Great Oaks’ Partnership with Core Capital™ (PCC) provides a model for clinic management compatible with patient-centered health care. It is designed for doctors who plan to practice for at least five years. Capitalized with a fixed amount of private equity investment at the start, subsequent financing needed for operations and expansion is provided by a commercial bank. This means the enterprise is effectively doctor-controlled from the outset. Doctors retain ownership and autonomy.
“This approach to rollups flips all the right switches.”
Ken Thrasher CPA, Co-Founding Partner of Bennett Thrasher LLP
As an independent sponsor, Great Oaks works first with doctors and their advisors to meet the organizational, financial and operational objectives of the medical services team – forming a sustainable business platform. Next, Great Oaks structures financing to meet the requirements of Core Capital investors and the participating commercial bank. The result is a doctor-controlled enterprise with funding for future growth of clinics and redemption of doctors’ shares as needed.
Central to Great Oaks’ approach to medical rollups is investment in clinics, not acquisition.
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A participating doctor with a practice value of $5,000,000 could expect:
The PCC is:
Initial use of core capital opens two important channels for the professional medical association:
Merging a clinic into a larger operating partnership allows a doctor to cash out a significant portion of the equity value and leave the remaining equity ‘at work’ earning dividends from the platform.
Doctors can monetize 100% of the practice value within 7 to 10 years and still retain valuable “legacy shares” in the partnership. Substantial dividends also augment attractive salary and bonus compensation.
Operating policies and procedures are controlled by the platform’s participating doctors by means of an affiliated management services operation rather than private equity investors—a doctor-friendly environment.
A doctor’s shares in the platform earn substantial dividends annually that increase over time, along with the shares’ value, as the PCC platform grows. These shares are “legacy assets” and not controlled by outside investors.
The employment agreement will include provisions for medical and professional insurance, vacation, base salary with incentive income features based on performance, and provisions for reimbursable professional expenses such as conferences.
The substantial profits sought by private equity typically can be achieved only by a sale of the platform within 4 to 6 years. The PCC business platform is sustainable. The lower cost of bank financing allows the platform to redeem doctors’ equity in “rollover shares” without having to sell the platform.
An affiliated management services organization (MSO) comprised of professional health care executives will be responsible for all day-to-day clinic operations supporting patient care and medical procedures.
The doctors’ partnership will have a role on the MSO board of directors, where the partnership regulates the operating policies of the MSO.
The MSO model gives doctors and medical staff more time to focus on patient care and professional development.
While profitability is essential for any viable enterprise, in the sustainable PCC model improving financial results will always be tempered by a doctor’s core values and professional standards.
The Great Oaks PCC template offers a balance between prudent business practices and an optimal clinical experience for patients and staff.
Great Oaks PCC: Prudent business practices, optimal clinical care
