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Connecting Community Cardiology for Value

Fellowship Paper - September 5, 2020

Business Strategy

Austin Kirkland MBA, MHA, FACMPE
PROJECT SUMMARY

Winning in community cardiology today means delivering more value through higher quality and lower costs than the competitor. In other words, it means change – specifically, structural change. The organizational structure of independent private practice is incongruent with the market need for achieving synergistic growth and profitable risk contracting. Current payment and care delivery models require a scalable organizational model, a reliable administrative infrastructure, and an agile care management platform. The solution: align the organizational structure to market need.

A near-term core market opportunity of $26-50M in annual net medical revenue under management exists to leverage the management services organization (“MSO”) model to connect, unify, and grow the business of 31-60 community cardiologists. While the MSO model itself is not new, its ability to meet the core market need is undeniable, making it the essential model for winning in value-based care. The long-term market opportunity, including the statewide growth market, is estimated at $54-98M in annual net medical revenue under management.

Twenty-one (21) or more cardiologists in the core market will come together to form a limited liability company called Valuspan, a cardiology-specific MSO. Valuspan will be initially capitalized with $350k in long-term debt and $5k per cardiologist in member contributions to fund tenant improvements on space, acquire furnishings and equipment, pay for organizational costs, and provide short-term working capital to begin providing management services to the clinical practices of the cardiologists under a management services agreement. Valuspan will achieve profitability in its second year of operations and will grow beyond breakeven in its third year of operations to 31 cardiologists and $28M in net medical revenue under management by aligning core market community cardiologists. Statewide long-term growth is planned beyond the fifth year of Valuspan’s operation.
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About the Author

Austin Kirkland
Austin Kirkland MBA, MHA, FACMPE
Managing Director OutPerform LLC Falls Church, VA
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