Why Arizona Digestive Health joined the GI Alliance

Dallas-based GI Alliance, led by President Jim Weber, MD, has aggressively expanded since first closing its deal with Waud Capital Partners, recently acquiring Phoenix-based Arizona Digestive Health.

ADH President Paul J. Berggreen, MD, elaborated on why his practice joined the private equity-backed GI Alliance in Dallas and why he became the Alliance's chief strategy officer.

Note: Responses were edited for style and content.

Question: What drew ADH to partner with the GI Alliance?

Dr. Paul Berggreen: We had been keeping a close eye on the national scene, seeing: consolidation among payers and hospital systems, increased regulation among the government, and hospital surgical care getting more specialized. We were looking at this and saying, "Well, we have market strength in Phoenix, but we're probably not taking advantage of the opportunities that are out there."

We'd been members of the national organization of Digestive Health Physicians Association for years. … I knew Jim Weber, MD, through that for a long time, and we talked about private equity. I was initially skeptical of the process, and then about two years ago I started to really look into it very carefully and attempted to understand more about it. I always thought there was a benefit to becoming bonded as a national group if certain precautions could be taken to make sure we didn't lose autonomy and didn't become part of this big corporate machine. I wanted to make sure we had the emphasis where it had to be, which was patients first and practices second. We were interested in a partner that could do that, and it took a lot of time and effort to assure that.

What Jim Weber put together with the GI Alliance was very compelling. I had him come up to Phoenix several times, and I've been out to Dallas several times. We really talked and got to know what it was he put together, and when we really got into it, it was like he checked all these boxes. He has physician autonomy, he has an emphasis on the patients. He wants the practices controlled at a local level so that everything stays the same. It functions like a normal practice but with some of the benefits of a national presence.

Q: What does the GI Alliance offer that other platforms didn't?

PB: There were three platforms when we started our process. There's the Atlanta platform, the Miami platform and GIA. There are now a couple more smaller platforms. We had looked at the structure of the others, but didn't get too far down the road with them.

What I was hearing was that people kept saying, 'autonomy, autonomy,' but when you started exploring the issue, we found people meant different things when they said autonomy. I explored the governance structure of GIA and looked at every level of decision-making and said, "Who has the control here?"

When it came down to it, GIA gave the vast majority of decision-making to practicing gastroenterologists and was the only platform that's led by a practicing gastroenterologist.

Q. What's the ultimate vision for the GI Alliance? With three partnerships established to date, are more in store?

PB: We have a lot of deep personal connections across the entire country. We're also looking at smaller practices in metro areas or smaller towns. We're interested in groups with four, six or eight physicians too. These people are good doctors in different markets who could benefit by being part of a larger organization. These smaller groups are very appealing to us because they're typically composed of hardworking GI docs that want to do progressive things with their practice. Sometimes when it's just four physicians and an office manager, it's hard to talk big picture accomplishments with them. They're busy seeing 25 to 30 patients a day. It's just not feasible, but when you have that backbone of the GIA, suddenly these things become doable.

Q: Speaking to the industry in general, do you expect more PE-backed deals moving forward? How much consolidation can the industry support?

PB: I looked at another specialty to help answer that, ophthalmology. In 2016, there were three ophthalmology platforms; in 2019, there are 16 of them. I think there will be more of that in GI, but I think GI is a little bit different. It started off with one platform in 2016, then in 2018 there were two other platforms. These were respected groups, but the way that Jim has put together the GI Alliance is so appealing, it went from 145 physicians initially — which was just Dr. Weber's practice, Southlake-based Texas Digestive Disease Consultants — and we're now at 277 physicians and that number is going to balloon in the next 12 months, and I do mean balloon. The reason? It's just appealing. It's just downright appealing.

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