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Healthcare deal spotlight: Ambulatory infusion centers offer ‘sweet spot’

The AIC model 'offers a unique value proposition to balance the needs of constituents in the ecosystem,' InTandem's Brad Coppens said.

InTandem Capital Partners, a New York City private equity firm that invests in healthcare services, announced earlier in March that it recapitalized and combined MPP Infusion Centers and ID Consultants to create Vivo Infusion. PE Hub spoke with Brad Coppens, senior managing director at InTandem, about the newly formed company and the strategic growth plan the firm envisions for Vivo.

Based in Denver, Vivo provides “accessible, affordable, and safe community-based infusion and injection care for patients suffering from compromised immune systems, infectious disease, and other medical conditions,” according to InTandem. “Vivo Infusion provides convenient, compassionate, expert care administered in safe and inviting state-of-the-art facilities using efficient and cost-effective patient-focused best practices.”

AIC model

The idea started with a simple thesis of alternative site delivery of infusion services, but that quickly evolved into one based around the ambulatory infusion center.

“The reason why we like the AIC model is that it offers a unique value proposition to balance the needs of constituents in the ecosystem,” Coppens said. “There are a few things happening in the sector: there is a wave of newly approved pharmaceutical therapies that are going through FDA, a large percentage of which are infusible therapies. Many of these therapies have important clinical outcomes, but they can have an enormous cost toll on the healthcare system.”

According to Coppens, from the vantage point of commercial and Medicare Advantage payors, one of the more effective methods for the management of rising pharmaceutical and infusible therapy costs is shifting the site of care from in-patient and hospital outpatient sites to home-based and ambulatory settings.

“The cost advantage [of AICs] is different from therapy to therapy but can be as much as 60 to 70 percent savings relative to in-patient care,” he said. “So, from a payor vantage point, Vivo can deliver incredible value to the system.”

Two things matter to patients: care and convenience, Coppens said. The firm did some surveying and concluded that AICs offer a “sweet spot” between care and convenience. Patients “really prefer these centers,” he said.

“From a referring provider perspective, they have historically struggled with the scheduling and administrative complexity, lack of scale and working capital investment associated with managing infusion in-house,” he said. “So, increasingly high-quality AICs are taking share away from in-office infusion.”

Growth strategy

Coppens views Vivo as a platform investment and said there are already both medium- and long-term acquisition targets in mind as well as “plenty of capital to continue to support the business going forward.”

Brad Coppens, InTandem Capital

“Our growth strategy is multi-pronged,” Coppens said. “There is a dearth of AICs in many markets across the country and a lack of AIC capacity sufficient to meet the needs of payor-led site-of-care shifting strategies. Our payor partners have been huge supporters of de novo development (this means the build-out of individual clinics by Vivo rather than the acquisition of existing clinics or companies) by their high-quality provider partners in the markets where they have member lives. So, in markets that we currently exist (Ohio, Florida, Texas, Oklahoma and Colorado), as well as new markets that we will develop, de novo development is a huge area of focus for us.”

The AIC model is also attractive from a staffing perspective. Attracting and retaining high-quality clinical labor is “one of the large business challenges of our time,” Coppens said.

“We recognize that, and it had an impact on the way we view opportunities in this sector,” he said. “One of the reasons we have a lot of conviction about the AIC setting is that these centers are very efficient from a labor standpoint, deploying clinical resources on a one-to-many basis, as opposed to one-to-one basis. That efficiency benefits the whole system, as patients are able to be seen more quickly, and referring providers can ensure an efficient and reliable hand-off of care.”

Exit strategy

When it comes to an exit strategy, InTandem’s approach is a little different from many PE firms who may start an investment with a near-term exit in mind.

“Our approach to an eventual liquidity event is that we build operating companies to be evergreen, so in the case of Vivo, we’re building the infrastructure, team, technology and processes to support one of the nation’s leading ambulatory infusion providers without regard for exit timing,” he said.

“If the capital needs of the company expand so dramatically such that we can’t continue to support the company with our own managed funds, then we and our management team will have accomplished what we set out to build and will position the company for new investor support,” Coppens added. “Alternatively, if we can support it, then we will keep building.”