Southlake-based Texas Digestive Disease Consultants closed an investment with Waud Capital Partners Nov. 2, forming a gastroenterology-facing practice management company called The GI Alliance.
Waud Capital Partners Vice President Edward Sohn shared insights into the deal with Becker's ASC Review.
Note: Responses were edited for clarity and style.
Question: What drew Waud to invest in TDDC?
Edward Sohn: Waud Capital Partners had been studying and profiling the gastroenterology market for 18 months prior to the time that TDDC came to market (in March 2018). We had developed the perspective that the gastroenterology specialty was ripe for private equity investment and practice consolidation. In addition, we had maintained a multiyear relationship with Jim Weber, MD. TDDC was particularly attractive to Waud Capital Partners due to its scale as the largest independent GI practice in the U.S., its well-developed ancillary service lines and practice-support infrastructure and its impeccable clinical reputation. TDDC is also the only gastroenterology practice of which we are aware that has successfully expanded out of its initial metropolitan area or into a neighboring state. We viewed it as the best platform from which to execute a consolidation strategy that could reach the national level.
Q: During the negotiation process, how did The GI Alliance come up? Was that always in the initial vision?
ES: The GI Alliance was always the vision for the management company that would affiliate with TDDC and other platform gastroenterology practices. We seek to build a company of platform practices that retain the ability to operate independently day-to-day, but which are unified in their values and objectives and share a single, best-in-class operational infrastructure (including technology, revenue cycle, finance and accounting, human resources, compliance and managed care contracting). TDDC is the first platform practice within TGIA, but more are expected to join in the near term.
Q: What is Waud's ultimate vision for TGIA?
ES: Waud Capital Partners is fully aligned with Dr. Weber in this regard. The mission of The GI Alliance is to preserve and progress the independent private practice of gastroenterology and related specialties nationwide. We aim for TGIA to be the most attractive employment option for talented physicians by providing its physicians all the tools they need to provide excellent care to patients while retaining their independence.
Q: Your investment is one of the first in the GI space. How will TGIA compete with Miami-based Gastro Health, which also had a PE investor? ?
ES: We will not comment on competitive strategy or comparisons with other companies, but our vision is to partner with groups who embrace a patient-first approach, are highly respected in their medical communities and appreciate the benefits of independent practice consolidation.
Q: Now that this is official, do you anticipate similar deals to start emerging?
ES: We believe gastroenterology is an attractive industry in which to invest, and we believe TGIA is well-positioned to lead the market consolidation ahead.