Compliance, Capital, and the Deal: What Investors Really Want with James Carey

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• Episode Summary

  Why do private equity firms walk away from healthcare companies with strong margins and fast growth? Often it comes down to reimbursement risk, and how prepared a founder is to talk about it. On this episode of The Compliance Advantage, host Ross Ronan sits down with James Carey, Partner and Head of M&A at Next Sparc Growth Partners, to unpack what investors actually look for when they evaluate a healthcare business. Carey explains how payer mix, coding distribution, and state-by-state reimbursement trends shape a deal, and why a single overweighted code can cut revenue in half if reimbursement changes. His core message for founders is simple: transparency is the advantage. The gaps in a smaller practice, an old billing code, a collections delay, an unbuttoned revenue cycle, are not deal killers. They are opportunities to improve, and an experienced investor expects them. What stalls a deal is the founder who hides them. Ross and Carey also dig into the No Surprises Act, the rise of cash-pay functional health, and why even a small practice should treat compliance as protection for the revenue it worked hard to earn. The throughline is that compliance, used well, is how a founder gets the capital to grow instead of getting passed over. 

• Key Takeaways

  Why do investors walk away from healthcare reimbursement risk? 

  Many investment committees have been burned before. If a business is overweighted on one or two codes and a reimbursement cut lands, revenue can drop by half overnight. Some firms now look only at cash-pay businesses to avoid that risk entirely. James Carey notes that investors who understand the space do their research on the specific codes and state trends, and stay comfortable with reimbursement when others will not. 

  What makes a founder ready for diligence? 

  Understanding what a transaction looks like, what information an investor will request, and why they ask for it. Carey says he is not poking holes in the business. He is finding where he can add value. Founders who prepare mentally for a long list of questions on payers, coding, and revenue cycle start from a position of strength. 

  Is a compliance gap in a small practice a deal killer? 

  No. Smaller, family-run practices are usually less optimized because they do not have a dedicated reimbursement team, and that is expected. Carey treats those gaps as opportunities to improve, not negatives. The problem is not the gap. It is hiding it. 

  How does payer mix affect a healthcare deal? 

  Investors look at whether revenue is heavily federal (Medicare, Medicaid, VA) or commercial, and whether the practice is in-network or out-of-network. A multi-state practice can face five different sets of state rules and coding bodies. Knowing your payer mix and state-by-state exposure ahead of time keeps surprises out of the deal. 

  Should a cash-pay or functional health business invest in compliance? 

  Increasingly, yes. Cash-pay areas like med spa, wellness, and peptides carry less compliance weight today, but as insurers and the government start to cover preventative and value-based care, compliance will follow the money. Carey points out that the groups doing it well already document protocols and patient information clearly, which positions them for growth. 

• Read Full Transcript

  Introductions and a Shared View on Health 

  Ross Ronan (00:00) 

  Welcome to The Compliance Advantage. Today, we have a very special guest, and we haven't had a lot of investing professionals on our podcast in a while. So today, we get to present James Carey, who's a Partner and Head of M&A at Next Sparc Growth Partners. James, thank you for joining me today. I really appreciate it. 

  James Carey (00:25) 

  Ross, good to be here. 

  Ross Ronan (00:27) 

  Tell us a little bit about your journey. I know that you've been in this investment industry for quite a while, and also in healthcare. Tell me a little bit about where you came from and what you're doing. 

  James Carey (00:36) 

  Yeah, sure. Happy to. I started my career with Wayne Huizenga and his group up in Fort Lauderdale, Florida. I've lived in South Florida for almost twenty-one years now, so my whole career has been down here. I've certainly experienced a lot of changes, especially over the last five years. 

  I started with Wayne and his group, and then I was at H.I.G. Capital for about seven years, where we did a lot of healthcare investing, healthcare services, a lot of the things that we'll talk about today. I was at a small group called Peterson Partners out on the West Coast for a couple of years, and now I'm at Next Sparc. 

  At Next Sparc, we are a professional family office, but we very much act and feel like a growth equity firm. Currently, we've got sixteen portfolio companies that we're actively involved with. We make minority investments and majority investments, and seven of those have a healthcare focus. 

  Ross Ronan (01:22) 

  And what draws you to the healthcare side of the business? 

  James Carey (01:25) 

  I think I've just had a lot of experience in this space. It's something that we're also passionate about. I have a big focus personally on health and wellness, so that naturally leads to a lot of healthcare investing. We all wear Oura rings at our firm. All of our executives do. We do fun activities where we track our sleep, and we do dieting. So it's not only a big professional focus within the firm, but personally, and especially for myself, I'm very much passionate about it. 

  Ross Ronan (01:56) 

  I love that. Usually we end with this, but I'm going to start off with it. When we do things at our healthcare company too, at Ronan, one of the things we say often is, "You can't be part of healthcare if you're not healthy, and you shouldn't be part of healthcare if you're not." I'm a nurse, for God's sake, and in our profession we are the worst people about taking care of ourselves as nurses. When we look at our company, we say, "Look, healthcare comes first, because you cannot be in healthcare without being healthy." One of the things we do on a weekly basis is we go over wins and learning opportunities, but we always follow it up with, "What are you doing to take care of yourself this weekend?" And we make them explain it to the entire group, whether that's a relaxation weekend or they're going to go hike a fourteen or whatever it may be. I think it's great that you have that same kind of mentality. 

  James Carey (02:50) 

  Yeah, absolutely. It applies personally, throughout my family, throughout my friends. Naturally, as you get a little older, you have to be a little bit more mindful of your sleep, your diet, and your exercise. So it certainly helps professionally. 

  Ross Ronan (03:04) 

  We always say health is wealth. What do you do to take care of yourself on a daily basis, other than your Oura ring, which is amazing? 

  James Carey (03:10) 

  Well, if I wake up with a good sleep score, I'll typically head to the gym pretty early in the morning, before getting the kids off to school. I'm also a big believer in intermittent fasting, so that's helped out tremendously. I'm fasting now. I typically eat right after lunch, so I'll start my day with some aminos, but I don't break the fast until after lunch. 

  I'm pretty strict about that Monday through Friday. I can't say that for the weekends, especially running around with kids, going to golf or baseball, things like that. And then I'm in the gym at least five times a week. So outside of playing golf or paddle down here in South Florida, I get to the gym and do strength training and cardio about five times a week. 

  Ross Ronan (03:57) 

  That's amazing. I'm a big brunch guy, so Saturdays and Sundays are kind of wonky for me too, so I understand that piece. 

  James Carey (04:04) 

  Especially with football season coming up here, Sunday all bets are off. 

  Ross Ronan (04:08) 

  I understand. Days start early in football season, right? 

  James Carey (04:12) 

  Yeah. 

  Philosophy: Leading With the Human Element 

  Ross Ronan (04:13) 

  Tell me a little bit more about you as well, about your philosophy and how you think about things. Is there a book, a mentor, a person, or an overall philosophy that's shaped how you've looked at deals, or how you've handled management, or however you do things? 

  James Carey (04:35) 

  Yeah. One that sticks out in particular, going back to where I started my career, was Wayne Huizenga. Wayne built four Fortune 500 companies, essentially built the city of Fort Lauderdale, gave back a lot, was tremendous with philanthropy, just a tremendous human being in general. But also a very shrewd and very successful businessman. So I got to see both sides of Wayne, and he was one of the nicest humans I'd ever met. 

  From a young age, and a pretty formative part of my career, I learned simple things. When I'm talking to a founder or an entrepreneur, don't go in and talk about the deal, or don't go in and talk about compliance, even if that's the subject you want to talk about. Ask them about their family, ask them about their kids. It sounds simple, and it is, but a lot of folks don't do it in my industry. They just want to get into the quality of earnings, or the finances, or the P&L, or the compliance report they received from you or someone else, and start talking about things that are unrelated. 

  So I try to be as personable as possible. I'm a big believer in developing relationships with the folks that I work with. Quite frankly, at this stage of my career, if I really don't genuinely connect on a human level with someone that I'm working with, most likely we're not going to end up being partners or doing a deal together. So I really value the relationships I get to build with founders, entrepreneurs, and management teams. I always try to bring the human element to all things business. 

  Ross Ronan (06:05) 

  It's funny you say that, and before we get into our main questions on the compliance advantage. I've had that same conversation with a lot of private equity or venture capital groups that we work with who are going into diligence deals and who, unlike you, may see the deal beyond the person. I think it's great that you can see what that deal looks like, and you can visualize it five, seven years down the road when you take another turn at it. But when we get in there and we do diligence, sometimes I'm just like, "Ooh, I'm not really vibing with this person who's supposed to be giving me the compliance, the revenue, things like that. I feel like there's something being held back. I feel like there's some issue in there." I'll usually sit down with the investment team and go, "I don't know what it is, but there's something there, so you probably should think about that as a red flag." And I'd say eight out of ten times something would have happened if they went ahead with that person, who's no longer there a year later because of some sort of relationship issue that you can just kind of feel right off the bat. 

  James Carey (07:08) 

  Yeah, absolutely. And just to add on to that, I think it's about creating alignment from the beginning. When you're talking to a management team, a founder, an entrepreneur, being very transparent upfront and being clear on what your expectations and goals are. Like, this is what we'd like to do, this is the way we're thinking about this investment, this is what we'd like to do with the business. Just setting expectations accordingly from the beginning, that way there are no surprises down the road. Being transparent and honest with folks typically is the way to go. 

  Ross Ronan (07:37) 

  It's amazing how much that will actually get you. How much integrity will get you. 

  Where Founders Are Unprepared for Diligence 

  Ross Ronan (07:45) 

  As we talk here, and we've talked about this in the past, you've watched a number of our different podcasts talk about the compliance advantage. That is how people see compliance as their advantage, or use it for their advantage, in whatever situation they have, whether it's growth, selling, or buying. You said you deal with a lot of founders. When you're going into diligence, or you're looking at a specific company and talking to the founders, and you're looking at things like revenue cycle, payer mix, reimbursement trends, coding levels, and I know you do that a lot because that's a big piece for you, where do you find that most companies or founders are really unprepared when it comes to diligence and really saying, "I'm not using my compliance as an advantage when it comes to payer mix and reimbursement trends"? 

  James Carey (08:34) 

  Sure. There's a lot, and probably a lot of answers to that question, depending on the opportunity or the business that you're looking at. But from a compliance perspective, and maybe going back to revenue cycle management, when I'm dealing with a founder, typically we're the first institutional capital into a business. So these are family-owned businesses, sometimes very well-run family-owned businesses, but they're not professionalized. So financials maybe aren't up to speed, or they're there but they could be a little cleaner. Or the revenue cycle management, as far as payer collections and commercial relationships, isn't as buttoned up as it should be. Maybe that founder or management team is not collecting on time, so it's taking them a little bit longer to get reimbursed than they should, because one of the commercial payers is asking for additional information on a certain claim. 

  When I find that, that's fine, that's okay, and quite frankly that's expected. But sometimes founders, CEOs, or management teams are a little shy about it, or they maybe want to hide that fact because they're not as proud of it. That's okay. That's what I'm here for. I'm here to help, and I'm here to enhance that and make it a much smoother process moving forward. 

  So it goes back to transparency. I like to be as upfront as possible. Sometimes you can get the sense that they're dancing around something, so I'll have to ask a different way, but we'll end up getting to it. I look for transparency, but I also try to get a very good sense from the beginning of what I'm actually working with. Where is there a need for improvement? What are the gaps today? I quite frankly look at those as opportunities to improve. It's not necessarily a negative thing. It's something I know I'm going to have to clean up and fix, and I'm certainly okay with that. That's part of the reason we're having the conversation in the first place. 

  Ross Ronan (10:33) 

  I think you hit the nail on the head when it comes to compliance as an advantage. We talk all the time about transparency. Just be transparent. Know what you don't know. Pick up rocks, look underneath them, figure out where you're at, and just be transparent about it. It's okay. When you look at coding distribution across a healthcare company, I've seen it on both ends. Some people want to hide what their coding distribution is, because they may be skewed one way or the other, and that may put them in a bad light. But I've also seen people who are very proud of their skewed coding distribution on one side or the other and explain it away, and you're just like, "Ooh, I don't know that you can do all that." So I think it's very interesting to talk to these founders, and people wanting to sell their business, about listening to this podcast and going, "Wow, they do really care about what my revenue is, what my coding levels are, and do we have the right distribution to not drive me or anybody else away from a certain type of deal." 

  James Carey (11:42) 

  Yep, absolutely. Going into coding, a lot of what I'll look at is, are they billing using the proper code? Let's just call it a medical device. Sometimes they don't know there could be two or three codes for a device, and they could be billing the wrong code. They're not doing it on purpose, but it's just the way they've been doing things for the last five years, and maybe a code was introduced a couple of years ago. 

  We can come in and say, "Well, actually, no, you can use this code, and this is the way you should be doing it. I worked with Ross. We found out this is a new code, and this is the way you should be billing." A lot of folks, especially in healthcare services, are so busy running their practices and treating patients, first and foremost, that when it comes to the business side of things, it can be a little bit of a heavy lift. 

  Going from one code to another, there are some internal processes and protocols that have to get done. They have to let their reimbursement team, if they have one, know, "Hey, we're now billing to this code." There's compliance, there's paperwork involved, and submitting differently, and that takes time. So sometimes they just don't get around to it, or they don't want to, or they simply don't have the time. That's something we certainly look out for from the beginning as well. 

  Why Investors Walk Away From Reimbursement Risk 

  Ross Ronan (12:59) 

  In healthcare, it's pretty easy to hang your shingle and bill a code and make money. It's pretty simple to do that. It's very hard to do it right. When we talk about different private equity firms that are in healthcare, and you and I talked about this a little bit recently, we're seeing a lot of them walking away from healthcare companies that really have reimbursement exposure. They may be thirty, forty percent Medicare or Medicaid, or something of that nature, and the investment committees are just turning away from them. What do you think is driving that, and what does it mean for healthcare companies to really get the capital they need to grow? 

  James Carey (13:40) 

  Yeah, great question. You've seen it over the years with reimbursement trends in different industries, different sectors, different spaces. You've seen some examples of dramatic cuts. As an example, let's say you're overindexed toward two different codes, and that's where eighty percent of your revenue comes from. Well, if one of those codes gets cut in half from a billing and reimbursement perspective, there goes fifty percent of your revenue on that one code. So that could dramatically affect the investment from an investor's perspective, where, "Hey, I thought we were doing twenty million in revenue, and now we're actually doing fifteen or ten, or even less than that, depending on the cuts." 

  So there is risk there. There are some investment groups now, some private equity firms, venture capital firms, and family offices, that may have gotten burned in the past, and that happened in real life. They've had a troubled investment, or they've potentially lost money on one of those investments. So as an investment committee, they just say to themselves, "Hey, guys, I don't care if this business has fifty percent EBITDA margins and they've been growing like a weed. We're not looking at anything with reimbursement. All we want to focus on is cash pay. We don't want to go down that reimbursement path again. We already got burned once. Let's not do that again." It could be the best opportunity in the world, but as a committee and as a firm, they've made the internal decision not even to bother. Let's focus our time on, we still like healthcare, we still like healthcare services, but we're only looking at cash-pay businesses, just eliminating that reimbursement risk altogether. 

  That being said, I think there is a differentiated look at that. Certainly someone like myself, and there are many other great healthcare investors out there who do understand reimbursement, aren't necessarily scared or worried about it, because they've done their research. They understand the space, they understand the trends in that specific space. They've done their research ahead of time going into the investment, and they've really taken the time to understand the trends in that industry, and then specifically the codes tied to that business. So nowadays, you're either comfortable with reimbursement or you're not. I don't really see an in-between, and I've been seeing that a lot in the market now. Yes, we are, or no, we're not. There's really nothing in between. 

  Ross Ronan (16:00) 

  I've seen that too, and I see a lot of people who are just totally shying away from reimbursement risk. Now, those that are really diving into those heavy reimbursement-risk areas, let's say they're post-acute and seventy, eighty percent of their business is really coming from Medicare or TRICARE or something of that nature, how do you see that on the diligence side or the investment side, where a company is really looking at their compliance program to say, did you understand the exposures that are out there? Do you understand it, have you been looking at it, and are you really using that to your advantage on a deal side? Do you see that a lot, and what's that compliance posture? 

  James Carey (16:47) 

  Absolutely. For example, let's say we're looking at a healthcare services business based in the Midwest. Wisconsin may be a great state for that specific code or that specific service, but then Illinois or Ohio aren't as favorable. They don't have as favorable reimbursement trends, because there's some type of state regulation, or in-network versus out-of-network. 

  So a couple of things you'll look for. You'll look for the payer mix of this business. You'll look for whether it's heavily indexed on federal, or is it a hundred percent commercial? Are they using the Blue Cross Blue Shields, the Uniteds, the Aetnas of the world? Or is this business mostly VA and Medicare and Medicaid patients? So that's something to consider, one. And then two, you also want to look at, are these folks in-network? And then what are the specific trends in that state? 

  If it's a healthcare services business, and they have clinics throughout five states, you're going to have five different regulations and five different coding regulatory bodies in five different states. So it could differ from state to state. That's just something you have to be mindful of and aware of going into the investment. It's certainly, in my experience, better to get ahead of that and find that out sooner rather than later. 

  In-Network, Out-of-Network, and the No Surprises Act 

  Ross Ronan (18:08) 

  You talked a little bit about in-network versus out-of-network, and I think that's a very interesting piece, because a lot of compliance programs really focus on government payers, and there is no in and out of network there. You either take Medicare or you don't. But when you talk about commercial payers and in-network versus out-of-network, especially if you're doing emergency care services in any way, shape, or form, you have the No Surprises Act out there that can really burn you from a reimbursement standpoint. Some states have their own version of the No Surprises Act as well, so you can't bill that allowable and balance bill anybody. I think that's really a detriment to the companies as well. 

  James Carey (18:47) 

  Yeah, no, absolutely. Like I said, a big part of understanding that, when you have a multi-state practice, is really understanding the laws on a state-by-state basis. 

  Compliance Gaps in Smaller Practices 

  Ross Ronan (18:58) 

  When you talk about Next Sparc and the deals that you're dealing with, and I think you do, what, between five and a hundred million in revenue, or maybe even larger than that. Do you see differences in those revenue ranges where maybe a compliance gap shows up higher? Obviously, in the higher revenues it can be a little bit more, but do you see that there may be a gap in the programs that are in the ten to twenty million dollar range too? 

  James Carey (19:27) 

  Yeah, typically with the smaller businesses that I look at, if I'm doing an add-on to an existing practice, and I'm acquiring one location, and that doctor or practice has been treating patients at that one location for twenty years, they probably don't have a large team. They're doing things well. They're getting by. They've run a successful practice. But really, to take it to that next level where you're professionalizing the business, there's most likely gaps or room for improvement in the reimbursement and just billing in general. 

  Again, there could be ways that they could be billing more, or they could be billing less. It's really case by case. I will say, though, yes, with the smaller businesses that I've looked at over the years and continue to look at, typically they're not as optimized and not as professional as a larger platform that has a dedicated team of professionals all focused on reimbursement, all focused on regulatory issues on a state-by-state basis. You just don't have enough people or time when you're dealing with these smaller practices. I would say that's absolutely the norm when it comes to these smaller businesses. 

  Ross Ronan (20:35) 

  It's interesting. I just had a conversation not too long ago with a group that's in that lower range of revenue, and in reality, they got their first audit. They're like, "Oh my God, now we've got this audit and we have to deal with it." They've never had a compliance program that would be able to handle what you do with it, or be prepared for it. So really, even having a conversation with someone about spending a hundred, two hundred thousand dollars on a compliance program on an annual basis, even if your revenue is five, six, seven million dollars a year, that's one audit, that's one exposure, that's one something you have to pay money back that you've worked really hard to keep. And I'm sure when you're looking at investments and you're in that growth stage, you're paying a multiple on that revenue that you don't want to give back, and that's a terrible thing too. 

  James Carey (21:26) 

  No, and we try to do that with all of our larger investments, where we have a policy in place, or we have a team like yourselves in place. So in the event that we do get an audit, and we hope we don't, the business is not shocked by it, because, okay, we've got professionals who can deal with that. And maybe it's just a random audit. Maybe you've been doing everything right, but you just got an audit. It happens. So we do try to get ahead of that. To a smaller business, that can be a big shock, and it could feel like the end of the world, or they think the world is ending. But there is help out there. There are professionals out there who can certainly help out in the event you do get audited. 

  Ross Ronan (22:03) 

  It happens all the time. It's not if, it's when. We always say that. 

  Functional Health, Cash Pay, and the Future of Compliance 

  Ross Ronan (22:08) 

  I know you guys do a lot of functional health, which is a little bit different than your normal standard fee-for-service reimbursement pieces. Preventative, lab testing, things like that. As you deal into that, I think there are a lot of people moving into that realm, and it goes along with that reimbursement versus cash-based business that people are looking at. Do you see compliance changing in those areas? We have a number of med spa and health tech type companies who don't necessarily bill and collect from the federal healthcare program but are supporting it, or they have state regulations. Do you see compliance working into that as a change agent for them, to be more supportive of growth in tech or other functional health businesses? 

  James Carey (22:53) 

  Yeah. Right now, health and wellness in general is obviously a positive trend coming out of COVID. A lot more people are mindful of their health and wellness. They got mindful of their sleep. They were able to eat right or eat healthy, or maybe they didn't during COVID, one or the other. And then they picked up a lot of trends. So there have been a bunch of tailwinds coming out of that that have just stuck around. People in general are a lot more mindful of being healthier. That contributes to a lot of the growth in the businesses you just alluded to. 

  You're seeing a lot with health and wellness services, whether it be supplements or wearables. Obviously the wearable space is big. And then in and around med spa, it's aesthetics, or even things like peptides now. We could probably do a whole podcast on peptides if we wanted to. There's a lot of that down here in South Florida. 

  So there's not a lot of compliance around that now, because it is cash-pay business. Could that industry benefit from compliance? Absolutely, it could. And I think the more popular it gets, and the more accepted it is within the medical community, and with the FDA recently approving some peptides now, so I think naturally, as you see things progress and grow, and it becomes more of the norm, you potentially have the ability to have some insurance start covering some of these services. With that will naturally come more compliance. There are some groups out there that try to get ahead of it. They do a better job than others, with having protocols in-house, having things well documented, having procedures clearly mapped out. So if a new nurse practitioner comes in, this is the way we do things at the clinic. All the patient's information is clearly documented. We've got check-ins, we've got protocols. There's room for improvement there, but some do it better than others. 

  Ross Ronan (24:54) 

  I think it's a very interesting trend. Like you brought up, there will be insurance that's going to start covering these things, and especially with Medicare and Medicaid, I think it's really important. It's the whole purpose behind accountable care organizations. Value-based care is about preventing people from getting sicker or going into the hospitals, which costs hundreds of thousands of dollars in the Medicare program. So at some point in time, even if fee-for-service is literally "I'm going to solve your problem today," value-based care is "I'm trying to prevent things from happening in the future." I think the same thing applies with all this functional health and this health and wellness trend. If we can show, through Oura rings, through whatever it may be, that they're living a healthier lifestyle and therefore it's not going to affect hospitalizations, and you're not going to have to pay for that, then insurance companies, including the government, are going to start paying and reimbursing for that care. And anytime you get money from the federal government, compliance goes hand in hand with that too. Plus state governments on licensure and scope of work are out there as well. So I definitely agree with you a hundred percent. As that trend starts going, people are going to pick up on the fact that people are staying out of the hospital, and we're going to start paying for it more and more. 

  James Carey (26:14) 

  Yep, absolutely. Just in sleep, we could talk about that as an example. If you're treating sleep, or you're more mindful of your sleep, there's a lower risk of cardiovascular disease, there's a lower risk for heart disease. So taking care of yourself leads to better outcomes. Ideally, the carriers and the payers want that, hopefully. They want folks to be healthier. Again, that could probably be a separate podcast in and of itself. 

  Advice for Founders Getting Ready for Investment 

  Ross Ronan (26:40) 

  A whole podcast in and of itself, just on functional health. I'm a firm believer in that as well. As we wrap up, I really want to leave a message here for those founders and CEOs who are listening to this podcast and trying to figure out what they need to do to get ready for an outside investment, or some sort of partnership with somebody someday, and thinking not only about their operational output, or how they do things from a professional or corporate standpoint, but along with compliance too. What do you think they should do, and what steps should they have in order, before they meet with someone like you who's very interested in their business and wants to take it to the next level? 

  James Carey (27:25) 

  That's a great question. I think, one, understanding what a transaction or a partnership looks like, and then with that, understanding the types of information that I'm going to request, and more importantly, the reason why I'm asking for it. I'm not trying to probe for more information, or trying to poke holes in your business. I'm trying to understand where I can bring value, and what I'm going to have to do when I'm partnered with you, in order to continue to grow and scale the business. 

  So a lot of it is just understanding what a transaction looks like, understanding the diligence process, understanding the reasons why we're going to have to talk about compliance, the reasons why we're going to have to understand who your payers are. What are your payer trends? Any investor is going to ask for that. And again, it's in order to continue to grow and scale the business. Most likely, an experienced investor in this space can add a lot of value there, and they can help these founders and management teams out, and continue to grow and scale the business. 

  So I think just getting ready for it. There are going to be a lot of questions asked, right then and there, because it is a pretty big lift sometimes, depending on the business. So just preparing for that mentally is a great first start. 

  Ross Ronan (28:45) 

  I often refer to it as the business colonoscopy. We all in healthcare know what that means, so we've all kind of been there. Getting your ducks in a row and being transparent, I agree with you, it's the number one thing you can do to make sure that deal is a good deal. So I completely understand where you're coming from, and I think that's great advice. 

  James Carey (29:04) 

  Great. 

  Ross Ronan (29:06) 

  Thank you for joining me today. I really appreciate it. I thought it was great insight from you, and I hope the listeners are really understanding what it takes to truly be on your radar and what you look for in an investment. It's always great to be able to have this kind of conversation, to make sure everybody out there understands what people are looking for. So thank you so much for your time today. 

  James Carey (29:28) 

  Ross, thanks so much for having me. 

  Ross Ronan (29:29) 

  Appreciate it. 

• About the Guest

  James Carey is a Partner and Head of M&A at Next Sparc Growth Partners, a professional family office that invests in growth-stage companies, including a healthcare-focused portfolio. 

  He has spent his career in private equity and M&A, with earlier roles at H.I.G. Capital and Peterson Partners, and he evaluates healthcare deals through both a reimbursement lens and a relationship-first approach. 

  On this episode he joins Ross Ronan to explain why investors walk away from reimbursement risk, and how transparency on coding and payer mix turns compliance into a deal advantage. 

  Connect with James Carey on LinkedIn: https://www.linkedin.com/in/jamesjcarey/ 

“In healthcare it’s pretty easy to hang your shingle and bill a code and make money. It’s pretty simple to do that. It’s very hard to do it right. ”

— Ross Ronan

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