Latest / Becker’s Healthcare Podcast / Healthcare M&A Trends and the Rise of Regional Growth Strategies with Alan Condon

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Healthcare M&A Trends and the Rise of Regional Growth Strategies with Alan Condon · Becker’s Healthcare Podcast

• 0:02
  - Every health system executive right now is being
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  - asked to do something that has no useful
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  - precedent,
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  - make durable technology decisions in an environment that
• 0:10
  - looks meaningfully different every six months.
• 0:13
  - The pace isn't slowing,
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  - the vendor landscape isn't getting simpler, and the
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  - cost of missteps
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  - keeps rising.
• 0:19
  - Becker's eleventh annual IT and Revenue Cycle Conference,
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  - The Future of AI and Digital Health, exists
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  - for exactly this challenge.
• 0:27
  - Here, you'll find more than 2,500 executive level
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  - attendees,
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  - 600 plus speakers, and four days of sessions
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  - built around the questions leaders are actually wrestling
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  - with.
• 0:37
  - How to scale AI responsibly,
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  - how to protect increasingly complex systems,
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  - how to wring more performance out of the
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  - revenue cycle, and how to make tech investments
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  - that hold up over time.
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  - Join us September fourteenth through the seventeenth at
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  - the Hilton Chicago.
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  - You can register on our events page at
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  - beckershospitalreview.com
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  - by clicking on the events tab in the
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  - upper right.
• 1:00
  - This is Scott Becker with the Becker's Healthcare
• 1:03
  - Podcast.
• 1:04
  - We're joined weekly by Alon Condon,
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  - editor in chief at Becker's Health Care, and
• 1:09
  - shares with us what he's seeing in health
• 1:11
  - care with health care systems.
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  - We often focus on the financial side with
• 1:15
  - with Alan and what he's seeing. Alan, let
• 1:17
  - me tee it up for you. What are
• 1:19
  - a couple of trends and stories that you're
• 1:20
  - watching currently in health care?
• 1:23
  - Yeah. Absolutely. I think,
• 1:25
  - Reid, since you last spoke to that last
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  - week, I think there's been a ton of
• 1:28
  - big news that just broke. So to kinda
• 1:31
  - take out a couple of the biggest stories
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  - that we've covered since then, I think first
• 1:35
  - and
• 1:36
  - foremost, would be Ascension,
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  - finally getting over the line. Long, long awaited
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  - deal here, but just completed its acquisition of
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  - ambulatory surgery center operator, AmSurge.
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  - So it's ultimately expanding Ascension's total footprint of
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  - ambulatory surgery center to 300
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  - ASCs
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  - across the country. So this is a nearly
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  - $4,000,000,000
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  - acquisition,
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  - significant step in Ascension's strategy to really expand
• 2:02
  - our patient services,
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  - respond to this ongoing shift in procedures, away
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  - from hospitals in these lower cost community settings.
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  - One small condition
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  - from the FTC
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  - was that
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  - Ascension had to divest seven of these ASCs,
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  - six of those going to,
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  - Optum's,
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  - subsidiary,
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  - FDA Health,
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  - for some potential anti antitrust concerns there. But,
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  - importantly, that deal has finally got over the
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  - line and, essentially, it is now working on
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  - essentially integrating
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  - AmSurge into the the wider health. The confusion's
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  - deal there,
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  - and very, very timely giving, our spine, ortho,
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  - and pain management driven ASC conference kicking off
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  - this Thursday in Chicago. So I think just,
• 2:48
  - importantly, just to kinda give a lay of
• 2:50
  - the land of where
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  - the biggest ASC operators stand since this deal
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  - has now got over the line.
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  - USPI,
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  - of course, the tenant subsidiary is still number
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  - one in terms of the number of ASCs
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  - operating. That has about 530
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  - ASCs across the country.
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  - FDA Health,
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  - under Optum, under UnitedHealth,
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  - about 330
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  - ASCs. And coming in in third place will
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  - now be Ascension
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  - slash and surge. That combined system now operating
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  - over 300 ASCs. So a huge, huge footprint
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  - for ASC. I've been giving it a real
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  - leg up on the ASC space. Really exciting
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  - deal there.
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  - No. Absolutely fascinating to see what's going on.
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  - I mean, Tenet's largely transformed itself into a
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  - service center company. It doesn't seem like a
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  - sense it's going that far, but certainly making
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  - it a major part of their strategy going
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  - forward.
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  - Yeah. Absolutely. I think, speaking with the chief
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  - medical officer of Ascension next week as well,
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  - just to kinda get a little bit more
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  - insight on the clinical side of the equation,
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  - kinda what their game plan is there from
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  - the clinical strategy standpoint.
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  - Had the pleasure of speaking with our CFO
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  - and our chief strategy and growth officer recently.
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  - Really, really excited about this deal, what it
• 3:58
  - means for the overall health system. Of course,
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  - the pension did offload quite a number of
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  - hospitals in the in recent years as it
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  - was re rebounding its footprint,
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  - focusing on its turnaround. Doesn't appear to be,
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  - more of these hospital sell offs coming down
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  - the pipeline from Ascension. This is a huge,
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  - huge deal. Just got over the line. Seems
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  - like, core core focus now on these on
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  - these outpatient and ambulatory operations for a really
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  - exciting deal. And it'd be interesting to see
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  - how the how the wider health system landscape
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  - there we have.
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  - Fascinating. And and, you know, besides the Ascension
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  - Amsearch deal moving forward, which is a huge
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  - deal that really remakes the
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  - both the surgery center industry and a little
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  - bit of the health system industry because, essentially,
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  - it's one of the largest not for profit
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  - systems. What else are you watching closely currently?
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  - What are those stories that have come up
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  - this week?
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  - Yeah. I think,
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  - in terms of the staying on the m
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  - and a kind of topic here, I think
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  - when we look at the for profit community
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  - health systems, they've they recently they continue to
• 4:55
  - pay off their debt, really selling off multiple
• 4:58
  - hospitals. They just exited two states this year.
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  - That's Arkansas
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  - and Pennsylvania. So sold all their hospitals in
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  - those two states. Around about 60 hospitals now,
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  - they're operating in 12 states.
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  - But I think the other interesting deal from
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  - not just the CHF standpoint,
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  - but the the operator on the other side
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  - of this deal,
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  - mainly Freeman Health System,
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  - headquartered in Missouri. So CHS had sold four
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  - hospitals in Northwest
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  - Arkansas effectively
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  - exiting the Arkansas estate.
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  - All those four hospitals, the Freeman Health System,
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  - not not one of those systems. That'll be
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  - a huge, huge name recognition.
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  - Very, very small system recently, but it has
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  - it experienced a ton of rapid growth. So,
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  - this deal essentially takes Freeman Health Health from
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  - a four hospital system
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  - to an eight hospital system. But importantly,
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  - just spoke with their president and CEO, Matthew
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  - Fry, fantastic leader there,
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  - really managing this rapid growth.
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  - Freeman is essentially operating across four different states
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  - now with this acquisition. So,
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  - headquartered in Missouri,
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  - recently built its first hospital in Kansas, has
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  - another hospital in the works there, and then
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  - acquired the Explore Hospital in Arkansas
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  - that also serves a number of patients across
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  - Oklahoma as well. So four four key markets
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  - and states there. I think the important
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  - takeaway, and then he kinda finding for me
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  - after speaking with Matt Fryder's CEO, is he
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  - really sees
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  - independent health systems, especially
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  - rural independent health systems, really looking at these,
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  - quote, unquote, smart growth opportunities.
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  - So how can they,
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  - become multistate operators? How can they spread their
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  - overhead across a wider
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  - wider area, across a few different markets, really
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  - getting that economy to scale to to push
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  - back against some of these, an increasingly challenging
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  - reimbursement landscape.
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  - Not the only small regional system that we've
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  - seen take at least at least out of
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  - this table.
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  - Expect to see more independent rural systems. Follow-up
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  - through here as, no doubt we see some
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  - some some pretty challenging times coming down the
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  - pipeline at the end of this year into
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  - next, of course, when we're when we're talking
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  - about Medicaid,
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  - reimbursement cost work requirements and whatnot. So really
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  - interesting deal, not just for CHS side of
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  - things, exiting market pain down a debt, but
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  - also small independent rural system requiring more hospitals,
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  - really spreading out over four different states there.
• 7:26
  - No. Absolutely fascinating.
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  - Yeah. And so that's especially to the growth
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  - of Freeman Health Care. I saw an article
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  - you had posted on it this morning or
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  - written on it this morning and and fascinating
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  - to watch. No. Thank you very, very much.
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  - If anything else that's top of mind that
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  - you want to share as we head into
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  - our rural health care summit as well as
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  - into our
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  - our our,
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  - conference on surgery centers in spine, orthopedic, and
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  - pain management.
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  - Yeah. I think, really, really looking forward. I
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  - think, yeah, one of the conferences that I'm
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  - most looking forward to under the Becker's brand.
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  - So really excited to kick in and dig
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  - our feet into the rural hands standpoint too.
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  - I think the one key takeaway for me,
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  - I think we spoke quite a bit during
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  - the annual meeting with some some rural leaders
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  - in terms of the rural health transformation
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  - fund from CMS seems to be,
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  - from most leaders I spoke about, a drop
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  - in the ocean in terms of,
• 8:12
  - what rural hospitals really, really need in terms
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  - of the turn of corner, combat some of
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  - these big, big financial challenges,
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  - from a reimbursement standpoint. But,
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  - really, really looking forward to connecting with rural
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  - leaders. Ask that someone on Friday, our debut
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  - event. I think we've just gotta get a
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  - wider perspective there across many different states. Our
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  - rural hospitals really see this, how they're preparing
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  - for this, and then, other challenges and opportunities
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  - on the horizon. So really, really looking forward
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  - to to dive into those two conferences on
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  - Thursday and Friday, and, looking forward to catching
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  - up with you in person as well, Scott.
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  - Alan, you are a fantastic leader and journalist.
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  - Thank you so much for joining us today
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  - on the Becker's Healthcare podcast, and I look
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  - forward to visiting with you this week. Just
• 8:51
  - fantastic. Thank you so much. My pleasure. Thanks
• 8:54
  - so much, Scott.