FFL eyes three-stage growth plan for tech-leveraged primary care provider Perlman Clinic

FFL Partners will announce later this morning that it has invested in Perlman Clinic, an independent provider of primary care in the greater San Diego market. Financial terms of the private transaction were not disclosed.

PE Hub spoke with Chris Harris, managing partner at FFL, in an exclusive interview to discuss why this is an attractive investment and how the firm plans to grow and scale the company during the holding period.

“We have been proactively focused on risk-based primary care for the past four years and the thesis for us has been based on the shift to providers taking [on] more risk,” Harris said. “You have seen a lot of investments where providers are taking more risk, much of it down in Florida.”

Founded in 2005, Perlman Clinic is a full-service provider of comprehensive primary care, as well as urgent care, behavioral health and wellness services. The company operates 16 facilities staffed by more than 100 primary care providers across the greater San Diego region.

“If you step back and take a look at healthcare you think of what needs to happen – we need to provide better care at an overall lower cost to the system,” he said. “Primary care with a risk-based approach needs to play a critical role in accomplishing that goal. So, we see Perlman as very well-positioned for future growth.”

“They have done a lot of really interesting things with technology and have an in-house tech suite called Pocketdoc, which is their tech-enabled solution,” Harris said. “Perlman is differentiated in how they have leveraged technology, along with their footprint of 18 offices in the city of San Diego, and how they adapted to the shift towards risk.”

Pocketdoc, Perlman’s proprietary telemedicine platform, enables its patients to schedule appointments and includes workflow software to help practitioners manage tasks such as insurance verification, payment processing and communication.

The growth plan for this investment will be multifaceted, according to Harris.

“There are three levels to the growth plan – the first is to continue to grow in the San Diego area. They are the largest independent today but still have a small market share given the fragmentation of the market,” he said. “We see a lot of organic growth in the San Diego area, and Perlman will be opening four new de novo locations this year. Expanding in San Diego is a core part of the growth plan.”

Part two will be expanding the footprint, or “organically growing into new geographies, and we will prioritize the opening of offices in California. Growing the business outside San Diego County will be the second component.”

The third part is growing through M&A. Harris said the firm identified some targets, but nothing is imminent, as this investment is about organic growth first. That will likely be supplemented with M&A in new geographic markets.

“We don’t just do M&A for M&A’s sake,” said Harris. “We think it has to make sense and has to be strategic.”

As far as the exit plan for FFL’s latest investment, it is something the firm has put a lot of thought into.

“We think in five-year periods, but this is one that would not shock me if it was a shorter timeline. There is a lot of interest in the value-based care space, and I think Perlman would be attractive to both strategic and financial buyers as we continue to scale it.”