Room to operate: Nueterra finds, expands its niche in health care
Kansas City Business Journal
Friday, April 30, 2010
Dan Tasset doesn't head to Las Vegas much, but when he goes, craps is his game of choice.
"It's the same as business," he said. "It's beating the odds."
Tasset rolled the dice 13 years ago, transforming himself from a miscast Dodge City, Kan., accountant into a health care entrepreneur. Less than a year after starting his company, he migrated to the metro area to find talent.
The result is Leawood-based Nueterra Holdings LLC, an affiliation that includes health care, venture capital and real estate companies.
The company, which has more than 90 surgical and outpatient facilities nationwide, posted annual revenue growth of more than 14 percent in 2007 and 2008 before cooling off to about 6 percent last year.
Nueterra specializes in financial partnerships with physicians.
It has expanded by creating new ventures that flow from the core business of owning, operating and managing health care facilities, including outpatient surgery centers and community hospitals. Saint Luke's Health System is one of its local partners.
The philosophy is that you go where the market takes you: "There's no need to row upstream," Tasset said.
He has built a business model in which Nueterra Healthcare is part of a family of complementary spinoff companies that operate independently but collaborate when it makes business sense.
One example is Nueterra Capital Management, or NCM. The CEO is Tasset's son, Jeremy.
NCM was established in response to inquiries from physician investors. Happy with returns from facilities, the physicians kept asking whether Nueterra had other investment opportunities.
What has happened, Jeremy Tasset said, is that the roughly 90 to 100 physicians invested in NCM's two funds have provided capital for Nueterra Healthcare developments.
That differs from the typical Nueterra model: Physicians invest in a project that will serve their medical needs, such as helping finance an outpatient surgical center in which they will practice.
Flexibility is a Nueterra hallmark, and Jeremy Tasset said NCM put that to use in finding additional capital for a hospital it developed in Pennsylvania.
An NCM investor in California had said he was interested in other deals, and when local doctors in Pennsylvania couldn't raise all the capital needed for their project, Jeremy Tasset called the California physician.
As it turned out, the doctor had gone to medical school at Penn State University, and he put money in the deal.
"So there are different ways we can add value to everybody and to be flexible to accommodate that in many different ways," Jeremy Tasset said.
Meeting a need
Nueterra Real Estate also evolved to meet a need. It was established in 2005.
In that case, it was Dan Tasset's desire to speed up construction of facilities.
He was frustrated being at the mercy of an outside contractor, and Nueterra Real Estate COO Mike Rothwell said that impatience is embedded in the real estate unit. In addition to acquiring property, Nueterra Real Estate acts as an in-house project manager that, for instance, can push construction timetables.
"Our mentality is all about: How do we get operational as quickly as possible?" he said.
One way it can do that, Rothwell said, is its access to the operational design experts within Nueterra Healthcare.
That team knows exactly how the building has to be laid out to maximize clinical efficiency and compliance.
The outpatient surgical center at Saint Luke's East Hospital in Lee's Summit is an example of the partnerships Nueterra creates.
The roughly $2.8 million facility, which opened in 2005, is a joint venture between Nueterra Healthcare, Saint Luke's and physician investors.
"It's a good investment, and you make money on it," said orthopedic surgeon Dr. Larry Frevert, an investor in the Saint Luke's East surgical center and a member of the center's board.
But having a say in the operation of the center is the biggest benefit of having an ownership stake, he said, including having input into personnel decisions.
Having a good staff that runs a tight ship is crucial to a practice's success.
"If you are not efficient, you are out of business," Frevert said.
Working in the main operating room of a hospital, he said, he might have to wait as long as 40 minutes between surgeries. The goal at the surgical center is to cut that turnaround time to perhaps as short as 10 minutes.
The partnership works well for Saint Luke's, too, said Robert Bonney, senior vice president of business development for Saint Luke's Health System.
The physician ownership is important to Saint Luke's, he said, because it allows the doctors to "provide some of the leadership and guidance" and gives them a vested interest in the center's success.
Plus, Bonney said, he liked Nueterra's flexibility. Other companies weren't willing to give Saint Luke's a majority stake, but Nueterra did.
A deft hand
It takes a deft hand to spin off related - yet separate - companies as Dan Tasset has done, said Mark Parry, a University of Missouri-Kansas City marketing professor who also has the Ewing Marion Kauffman/Missouri Endowed Chair in Entrepreneurial Leadership.
"When you are moving into different areas like that," he said, "it is especially important to make sure you have all the talent you need to be successful - and it sounds like he is very good at that."
And Dan Tasset isn't through.
He's looking to seize opportunities presented by the recession, getting set to launch ventures in areas as diverse as information technology, human resources and financial services.
He has the same attitude about the new health care reform law.
The law put a bump in the road for Nueterra by severely limiting the growth potential of physician-owned hospitals by, among other things, saying these facilities can expand only if the population in the hospital's home county has increased by at least 150 percent of the statewide growth rate during the most recent five-year period.
Dan Tasset attributed that provision to successful lobbying by nonprofit hospitals looking to cut down on competition.
Bully for them, he said. They worked the system and won.
Still, though, he said physicians can remain involved by owning the building - as opposed to profiting from operations - and medical practices can be operational investors even though individual doctors cannot.
"I couldn't have asked for a better script than it is right now," he said. "What I get to do is, I get to look forward to the future. I get to design the board game, based on these rules, and I get to test my wares against the competition."
He laughed.
"It's exciting," he said. "It couldn't be any more fun."
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