This week we continue our conversation with Rod Rivera and David Baker, Managing Directors at Capstone Headwaters. Capstone Partners LLC and Headwaters MB, LLC recently announced a strategic transaction combining the two firms. This single platform has 150 professionals, covering 16 dedicated industry groups, spanning 20 offices across the US, UK and Brazil. This combination has resulted in one of the largest independent investment banks in the US. Mr. Rivera and Mr. Baker cover healthcare for the firm. Second of two parts – View part one.

The Lead Left: Could you provide an example in practice?

Rod Rivera: A good example is respiratory medicine. Many MCOs pay a premium over competitive bidding rates to include the service component.  Respiratory therapy provides value to the system by ensuring higher compliance and reducing expensive trips to the ER or hospital readmissions.

We are seeing the same trend in orthopedic surgeries.  Payors are beginning to bundle reimbursement to include post surgical care and outpatient  physical therapy. In a capitated world, outcome management is being more broadly defined.

David Baker: I see two pieces of risk. First, there’s the current landscape of disruption into a value-based model compared to whatever your company’s strategy is. Second, there’s execution risk. The contracts become much more important in the delivery in a value-based model.