How a Compliance Program Raises Your Valuation (with Jerry Chang)

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• Episode Summary

  Most healthcare executives treat compliance as a cost line. Jerry Chang, Managing Director and Partner at Stout, sees it differently from the valuation seat. On this episode of The Compliance Advantage, host Ross Ronan and Jerry walk through how a strong compliance program changes what a business is actually worth.

  Jerry has spent about 30 years valuing hospitals, health systems, medical groups, surgery centers, and dialysis centers, and he has testified roughly 20 times as an expert witness. He breaks compliance value into three jobs a valuation does: measuring value, protecting value, and recovering value. The throughline is risk perception. When a buyer sees a weak compliance program, that perception shows up as a higher discount rate or a lower multiple, which pulls the price down.

  Ross and Jerry trade real diligence stories, including a dialysis center sale where undisclosed compliance issues triggered a claim that the buyer overpaid, and a deal that nearly collapsed when an Anti-Kickback problem surfaced at the last stage. They cover fair market value and commercial reasonableness, why a 10-year-old valuation sitting in a file cabinet is a red flag, and why sell-side compliance diligence pays off before a buyer ever asks. Jerry's rule sums it up: go slow to go fast.

• Key Takeaways

  • Does a compliance program actually affect what a healthcare business is worth?
    Yes. A strong compliance program lowers the perceived risk of the business, and lower perceived risk shows up in a valuation as a lower discount rate or a higher multiple. Jerry Chang puts it plainly: perception of risk is not just actual risk, it is perceived risk, and investors price that perception into the deal.

  • What are the three ways a valuation deals with compliance value?
    Measuring value is producing a defensible fair market value opinion for a deal, arrangement, or compensation. Protecting value is defending that number in court or arbitration and guarding against penalties tied to Stark Law or the Anti-Kickback Statute. Recovering value is helping a client show they overpaid when compliance problems were not disclosed, as in a dialysis center sale Jerry worked on.

  • Why is an old fair market value opinion a problem?

    A valuation that was done years ago and never refreshed is a red flag. Arrangements expire, contracts renew, and legal or compliance teams turn over. Jerry recommends having policies and processes for when to obtain an independent valuation, who is qualified to do it, and when to refresh it, so a 10-year-old opinion is not the only thing supporting a current physician arrangement.

  • What is the difference between fair market value and commercial reasonableness?

    Fair market value asks whether the price is right. Commercial reasonableness asks whether the arrangement makes business sense at all. Jerry's example: a hospital can pay five cardiologists fair market value for medical directorships, but having five medical directors may still not be commercially reasonable. Both tests matter.

  • Should you wait until a deal is happening to fix compliance?
    No. By the time compliance surfaces in diligence, it is often too late, and it can move a deal from a stock deal to an asset deal or kill it within seconds. Jerry recommends sell-side compliance diligence ahead of a sale, so you cut off buyer questions early. He calls the approach go slow to go fast: engage counsel and a valuation advisor early to spot the landmines before they cost you.

• Read Full Transcript

  Introductions and How They Met 

  Ross Ronan (00:07) 

  Welcome to the Compliance Advantage. Today we have a great guest, Jerry Chang, who is Managing Director and Partner of Stout. Jerry, thanks for joining us today. 

  Jerry Chang (00:16) 

  I'm happy to be here, Ross. 

  Ross Ronan (00:18) 

  It's kind of like we were just talking before we got on the air. It's serendipitous that we got to meet each other at an event in Nashville and got to talk a little bit about what you do at Stout. So I'd love to hear a little bit more about your trajectory and what you do at Stout. 

  Jerry Chang (00:38) 

  Sure. Well, I'm a Managing Director and Partner at Stout. I'm based out of the Atlanta office, Ross, and I've been doing pretty much the same thing for about 30 years now. I focus on valuation and financial advisory, primarily in the healthcare industry. So think about providers and payers. I don't really do a lot in the life sciences area, but most of the work that I do in terms of valuation and financial advisory relates to hospitals, health systems, medical groups, surgery centers, dialysis centers, these types of service organizations. 

  Ross Ronan (01:19) 

  I need to correct myself, because it wasn't the first time we met in Nashville. It was the second time we met. We were a part of a deal back in the day, an issue that we had to work on, where I think unbeknownst to either one of us, we were collaborating with each other to help support a client in an action that they were defending. So we did get to meet back then, and we just got reintroduced in Nashville. 

  Jerry Chang (01:47) 

  Yeah, it's funny, Ross. In Nashville, I remember seeing your name and thinking, where have I heard that name before? And I'm getting old, so I had to go back through my memory banks, and I'm like, it's that matter that we worked on, where we were actually on the same side of the table, but you had a different aspect of the scope of work. And I had, of course, the valuation scope. 

  Ross Ronan (02:09) 

  Collectively, I think it worked great, and it's really nice to know that there are partnerships out there that may not have been intended but actually worked out for the better, for the advantage of this client, to be able to pull through on their issue. 

  Leadership: Servant Leadership and Teaching 

  Ross Ronan (02:27) 

  All right, tell us a little bit more. You have a very full position, and I always like to talk about leaders. Before we get into any of the compliance pieces of it, what got you to where you're at? You're a Managing Director and Partner of Stout. That's a huge position, doing lots of great things at Stout. Any books, mentors, or philosophies that really resonate with you, so that anybody who's listening and trying to be in that leadership realm can take from it? 

  I always like to hear these kinds of things, because I go out and read them. I think everybody has a great perspective. 

  Jerry Chang (03:11) 

  That's a good question, Ross. I think back over my 30-plus year career and how I got to be in a quote-unquote leadership position. And I'll be honest, when I first started in this industry, I thought leadership was all about titles and power and getting to that point where I can tell other people what to do. But it's flipped. As I learned more about effective leadership, informed by things like my Christian faith, I learned about concepts like servant leadership. 

  Understanding that true leaders really lead not by power or coercion or fear. It's more about inspiring people, it's more about serving people. To me, that was a lesson I had to learn as I matured. So I think that is one big factor, my faith. 

  I also always think of myself, as a consultant, as a teacher at heart. One of the areas that I try to get better at, as far as advising clients and counsel, is how do I teach and explain esoteric concepts better? And I found that using examples and analogies are things that seem to resonate with clients. 

  An example would be: I was in front of a jury one time testifying on behalf of a client, and it was a shareholder dispute. I was explaining the concept of a market approach, using guideline companies to value a subject company. The best example I could give was valuing a house. Everybody knows that when you value a house, you look at comps. But instead of making adjustments based on number of bathrooms, square footage, and bedrooms, I explained that you still have to make adjustments to the comps of businesses based on things like size, risk, and growth. So that's just an example of how I try to get better at teaching and consulting clients. 

  Ross Ronan (05:24) 

  The leadership definition that you gave is really important. I was reading a book, and I cannot remember which one it is. I have a lot of different ones that I go after. But it was someone who said, managers do and leaders are. I thought that was a very interesting, philosophical thought process. Instead of getting after people, micromanaging, making sure the work gets done, which our managers do really well, leaders just are. They're leaders. They inspire, they have a presence, and they're helping people get better. That means they're not doing all the work. They accomplish the work that gets done just by being that leader in and of themselves. 

  So whether it's a Managing Director like yours, compliance officers, CEOs, or board members, we all have to take a step back and go, let's just be. Let's figure out what we're doing here and how we can inspire people to go forward. I think that's a really good analogy, and the teaching part of it is really important. 

  Compliance as Cost vs. Value 

  Ross Ronan (06:00) 

  All right, let's get into compliance a little bit more. You do lots of valuations. You're really telling people the value of their business based upon certain different aspects of it, or you're doing fair market value analysis to say this is what you should be doing to comply with Stark or the Anti-Kickback Statute. So when we think about healthcare executives, whether they're boards, CEOs, or COOs, what do you think they're still lacking in the understanding of how compliance can be an advantage to them and add value to their business? 

  Jerry Chang (07:28) 

  It does vary, Ross. Some clients are more sophisticated than others, as you know. I do feel like there are some executives that still have a mindset that equates compliance with just cost: additional cost, additional headache, a necessary evil, whatever you want to call it. And yes, all things being equal, if you add the cost to create a compliance program or get fair market value opinions related to certain deals or arrangements, that is adding cost. But some seem to forget that there's also this other side of the equation, where you also have increased value that can come out of a strong compliance program. That usually manifests itself in reducing the risk profile of the business. 

  In valuation speak, we have this risk factor called the discount rate. Or you could adjust the multiple, higher or lower, depending on the perceived risk. So if you can reduce the risk perception of a business through a strong compliance program, it can actually increase the value of your business as well. 

  Ross Ronan (08:50) 

  I don't know if you've ever heard this before, but I think Deputy Attorney General McNulty said, you think compliance is expensive, try non-compliance. I think that's the epitome of what you're saying. You think of it as a cost center, which it is. Everything in business is a cost center, right? We get that. But imagine having the non-compliance effect in your world. 

  You're doing valuations. How do you see that when you're looking at it? Are we measuring value, protecting value, or recovering value? How does it show up in each one of those? Because thinking of it as a cost center and not thinking of the ROI on it, and no one likes to talk about compliance in terms of ROI, but there's a huge piece of it, because non-compliance means not having a program, not knowing what you don't know. When you're doing those valuations, how do you see that, and how does it show up differently in each one of those: measuring, protecting, recovering, all of those things? 

  Measuring, Protecting, and Recovering Value 

  Jerry Chang (09:55) 

  Sure. So measuring is pretty straightforward. It's using my expertise as a healthcare valuation expert to come up with a credible, defensible fair market value opinion related to transactions, deals, arrangements, and compensation, in all these different areas in healthcare where it's necessary to measure value in a credible way and, if necessary, to be able to defend it on the stand. We talked a lot about regulatory compliance, of course, making sure that you can have a defensible value for Stark Law, the Anti-Kickback Statute, even IRS private benefit and private inurement. But you can also measure value for financial reporting and for tax reporting. There are other ways you can be hired to measure value, even as an expert witness. I've testified about 20 times now in federal court, state court, and arbitrations, where I have to measure value. 

  And that really gets to the second category of protecting value. So let's say you're having a shareholder dispute and one party is suing the other party, and the defendant hires you to protect value, because there's a plaintiff trying to allege that there's some damages. My job is to go in there and measure the value and to be able to defend it in court or in arbitration, so that client can protect that value. But also, protecting value in terms of Stark and the Anti-Kickback Statute, because as you know, if a healthcare entity is found guilty of violating Stark Law, the Anti-Kickback Statute, or IRS private benefit and private inurement laws, that could result in hefty monetary penalties. It could result in them being disqualified from federal programs like Medicare or Medicaid. You could have reputational damage. You could actually lose the entire business itself, where it would be just shut down and could not operate. So that's measuring value and protecting value. 

  And then recovering value. I think of an example there. I do work related to bankruptcy, restructuring, and, as I mentioned, litigation support. I remember having this one case. It involved a dialysis center that was sold to a private equity firm. And the private equity firm alleged that since it was not disclosed that the target company was having compliance issues and was actually under investigation, they overpaid for the business. So they said, well, we paid 10 times EBITDA for this business. However, if they had disclosed these compliance weaknesses and the pending and potential investigation, we would have paid five times EBITDA. 

  So I was brought in as an expert to value the business and assume that if a hypothetical buyer knew that there was a compliance issue with this dialysis business, they would have paid less. That's an example of a client seeking to recover value and using a valuation expert to help support their case. 

  Ross Ronan (13:44) 

  Let's dig into that a little bit more, because I think what's really important is how you see that valuation occurring and measuring. For the people who are listening who are saying, okay, I really want to prevent those things from happening, the perfect example is what you just said with the dialysis program. I want 10x, I don't want 5x, and you should have had 10x. What do you look for in these companies to see whether or not they have an active compliance program? 

  Because there are two things there, and I want to clarify. Just because you have these things, let's take your dialysis example, doesn't necessarily mean that it's worth 5x versus 10x. It just means you have these issues, and it's about how you manage and mitigate them that creates value or reduction in value. The fact that you don't tell them at all is a huge reduction, because it means you don't know what you don't know. 

  So when you think about that, and you're doing these valuations, or you're testifying in court, or you're on a due diligence call trying to understand what's going on, what do you recommend for these different businesses and groups going through this to have in place before they even get to this point, so that they don't have a diminished value? 

  Policies, Processes, and Keeping Valuations Current 

  Jerry Chang (15:23) 

  That's a good question, Ross. As a valuation expert, I often come in and do due diligence on the valuation. I'm asking questions like, what sort of protocols, policies, and processes do you have in place to get a valuation, let's say to get an independent valuation from a firm like Stout? Do you even have a policy? That's just part of the process. Having policies on when to obtain an independent fair market valuation and from what firms. Is there a list of qualified firms? Or do you just order one from your CPA, who really doesn't understand anything about healthcare? 

  And then, what are your policies, procedures, and processes for refreshing or updating the valuation? Because I see too many clients who understand to get the upfront valuation, but then they just put it in the file cabinet, and they may never look at it for like five years. So being able to have that management process of obtaining, refreshing, and revising that fair market valuation, and also having the complete list of contracts you have with physicians, and how robust your organization is as far as contracts. 

  And not only how complete they are, but how current they are. If I see a valuation that was done 10 years ago and they say, yeah, this is what's supporting our physician arrangement, then that's a red flag. I also want to mention this concept of commercial reasonableness. Fair market value is one thing; commercial reasonableness is kind of a close cousin. Even if an arrangement is at fair market value, does the arrangement, deal, or transaction make economic business sense? The classic example you always hear is, let's say you're looking at a hospital and they have these medical directorships with physicians, say cardiologists. They could be at fair market value, but if you have five medical directors, that's not commercially reasonable. So I always recommend that my clients also assess commercial reasonableness. 

  Getting the FMV Analysis Off the Shelf 

  Ross Ronan (17:51) 

  Let's talk a little bit more about the FMV analysis, because I think it's very interesting. I have a lot of conversations with our clients and a lot of CEOs who want to get a fair market value analysis done and really understand, is their compensation structure okay? Are they able to do this? Medical director agreements are a great example. 

  A lot of the time, they will go, I need a fair market value analysis, I'm going to get it, then I'm going to tell everybody what to do, and then I put it on the shelf. You see that a lot. From a compliance standpoint, it's our duty to show value within an organization by taking that analysis and actually doing something with it and making sure it's implemented. Like you said, you got it 10 years ago, never updated it. Show me what you're doing today. Are you even complying with what we told you to do in the first place? Have you ever seen that come through, where you give them something right off the bat, and then four or five years later they come back and they're like, hey, I know you told us to do this, but we really... 

  Jerry Chang (19:18) 

  Yeah, that happens occasionally, where a fair market valuation opinion was rendered years ago and they just lost track of it. They haven't revisited it. And then all of a sudden, maybe they know it's coming up for renewal, the contract's coming up for renewal, and they look at the support for the fair market value opinion, and it's just so dated that they need an update, and they just haven't looked at it. 

  Sometimes you have a change in, I have a client recently that had a change in their legal team. The new team didn't really understand exactly what the old team did as far as fair market value opinions. They just had turnover in their legal department. That was another example of where it's so important to have these processes and procedures in place, so that if you have this disruption, let's say in your compliance team or legal team, it's easy to still understand what went on before: the inventory of arrangements, when the last fair market value opinion was rendered, which ones need to be updated, which ones are getting ready to expire, and that sort of thing. 

  Ross Ronan (20:40) 

  We call it operationalized compliance programs. I always hear this all the time: you should go create a fair market value for this issue. And I'm like, no, I'm not an FMV expert. That's Stout, that's Jerry. This is what he does. We take what they tell us and we make it work. I put it in action. That's our job. And if you don't have that little nuance there, it will just fall by the wayside and sit on a shelf somewhere. 

  Jerry Chang (21:11) 

  That's right. 

  A Diligence Case: Coding Compliance and Cost Structure 

  Ross Ronan (21:12) 

  You talked a little bit about that other example with the reduction in multiples. Any other things you can think of, on a diligence standpoint, that you've seen on a specific deal, like escrows, discounted rates, or moving from a stock deal to an asset deal because of valuations, or even Q of E's? Tell me a little bit more about any compliance issues that really could change the deal. 

  Jerry Chang (21:44) 

  Yeah, Ross, I'll give you a very good example. You mentioned the work that we did on a matter years ago. I won't get into any specifics as far as client names, of course, but I recall that you went in and did some compliance due diligence work related to a potential transaction. One of your findings was that the company did not have a robust coding compliance program at the time of the transaction. And so, in my valuation, I had to do the value... 

  Jerry Chang (22:39) 

  The example I thought of, Ross, was something you're familiar with, that matter we worked on together that you referenced earlier in our discussion. It related to a company, and I won't get into specifics as far as client name, of course, but I recall that you did some compliance due diligence related to that potential transaction. In your report, you concluded that the company did not have a robust coding compliance program in place at the transaction date. 

  My scope of work was valuation. In this case, it was a litigation support project, as you may recall. I was the expert on the same side of the table as you, where we had a mutual client, and I had to revalue the company assuming certain facts and circumstances. One of those facts and circumstances was your report that stated that the compliance program was weak from a coding perspective, and that the company needed to shore up its compliance function. 

  So in my valuation, I assumed that any hypothetical buyer, if they were looking at this company, would have to implement a compliance program that mitigated the risk associated with non-compliance related to medical billing and records documentation. That affects things like the cost structure of a company, right? Because you now have to increase training costs. You maybe have to hire a compliance officer. And you also could affect the patient throughput of the company if you have to make your compliance program more robust. All these things, all things being equal, decrease the value, because your cost structure just increased. So I took your conclusion, and in consultation with one of my colleagues, we came up with a revised cost structure that assumed a hypothetical buyer would have to incur these costs to bring the compliance function up to speed and up to par. That was one of the examples where I had to value a business and make some adjustments based on a compliance weakness that had to be improved. 

  Ross Ronan (25:10) 

  That was a very interesting case, and I'm so glad you were on that side, supporting our diligence findings. It's really funny, and I'm sure you have this conversation with healthcare leaders all the time, investing into compliance programs. We call it a compliance investment. It's not just putting money out there; you're investing in your program. 

  One of the things you hit on was, when you're in diligence and you have your specialists, whether it's Stout or us, look at a company to be purchased, one of the risk factors we look at is, do you have a compliance program? And that valuation, like you just said, really plays a big part of that. As a company, you're not going to sit there and go: A, you don't know what you don't know, because you're not picking up rocks, you don't have a compliance program. B, you're not mitigating things that are out there, because you don't know what you need to mitigate. And C, you haven't invested your dollars into a compliance program to be able to say, okay, this is where we're resourced enough to do that. 

  Honestly, we've started to put together in some of our proposals a side-by-side analysis with potential clients to say, here's what a company of your size should be spending for compliance, based on surveys and things like that. Not to put them on the spot, just to say, 50% of your peers in your area of expertise, by revenue, patient volume, and employee staff, are spending more on compliance. So maybe you should think about that. 

  What you're talking about is really, when you go in there and have that conversation with business leaders and make that investment, you do see that without that piece, without that preventative, detection, and mitigation aspect of compliance, it makes a big difference on value. 

  Jerry Chang (27:34) 

  That's exactly right. It definitely has an effect on value. A lot of executives, like I said earlier, just have the mindset that compliance is just cost, and they think the valuation is just a necessary evil. They don't understand that it actually has an accretive effect on value. If you can demonstrate to any owner, potential investor, or stakeholder that your compliance program is strong, you're protecting against possible reputational harm in the future, and you're decreasing the risk perception. Your perception of risk is not just actual risk, it's perceived risk. So if there's a perception that you have a weak compliance program, investors are going to factor that into their valuation in the form of a higher discount rate, or maybe a lower multiple, to account for that perceived risk. 

  What Leaders Still Underestimate: Go Slow to Go Fast 

  Ross Ronan (28:39) 

  People are becoming more sophisticated day by day. They understand, because they've seen it happen to them in the past, where something went sideways on them, like you said with the dialysis diligence, and like our other issue, where it really did affect what they bought or invested in. 

  From where you sit, and from the bigger perspective, what is the one thing healthcare leaders are still underestimating about enterprise value from the big-picture perspective? We talked about escrows and multiples in your business. Is there one thing out there that you would advise them to go, think about it this way? 

  Jerry Chang (29:35) 

  Yeah, I think one thing that comes to mind is that sometimes executives feel it's just a check-the-box thing, that as long as they get it done sometime during the process, they're covered. I always recommend engaging healthcare legal counsel as early as possible. If it's a complicated deal, or there's a physician transaction that has potential risk of a Stark Law violation, an Anti-Kickback issue, or even IRS private benefit and private inurement issues, getting counsel and a valuation advisor early in the process can prevent future pain later and can actually help the deal and the arrangement go smoother. It's what I call go slow to go fast. Make sure you engage counsel early in the process, so that you know what the landmines are, the issues that may occur. 

  I had a deal one time where there was a large hospital system looking to buy a big medical group. During the due diligence process, they uncovered an arrangement between that hospital and the medical group that was very problematic. It just had Anti-Kickback violation written all over it. 

  They discovered this late during that due diligence process, and it almost torpedoed the deal, because it was uncovered by, I think, the buyer's attorney, the transaction attorney, in conjunction with the compliance attorneys at that firm. They said, this is a problematic arrangement, and it either has to be unwound, or do they have any type of fair market value opinion? I remember them coming to me, because my company at the time, not Stout but another company, was working on that transaction. They came to me and said, Jerry, we have a problem. Can you look at this arrangement, this agreement, and come up with a quick fair market value opinion on it? I looked at it, and thinking about what they were paying, I said I don't think I can support it. It became very stressful because, of course, they wanted the deal to go through. This was like the last stage, and this thing could hypothetically torpedo that deal. That was just a case where it was too late in the process when this was uncovered, and that caused a lot of pain. 

  Ross Ronan (32:20) 

  I think that's really good advice, especially for people listening. If you're thinking about putting compliance in place for something that's already happening, you're probably a little bit too late already. Whether it's doing a compliance due diligence assessment, trying to find out whether the arrangements are good, or getting ready for a deal tomorrow or in the next three or four months, you're probably already a little bit too late. You need to think about it now. And it's not, like you said, a check-the-box situation where it just goes on a shelf. 

  I had this conversation with a potential client the other day. They said, we're checking the boxes. And I'm like, we don't talk like that here. Those are not words we use. We don't check the box on anything. But once they get it, you understand, and now you're actually being proactive in your investment, so that you do create enterprise value. That's a great example of where getting in too late on the diligence side of the house, whether you're sell-side or buy-side, putting your compliance program in place or evaluating their compliance program, it could kill a deal within seconds, move from a stock deal to an asset deal, and then it really becomes unattractive for the sellers. 

  Jerry Chang (33:45) 

  Right. And you mentioned sell-side due diligence. That's something I would recommend, especially for larger entities, to just go ahead and do some sell-side compliance due diligence, because you're going to cut off a lot of potential questions and concerns down the road if you've already gotten in front of it and made sure all your fair market value opinions are current. You've made sure you've got that process in place. Because when that potential investor comes looking at your practice or medical group for a possible purchase or acquisition, they'll say, wow, they've already made sure their compliance program was up to par, and that's one less thing we have to worry about, less perceived risk, probably a higher multiple. 

  Ross Ronan (34:40) 

  Right. The way that I think about it is, every hundred thousand dollars you don't spend, they're going to put it in your budget anyway, and then that's a 10 multiple on top of that. So that's about a million dollars, if you're getting a 10 multiple, that you didn't do in the first place. Now they're going to reduce either your multiple or your purchase price by that, because they're going to add it back anyway. So add it up front, show your benefits and your values, and maybe you get 10 or 12 times your deal, versus six or eight, because they have to put more money in there, which reduces your valuation or your dollars out. I think about it in multiples of 10. Every hundred thousand dollars you don't spend could be a 10 times penalty to you, for whatever reason. 

  Health Is Wealth: How Jerry Takes Care of Himself 

  Ross Ronan (35:00) 

  Well, Jerry, last question I have. This has been a great conversation. I love talking colleague to colleague, where we can educate some people out there on what we do, how we do it, and the effect it might have. But we're a healthcare company, you guys dabble in healthcare as well, a lot of it, and health is wealth. We've got to take care of ourselves, mind, body, and spirit. What do you do to take care of yourself? I know you talked a little bit about your faith, and that's great. What else are you doing on that front? 

  Jerry Chang (35:57) 

  Yeah, you said it. I look at health holistically. I look at it from the physical side. I'm not a serious runner, but I run 5Ks, and I try to at least run a couple of times a week. Then I also do some strength training. On the physical side, running helps my heart and my cardio, and then, as I get older, I need to maintain some muscle mass, so I'll do some weights. 

  On the emotional side, or the mind side, I find a lot of peace in nature. I love going out hiking. I grew up in northwest Georgia, where there are a lot of mountains, and I just love water, I love lakes, I love going to places like Yellowstone and the Grand Tetons. I just get energy and recharge in nature. So occasionally I'll take my car and go up to the North Georgia mountains, sometimes by myself, and just stop at some parks and go hiking. 

  And then spiritual, like you said, faith is important to me. Having a higher calling, a higher being, it definitely grounds you, keeps you humble, and keeps you from thinking too temporal. I don't know if you know this, but I have an MBA, and I also have a theology degree from Dallas Theological Seminary. It was a part-time program, because I was working full time, and I graduated there last December. So that's another thing that really got my mind off of work and let me feed my spiritual side as well. 

  Ross Ronan (37:46) 

  All of those pieces, and nature's a great one. We always talk about grounding: getting out there and feeling nature. I think that's a great way to recenter with the things that are bigger than you. 

  Jerry Chang (38:00) 

  That's right. 

  Ross Ronan (38:01) 

  Well, Jerry, thank you so much for spending time with me today. I can't thank you enough, and I look forward to working with you in the future. Thank you so much for joining. 

  Jerry Chang (38:10) 

  It's my pleasure, and thanks for having me on. This is a great podcast series, and I'm just excited I was able to participate. 

  Ross Ronan (38:16) 

  Great, thank you so much. 

  Jerry Chang (38:17) 

  All right, take care. 

• About the Guest

  Jerry Chang is Managing Director and Partner at Stout, based in the firm's Atlanta office.

  He has spent about 30 years in healthcare valuation and financial advisory, valuing hospitals, health systems, medical groups, surgery centers, and dialysis centers, and he has testified roughly 20 times as an expert witness in federal court, state court, and arbitration.

  On this episode, Jerry shows Ross how compliance moves real numbers in a deal, from fair market value and commercial reasonableness to the diligence findings that change a multiple.

  https://www.linkedin.com/in/jerrymchang/

“Every hundred thousand dollars you don’t spend, they’re going to put it in your budget anyway, and then that’s a 10 multiple on top of that.”

— Ross Ronan, JD, BSN, CPCO, CHC, CCEP, CMPE

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