So, let me get started, and I know you guys, this is already a long day for a virtual meeting. Having done a few of those over the last couple of years, we all know there's a little bit of a down point. Hopefully, the lunch break provided for a bit of a break, but if you guys need to do something or answer phone calls, come and go however you like. I'm Klaus Mergener. I'm a past president of ASGE. I had the good fortune of leading ASGE into the pandemic, and I was asked to talk to you a little bit about the impact of COVID on GI practice. What I really want to do is, 30 minutes is pretty short, is to make sure we start by and go through the 30 minutes answering your questions. We can, but we don't have to look at slides. You have access to these slides. I'd rather talk to you, and let me give you a little bit of my background so you know what I can talk to you about and what you can ask me about if you'd like. As you can tell when I open my mouth, my kids still make fun of my accent. I'm not from this country. I'm from Germany originally, immigrated here about 25 years ago, have worked pretty much in any sort of practice setting, initially more in academic hospital-based practices, then for 17 years in a private practice environment, large private practice, six endocenters, ran that practice for a while, then took some time off to help work with ASGE through the initial year of the pandemic. Now I'm working part-time clinical in a hospital setting again as a GI hospitalist. I went back to working part-time with industry. I've worked with some of your companies in the past. You guys are too young to know that, but Ambu, Fuji, Olympus, Boston, and now doing quite a bit of work with Pentax as their part-time chief medical officer. So I think I have a bit of a sense for the pressures that some of your teams are under as well, and a bit of a sense of the various practice settings in GI. I will, if you want to start throwing a question or two at me, I'll share my screen with the slides just in case we need them, but anything burning on your mind about your interactions with GIs or with GI practices, any challenges you're running into in your everyday work? Because if you don't speak up, I'll keep rambling and throw slides at you, and that's usually not a good thing as Bernie will tell you. I have a question. Doc, thanks for your time today. As we hire newer reps that are not as comfortable clinically in the space and find it challenging to really make an impact and have an educated conversation, from your perspective, what's the best way for someone to approach you in a manner in which they want to learn and really just bring value to your lab? Yeah, yeah. That's an excellent, excellent question. By the way, you can see my slides there, right? Yes. Just in case. Yeah. Okay, very good. So the first thing I would say is what you guys are doing already is something that if a company can fund and support it, that you would want most of your team members to somehow get at least a piece of, which is education and understanding the space we're working in. There's nothing worse for us on the physician side than having to talk to someone who, after the first half sentence, you know they have no idea what they're talking about, but they're just trying to hand you a glossy brochure and sell you a gadget. And that is not sort of, when you internally talk about service and partnership and everything else, the whole package deal, that gets destroyed immediately if you don't educate your team well. And I know for you guys, depending on your company, it's a different degree of challenge. Some companies do real well with internal education, but that's where it starts. So make sure that when you send your team members out into the field, they have at least a basic understanding. If that's the case, then oftentimes in your territory, you can find that friendly GI provider who actually enjoys interacting with industry and who doesn't mind some of your team members coming in and standing in the back and watching some endoscopies and learning even a little bit more of sort of the real life of a GI, how does an endocenter run. You know, you're golden if you can identify that person somewhere in your territory, and then you might be able to bring part of your team there and get some sort of on the ground additional experience. Yeah, that's great. I appreciate that. That's definitely the approach that I've seen work in the past. So thank you. Other than that, let me add one more piece, and that is, and I say it on the last slide here somewhere, when I talk about, where's my laser pointer here, find door openings, right? So be well prepared, as I just said. And then I don't know if we have anyone from Fuji here. I use Fuji as a great example. I really like the company. I like the product. As I said, I work for Pentax currently part time, but we all have an interest in our industry to have some competitive environment going forward. The last thing we all want, certainly as physicians, is one Boeing company that you can buy airplanes from, right? That destroys innovation and everything else. So I'm always happy to see Olympus and Fuji and Pentax doing well. What Fuji has done well in terms of door openers, what I mean is maybe you have a product that is unique. Fuji's case, double balloon endoscopy. No one else has it, right? They did great. Of course, they have good other products and good imaging and competitive and cutthroat pricing currently, but they have a double balloon endoscope that no one else has. That opens your door to almost any hospital-based practice, right? And then when you're in, then you start talking about all the other stuff you have, right? So maybe there's something, some gadget, some accessory that sort of, you know, you can identify as, if not totally unique, then clearly better than what everyone else has, and you can use that. The other kind of door opener is sort of on the practice side. Sometimes you can identify, as I said before, a friendly gastroenterologist to let you in, but sometimes it's not the physician, right? And you guys know this if you've been around for a long time. Sometimes it's that endoscopy nurse who really somehow connects with your team members, and that could be over education. You know, you might be bringing an hour off, you know, if you're Cook Medical and you have the hemo spray, you can bring some good education to the team members, and you can build a relationship there. And the person who really controls endoscopy these days is not the doctor, it's the head endoscopy nurse, all right? He or she controls much of the scheduling and everything else. So oftentimes, you know, it's finding that door that gets you in, and then once you're in, it gets a little bit easier. And they actually sometimes become your helpers and your partners in getting to the doctors and the real check writers. So it's a little bit of that, I think. Absolutely. Thank you. I'm curious what you've seen. So as we recover from COVID, you know, we hear sometimes that procedure volume is back up to normal, or close to normal, or maybe 80% of normal. And then, you know, but what we see maybe more in numbers that I look at, it's not the case. And maybe it's geographical, you know, we, for a while, I was assuming the South was coming back a little bit quicker, just because more open doors, faster after COVID. And, you know, it depends on what data set you're looking at, as to what is true at that moment. And I'm curious what your gut feeling is, as far as volume and procedures and, you know, nationally or regionally. That is a fantastic way to frame the questions. Actually, so good that I'm thinking about letting you give this talk the next time. Because there's several elements in your question that are absolutely true. One is it varies totally from region to region. Secondly, it's really about gut feeling. If anyone tells you they know the precise answer to your question, they're lying to you. Because this is such a diverse country, and between rural and urban areas, and hospital-based and private practice environments, and the Pacific Northwest, and Miami, and the Midwest, and everything else. As I go out, and I talk to lots and lots of practices and hospital-based groups, everyone is different. If I had to really, as you were asking, give you my gut feeling, I'll say a couple of things. One, what I hear as a theme in many practices, not all but many, is staffing levels. Second bullet point here on that slide. And initially, it was a little bit about the patients being scared to come back to the practice. You know, is it really safe to go back in, walk back into an endocenter, have an endoscopy? I don't see that so much anymore. I think we can convince patients that where we're at now in 2022, it's relatively safe to have your endoscopy done, and in fact, it's important. Where a lot of folks are struggling is with staffing, and it has two components. The smaller one is physician staffing. There's been a lot of early retirements, the people who were well off, and were thinking about retiring maybe in five to seven years, and now the pandemic hits. Some of them have said, the hell with it, you know, I'm done. And so, there's a little bit of that, but mostly it's on the staff side, meaning nurses and techs. And what's happened there is the one entity that's really done well in our field throughout the pandemic is the agencies, agency nursing. They are paying premium dollars now in many geographies where the nurses that were really stressed, you know, as you can imagine during COVID in hospital positions, lots of COVID there. Sometimes they get reallocated to the ICU where they didn't want to be taking care of COVID patients. They quit their jobs. They joined agencies. If they're mobile, they do some travel nursing, and if not, there's probably locally some jobs, but they do it through agencies. And these agencies now with this current staffing shortage, they're asking premium dollars and they're getting them. So, where I see practices struggle to get back up to 100% of mostly procedure volume to some degree clinic volume, it's because they don't have the nurses to open extra rooms. It's not that they don't have the rooms. It's not that they wouldn't have, of course, the backlog of patients. It's not so much physicians. Thank you. So, yeah, that is some of it. And keep interrupting me if you would. I know it's considered not polite, but I consider it very polite and very productive for you guys. If you don't, then I will try to get one point across that I find when I talk to industry that is not fully understood and I think is overall is pretty important for you. Let me make a larger point first real quick. And that is that when we're talking about impact of COVID, I would tell you that most of the challenges we're currently facing are the same challenges we had before COVID. They're just accelerated. And if you look at my slide deck later on, I'm listing some of these pre-COVID challenges here and they essentially have to do with reimbursements having gone down gradually. GI still do pretty well with reimbursement, but they are seeing less reimbursement for colonoscopies, for example, than they did 10, 20 years ago. And pre-COVID, they've tried to make up for it by building pathology labs and anesthesia and stuff that's separately billable. And they're running out of these strategies to make extra money essentially. And then COVID hits. And the reason that was specifically painful for GI is this slide here. And you guys are too young to know this, but if you had done a lot of air travel 30 years ago, you would have been sitting on planes where half of the seats were empty. That was not unusual at all. That's gone away on major routes of the last 30 years as profits in the airline industry have gone down. Why? Because airline, just like endoscopy is a high fixed cost, low variable cost business. What that means is most of the cost you incur in the airline industry is building the plane in the first place, hiring the expensive pilots and the staff, building, paying for the airport build out and so on and so forth. That is all done, whether or not your plane is full or empty. I just got back an hour and a half ago from Chicago. Every seat was filled. If my seat had been empty, if I had not traveled, what I cost United is essentially the cost of a bag of pretzels and a cup of coffee, right? So they would have lost almost the entire ticket price or whatever they keep of it if that seat had been empty. High fixed cost, their costs were already done. Low variable costs. Think about endoscopy now. Main cost is building the endoscenter, buying the scope, hiring the staff, training that staff, keeping the lights on. It's all done, whether or not I do 16 colonoscopies or eight. What that means is I really, as my profits, as my reimbursements are going down, I have to really increase efficiencies because the last few colonoscopies in the day make all the profit essentially. Or reversely, if that seat is empty, I'm losing almost all that I would have otherwise made. Does that make sense? So the reason I emphasize that, and it's so important for you to understand, is reimbursements have gone down and therefore GIs now, they're running out of other ways of making money. They have to run faster in the endoscopy unit. That's why when you call them, they don't answer anymore because they're always busy, right? So it's double important that you build these personal relationships where you can still get a foot in the door because it's gonna harder and harder and the pandemic has made it even harder, not easier, because a lot of the smaller practices are in trouble. They are in trouble because they were not responding quickly enough. So if you look at this slide here, the orange curve is expenses. So February 2020, the shutdowns hit, right? So what was key at that point is to keep this line very short from the time that the shutdowns happened to the time that the practice figured out a way to cut their expenses. And they did that by laying off and furloughing some staff and renegotiating and reducing waste. But what that spells is professional management. When you go into GI practices pre-pandemic, if you did that, they were doing so well in terms of making money. They were very, very poorly pathetically run. The smaller ones had no people with an MBA degree, with some of the older doctors running the practice and so on and so forth. You can't respond quickly if you don't know how to, right? You have to bring your team together. You have to figure out what do I do first, second, and third, you really need professional management. And that was the main challenge. Second challenge was from the time the shutdowns happened here on the revenue side blue curve, and the revenues went down, you needed to quickly find a way to get revenues back up initially with telehealth services. So that response time was critical. So what that means is the smaller practices, the poorly run practices, when you now go out into the field, as everyone's crawling out of the pandemic, they will essentially go away and have to merge into larger practices or be bought up by hospitals because they're not doing well economically. The more professionally run pre-pandemic are the ones that are gaining from a crisis. It's the same in any industry. And this shows your revenues are back up to pre-pandemic, but your expenses are lower. Is that accurate? Yes. So that presumes that because more than two thirds of revenue in a GI practice, we're now talking private practice, not so much hospitals where everything gets more bundled and complicated, but in private practices, more than two thirds is related to endoscopy work and not to clinic. And so it presupposes that you got your numbers up and didn't have major staffing problems as we talked about before. But if that's the case, then yes, revenues are back up to pre-pandemic. Sometimes they're slightly higher because some practices are 105, 110, 115% of pre-pandemic volumes in their endoscopy units to make up for some of the backlog of patients. And expenses are down to some degree. Now it gets complicated in terms of implementing a solid IT infrastructure if you didn't have that pre-pandemic because we're also very clear that telehealth is not going to go away again. That was maybe if I had to name the one thing that's going to change post-pandemic compared to where we were pre-pandemic, we might have never seen telehealth take off this quickly in medical practices if it hadn't been for the pandemic because there was no payment for it, right? And at least during the pandemic with Medicare and commercials agreeing to provide some temporary payment for telehealth services that provide the momentum for everyone to go there because they had no alternative. We have just a few minutes left. Last not least maybe, and this is again something you're going to just have to figure out a solution for, is the consolidation trends that have started pre-pandemic. Again, all the stuff that started pre-pandemic essentially is still there, only bigger and faster and more accelerated. And specifically for all the reasons I just mentioned, even on the practice side, consolidation into larger and larger and larger entities. The largest GI practice when I started in this country 23 years ago was 54 GIs in Dallas, Texas. That was still a pretty big practice. Now the largest practice is 640 GIs all in one practice, right? Can I ask a quick question on that? So one of the things is economics, right? People have fear of surprise billing and there's, you know, obviously one of the effects of COVID that's in just the world in general right now is the cost of everything. So it's already trending that patients are less likely to seek medical care, you know, we're heading into that direction. Are you feeling that? Are you seeing that? Because even though mostly, you know, colon cancer screening is covered, however, there are some people that may or may not be comfortable with that. They may or may not have a pre-existing condition and they have, you know, extensive concerns that they're going to get stuck with the bill. Yeah, that's right. So it's essentially covered period, right? But a lot of patients don't know that. Hence the concern for getting stuck with the bill. But it is covered ever since the Affordable Care Act for essentially everyone. Now there's issues with access and everything else. I agree with you. I think people are worried both on the patient side, also on the physician side. It's multifactorial. I mean, what's driving on the practice side is a number of things. One is the decrease in revenues that I mentioned, the financial hit that some practices sustained through COVID and trying to crawl out of that financial hole. They might have taken on debt and so on and so forth. There's a generational issue not to be discounted here with millennials coming into our field who just don't feel like taking risk in the same way a gene overhaul in the 80s and 90s took risk when he single-handedly built a number of practices, right? They want to be employed. Some of them want to work eight to five. They don't want to manage the practice. They want to essentially have a day job and have a good work balance. They're probably smarter than I was when I came in. I applaud them. But that also drives some of the current dynamics you're seeing in practice. They're more employed physicians, both of course on the hospital side, but also in private practice, and they don't mind. And they don't mind joining these mega practices where essentially you feel like an employee, even if you have an ownership stake in an entity that's 600 physicians. You essentially get told where to go and scope, right? It's no different from being employed in the hospital. So all of these sort of fit together. And then on the patient side, yes, some of them are still concerned. Now, again, I go back to what I said to one of the first questions. I don't know that I have a good sense for whether or not that's true all across the country or just in some of the areas that I see. In my own practice, patients are doing fine. We believe we are putting a lot of effort into educating them. And that happens when they're in our practice, of course, when we get to talk to them through letters, through some online events, that it's safe, that it's necessary, that it's very effective, and that it's the best way to get screened for colorectal cancer compared to some of the alternatives. And they come. So in our practice, I don't see it, but I hear what you're saying in some other areas. Maybe one more question before we wrap. I have a quick question just on your efficiency comment. Interesting to hear the trends. And essentially, it sounds as if you need to increase your procedural volume to meet the same contribution margin that we saw years prior before the pandemic. Somewhat of a twofold view feel as if looking at innovation in the future, will this take clinicians away from moving the threshold forward to move the clinical space forward into the future because now you're more focused on day-to-day procedures at the ASC versus in the hospital? Yes. So a short answer is yes, and I worry about that. Now, if we've been at it long enough, we know that at some point, there's a paradigm shift and something's going to happen that we're currently not predicting that will take the field into an entirely different direction. But for the time being, that is sort of the mechanism that is being pursued. You have to be more efficient. You have to scope more. You have to spend more time in the endoscopy unit. Now, people are talking about, does it really have to be the physician? When you're talking about innovation, could there be a scope that is easier to handle that is partially automated where a non-physician provider could do at least some of the screening and the physician would only do the polypectomy? So there's one model for you. The Europeans and others have decided that maybe colonoscopy is not as important as a first test and stool testing is at least as good. We have a couple of randomized trials that are still going on. One is called the CONFIRM trial. That's one to really watch for. We'll see some results hopefully in three or four years. It's a massive trial over more than a decade comparing stool tests to colonoscopy. If that trial shows that stool test is just as good in saving lives, then we're essentially done using colonoscopy as a primary screening test. But for the time being, I agree with you. I think we'll just have to spend more time in the endoscopy unit and figure out everything else around it. Part of the reason you're seeing more advanced providers, physician assistants, and nurse practitioners is we're putting them more into our clinics to see patients so doctors can spend a bit more time in the En-ROSE Center. I think I better let you go. Again, feel free to take a look at my slides if you can't help it and can't find anything better to do. You can find my email on there. You can find me online. I'm always happy to connect with you one-on-one and talk some more. Thank you very much. Thank you. Very nice to meet you. Thank you. Hope it was helpful. All right. Take care, you guys. Bye-bye.

COVID impact on GI practice

Klaus Mergener

GI hospitalist

approaching physicians

value in the lab

education in GI space