The Regulatory Advantage: How Innovators Win with Dr. Adam Brown
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Most healthcare founders treat compliance as overhead, a box they check after the product is built. Dr. Adam Brown sees it differently. On this episode of The Compliance Advantage, host Ross Ronan talks with Adam Brown, Founder and Principal of ABIG Health and a former president of emergency medicine at Envision Healthcare, about why a real compliance program is what actually lets a company sell. Brown walks through the total product lifecycle for healthcare innovators and explains why getting through the Food and Drug Administration is only one hurdle. The harder questions come from payers like Medicare and Medicaid, from state regulations, and from hospital procurement teams who will not buy software that cannot answer security and Health Insurance Portability and Accountability Act questions. As Brown puts it, selling without a compliance program is like selling a car without an engine. Ross and Adam also dig into communication as a compliance tool, the role of physician messengers in driving clinical buy-in, and where private equity is helping and hurting healthcare. For the CEO of a private equity-backed group or the founder of an early-stage company, the takeaway is clear: compliance is a commercialization strategy and an enterprise value driver, not a cost center.
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Why is a compliance program important before you try to sell a healthcare product?
Hospital procurement teams and acquirers ask compliance and security questions as part of due diligence. If a company cannot show a real program with the right policies and training, the sale stalls or dies. Adam Brown compares selling without a compliance program to selling a car without an engine. A rigorous program is table stakes for commercialization, not an afterthought.
Is getting Food and Drug Administration approval enough for a healthcare innovator?
No. Brown says founders often deploy most of their capital just to get through the Food and Drug Administration, thinking approval guarantees commercialization. The harder questions come later, from payers like Medicare and Medicaid, from state-based regulations for software as a medical device, and from a coverage strategy that proves the product improves outcomes.
How does communication make a compliance program work?
A program only lands when people understand the why behind it. Brown stresses identifying your stakeholders, picking the right messenger, and choosing the right channel. Ross adds the three Cs that RHC uses for compliance communication: clear, concise, and complete. When the message reaches the right people the right way, risk drops.
Why do physicians respond better to other physicians on compliance?
Doctors tend to tune out compliance staff, consultants, and coders, but they listen to other doctors. When a clinical leader carries the compliance message peer to peer, buy-in goes up. Brown notes the real work is translating the rationale and the risk into terms that matter to the clinician, not just the company.
Is private equity good or bad for healthcare?
Brown resists a simple answer and asks, compared to what? Capital is required for scale and gives provider groups negotiating strength against consolidated insurers. The risk is that profit pressure pushes physicians and patients to do more with less. His point: the financial incentives across the whole system are misaligned right now, and value-based care is one attempt to fix that.
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Introductions
Ross Ronan (00:00)
Welcome to The Compliance Advantage. Today we have a really special guest, Dr. Adam Brown, who's a founder and principal of ABIG Health. He also is the chief medical officer for Radiant Healthcare at this point in time. Adam, thank you for joining us.
Adam Brown (00:20)
Hey, Ross. So good to see you. Thanks for having me on. I really appreciate it.
Ross Ronan (00:24)
Absolutely. I know we've had a connection here for the better part of probably fifteen to twenty years, and so it's really nice to have you on the show in your new capacity of what you're doing today, as opposed to where we knew each other before.
Adam Brown (00:36)
Yeah, I guess from that age bracket, we met each other in preschool. I think that's what you're trying to say. Not as professional colleagues, but yeah, it was as professional colleagues. We're getting old, dude.
Ross Ronan (00:50)
It's hard to start work when you're twelve.
Adam Brown (00:55)
Hey. Yeah, exactly.
Ross Ronan (00:58)
So tell me a little bit about what you're doing now and your journey from emergency room physician to being part of one of the biggest emergency medicine groups in the country, to founding your own firm. What have you been doing? What are you doing now? I'd love to dig in a little bit.
From the ER to Founding ABIG Health
Adam Brown (01:12)
Sure. When I tell people that story, they're just like, "How are you doing? What are you doing?" For the last four years, I started ABIG Health, and it's been an absolutely fun experience, a really fun ride. As you mentioned, I'm an ER doctor by training.
I worked my way up at Envision Healthcare. I was a medical director, then a regional medical director, then eventually president of emergency medicine, which at the time was the largest emergency medicine practice in the country. And then COVID hit, so we went through the COVID disaster that it was. Some of the ripple effects are still being felt.
One of the best decisions was when I decided to leave to start my own firm. What I noticed in my work at Envision, but also as I started teaching in business school, is that there's a gap with a lot of early-stage companies being able to scale. They didn't understand the necessity to have deep stakeholder engagement, how to understand the regulatory compliance landscape, how to understand who your buyer was.
Oftentimes, as you're talking with people who've been in the technology space, they're in a B2C type of relationship, and now you're moving into a B-to-I-don't-know-which-letter, because procurement is sometimes separated from the doctors, separated from the patients. When you're selling into healthcare, it's much more complex.
So what I saw as a potential was to build a team that would be able to solve innovators' problems and how to commercialize their product in the US market. We built a team of regulatory experts, other physicians, communications and marketing specialists. Now we're working with several of the world's largest device manufacturers, large communications firms, and their public health management and messaging. We're also working with earlier-stage innovators and venture capital companies, de-risking some of their investments, because we have a very broad view of how, and can also get very deep into, the challenges of commercialization of new products and services.
Ross Ronan (03:28)
It's amazing, because it's such a need, and it's such a gap that I think we have out there, especially for new startups trying to get launched. We get that question a lot: can you help us even navigate the regulatory environment to set all of these things up, whether it's durable medical equipment, provider groups, or whatever? There's so much that goes into making sure your licensure is there. Every state's different. There's federal regulations, there's state, there's local.
Sometimes it's just such a daunting task, because, as we talk about compliance, one trip-up when you start off is going to affect you down the road for many, many years and could actually make you start over.
Adam Brown (04:14)
Yeah. What I've seen with innovators, and I use the term innovators more than early stage and late stage or enterprise, because if you've got a large medical device firm, they have innovation groups built within their companies, or they're buying products and services that innovators have started up.
They still have to navigate the complexity of the regulatory space, just like an early-stage company that's bootstrapping it together and pulling in nickels and quarters from friends and family to get things started. Our thesis is that if we can get started early with a company in their ideation phase of product development, scientific study design, and regulatory navigation, then we're actually helping them save money and anticipate some of the challenges in the long term.
I'll give you a quick reason why we chose this as the framework. The total product lifecycle framework is what we use. If you've designed a new medical device or an AI tool that's going to be used for patients, either for clinical decision support or as software as a medical device, you need to understand in the early phases that if you're designing a scientific study to prove that your widget works, you've not only got to get through the FDA, you also have to prove to payers like Medicare and Medicaid that your device is reasonable, that it's necessary, that it works, and that the outcomes are actually going to improve the beneficiaries who are part of that payer.
For Medicare, that's people over 65. So you better have people in that age bracket in your study design. Otherwise, Medicare's not going to want to pay for it. Similarly, if you've designed a study with outcomes or endpoints that aren't going to tickle the ears of a hospital CFO, that's also a major problem.
So we try to get in early to look at study design, and talk with them about navigating this regulatory chaos that we're a part of right now, so they can anticipate the capital requirements, the operational requirements, who they need to dispatch where. It's fun helping all these different companies navigate this complexity.
Ross Ronan (06:36)
It's one of the most complex regulatory environments, healthcare these days. You've got banking and airlines above that, but outside of that, it's in the top three to top five for sure. So it's really good that you're doing that for these groups, because on our end, we just maintain it afterwards, and you're setting it up. That's amazing to do.
You talked a little bit about teaching business and healthcare. Tell me how you got into that, and was there any role model, book, or mentor that helped you along with this business? We always like to talk to leaders who do it right, understand how to do it, and really know what they're talking about and where they actually came from.
Teaching, the Five Ps, and a Mentor
Adam Brown (07:19)
Yeah, it's a great question. I did my MBA at UNC Chapel Hill, go Heels. I finished that in 2014 and immediately saw that physicians and clinical leaders needed to be at the boardroom table. With 20-plus percent of the GDP being taken up by healthcare, over five-point-something trillion dollars of annual spend, you needed people at the table who understood the clinician experience, the service experience, and the patient experience.
Otherwise, a lot of decisions were being made without that lens of consideration, where it's much more financially driven. So I decided to do my MBA. When I came out, I saw the opportunity to get much more engaged with the board of advisors with the Center for Business of Health at UNC.
In 2020, I became their co-chair of the board and still am co-chair of the Center for Business of Health at UNC. And in '22, when I left Envision, the senior associate dean of the school asked me to become a professor at UNC. He said, "We've done some seminars together. We've done some work. Would you be willing to teach MBA and executive MBA students at UNC?" And I'm like, "Are you kidding me? Seriously?" I jumped at it. I was very nervous,
Ross Ronan (08:42)
Nice.
Adam Brown (08:42)
but I jumped at it and have absolutely loved it. I just finished my last cohort Tuesday night of last week. So I teach at UNC. I also teach in Europe at ESCP, a French business school, in the biopharmaceutical management program, where I'm a visiting professor.
At both programs, I'm teaching about commercialization, broad strokes, a survey of the United States healthcare system. In both courses, I frame it through the framework of the five Ps: providers, patients, policymakers, payers, and producers of healthcare, like pharmaceutical and device manufacturers.
From that lens, it gives students an opportunity to think through healthcare challenges and commercialization through that framework. So that's how I got involved, and I still love it. I'm still very much engaged in that place.
Ross Ronan (09:39)
I'm glad that you're giving back, because that's always important, to be able to communicate many years of experience, many years of education, knowing how to pull people together, and be able to teach.
Adam Brown (09:50)
Well, you asked and I didn't answer the question, who was a mentor that really... I've got to give a shout-out. I had so many amazing professors at UNC. Atul Nekar, Ashraf Shaffar, Brad Stotz. I could go through the list. One of my professors that I continually go back to the education that she imparted was Alison Fragale.
People should look her up. She just wrote an amazing book. Here, I'll show you. It's "Likable Badass." She's an organizational psychologist, business school professor at UNC. She was my negotiations professor,
Ross Ronan (10:35)
Okay.
Adam Brown (10:36)
and she takes this notion that you don't have to be an awful, not nice person to be successful in business. You can be ethical, you can be kind, and you can still be a badass at the same time. I really love that framing. Even though this book has been written more for women navigating the business world, there's a lot of applicable things there. She taught me one of the most important things that you and I have when we're dealing with clients in compliance, with communications and compliance, which is really understanding the needs and the driver of the stakeholder, to gain engagement, and then to negotiate for a position that's best for both parties.
She was such a strong influence on my thinking in business, and also the importance of pulling together communications with so many different pieces of the work that we do.
Ross Ronan (11:40)
Likable Badass. I like it. It's going to be on my Audible here pretty soon, because that's how I read these days, in my car. So let's dive a little bit into regulations and compliance, and how you see it as an advantage from that perspective. You're dealing with, I think you kind of don't talk about startups, you talk about innovators, right?
What Innovators Get Wrong About Regulatory Risk
Ross Ronan (11:55)
People who are doing something new, bringing something new to the table, in this highly regulated environment we have called healthcare. What do you think these founders, these innovators, are getting wrong or not really understanding about the regulatory risks, and where do they get blindsided a little bit?
Adam Brown (12:22)
The simplest answer I can speak to, especially with a lot of the healthcare innovators I'm working with in the medical device space, is that they think navigating or getting through approval through the FDA is the only real major hurdle. I don't think any of them would get on a stage and say, "The only thing we need to do is get through the FDA." There is awareness that there are other types of regulations, federal and state, that they'll have to think about.
That said, if you look at their strategy and their financial strategy of capital deployment, a lot of it is just to get through the FDA, thinking that if I can get a product through one of the FDA approval pathways, then I'll be good and I'll get commercialized with ease and investors will come forth. That's just not true.
So the first simple thing is people underestimate the timing involved, the requirements from study design, and underappreciate that the FDA, if they have the staff there now, is actually able to interface and work with some of these innovators. There's a goal to try to work with entrepreneurs to help put them in the right path so they're not burning through capital.
All that said, you also need to be thinking, "What is my Medicare and Medicaid, my CMS strategy? What is my coverage strategy? If I've got an AI clinical decision support tool or any AI support tool that's software as a medical device, what are the state-based regulations?" Because that's going to inform your commercialization sales strategy and pilot strategy. That's underappreciated on the front end, under-invested in, and then not communicated to investors.
This is one of the reasons we exist. I wish we had more founders willing to say, "Okay, before I go too far, let's see what the challenges are going to be."
Ross Ronan (14:55)
It's really interesting when you think about it that way, because you also think about, not just medical devices that need FDA approval, where obviously you don't go anywhere until you get all of those things done. Think about some of the provider-based businesses, like home health, hospice, different groups who need their surveys, whether it's Joint Commission or Medicare surveys, to get their license and do business.
They put a lot of work and effort into making sure they can get these surveys completed, or the FDA approvals, so they can start doing business. The one thing they always forget about is maintaining these things. I've got to make sure they're still good. I've got to make sure I'm doing it right thereafter. That's where the compliance and regulatory pieces come into place, because we talk about compliance being an advantage on this podcast all the time, and one of those things is profit protection.
Adam Brown (15:57)
Oh, that's right.
Ross Ronan (15:59)
What does profit protection mean? Okay, you've started. A lot of people can hang their shingle. But don't you want to keep that money you've earned? Don't you want to keep that money you've rightfully made and keep doing it right thereafter? We talk a lot about how you protect that profit as being your compliance advantage. I'm sure you come across that as well, because there are people who do it well, and there are people who get in trouble and lose control over what they've built.
Adam Brown (16:28)
I think that's right. There are two areas from a compliance standpoint. If you're on the healthcare services side and you have doctors, nurses, and technicians working with you, there are so many important considerations you've got to think through.
One is the licensure aspect, and how are you educating your clinicians and staying ahead of license expirables? Are you ensuring your clinicians have the right amount of education? If they're having a license renewal, do they have the right continuing medical education based on the states? Some of that skirts between compliance and not, but if you have client doctors working with an expired license, then it becomes a big problem.
The other piece is data, and how are you going to take care of the data coming to you, either into your software package, or if you're housing licensure information from clinicians, how are you housing that in a compliant way? These are considerations that, at times, doctors will have some level of concern and focus on, but they don't really know what to do about it. So ensuring you have someone there at the right time to address those things becomes really important to their strategy and profitability in the future.
Communication as a Compliance Tool
Ross Ronan (18:00)
You really have to build it, then you've got to maintain it. I think that's the biggest key takeaway. Now, you've talked a little bit about communication. Tell me about that communication conversation as it relates to compliance. What does that mean in practice for people who are founders and trying to build a program and grow their business, especially getting FDA issues on the medical device side? You have physicians wanting practice growth. How does that work in your mindset?
Adam Brown (18:31)
Well, the first thing it means is that none of us know all the information. So it's pulling in and identifying very early on where your gaps may be, or at least engaging with someone who can help you understand where those gaps may be, so you know what tools you need, what type of documentation you need, what you should be doing to support the work you're planning to do. That's number one.
The second is that once you identify those gaps, and depending on the size of your organization, when you're deploying new policies, you need to understand who the stakeholders are. From the communication perspective, once you know your stakeholders, how are you going to engage them into a program that doesn't seem like an afterthought, but is actually a forethought? Having been at a large organization before, and you were at the same organization, compliance was very much part of our vernacular, ensuring we had annual training and that...
But it wasn't just how do you get doctors and nurses and advanced practice providers, tens of thousands of them, to do this training. You had to identify that we need them to do this training, and figure out how we're going to communicate to let them know they're going to need it.
What are the communication channels going to be? Is it going to cascade through regional medical directors, medical directors? Is it going to be direct email? Is it going to be population through a learning platform? Those are the considerations companies need to think through, of how to best engage employees or the clinical workforce, especially depending on the type of company you are.
Ross Ronan (20:19)
Yeah. Transparency is the key when it comes to compliance. Even in one of our pillars, it's how do you build good communication with the people, the employees, the practitioners, whatever part of the group. Like you said, coming from Envision, we had, I don't even know, thirty-five hundred, four thousand docs, five thousand docs or something of that nature. What's that?
Adam Brown (20:49)
We had 35,000.
Ross Ronan (20:50)
Thirty-five thousand.
Adam Brown (20:52)
Yeah, doctors, nurses, clinicians across all the different service lines. It was massive.
Ross Ronan (21:00)
From the training and education standpoint, there's a cascading effect there of who is responsible for it. When we talk about that advantage, it's how does compliance communicate? Because the doctors want to do the right thing. The founders, the innovators want to do the right thing. They just don't know how to do it sometimes.
Being able to effectively communicate clear, concise, and complete, those are our three Cs that we talk about for communication. If you can do that correctly, then you can make sure the message is getting out and that your risks are lower.
Adam Brown (21:36)
Yeah, I've certainly seen cases where you have clinicians who didn't, or I've seen communication go out before and you're like, "Ooh, that communication was not going to land right." Or it didn't have the oversight or the thought behind how it was communicated. Depending on what it's asking you to do, whether it's coding education or responses in emails, you want to make sure you're buttoned up on that before releasing it into the environment.
Ross Ronan (22:14)
It's really funny you brought up the coding and billing education. I had this conversation at Envision when you were there as well. With a lot of our clients, when you're talking about doctors, and you're a doctor, you understand this, when you're documenting in charts, whether it's an electronic medical record, emergency medicine, primary care, anesthesia, it doesn't really matter. Nine times out of ten, who do the doctors like to hear from?
Adam Brown (22:43)
They usually like to hear it from another doctor. Exactly.
Ross Ronan (22:46)
They don't want to hear from me, compliance. They don't want to hear from other consultants or coders. They hate hearing from coders and billers. For some reason, it just rubs them the wrong way. But they really like to hear from doctors. When you talk about communication and compliance or regulatory adherence, when you have that buy-in from the leadership, and I mean the clinical leadership as well, who says, "I'm going to carry this water." You did this a lot at Envision, right? "I'm going to carry this compliance water for the company because I know the risks out there." When you're able to have that communication on a peer-to-peer level, that really makes a difference in getting the point across.
Adam Brown (23:30)
Well, to that point about understanding the risks, one of the biggest challenges that compliance, or any administrative function, has is translating the rationale, the why behind it, and why it's relevant to me. To your point, having a physician communicating to other physicians and saying, "Hey, we don't want to get hit with a citation for a HIPAA complaint." I'll just make that up. Or, "We don't want to be telling people to document in a certain way, because that can be a violation." That could be seen as a problem from a compliance standpoint. And then what's the risk of that? The risk is A, B, C, D, E. They're really significant risks, not just to the company, but to the professional, the clinician as well.
When I'm working with clients on communication strategy, I want to know who really is your target audience? Where do they get information? Who influences them? Who is the best person to communicate that information to drive a change or reaction? For compliance, especially if you're working within a healthcare entity, you need to think about who your messenger is going to be that's going to best be a trusted communicator to your target audience. That was the thesis I wanted to try to do the best I could during quite challenging times. That's my philosophy.
Compliance as a Commercialization Requirement
Ross Ronan (25:07)
When you think about changing, you take it up a level. We have these CEOs, we have boards, the executive leadership that may be running management services organizations or different businesses from a very high level. A lot of times what I hear, and you heard it a lot, is, "Maybe I have a compliance program because the Affordable Care Act makes me have it," or it's just overhead, or you're just a cost center. Just go stand over there in the corner and wait until I tap you on the shoulder to come fix something for me. It's very reactive instead of proactive.
So when you talk about these big innovators and CEOs, and they see compliance as overhead, no ROI, not an advantage, is there a conversation you ever have to say, "Look, if you have this program, if your regulatory adherence is here, then we can use that to your benefit," not necessarily the negative of preventing a bad thing from happening? How do you prove a negative? It's really hard to do. But you can use it as your advantage.
Here's a great example. You've got a founder, an innovator, you're going to the FDA. Or hospice doing a survey. There's an advantage to say, "We're getting this, and look what we have to make sure we can monitor it going forward. So will you give it to us faster? We want our FDA approval faster, or we want our survey results now, because we have this program over here that's going to create a control so we don't have a problem." What's your thought on that?
Adam Brown (26:57)
Let me take it down the product lifecycle a little further. When you're at the point of commercializing, if you don't have your compliance checkboxes checked off, and not just checked off, but actually have a rigorous program, you're going to have a much harder time selling your products and services.
Let me give you an example. When hospitals and hospital procurement teams are looking at certain pieces of software, things to help support clinicians, one of the biggest risks is the security risk they could have. So it's table stakes to ensure there's a compliance lens and a program. If you can't come to that meeting saying, "Here are the things we've done to ensure our software is compliant and meets all these different benchmarks for safety, security, HIPAA compliance," then you're dead in the water. You're not going anywhere.
I look at it from a commercialization imperative. It's like saying you're going to sell a car without an engine. You've got to have this as a selling point, and it needs to not just be, "Sure, yeah, we've got a compliance program." No, it needs to be detailed with the right type of policies and continued education programs, because if you don't have those things when those questions are asked during a due diligence process,
Ross Ronan (28:23)
Right.
Adam Brown (28:24)
you won't sell. And if you happen to make it through, there will likely be a problem at some point, and then you have a huge amount of exposure risk, both from the client and with your own product. That's where I go, Ross, even beyond FDA and CMS. I look at it as a table-stakes thing. You have to have an internal compliance program to ensure you're on the best footing when you're trying to sell to potential clients.
Ross Ronan (28:58)
Our three pillars, we have the three Ps too, and they mean something different for us. It's profit protection, preferred partner status, which I think is really what you're talking about,
Adam Brown (29:11)
Right.
Ross Ronan (29:12)
and the last one is patient trust equity. So we talk about preferred partnership, and I think, as an advantage, we really look at the preferred partnership of saying, "Who do I want to be a partner with?" Whether it's a private equity firm that wants to buy this, a government agency that wants to contract with you, or a hospital that wants to use you. These preferred partners out there do not want to deal with people who are unethical, who don't have a compliance program, who don't adhere to the regulations and rules.
And the last P for us is patient trust equity, really having the patient's trust in whoever that provider is. So the three Ps for us: profit protection, preferred partner status, and building that patient trust equity, which is good quality care. You brought that up before, to say, does your medical device product work? Does it actually serve somebody who's going to use it, and therefore it really has its benefit to the organization.
Adam Brown (30:54)
Exactly. Going back, I can't reiterate enough that when you are sitting before procurement committees, or at an acquisition, let's say a larger device firm is trying to buy a smaller company, these compliance questions should be, but typically are, part of the due diligence process. Ensuring you have a program that's protective is really critical for your ability to position yourself as a company to be sold or bought.
Private Equity in Healthcare
Ross Ronan (31:34)
On that same notion, you've talked a little bit about private equity and healthcare. Tell me what you think they're doing right and what they might need to enhance. Most of our clientele are private equity owned and backed. So I'd love to hear your thoughts on that.
Adam Brown (31:53)
I want to be very clear, and I've said this to my students before, I have yet to meet broad swaths of horrible people in healthcare. Whether they're in private equity, financing, device manufacturing, or pharmaceutical companies, I've had colleagues from across the entire industry, and when you ask them questions, yeah, they want to make a profit, but they don't want to do things that are harming patients. Let me just say that right off the bat. There are a couple of bad actors, but it's less than I can count on one hand compared to what I've seen broadly. That's number one.
Number two, whether it's the massive amount of vertical integration that's occurred across the insurance industry or because of private equity, the market dynamics and the financial incentives within healthcare are giving us the product that we designed as a country.
So when I talk about private equity in the negative, it's oftentimes framed as these policies are driving private equity to do X, Y, and Z, and that is shareholder value. Equity value is traded on the stock floor and in the boardroom. What is not traded is benevolence.
We need to ensure that while we're focused on profit, we're not forgetting the important role of the clinician in the process, and also the outcomes of the patient, and we need to be honest about those things and hold companies to account for them. Capital is an absolute requirement for scale and growth, and also a counterbalance. If you're a private equity firm working with healthcare services firms, you have to have a counterbalance now to the large insurance companies that are all consolidated.
Their market strength is massive when most of the insurance industry is consolidated into about five different insurance companies. So private equity is providing, in some ways, negotiating strength for clinicians and physicians. That said, we also have to realize that as reimbursement is going down from an insurance perspective, and there's still a desire by private equity to make profit, we can't have physicians and patients be the ones who suffer by having to do more with less, or get lower quality.
There are several studies that do show private equity in certain industries has worse outcomes than non-private equity. But just looking at the individual studies fails to look at the broader landscape and the broader drivers of why private equity or vertical integration exists in the first place. That's where policymakers need to address those things.
Ross Ronan (34:53)
What I've seen with our clientele is a little bit of a different perspective, because I do think there are a lot of very large private equity groups out there that are mass consolidation of big types of
Adam Brown (35:11)
No.
Ross Ronan (35:12)
And I think the majority of the private equity in healthcare that does benevolent work, that's beneficial to everybody, are those mid-sized private equity groups who come into it to say, "I'm going to consolidate because it grows the network's ability. So we're going to
Adam Brown (35:37)
Economy of scale. Yeah.
Ross Ronan (35:39)
We're going to scale. We're going to be able to serve more clients and patients out there." And then also contracting, we can negotiate better rates, we can do all these things. And finally, at least the ones we deal with, and we sit on their boards and do their compliance program, the quality of outcomes is such a big piece. Quality of outcomes for patients, to say you're not going back to the hospital, or you're doing a lot of post-acute work that keeps people out of hospitals.
I see a big trend shifting from hospital-type-based businesses to post-acute, to use preventative measures to reduce spending in healthcare,
Adam Brown (36:22)
Right.
Ross Ronan (36:24)
and reimbursement on the preventative nature of it in a post-acute standpoint. When we talk about it from a compliance perspective, it's that patient trust equity. Are the patients getting good outcomes? Are they trusting that you're not going to bill them or charge them for something you didn't need to do, just because of money? I would say that on the consolidation efforts for investors, there's a lower likelihood they're going to order more tests, or have high utilization, because they have to then prove it
Adam Brown (36:59)
Right.
Ross Ronan (36:59)
in some way, shape, or form. It's a lot easier for the smaller groups to have utilization that's higher too. So I agree with you and then disagree a little bit, because I do think there are some very valid pieces, but they've got to do the right thing. They've got to use places like ABIG and us to be able to go, "How do we do this? How do we do it right? How do we use it effectively?"
Adam Brown (37:20)
Absolutely. And to be clear, I've seen great work that private equity is doing in some areas. Then you have to ask the question, what are the alternatives of capital? This is why I hedge a bit, because there are colleagues of mine who would want to say private equity is all bad.
Ross Ronan (37:42)
Oh.
Adam Brown (37:43)
Then I oftentimes say, "Compared to what?" When the answer is, "Well, the largest workforce of clinicians is employed by UnitedHealth Group," then you see that, okay, that's an alternative. It's a publicly traded company that is vertically consolidating, that has a workforce of, don't quote me on this, but I think somewhere over 80,000 clinicians, through Optum and other programs.
Then Aetna is owned by CVS, which owns MinuteClinic, and you can go down the line. Is that the alternative? I don't know that their outcomes
Ross Ronan (38:25)
Right.
Adam Brown (38:26)
are significantly better. So then what's the alternative to those? There are government payers. What are the outcomes of the VA or the military services? And then there are independent groups, and when you look at the sources of capital there, it's friends, families, private banks, but even there, there are some struggles and issues as well.
I don't make friends anywhere, Ross, when it comes to my academic hat of what works and what doesn't work within healthcare. What I can say is the financial incentives for all parties, whether it's physicians, patients, insurers, healthcare services companies, or private equity, are very, very wrong right now. Value-based care tries to shift that,
Ross Ronan (39:17)
It does.
Adam Brown (39:18)
but it's struggled. So I don't have a great answer. That's one thing I don't know. There are some pieces that work and some that don't right now.
Ross Ronan (39:26)
Well, when you find that answer, you and I will go into business together, because I think we would be very profitable in finding that answer, since I'm not sure anybody knows right now.
Adam Brown (39:36)
Right. Exactly.
Health Is Wealth
Ross Ronan (39:39)
Well, Adam, it's really been a pleasure. One last question I always ask all of my guests. Health is wealth. We always say if you're in healthcare, you better be taking care of yourself. As a former nurse, we were probably the worst ones to take care of ourselves. What do you do to take care of yourself?
Adam Brown (39:58)
Fun fact, Ross. I was a spin instructor. I am a spin instructor. When I left Envision, I got really big into cycling all through COVID, even before COVID. And then, as a whim, I'm like, "You know what? I'm going to get a spin certification." So I still can teach. I have wound that down over the last six or seven months as my business has gotten quite busy, and I'm living between Washington, D.C. and London. But I still do spin class probably three days a week. I work out every single day.
Second, I became board certified in lifestyle medicine, which is focused on nutrition as health, focused on sleep, reducing stress, reducing dangerous substances. And exercise, move, medicine, those are some of the big components. So it's all evidence-based, not voodoo stuff or woo-hoo stuff. All evidence-based preventative healthcare. So I've taken up those two lanes: exercise through spin, and then lifestyle modification through lifestyle medicine, as the way I try to stay healthy and encourage everybody else to do it.
Ross Ronan (41:08)
That's amazing. You are a role model in that standpoint. The spin class is tough. I've done one, and I wanted to leave halfway through. So I'm very impressed that you're part of that. Well, Adam, thank you so much again. I love this conversation. I feel like it doesn't always just have to be what the compliance pieces are, the regulatory pieces. We talk about healthcare, how it all intersects and pulls together, and this has been a really informative, great conversation. I really appreciate you.
Adam Brown (41:38)
Hey, thanks for having me on. I really appreciate it. A great conversation. So good to see you again.
Ross Ronan (41:43)
Nice to see you too. Thanks.
Adam Brown (41:44)
All right, take care.
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Dr. Adam Brown is the Founder and Principal of ABIG Health, a healthcare strategic advisory and communications firm.
A board-certified emergency physician, he was previously president of emergency medicine at Envision Healthcare, one of the largest healthcare companies in the country, and he teaches healthcare commercialization at UNC Kenan-Flagler Business School and ESCP Business School.
On this episode, Adam joins Ross to explain why compliance is a commercialization requirement for healthcare innovators, not a back-office cost.
“The doctors want to do the right thing. The founders, the innovators want to do the right thing. They just don’t know how to do it sometimes.”
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