Healthcare Search Is Not a Capital Problem, It’s a Structure Problem

Hey Healthcare Searchers & Capital Providers, One thing that’s surprised me during this acquisition isn’t deal complexity, it's how often healthcare platforms are still misunderstood at the capital level, even by groups that market themselves as search aligned. If you’re looking at healthcare, especially CPOM states, here’s the core issue that keeps getting missed: Bank debt under CPOM underwrites the physician, not the platform. That means: 1. Personal guarantees are at the doctor level 2. One off underwriting for every acquisition 3. Friction, delays, and artificial ceilings at scale That structure works for a single clinic, but it breaks completely once you’re trying to build an MSO. And this matters because the opportunity set is hiding in plain sight: 1. Clinics doing $450K to $900K of EBITDA 2. Often operating one surgical day per week 3. Deeply underoptimized and underutilized from an ops, staffing, and scheduling standpoint 4. Ignored by PE not because they’re too small and too operational At this level, healthcare roll ups are an operator trade, which means time, not capital, is the real competitor. And yet, I keep hearing: “We like healthcare, but it’s too early/ too complex/ needs more scale.” From groups whose own stated mandates are: 1. Minority equity 2. First or second acquisitions 3. Operator led search At this point, the issue usually isn’t the deal, it's s a straight misread on how healthcare platforms actually scale. And the predictable outcome is simple...operators lose time, sellers lose continuity, and capital quietly gets deployed to groups that actually understand the structure. In practice, this is why groups that pass at the platform stage often reappear later, when the structure is proven, competition is higher, and the only way back in is a significantly larger, less attractive check. Real MSOs don’t scale by re-underwriting doctors, they scale by capitalizing the platform, standardizing operations, and designing structures where physicians are clinical inputs and not bottlenecks, within compliance of course. On the other side of the table, the most effective capital partners we’ve engaged with share a few traits: 1. They understand CPOM mechanics immediately 2. They ask MSO level questions, not clinic level ones 3. They think in terms of platform capitalization, not one-off deal financing These interactions move quickly and create real leverage for the operator. We’ve been fortunate to have had a small number of those, and ^Julius Brown III‌ is a good example of that kind of thinking. Someone who understands that if you don’t fix the capital structure at the MSO level, you’ll keep solving the same damn problem every acquisition. For searchers: If you’re entering healthcare and things feel slow or “early,” don’t assume your deal is weak. More often than not, it’s a capital alignment problem, not an execution problem. For capital partners: Healthcare rewards precision. If you don’t underwrite the structure, everything will always feel “early.” Once you see the difference between those two perspectives, you can’t unsee it. Always open to comparing notes privately with other operators and capital partners who live in this world. Marcus