Physician to CEO: Dr. Antonio Gamboa on the Power of Business in Medicine (part 2)

Hi everybody and welcome to the podcast. This is Generations md. My name is Stephanie and I'm one of the co hosts here. If you didn't listen to last week's episode, make sure you do because this is part two of our interview with Dr. Gamboa. Dr. Gamboa is telling us about his journey from being a physician to going into more leadership roles and he is talking about how important it is to advocate for physician leaders. We're going to continue talking to him more about the business side of medicine, how he grew his business and so much more. So stay tuned for a great episode. Talking about that independence and teaching that in school a little bit. Just being not, you know, not to bag on big institutions at all because like I'm in a great academic institution that I'm learning so much. But also I think there's a big pipeline of just going and working for these big hospital systems. And I've also even seen a difference being in Texas versus in South Carolina, of in Texas having more independent groups and seeing more physicians work independently versus when I was in college in South Carolina. It was really hard to do that. PRISMA Health kind of had a monopoly over the whole state and that's how everybody, everyone was essentially employed by them. And it was really hard to get around that. What's your opinion on that and how do you feel like being able to work independently as a physician? Like, have you seen differences in that state to state? Oh yeah.

I mean, look, the corporate practice of medicine rules, if you're not familiar with them and you can google them and they vary from state to state, it either makes it more difficult or less difficult for non medical practices to run and operate in or practice. I think the intent for the corporate practice of medicine rules is to prevent a for profit mindset impacting medical decisions. But beyond that, it doesn't prevent entities from look, legally and properly and compliantly forming, you know, third third party agencies that ultimately hire physicians and then, you know, and they're the ones that, you know, provide health and benefits and employment and compensation. But you know, it doesn't involve, it typically does not involve physician leadership, it typically does not involve physician ownership. And I think there's pendulum swinging that is happening as we speak. And I've seen this, and by the way, particularly in the hospital setting, hospitalist setting, where Dan and I have spoken about this, you started out, hospitalism started as a movement of primary care doctors who subspecialized and unofficially became more confident and more comfortable working in the hospital and split off from the main groups and just did that full time as opposed to kind of running a traditional practice. Right. And I think there's value to the optimization of presence of physicians in the hospital versus the clinic because, you know, discharging patients on a timely basis and reducing, you know, waste. There's, there's true value in that, you know, but at the end of the day it's difficult to create really, really large groups that are going to perform well both financially and clinically without buy in. And I think the fact that you have a large corporation employing a lot of people isn't inherently negative or bad. It is however, inherently negative or bad if that corporation is doing it at the cost of quality of life for patients, physicians or any involved in the, in the ecosystem of health care. And you always, any, any large successful, in my opinion, large clinical successful organization is going to have found a way to properly align the goals of the company with the physicians and those other healthcare professionals that drive the outcomes. You can still do that. And I've seen several high quality companies do that. You know, Cleveland Clinic comes to mind, you know, but there's always going to be challenges and I think when I talked about pendulum swings, I think we will see, you know, these mega institutions currently, by the way, they're struggling to retain physicians because they haven't, because over time they've lost that alignment. And so positions are now starting to move back towards independent practices, small group practices, which I believe is. There will be a renaissance of independent groups servicing every sector, but in particular the hospitalist sector. Because at the moment the way that health care is compensated through, you know, the current Medicare benefits and payment model, and I'm leaving value based care, you know, out of the picture. But fee for service, it's really difficult to support a practice that has a heavy administrative burden. In other words, like, you know, expensive CEOs, expensive CEOs, expensive directors and vice presidents. You know, there's not enough margin. There's a finite amount of money. Medicare pays you for each procedure, each CPT code, you know, it's a coupon clip. And if your cost of managing that coupon clipping at the physician clinician level exceeds what is left over after you pay the doctor, there's no business. So, you know, the way that healthcare is constructed right now the fee for service component is forcing practices to revert to either a micro practice or, you know, concierge or a, something that more closely resembles what my, my partner and good friend Alfred McDaniel, who's my current business associate says it's more of a business, sorry, more of an owner operated model. So in other words, the reason small practices are successful is because they have ownership. And you know, if you tell me, Tony, you're my partner, we're doing really well, but Stephanie called in sick and Sarah's out of town. Can you cover tomorrow? I said sure, I'll go make a little more money for us. The difference is in a non aligned environment. No, I already done my shifts. You can't pay me enough to come in because it's just not worth it, you know, for me to come in on Saturday. There's no end result for me other than a few more bucks and I'd rather spend time watching my kid play soccer this weekend, you know, and I think, I think that's, that's a dynamic that we're seeing with large organizations. I think there will be a reversion back towards and frankly, by the way, that the health outcomes are better when physicians are in leadership. The ACOs that have the best outcomes are physician led Practices that have the most profitability, have physician leadership. Hospitals that are the most profitable and have the best outcomes have physicians at the helm. I think there's a purpose to that. Right. You don't go to a technology company and not expect somebody with an engineering background or technology background to not lead that company. The same reason in healthcare, it's my belief that a physician, even if they don't have a formal business education, should be highly involved if not at the top of the direction driving, know where the business is going and you can still have great people that guide you economically and operationally. You know, I, I've worked alongside and have tremendous amount of respect for non clinician leadership in healthcare because they've helped me and they've educated me. But at the end of the day, you know, the mission and the values that we went to school for are the reason why, you know, these companies existed to begin with. And I think it's easy for people to forget that, you know, healthcare was not created to support an increasing general administrative burden of, you know, executives that make way more money than any single doctor. It's just ludicrous to me that we've gone in that direction, but I'm hopeful that there'd be a pendulum swing in the right direction. The way I see it.

Well, so backing up to like your path, I mean we got to the point where you went and got your MBA and then what happened? Then how did you continue to grow this practice and what happened next?

Yeah, so you Know, we kept on growing. I, I always kind of do a yada, yada moment. We were, we were about 20 employees in 2012. And you know, we followed that formula, high customer centric, you know, philosophy from a business and sales standpoint. We emphasize our partnership approach with the communities and we emphasize our commit, our commitment to providing great care through high quality clinicians that were dedicated to their communities. And that helped us grow across Texas, central Texas, into other states, New Mexico, Nevada, South Carolina, which by the way, I think remains the largest hub, you know, from, from the legacy company that, that I helped create and you know, those. We grew from 20 employees to 200. And by the way, this was all organically. We had never taken out of debt alone and we had never taken money from anyone else. That said, at that point we were at the famous, you know, you'll hear this memory business, MBA type. There was an inflection point in the business where we had to decide we should continue to take all the risk and fund the growth if that's what we wanted to do, or maybe make it more of a lifestyle, permanent business and just stop growing and focus on the business that we had, which was totally doable, but, you know, risky. If you lose one major customer, then all of a sudden you're really small and you don't have a company anymore. And then the third was to get outside, outside capital to help us continue to grow and find a partner. And we had a lot of people that reached out from private equity and other strategic groups that were in the same space but much bigger, better funded than us that reached out and offered to buy us many times. And every time we turned it down for one or two reasons. One or three reasons. One was offer was stupid. We could make more, make more money in one year than they were offering. Two, there was no clear vision or strategy or position for, for Paul and I who still wanted to be highly engaged and wanted to continue to drive what we felt was a positive change in how healthcare was being delivered in the post acute and then or the third was good partner potentially, but they didn't know that the business. And while they could provide money, you know, it was dumb money, it was not going to be strategically helpful for us to grow. We were still going to be the ones having a, you know, claw and scratch our way into different, you know, markets. We needed somebody that could take us and introduce us to places, understand our business and be supportive of, of our, of our culture, which, you know, was very strong at the time and remains, I think, strong From a clinical standpoint, you know, prioritizing patient care and outcomes and moving into a direction of value based care. So we took our first investor in 2019, Private Equity Group that was led by a gentleman. I'm not sure if he would appreciate me saying his name but he was well known for starting some of the first ACOs and had, well, himself not a clinician, had many years of success in building a home visiting physician group and sold it to a large insurer. And so clearly he understood our business with smart money had the right connections and we said this could be a good partnership. So we, you know, we sold part of our business to them, you know, rolled over equity into the platform.

Can you just because some of our listeners don't know all these different terms. Will you explain what an ACO is and just kind of briefly explain when you say like rolled over equity, like just kind of explain that for us?

Absolutely. So an ACO is an accountable care organization and effectively what it is, it's a, it's a, it's a program sponsored by Medicare whereby a practice can generate additional income not just from the coupon clipping and you know, individual encounter based fee for service revenue but also based on outcomes. If you, if you drive costs down, you get to participate in the share of savings that you generate out of the population that you manage. So that's, that's an ACO in a very, very, you know, brief description. And as far as you know, private equity is you know, ubiquitous. It's, it's one of the, you know, most powerful groups of people right now that have, that hold a lot of holdings in cash. But it, it's basically an investment type of group. There's many different types, types that buy very, very large groups like BlackRock and then hundreds if not thousands of smaller private equity groups that are more sort of industry specific. In, in our case it was a healthcare specific private equity group. When you sell your practice, if, if I own 100 of the shares and I sell 40, I have the ability to say I want to roll over some of the 60 that you bought into the platform. That means that I'm not vacating entirely my position as an owner in that business. I'm taking some chips off the table and I'm paying off remains of my school debt, my, my mortgage and putting you know, money in my kids college accounts. Certainly not small island or jet money but you know, it was good, it's good for my family and it was good for us. It removes the risk that you know, if we need money, we have to go borrow it or if we lose money, we have to pay it back from our own account or our house gets taken away. You know, there was a de risking element to doing that private equity partnership deal. But effectively what I mean, what I mean by rollover is that you, you maintain ownership in the, in the, in the entity. I continued to manage it. I remained CEO and we went and we acquired a couple other companies and we rolled them all together and that's typically called a roll up. But again I'm proud because I was a CEO and I remained the CEO up until recently where it was a physician led organization that able to effectively start our own aco. We started our own ACO and that was always the vision was that we would somehow figure out a way to, to economically move past the fee for service, you know, hamster wheel and get into a position where. I've said this before, I don't, I don't mean this loosely. It's very difficult to beat insurance, very difficult to do well in life unless you don't take insurance. But it's, it's difficult to beat the system if you're not the system. And so the intent here was that we would become the risk taker. And when you become an ACO and take risk, we're also liable for potentially paying back the government if we don't do a good job taking care of patients. But at least we have the option to say if we save instead of somebody else pocketing that money, an executive and an insurance company, it's me and my providers that get the distribution of wealth and the distribution of benefits and the company has more money to continue to grow and promote our vision to have a clinician le organization. But that, that's what I mean by rollover, Sarah, is, is you know, you keep ownership equity. And, and so by the way, it was very important because two years later another company noticed us that had more money that this private equity company and they said now we want to buy you guys. You're a larger platform. We were 400 providers, we were in 15 states at that time. You know, we had our own ACO. We survived Covid it was in 21. And they said, you know, this is what we want. We want to a high quality clinical platform. That rollover got another multiple on it. So you know, if I had 10 bucks and I got paid eight times that and I rolled over 20 bucks, those 20 bucks got another eight times that in the second time. Right. And that by the way, that's, I Coach every practice. And this what I do for a living. Now I have a healthcare advisory and I'm also starting new businesses again. But in the healthcare advisory side, I help companies understand these dynamics. I recommend that they read a book called Private Equity Playbook, which, if you're listening, buy it because it explains the mentality and the rationale and, and the strategy behind private equity. So you go into it with eyes wide open. It's not for everybody. You know, I don't want to sound like a, you know, a hypocrite because at the end of the day, we did sell our business, you know, but, you know, but my point is I wasn't economically negatively impacted by that. I have benefited from the hard work and the value that we created in our business. We extracted it. And I think every, every physician should be able to do it if they choose. And if not, you know, all the power and kudos to them to keep it going.

That's great. That was a great explanation of all of that because I just think that's stuff that physicians really don't, they don't understand, you know, and when they do start a practice and again, you know, I mean, I'm just a little one horse practice and you know, which is, which is just fine. And that's just fine for me. But it's important, especially when you do have partners and you're trying to build a business to understand like, okay, what's then, then what happens? What's the next thing? What's the next thing? And so kind of having you like lay that out is, you know, that's very helpful.

You, you know, you don't have to be a big practice to understand some, some important elements that I'm sure you guys have thought about because I know Matt and I know he doesn't leave a stone unturned. And it's important for your listeners to hear that if you own a practice. You know, there's an old adage for those of us in clinical medicine that when you admit a patient in the hospital, the minute you admit them, you start thinking about discharge, you start planning a discharge, you start thinking about what resources, social work, case management, you know, et cetera, are going to be required for you to be able to execute a safe discharge based on their condition when they admit. Similarly, when you start or own your business, you have to be thinking about the out, you have to be thinking about succession. You have to think about what do I want? Do I want, you know, Stephanie to take over the reins in a few years? That's a great succession plan. Absolutely, incredibly, incredibly good. That's a great way to preserve value and generational wealth. You know, and if Stephanie eventually has a son or daughter, that does it. You know, you guys keep building it. That said, Stephanie might say, no, you know what? I'm going to end the loop here. I want to. I want there to be a value recognized for the work that my predecessor, my mom, my dad, and myself created. How do I. How do I monetize the work that we did? How do I optimize the return of my personal and professional investment over 20, 30, 40 years? And, you know, I think many physicians, in general, many business owners don't think about that again, because I think they think of it as a dirty word. Think about selling my business. It's my baby. And it is. It is. Right? You care about it deeply, but you can't take it to the grave. And, you know, and I'd like to think, I'd like to retire. So, you know, what is the plan? Hope is not a plan. A strategy is a plan. And, you know, every physician who owns their practice should think about what they want to achieve individually and. And plan ahead for it so that they're not, you know, at 65, thinking, damn, you know, how do I get out of this? You know, this. This treadmill that I'm on? I'm ready to, you know, travel. I've. I've done really well. I've taken care of thousands of patients. I've got great experiences and amazing connections with people that have helped. But I want to go to Bahama, you know, and stay for a month. Nobody here to cover me. So, you know, you do have to plan ahead for that.

Yeah. And I think that's important even early in your career to kind of think about. And as you were saying, it can sometimes be taboo or whatever to talk about making money and kind of what you want your life to look like and post retirement, because I think we do just get on the treadmill and just kind of keep on, run in and just like, look right in front of us instead of looking beyond. I think it's even intimidating for people early on in their career to choose what path to go. And just again, as I was talking about getting, you know, you're getting into med school, then the residency match, you're literally just matched to a place that. And you're like, okay, this is where I'm gonna go. You have no autonomy. So then once you actually get into the real world and you have this autonomy, I think it's a. It's hard for physicians to kind of rewire their brain to think, okay, like, what do I want?

Yeah, it's sort of part of our DNA. You know, we think about others first, and we oftentimes don't think about the impact that has on us physically. When, when I, when I finally started to stop doing hospitals medicine, I know the exact time and day that that happened. It was a Saturday night. I was missing somebody's birthday party, and it was like an overnight shift. I was in the ER meeting people, and unfortunately, it was a slow night. So I started reading and I was reading like today's hospitalist. And in the, in the, you know, the center cover center panel, there was an advertising for the executive MBA program for, I think it was like University of Tennessee. And I applied that night and I said, you know what? I can't. I can't see myself at 65 and an overnight shift missing, you know, my kids 18th birthday party. I just couldn't do that. And, you know, look, it's a young person's game. It's an incredibly well paid position. I think it's really rewarding. I enjoyed every minute of being a hospitalist and not probably, you know, stop being a hospitalist sooner than I ever thought I would because I, I wasn't burnt out. People say, well, you were burnt out. I said, no, I just started to realize there was a future that I hadn't thought, that I hadn't thought about Stephanie, you know, what, what is in the future for me? What do I want to achieve? I'm, you know, do I want to have a divorce? Do I want my kids to know me and, and not hate me? And, you know, those things, by the way, were frequent conversations and physician lounges, you know, where I would sit down with other mentors, clinically incredible physicians that were, you know, doctors. Doctors that were living a life of a martyr and a saint, frankly. And the martyr is not giving them credit for the work that they did in transplant and, you know, cardiac procedures. Up every night, never a break, you know, because you don't get a break when you're, you know, highly specialized, you know, professional like them. And they would tell me, man, you know, my kids hate me, Tony. I don't even know. And. And I'm on my second divorce and I still got all this debt. And, you know, it sunk in there. It sunk in there, you know, because again, going back to my roots, El Paso, I tell people I'm American, as you can get it. I live. I am the American dream. But, you know, culturally speaking, you know, I. There's significant differences. I. Americans live to work. Hispanic people in general, we work enough to live, and we think about when are we gonna express joy and spend time with others. And it's as important, if not more important, than getting a bigger house or a nicer car or a bigger boat, you know, and get too caught up in the rat race. I think many of us as physicians, because we earn good money, we tend to, you know, get carried away with that. And, I mean, I feel even, you know, it's impossible to. Not because you have access to it, but at the end of the day, I think, you know, you just gotta put some guardrails around it and realize, you know, what do you want from life? And hopefully it isn't. I used to tell people all the time, being a physician doesn't define who I am. It's my career, and I'm passionate about it. But I have way more to offer in the world than just me as a doctor. Right. That's. That's the way I'd like to think about it. To your point, I'm becoming a more awesome person, a more, you know, a complete applicant. I do notice a difference in my experience in being around other med students that were older or had different life experiences. They. It was a very different. It was a very different four years for them. They were not as stressed as those of us that went straight through college into med school because they had much better coping mechanisms and understood that there was more to life than, you know, the next achievement and then that first big paycheck, they have that to lean on.

Yeah, I definitely think that my generation is looking at medicine a little bit different and definitely challenging that notion of it being your whole identity and everything. And that's definitely a theme that we talk about on this podcast. So I really appreciate all of these perspectives. I guess now, you know, post selling. And just as we're talking about, like, enjoying life a little bit, have you been happy with the way that you set up your life? And have you been able to enjoy your life a little bit?

Well, I mean, ok, I couldn't have written it up better in terms of the success that we've had. Of course, I've had tremendous support from my wife, who, you know, rightfully will tell you there are periods of time when she was a single mom, because when we were building the South Carolina practice, I literally commuted to South Carolina Tuesday through Thursday every week for nine months. And that was sacrifice that in hindsight, I'm Like, I would never do that again. But I did. I did because I cared about, you know, the business and. And moving my family forward. So, yeah, I'm incredibly blessed. I recognize that every day. I'm incredibly grateful and thankful to have three healthy kids and knock them wood there, you know, and. And generally be healthy myself. I'm very happy. But unfortunately for me, I am a hyper achiever in DNA. I don't think I'll ever stop. But I do try to be aware of how do I continue to do this and to use an overused term, you know, work smarter, not harder. I've done the hard work, and I earned the first round of success through just incredibly brute force. You know, I will make this happen no matter what the sacrifice. Now I try to use the benefit of my knowledge and education and experience and leverage that, you know, and I get paid for that now. I get paid for the sacrifices I make and sharing that with other people that I'm telling them, don't do the same mistakes I did, and I can help you avoid that. And, you know, I was gonna say this earlier, but for me, life, like medicine and businesses, is a curve. It's a learning curve. It's incredibly steep. So you're in healthcare, you're, you know, your first years of residency, you're gonna learn a ton. Like, there's a huge curve, a steep, steep curve where you're gonna master, you know, the vast majority of the knowledge that you need to do well by others and not hurt them. And then there's an incredibly long tail. That tail never goes to zero. Right. If you're looking at it from a graphics perspective, that that tail declines and degrades very slowly over the course of the rest of your life. And that long tail is where the. Where you extract your value. Because most of us will get that 90% knowledge achieved in three or four years, and we're at the top of our game. We're practicing good medicine. But it's that long tail, those rare situations that you experience over 10, 15, 20 years that bring value to you as a professional. Because it's only until you experience all those nuances that you're able to handle them without, you know, making a mistake or panicking. Men, that's what I tell people all the time. Business is the same way. You can learn the vast majority of a business reading a book or Googling or using AI, but you will not be a good operator necessarily from reading. You'll be a good operator because you've experienced and made mistakes, and when people ask me why am I paying you is because I've made those mistakes. It's because I have a long ass tale that you, that I can help you avoid in terms of trouble, bad, bad decisions, etc that you're paying me for. It's my experience is why my time is valuable by the way. And it's another, it's the same reason why you want an experience and you know, a professional as a physician and interventions etc is you're paying for the long tail. They've seen it all and they've been able to manage it. Right. And the odds of them doing something bad for you are very low. Yeah.

So do you do. So you don't do any clinical medicine anymore?

You know, not as much as I like to do a lot of things. Sidebar. Family, friends, you know, type of thing. I keep my licenses and I try to keep my cme. But actually I'm, I'm finally doing something closer to my heart in medicine. I'm going in July, I'm going to Honduras for, for a mission trip and we're going to be providing care to very, very underserved people, you know, out there in the jungles. And I'm really looking forward to, to doing that again. And obviously it's completely free. You know, it's, it's about getting back to, to helping others on a individual basis. I, people ask me all the time, do you miss it? And I say of course I do. I miss the interactions. I miss the feeling of reward, of helping somebody get better. It's incredibly powerful. It keeps you coming back like, you know, hitting that one good golf shot, you're like, oh, I can do that again. And then it's like 100 years before you hit another good one. But it's really rewarding. But I don't miss a lifestyle, you know, and so it's, it's a, it's a dynamic where I try to, you know, reconcile the fact that now I'm helping people at a much larger scale. Because when I was CEO and I was no longer seeing patients, I was still training young physicians, young nurse practitioners, and I was helping them become better providers. And so my impact was not just in one patient, it was 100 patients in every interaction because I've trained and developed these people, so my impact to the world is much larger. That's how I try to reconcile the fact that I'm not at the bedside anymore is that I feel like I, I've created a legacy of high quality providers and leaders that, you know, are Doing that now. Yeah.

Well, we won't take up too much more of your time. This has been great and I feel like I could keep talking to you. I understand why my dad is on the phone with you a lot, but. And you've given us so much advice in different realms, and I know you currently do that, but is there anything I ask all of our guests this. Is there anything that, any advice that you would give to somebody early on in their medical career, somebody like me who just finished their first year of medical school? Any small piece of advice you would want to give to me and our listeners?

Yeah, it's actually really simple. Take care of yourself and, you know, listen to your body, listen to your soul and realize that nothing good in the world is, you know, is easy, but it's worthwhile achieving. So you're gonna have to, you have to, you're gonna have to go through the hard times and, you know, you're gonna have to pay your dues and don't get discouraged. I think it's, it is a rewarding career. What I would say is make sure that beyond making it a rewarding career professionally and personally prepare to make, you know, your life rewarding as well in a long time. And that's, you know, going back to all the business stuff.

Love that. Well, thanks so much for being here. And do you want to plug your businesses, your consulting business and all of that stuff? Where can people find you?

Yeah, for sure. It, you know, we. The name of a group is called Archeon, Archeon Partners. Archon is a, I think it's a word that describes like a depository repository of knowledge, which is sort of the way we look at ourselves. We don't think of ourselves as consultants. We, you know, we're, all of us are experienced operators have either started, run and sold businesses and, or all the way above. And so, you know, we think of ourselves as a high impact sort of drop in executives to help, you know, businesses, particularly healthcare businesses, that's, that's our wheelhouse, you know, execute goals and sort of get through either turbulent times or, you know, these pivotal moments where they can't afford a guy like me to come in full time, but they need some help in, you know, staging a plan to take the next step in their business. That, that's, I think, where we're most impactful. So, yeah, I mean, you know, look us up or online. Arcan Partners and yeah, appreciate it. Thank you so much for the opportunity. It's been great talking to you guys. Great.

And you guys know where to find us @Generations MD on tick tock and Instagram. And if you have any questions, you can email us at ask generations.mdgmail.com and we will text you next week. Bye guys. Bye.