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Becker Private Equity & Business Podcast
Driving Efficiency and Growth in Ambulatory Care with Sri Velamoor of NextGen Healthcare 6-18-25
00:19:38
In this episode, Sri Velamoor, soon-to-be CEO of NextGen Healthcare, joins Scott Becker to discuss how ambulatory care organizations can tackle today’s staffing, reimbursement, and technology challenges. He shares insights on the efficiency levers high...
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- [00:00]
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- [00:59]
Scott Becker
Available@pockethost.com this is Scott Becker with the Becker's Private Equity and Business Podcast. I'm thrilled today to be joined by a brilliant leader, someone who's both a Duke and a Wharton grad with just brilliant background. McKinsey, Price, Waterhouse and more. We're talking today with siree Vellimore and Sri serves as the President and Chief Operating Officer at NextGen. We're going to talk about how health care organizations, particularly in ambulatory settings, are navigating today's challenges to try and achieve sustainable growth and profit. I'll make a quick note. Siri, it'll be embarrassed for me to say this, has also recently been named CEO of the company. Just an absolutely brilliant person. Sri, before we get started in the formal discussion, can you take a moment and tell us a little bit about yourself and a little bit about NextGen and tell us about the organization.
- [01:53]
Sri Vellimore
Thank you Scott. Pleasure to be here and to be having this conversation with you. As you just noted, I've been here at NextGen Healthcare about four years now, almost to the day, and presently in the role of President and COO and privileged to be able to take over as the CEO here after a transition period. I started my career at NextGen here as the Chief Growth Officer working under the prior leadership team and it's been a heck of a run leading us through a growth and transformation agenda. And as you mentioned, prior to NextGen Healthcare, I was fortunate enough to have worked with great organizations like McKinsey, PwC, diamond and others where I had a chance to work with industry leaders across the complete spectrum in healthcare payers, providers and life sciences and health tech companies. So I'd love seeing where our industry is going and excited to have this conversation with you.
- [02:41]
Scott Becker
Thank you. Could you do me a favor? Give us a quick snapshot of NextGen's role in the healthcare IT space and what are the types of organizations that NextGen is most focused on and working most closely with today?
- [02:54]
Sri Vellimore
Of course, NextGen Healthcare has been around for over 50 plus years, Scott, and we are a leading provider of cloud based healthcare IT solutions. We specialize in developing electronic health record practice management system platforms for medical groups of all sizes across 40 different clinical specialties today. And everything think of us as a one stop shop turnkey solutions provider for medical groups. Everything from their core platforms and workflows all the way through to patient engagement tools to RCM to population health data analytics, EDI and other solutions that they need to run their businesses effectively.
- [03:34]
Scott Becker
Thank you. And you had the great opportunity to start as Chief Growth Officer, which gave you the chance to speak so closely with clients, with healthcare leaders, with people in your core space. When you talk to healthcare leaders today, either in surgical centers or general health system settings, what are the top challenges you're hearing from them right now as they're trying to balance profitability and performance? What are you hearing from leaders, healthcare.
- [04:02]
Sri Vellimore
Leaders, in one word, Scott, I'm hearing anxiety, a tremendous amount of it. The efficiency imperative, whether it's clinical efficiency or financial efficiency, is the imperative of the day. For literally every practice of every size that I've been speaking with, they're all concerned about financial resilience, as you noted, a few of the themes that come up pretty regularly, I'm happy to share here. You know, the first of these is almost all of them are facing pervasive staff shortages and this is compounded by wage inflation north of 4% on average and north of 10 to 15% depending on the market and the county that they're based in. And in a recent survey by the American Medical association, over 53% of all these groups cited the inability to staff and recruit individuals as their number one priority on top of everything else. So that's clearly top of mind for folks. Reimbursement pressures and denials are continuing to be A major concern. They've been steadily increasing for groups of all sizes and shapes, regardless of whether they're in commercial or government contracts. So managing that cycle is terribly important. Technology, cost and complexity is increasing for every practice. We're in the age where new AI tools and automation tools are emerging literally by the minute. And practices have to wonder about how they take a fixed cost portfolio and innovate with the few dollars that are remaining to them. Regulatory pressures, of course, continue certification needs. Almost all of them are facing consolidation pressures from private equity and health systems. And even though the pace of that is slowed, that activity seems to be continuing. And then last but not the least patient under engagement is top of mind for every group. Almost all of them recognize that healthcare is becoming more retail like. And thinking about how they retain consumers, how they acquire them, how they manage follow ups, referrals, all of those issues are incredibly concerning for every practice. So it's a pretty broad range of concerns, but they all point to the need for greater efficiency across the board.
- [06:09]
Scott Becker
Thank you. So talk about staffing, reimbursement, technology, trying to get closer to patients. And you look at this world, we're right. Private equity has invested so much in different healthcare practices and larger practice management organizations and struggling to find efficiencies, struggling to get physician comp back where it needs to be and grow the bottom line. When you see really high performing practices, what are the practices that are high performing? What can you point to that they're doing well and what can they do to drive measurable gains in both revenue and patient throughput? What's working well for practices today? For well run practices?
- [06:49]
Sri Vellimore
Yeah. Well run practices are the ones, at least across our portfolio we see are taking a portfolio approach to efficiency. What do I mean by that? They are looking across the board at efficiency, six to seven different efficiency levers and finding the right mix of exactly what to push and pull across each of these levers. I'll spell these out relatively quickly. The first of these levers is revenue cycle uplift and optimization. It sounds obvious, but nearly every practice either does its own billing or they work with a partner to do that billing. Best practice practices are able to reduce their charge entry lag by less than five days. And that gives them the best opportunity to ensure that they minimize denials and the denial management efficiency. In terms of how they deal with that situation, they're able to keep those numbers down to less than 5%, which gives them the best chance to drive almost a 5 to 10% uplift in that patient revenue. So that's lever number one. Lever number two is around scheduling optimization. So everything from how the patients come in, the intake process, managing the no shows, the follow ups, and the really effective practices we see are able to actually reduce their no shows to less than 5%. Every missed primary care appointment per doctor translates into almost $15,000 of lost revenue per year. So the numbers start to add up pretty quickly. Anything you can do to keep that no show percentage down, you're playing in positive territory. Similarly, managing the follow up appointments is critically important if you can keep the number of appointments that are missed because of a lack of follow up to less than 10%. Once again, these practices are playing in positive territory there as well. So solutions that really help them manage those wait lists, the no shows, the follow ups, are terribly important. Lever number three is around physician efficiency. So we keep hearing about how there's burnout amongst physicians. They are spending hours per day doing clinical documentation, whether it's writing their soap notes or their charges or their codes or the meds and the orders. With the solutions around Ambient Assist that are available to physicians now, they're able to cut that time down by 45 minutes to 2 hours per day per doctor on average. And you can imagine that starts to add up to 2 to 3 increased appointments per individual per practice, which of course they can use to take those appointments or go home to spend with their families. And practices are working through that lever as well. Referral management is another big concern. So nearly 10 to 30% of annual net patient revenue for medical group is lost because patients are either going to the wrong places or not showing up where they're supposed to. So solutions that help them manage that are critically important and practices that are doing well have a really strong grip on how it is that they're managing that referral process. Then the last two levers are. Number one is contract optimization. This is not just having your practice management system be a utility where you store all your payer contracts, but actively using analytics and more recently now, AI models to determine whether you're getting exactly what you should out of the contracts you've already negotiated with all your payers. And last but not the least, site optimization is becoming very important. So in a world where you have fewer staff and it's hard to recruit them, ensuring that you've got the right number of staff in the right locations and you're managing those site resources is critically important. And practices that are doing this well are seeing almost an 8 to 14% reduction in payroll costs based on some of the partners that we're working with and they spend 50% less time to schedule these resources. So these are just some of the quick levers and the impact numbers that we're starting to see amongst the top performers.
- [10:48]
Scott Becker
Thank you. And I love the concept at both the midsize or larger practice or the private equity fund who's managing a portfolio or within a practice, a portfolio of different technology levers that they could work with the ability to make an impact by having an X percent improvement in one area, a Y percent improvement in another area, and a bigger improvement in another area, and suddenly those can all add up to serious margin improvement in any mid sized to larger practice that could look at this as a portfolio of improvements like a private equity fund looks at a portfolio of companies or even across a large practice management company. Small changes that are very important changes can have a big impact on both thriving and surviving in a challenging environment.
- [11:37]
Sri Vellimore
Indeed. And to your point, Scott, it's hard for groups to really pull all of these levers simultaneously. It might be capacity issues, it might be leadership mindshare, as you mentioned, some of the practices have less than five docs and in some cases it's their relative or the admin staff. So I think this gives them the best chance to see at any given time which of these six or seven things that they can play with and gives everybody a fighting chance, which we love. And their maturity levels are also all different in terms of their tech utilization.
- [12:08]
Scott Becker
And let me ask you a question on that. Do you work with very small practices as well as the large mega practices? And could somebody work through, if you got six different levers, seven different levers, can they work through them one at a time or all of them depending on their capacity internally?
- [12:24]
Sri Vellimore
Absolutely. So we have thousands of medical groups that we work with on the smaller end of the spectrum today and they average less than one to five physicians per. And on the other side of the spectrum, we have mega enterprises that are PE consolidators operating in 30, 40 states with millions of concurrent encounters and visits per day. And we're seeing lots of similarities in both of their abilities to improve outcomes regardless of size. The key difference on the smaller end of the spectrum, Scott, is they have the ability to actually use turnkey platforms. So for instance, our next gen office platform is a EHR practice management patient engagement tool all in one and also has AI assisted documentation embedded within it. So just by purchasing that one product you are able to impact multiple of these levers because all of them can be pushed through A single technology platform if they have the right individuals to deploy it. Whereas on the enterprise side, because the solutions are significantly larger, you're working with more platforms, more products that are tightly integrated, but the staffing needs and the resourcing needs to execute that change is significantly higher. So you're just trading off A versus B, depending on where you play in the spectrum.
- [13:37]
Scott Becker
Thank you very, very much. There's just constant pressure on staffing and reimbursement. And obviously with discussions of the government bills, changes to Medicaid, Medicare, people are even more concerned about reimbursement. They're also concerned about Medicare Advantage, where commercial payers are and everything else. How could technology and workflow redesign help these organizations to stay resilient and not just reactive to the different changes going on? What do you see out there?
- [14:04]
Sri Vellimore
Yeah, and you brought up reimbursement. I think that's a useful place to look at. As the industry is searching for hard dollar returns on IT investments, one of the most obvious places to go to is the billing and the revenue cycle side. While we're waiting for Godot in terms of government and commercial payers figuring out how to optimize payment incentives. In the meantime, what we're seeing medical groups and practices doing is deploying AI models, automation tools to look at that whole workflow from when charges are created and captured in a practice management system, to when a clean claim is generated, all the way through to what do you do with the EOB and the ERA once it comes back from the payers. So that whole workflow between the practice management, the clearinghouse and the front end of the revenue cycle management process is being reimagined in very interesting and creative ways. So we've run into small companies and AI models that are essentially taking on the notion of becoming the brain of the practice management system and generating clean claims from the get go. So they significantly reduce the amount of time it takes to ensure that the right data is going into a claim to increase your best chance of it not getting denied. And in instances where the claim is getting denied, we're working with a couple of partners to use AI and automation to do the disposition of these denials. So instead of sending them to an outsourced team or a BPO overseas, you have a set of bots that are able to engage with payer systems and doing thousands of queries per minute essentially to ensure that that denial is appropriately handled and dispose. So these sorts of things are incredible tools to give the providers a chance to work with payers and work with the complexity of rapidly changing reimbursement rules, for instance.
- [15:53]
Scott Becker
Thank you. And NextGen has itself a private equity sponsor. So you're intimately familiar with the private equity world and the private equity backed world. You've got some of those prestigious sponsors in the world that have worked with NextGen, Sri. Take a moment around. The smartest opportunity is for PE backed groups, which these are often the biggest practices in specialties or high growth organizations to invest in efficiency for long term roi. Where do you see some of those best opportunities?
- [16:25]
Sri Vellimore
Absolutely, Scott. We have over 40 different private equity firms active in our client base today. So we've been having this discussion for many, many years about how do we serve them most effectively. If you take a step back and look at some of the key themes that are common to private equity backed medical groups in our space in particular, first among these is scale. Inevitably, these practices that are owned by these sponsors tend to be on the larger end of the spectrum and they're in growth mode and they're acquisitive. So having the right ability to work with platforms that can scale and support that rapid acquisition cycle is critically important, number one. Number two, many of these folks, they are trying to optimize EBITDA just like we are. And the way you do that is by minimizing variability across the system. So as these practices start to standardize and take variability out of their clinical protocols, their processes, inevitably they're creating shared services capabilities like MSOs, or they're creating scaled platforms that operate across their entire platform and developing standard capabilities, standard operating procedures that they can then deploy across all of these systems gives you an immediate bang for the buck. And of course picking the right platform also then allows you to add on the new technologies and capabilities to accelerate the innovation that you need to capture some of these efficiencies. And then of course, the third piece is many of them are looking at the contract structures between their groups and healthcare technology partners like ours. And they're revisiting whether the legacy license based contracts and others should be replaced with newer all in subscription models that future proof their ability to adopt and accept all the innovation. One of the biggest barriers for medical groups from taking advantage of solutions that can improve their efficiency is they are tied, their hands are tied with the contracts they signed historically. So unlocking their ability to go out and test new things and use new solutions makes a massive difference. So those three things are pretty significant areas where we're partnering with PE firms to help all of our customers.
- [18:34]
Scott Becker
Sri, just magnificent. The career that you've had the growth trajectory that NextGen is on. Is there anything else you'd like to share with the audience today? Nick, could you also tell us where people could learn more about NextGen?
- [18:46]
Sri Vellimore
Of course. NextGenHealthcare.com and NextGenHealthcare AI, of course are key areas where you can learn a ton more about what we're doing. Of course. Please follow us on social media as well on LinkedIn and Twitter where oh, pardon me X I can't get used to saying that. We post regularly about the impact stories that our clients are delivering and all the tremendous ways in which we're partnering with them. Taking a step back, macro level Scott I think this is a very interesting time for our sector. All of us are working, waking up every day and seeing major changes to the healthcare complex from a government perspective and the private sector is rapidly reacting to resolve a lot of these changes. We strongly believe that supporting independent medical groups stay resilient, particularly RFQ 8 seasoned community health centers that are the safety net for millions of Americans here today and finding ways to support them is a critical part of our healthcare ecosystem. And that's an area that doesn't get a ton of attention, particularly when we talk about the PE world. But we want to make sure that we continue to stay focused on all of those those practices and their groups as well.
- [19:52]
Scott Becker
Thank you very, very much again for our audience. Siri Valmore joining us today. He's the President and Chief operating officer of NextGen. NextGen Healthcare is an amazing, remarkable company. Siri is about to move into the CEO role. He's succeeding another great CEO at NextGen. Sree, I can't tell you how thankful I am to have you join us today on the Becker Private Equity and Business Podcast. I'm also incredibly thankful to our listeners. We've recently passed 7 and a half or 7 million plus downloads and ranked this past week number one in the Apple Business News Podcast rankings. Thank you to our listeners, our guest and our teammates. Thank you very much for joining us.
- [20:33]
Sri Vellimore
Thank you Scott. Thanks for having us.