A View From the Top: Bill Drehkoff of Heart & Vascular Partners

June 2, 2023

The interview below is part of a McGuireWoods series featuring interviews with C-suite leadership of private equity-backed portfolio companies. To recommend a leader for a future interview, email Holly Buckley at [email protected] or Tim Fry at [email protected].


Bill Drehkoff is the chief executive officer of Heart & Vascular Partners (HVP), a management services organization (MSO) focused on partnering with and supporting cardiology and vascular practices across the United States.

Q: You’ve been at a national surgery center management company and an autism platform. What excited you about the opportunity to work with HVP?

Bill Drehkoff: This is a unique opportunity to have an impact at the beginning of cycle shift in a sector. Some recent policy catalysts and rising tides in terms of demographic momentum and disease states in the cardiology space create a nice opportunity to build something special and devise a unique model that can take advantage of the beginning of a transformation we’ve seen play out in other sectors.

From a personal, career perspective, this is an opportunity to combine the experiences in supporting outpatient surgery networks and multispecialty partnerships with the experience of building, scaling and rapidly deploying a healthcare services organization and healthcare services to create points of access like we did at the autism platform. Putting these two together for the HVP platform aligns well for me.

One of the things I greatly appreciated about the HVP team, starting with our private equity sponsor Assured Healthcare Partners, was the intent, interest and commitment to build something for long-term intrinsic value. This involves not only partnering with groups, standing up ambulatory surgery centers (ASCs) and other independent networks, and benefiting from the migration of patients and procedure volumes, but also looking down the road to value-based care and building lasting provider models that can take advantage of risk contracting.

From the very beginning of HVP, we’ve been building this business with those goals in mind and recognizing it will take substantial work and a lot of capital to get there. That was all attractive to me.

Q: There’s been a lot of interest in investing in the cardiovascular space in the past few years. What is drawing investors?

BD: It’s a huge market. We estimate there’s about a $50 billion total addressable market for outpatient cardiology. There will be plenty of opportunities for capital to go to work, coupled with strong trends in disease and demographics. Heart disease is the leading killer of Americans and a huge expense for insurers and Medicare.

Some recent catalysts within the space are the regulatory and reimbursement policy shifts. In recent history, these had, on the one hand, forced cardiologists into the hospital and into employment or restrictive professional service agreements (PSA) by not allowing certain procedures or other ancillaries to be performed and provided in an outpatient environment. As those began to reverse themselves over the past few years, with several cardiology CPT codes released onto the ASC approved list, you’re starting to see significant capital coming to the table. Investors recognize they can begin to invest in that outpatient migration and profit from the move out of the hospital for a growing number of these procedures.

What’s more important about this specialty is it’s not simply going out and building ASCs or consolidating existing independent practices into an outpatient network. Due to the restrictions and regulatory limitations put on cardiologists years ago, there’s a lot of practice-building to execute. We work to stand practices up outside of a PSA or a hospital employment model and then build operations. It takes a lot more grit, experience and depth to stand up those practices and allow them to thrive, beyond partnering in an ASC environment and developing and managing a surgical suite.

In the past, many independent orthopods needed ASCs, so there was a great opportunity to help those physicians build those ASCs. That’s not the case in cardiology. You typically hear that 70-80% of cardiologists are employed. As we look at the market opportunity and what’s drawing interest, there’s intense competition for the big independents — a small portion of the 20% or so that are out there. Most of the investment cycle and efforts are going to be working with larger groups and figuring out how to stand them up out of hospital arrangements or engage in a different hospital arrangement while also allowing cardiovascular groups to build and leverage an outpatient network.

This process is a little more involved than some of the other specialties, like orthopedics. It takes a different type of capital partner and MSO to unlock the potential with these groups.

Q: What is special to you about this long-term investment opportunity surrounding cardiology?

BD: This work is more about helping create intrinsic value and grow practices organically before we even talk about an ASC. What does it take to have a fully functioning independent practice of cardiovascular care? How do we support these practices and help them thrive and add on surgery centers and the economics that come with that growth?

We expect, in the next 6-9 months, those few, large independent groups will all be purchased or otherwise transact. At HVP, we’re happy to have partnered with such a group at the beginning of our platform, but the longer-term work is going to focus on extraction and standing up practices, followed by complementary fills within the networks and markets, whether by subspecialty, geographic reach or other strategies. We’ll be looking to extend once we’ve planted our flags in the markets we’re targeting.

Q: Where are we in the investment cycle? It appears to be early stage, but are there good opportunities for investment when hospital relationships are impacting independent groups?

BD: As a baseball fan, I’d say we’re in the second or third inning of the cycle. There’s a lot of work that must happen in terms of standing up and supporting the practices that are employed today and then knitting together smaller groups into an independent, outpatient network.

We’re identifying small groups composed of only interventional cardiologists or groups that are endovascular or peripheral vascular physicians. Bringing these together is a relatively easy marriage and symbiotic relationship in terms of the comorbidities and patient populations. When brought together, they form a broader practice group that can fill an ASC and serve patients in a coordinated way. There’s a lot of work to be done in terms of adding specialties and even subspecialties within cardiology to help round out the coverage we can provide.

Q: Cardiologists have long, ingrained relationships with hospital systems, whether as employees, co-management relationships or other entanglements. Do those hospital relationships pose challenges to building platforms in this space?

BD: Hospital systemscan be friendly or contentious. They’re usually contentious, but we need them for inpatient access and service. They’re important parts of the care-delivery model.

The leaders of HVP have had success in past lives doing joint ventures with hospitals and ASC networks, working innovative contracting and partnering with independent specialists. We’re happy to do that work, but I typically start with the position that we’re going to need to maintain independence and be prepared for a less-than-friendly reception from some of the systems where we operate. We’re certainly open and would welcome more amenable partnerships with hospitals that will help improve coordination for patients and providers.

Q: Medicare and commercial payors are shifting toward quality measures and other value-based reimbursement. It seems that, in the cardiovascular space, the shift of patient services to outpatient settings is probably its greatest cost savings. Are you seeing ways to capture that with commercial payors in a manner similar to other specialties that use value-based bundles?

BD: I think after the last 20 years of other outpatient specialties delivering high-quality outcomes, more efficient rates and better patient experiences, those on the commercial side are tuned in to this performance. We have examples of innovative contracting in a fee-for-service environment that we’ll continue to proactively pursue for our partnerships.

In terms of bundling or the early stages of taking some form of risk, we are seeing more opportunities with discussions concerning direct-to-employer models but anticipate that, when we have the right coverage and depth within the markets we’re building out, we’ll be able to take more control and engage in value-based care conversations with payors or Medicare.

We’d like HVP to become an indispensable provider of choice for risk-based contracts, independent primary care and employers in our markets. Once we’re a little broader, we can do more chronic disease management through our cardiology work. We’ll have better opportunities to pull that lever.

Q: One of the things we see our clients struggle with in the cardiology space is matching their business opportunities with state laws that often limit what can be done in an outpatient setting, even if Medicare now approves the service. Have you run into challenges there?

BD: Absolutely, but we see this as a barrier that will come down over time. I think the biggest example now concerns percutaneous coronary intervention (PCI) — some states allow it, some states do not. We just continue to use data and advocacy efforts where needed to help argue for coverage of PCI. I expect coverage will only grow as we continue to gather data on quality outcomes in the outpatient environment. In states with regulations holding us back, you can look to data from hospital outpatient departments concerning same-day discharge and related measures to see what’s happening with specific procedures. There’s really good information that we can lever.

Other issues like certificate of need and hospital lobbying, influence and political control are always present in certain states. I believe we can continue to find ways to operate and succeed in those environments. With that said, the good news is that in these early innings of the cycle, we do not need to go to very restrictive states to make investments and help physicians thrive.

Q: What do you envision for the short- and long-term future of HVP?

BD: We’ve assembled a team and a model that I think is advantaged in the capabilities needed in this space to unlock the potential for independent practice and delivery of care. We have a track record of helping grow cardiology practices, with extensive experience in terms of organic growth, subspecialty recruitment, ancillary line development, marketing — the services that have helped our existing partners find success. Assured Healthcare Partners has completed professional practice management (PPM) deals across other specialties, so we know we have a good partner and precedent in terms of growing PPM models.

In terms of helping build up and grow independent practices and then get into ASC development and management, our team has experience from work at SCA, Optum, National Cardiology Partners and other models. Sometimes when we look at the market of competing platforms, we see ASC developers who are focused on cardiology centers but not really interested in the practice side, or a bunch of MSOs with cardiologists from health systems who are focused on the practice but lack the interest and/or experience in building and managing outpatient care and ASCs.

At HVP, we’ve tried to construct a group that focuses on the pivot point that will unlock what we believe is needed in cardiovascular care. We’re looking to partner with market leaders in secondary MSAs where we already have the lead practice — the provider of choice — in place that we can build from and get some leverage with health systems and other referral sources.

We’re off and running at HVP. We have six practices we’re serving now and many more under letters of intent that we’ll be looking forward to partnering with over the remainder of this year. We have the MSO capabilities built. We’re seeing really good results from the existing, mature practices we’re partnering with and seeing a lift in their operations from our work while we’re also building out and supporting newer, smaller practices to help them get to their next level.