The central concept in Great Oaks PCC approach to medical rollups is to use commercial bank financing primarily.   This enables the associated practitioners to (i) exercise more autonomy than would normally be possible in a rollup controlled by private equity capital, and (ii) obtain substantially higher financial benefits.  

By means of an affiliated management services organization (MSO), clinics will benefit from third party management of all non-regulated features of operating a medical practice, leaving the doctors and medical staff to focus primarily on patient care.  Using only a fixed amount of ‘core capital,’ the partnership will rely upon commercial banks for financing the partnership’s operating needs and funding additional acquisitions.   This greatly reduces the cost of capital for all concerned.

There are two basic ways to monetize equity in a professional practice.  Both rely upon a Management Services Organization (MSO) to operate the business platform as an integrated enterprise:

SELL THE PRACTICE:   Sell the practice to a larger platform financed and controlled by private equity, which is a common conventional solution.

MERGE THE PRACTICE into a PCC platform: Merge the practice into a larger operating partnership, cashing out a significant portion of the equity while leaving the remaining equity interest in the platform.  This partnership is primarily bank-financed and appeals mainly to doctors who plan to actively practice medicine for at least five years.  

A Partnership with Core Capital (PCC) embodies a style of managing clinics compatible with patient-centered healthcare.  The PCC is capitalized with a fixed amount of cash investment at the establishment of the enterprise.   All financing required for operations and expansion of the platform is provided by a commercial bank.   The enterprise is effectively doctor -controlled from the outset.

Professional healthcare executives in the affiliated MSO will be responsible for all the non-regulated day-to-day clinic operations outside of regulated, specifically medical procedures. This leaves doctors and medical staff more time to focus on patient care and professional development.  

Through its role in the MSO board of directors, the doctors’ partnership regulates operating policies of the MSO.   Benefits to physicians include:
·    more autonomy in local clinic policies,
·    maintaining local clinic identity/brand, and
·    ready access to capital for clinic expansions and adding new staff as opportunities arise.  
While profitability is essential for any viable enterprise, the constant pressure for financial results will be tempered by the doctors’ professional standards -- a balance between prudent business practices and an optimal clinic experience for patients and staff. Core capital opens two important channels for a professional Medical Association: (i) funds to monetize some of the doctor's equity in the business platform and (ii) sufficient credit to finance improvements, clinic expansion and staffing required to develop the platform.