Dallas-based GI Alliance and Miami-based Gastro Health, already have a presence in the Midwest market in Chicago, Indianapolis and Cincinnati, respectively.

We are bullish about our platform's differentiation in Michigan and regional market strategy versus the national network focus of the other platforms. Successful healthcare delivery remains local in terms of payer and employer contracting, referral networks and recruitment of new physicians and we see tremendous interest and opportunities in the Midwest/Great Lakes region for growth alongside the other platforms.

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