How Health Law and Policy Shape the Future of Healthcare Transactions

Christopher (Chris) Raphaely is the Co-chair of the Health Care & Life Sciences Practice Group at Cozen O’Connor, a full-service law firm with practices in litigation, business, and government relations. In his role, he provides transactional and regulatory counsel to various healthcare providers and investors.

With nearly three decades of experience in the healthcare industry, Chris specializes in mergers and acquisitions, payer negotiations, HIPAA compliance, and value-based payment arrangements. Before joining Cozen O’Connor, he served as Deputy General Counsel at Jefferson Health System, where he facilitated major transactions and led the system’s restructuring efforts.

Here’s a glimpse of what you’ll learn:

• [1:48] Why Chris Raphaely began pursuing transaction law
• [9:08] Chris shares how the complexity of the US healthcare system led him into healthcare law
• [14:48] How Chris transitioned from private practice to an in-house role at Jefferson Health System
• [21:30] The impact of regulatory uncertainty on healthcare operations
• [34:12] Macro trends in healthcare over the past 10 years
• [39:47] Chris discusses the future of innovation and financing in the healthcare industry
• [46:58] How healthcare practices can navigate transactions in a regulatory environment

In this episode…

Since the advent of the new presidential administration, the healthcare industry has experienced a period of intense disruption; regulatory overhauls, rising costs, and an influx of cutting-edge technology have created complexity for providers, investors, and entrepreneurs. At the center of it all are high-stakes transactions requiring legal precision and a strategic vision. How can leaders in this space make informed decisions and future-proof their deals in such a volatile environment?

Healthcare transaction attorney Chris Raphaely urges healthcare practices and providers to understand legal risks as well as the operational and regulatory contexts in which healthcare organizations operate. He advises aligning legal strategies with your business model, fostering collaborative negotiations, and staying abreast of changing regulations. Healthcare businesses should also prepare for potential financial disruptions caused by policy changes and emerging technologies.

In today’s Transaction Healthcare episode, Zak Eisenberg speaks with Christopher (Chris) Raphaely, Co-chair of the Health Care & Life Sciences Practice Group at Cozen O’Connor, about navigating the regulatory landscape to structure healthcare transactions. Chris shares insights on value-based care, Medicaid expansion, ACA subsidy shifts, and how to navigate C-suite dynamics.

Resources mentioned in this episode:

• Zak Eisenberg on LinkedIn
• Merritt Healthcare Advisors
• Merritt Healthcare Advisors email: contactus@merrittadvisory.com
• Chris Raphaely on LinkedIn 
• Cozen O’Connor 

Quotable Moments:

• “I knew I wanted to be a lawyer, but I also knew I wanted to do deals.”
• “It’s a business where you can’t turn people away… I gotta take them.”
• “You want to be human in the process, but figure out what their goals are.”
• “You have to set the context for the client; you can’t skip context.”
• “Ultimately, it’s not about the lawyer in deal work; it’s getting the deal done.”

Action Steps:

1. Understand your client’s end goals early: Clarifying what the client wants from a transaction helps tailor legal advice and strategy. This ensures every recommendation aligns with their broader business objectives.
2. Adapt your approach based on client sophistication: Entrepreneurs may need more strategic guidance, while corporate teams require focused legal expertise. Adjusting your role increases efficiency and client trust.
3. Stay informed on regulatory changes: Rapid policy shifts can significantly affect deal structures, risk exposure, and compliance strategies. Keeping up-to-date enables proactive, not reactive, decision-making.
4. Embrace collaboration in negotiations: Creating value through partnerships rather than confrontation often leads to better outcomes in healthcare transactions. It fosters long-term alignment rather than short-term wins.
5. Frame legal advice with context: Explaining how risks align with industry norms helps clients make informed decisions without unnecessary alarm. Contextual clarity builds confidence and speeds up the deal process.

Sponsor for this episode…

This episode is brought to you by Merritt Healthcare Advisors.

Merritt Healthcare Advisors is an investment bank with a unique focus on healthcare providers and their businesses.

Merritt leverages the healthcare industry expertise of its owner-operators, clinicians, investors, and advisors to develop surgical facilities that perform safe, efficient, and cost-effective procedures.

To learn more, visit https://merritthealthcare.com/.

Episode Transcript

Intro  0:00  

Hello and welcome to Transaction Healthcare. I’m Zak Eisenberg, Vice President at Merritt Healthcare Advisors. Merritt Healthcare Advisors is an investment bank with a unique focus on healthcare providers and their businesses. Transaction Healthcare is a podcast focused on addressing questions and concerns at the intersection of healthcare, transactions and business.

Zak Eisenberg 0:24

I’m Zak Eisenberg, a partner at Merritt Healthcare Advisors, and your host for Transaction Healthcare, where we address questions and concerns at the intersections of transactions, healthcare and business. Thanks for joining us. This episode is brought to you by Merritt Healthcare Advisors. Merritt is a full service investment bank with a unique focus on healthcare. To learn more, visit www.Merrittadvisory.com. I’m joined today by Chris Raphaely, who is a co chair of the Cozen O’Connor

Health Care & Life Sciences Practice Group. Chris focuses his practice on mergers and acquisitions, other fundamental transactions, pair contracting and disputes and regulatory issues that affect his clients in the health care and life sciences. Spaces, Chris’ clients vary from multi billion dollar academic medical centers to individual entrepreneurs in early stage companies in the Life Sciences and Health Care Technology spaces. Chris, it’s good to see you. it’s been an interesting year so far in the health care space. Chris and I think no more so, so for for lawyers, than for anywhere one else. So I really would just wanted to jump in, first and foremost, to your background so that you can introduce yourself to the audience. How did you end up studying law? What do you love about the law?

Chris Raphaely  1:48  

Oh wow. So you know, I always, I was always interested in, in, in the law, and I was really always interested in, believe it or not, doing transactions. I was one of the few lawyers, I think you know, when they went to law school while I did, you know moot court and all those type of things that you do typically in law school that knew I wanted to be on the deal side of things. It was kind of unusual when I graduated law school in 1990 so, you know, the even more than today. I think the focus was really litigation and, you know, preparing litigators to practice. But I sought out the the deal work and the corporate work. I really, when I first started, I took a securities course. Always enjoyed the corporate side. And so it was really kind of a fortunate for me that I was able to, you know, I knew I wanted to be you. I knew I wanted to be a lawyer, but I also knew I wanted to do, kind of do deal work and transactions, and then getting into the health care space, you know, that was an added that was somewhat fortuitous. I kind of, you know, started at my first firm, and that’s where I ended up doing a lot of work in the space. And again, we’re talking the early 90s here, when, you know, it wasn’t quite, you know, a health the health care bar was not quite what it is today. Quite frankly, maybe by that time, it had started to change. But, you know, a lot of health care law was, you know, the real estate lawyer who was on a hospital board, and the hospital had an issue that somebody had to figure out. And you know, that person started doing so all of a sudden, they were a health care lawyer. Meantime, it’s come a long way since, obviously, you know, it’s a very competitive field. Large firms like ours dedicate, you know, a lot of resources to what is, you know, a sector of the economy that’s, you know, nearly 20% of the GDP. So, so if I told you, you know, this was my plan to do this, since I’ve been a, you know, since I’ve been a teenager younger than that. No, I don’t think a lot of people at that age dream of health care lawyers, regardless. But, you know, some of it, like, like, life, it kind of evolves, but I’m real happy the way it’s evolved, and it’s been a fascinating run, and continues to be fascinating.

Zak Eisenberg  4:23  

Yeah, interesting. So health care is the piece of the law that you fell into, but sounds like you were very focused on transaction law, which is a very niche part of law, in my view. And again, maybe you disagree with this, but from from what I can tell, most most lawyers actually fall into transaction law, because it’s not necessarily a space that is well defined in law schools, right that they

Chris Raphaely  4:53  

don’t make TV shows about transactional lawyers. It’s not that exciting to show

Zak Eisenberg  4:58  

on television. Yeah, maybe just suits. Suit says a little bit of this, but

Chris Raphaely  5:03  

yeah, well, then if it, yeah, I don’t know that the point is the law in that, but yeah, that’s

Zak Eisenberg  5:09  

true. But yeah, without getting sidetracked, yeah, I’m curious why, why was kind of deal space always interesting to you? So you were focused on being a lawyer, and you knew that you wanted the deal space. How, how did you sign on this? The idea

Chris Raphaely  5:27  

the negotiation, I think it was the idea of, you know, putting together a couple of parties, and then, you know, you know, basically combining in a lot of cases. And happens to be what I do, you know, combining to do something better. And a lot of our transactions aren’t just like real estate closings, right? They’re, you know, two two entities or people or individuals coming together to then be more than just the sum of two parts. But you know, I guess it was the negotiation side. I guess I had, you know, I think I had, when I was, like, in high school, maybe early college, had known some folks in the neighborhood and stuff who did that type of work lawyers, and learned a little bit about what they did. So I think that was part of it, you know, so a number of different things. I had a background in economics, so, you know, and that’s kind of all about, a lot of economics is, you know, how do people behave rationally? You know, rational expectations was a big thing there when, you know, when they’re driven by, you know, driven by kind of economic self interest, so all those things kind of let and again, it wasn’t, I probably didn’t have it well formed in my, you know, headed really early. Oh, I want to be like an M and a lawyer or something. But the idea was, you know, yeah, I like the litigation part. But to be honest with you, spend a lot of time in litigation, preparing for stuff that never, ever happens. And, you know, for lack of a better term, arguing or fighting about stuff that ends up not mattering in the end, you don’t do a lot of that, you know, if you’re doing transactional work well. So I also like that it was kind of a more direct route. It wasn’t as much, you know, the game of, it wasn’t quite as part of the big thing is just getting kind of the work done. So, you know, again, I wouldn’t say it was a fully formed thought my whole life. But, you know, is things developed, it really was ended up to be the right space for me?

Zak Eisenberg  7:34  

Yeah, I’d be surprised if, if it was totally free.

Chris Raphaely  7:38  

Yeah, no, nobody grows up. Want to be like I said, Nobody grows up wanting to be a health care

Zak Eisenberg  7:43  

lawyer, yeah. But being, you know, a lawyer, obviously, for I think lots of young people, is very appealing. What’s so interesting, I think, about what you said, is to really, I think, be good in the transaction space across the board, whether you’re an investment banker or an investor or an entrepreneur or a lawyer helping to make it happen, you really do need to think collaboratively. Obviously, you don’t want to bend over on certain issues and just give give the other side the win on everything. But so much of these transactions, I think, does come down to and what you said is, you know, really bringing parties together and negotiating something which doesn’t necessarily mean that it’s adversarial. It just means that you’re, you’re, of course, you’re negotiating behalf of your clients for the best deal you can. But the the ultimate goal in most of these cases, when you’re talking about an M and A or capital raise, is, I think, really partnership, particularly when it comes to, when it comes to health care. So okay, so that’s, that’s, you know, the M and A side. So yeah, let’s talk a little bit about health care. So you said, this is an area you sort of fell into. What fascinated you about the space when you first start working,

Chris Raphaely  9:08  

yeah, so, I mean, there’s a lot of things that come into play on that Zak, you know, it’s a huge social issue. Even back in the, you know, early 90s, it was clear. I mean, I started off the top talking about 19, 20% of the GDP. That’s a huge social issue. It’s a very mentioned my economics background. It’s a very unique because it’s the, you know, in the United States, at least, it’s, you know, a very different market than anything else, one of the few markets where everybody gets the product, you know, really, regardless of their ability to pay, and it’s paid for by a third party. So you have just a fascinating kind of triangular economic or financial relationship. It’s still primarily an insurance based business. This. So you have all types of compliance things that that flow from that, as well as the social issues. So how do we take care of all of our people? You know, I mentioned the top that we do a lot of hospital work. I spent, you know, eight years in house for a large hospital health system. Got a really appreciate, real appreciation for how difficult that business is, you know. And you know because, again, it’s a business where you can’t turn people away. If you know, if somebody doesn’t want to pay our rates, your rates, or your fees, or my fees, I don’t have to, I don’t have to do business with them. Not the case. Somebody comes in emergency room. I gotta take them. I gotta see so incredible mixture of social, economic issues. You know that really, from the public conscience, I think, you know, I used to, when I first started, I’d tell somebody as a health care lawyer, like a cocktail party or some they’d go right on to the next subject. Come 2010 when the ACA came in and people started really being aware of, hey, there’s a lot of people that aren’t really getting health care or are getting it in a patchwork system that be, you know, put it much more in focus of kind of public eye. So people are now, when I tell somebody like, oh, you that must be incredibly interesting. They want to tell me this story that tell me story. So, you know, it was just as I learned more about it a because it’s complex and it’s dynamic and it’s unique like that, and the government pays for a lot of it. There’s a ton of legal work. There a ton of stuff for lawyers to do, which I know people don’t like to hear. But, you know, we got to earn a living too, so to speak. But so it was kind of all those things. As you learn more about it, you realize how important it was, how important the work that we deal with. I mean, the stuff that that that you, the deals that you and I have worked on and, you know, the deals that you work on as and I work on independently. You know, there’s incredible stuff going on in this in this field, and it impacts everybody, but you got to understand the economics. You got to understand the repercussion. So I guess, you know, it brought a lot health care to me, brought a lot of my interest that I came into the field with, and really kind of, you know, gelled them together. And really, you know, interested me the you know, throughout,

Zak Eisenberg  12:27  

yeah, it’s such an interesting anecdote you brought up without, you know, being at cocktail parties, that in this, when talking about this space, it seems like, especially over the last decade, like you said, since the ACA pass. People are very curious about it, not in health care, like you said, it touches everyone. Everyone goes to the doctor, so everyone has some some touch and feel with the system. But it’s also incredibly opaque, if you’re outside of, yes, the outside of the now. And so I think you know, just my own experience, and sounds like this is similar to you and similar to what I hear from lots of others. If you’re not in the space, there’s so much interest in learning just about this very complex, opaque system, which, by the way, for many of the same reasons that you’ve brought up, is equally as complex in other countries. I think one of the things that makes the space so exciting to me and dynamic here in the US, but globally as well, is that, by its nature, healthcare is a multi party system, like you said, but you’re fundamentally in business with the government, which creates a lot of risk, because especially in democracies, governments are not very consistent. Regulations change quite a lot. Things move around a lot, especially in our Federalist system, here in the US, yes, you have federal laws that don’t change quite as often, but state laws are extremely dynamic. On top of that, yeah, you have this very large, powerful other body, particularly if you’re sitting in the provider position, which is what you were talking about, as a health system, or, again, a health system, which is the pairs and obviously the patients. So it really creates this really interesting soup of dynamism that is all kind of coming together. And anyway, I want to dig into this, this health system perspective you have. I know we’ve talked about this in the past. Was this how you started in the healthcare space? Or do you first start in private practice and then you went into and maybe, let me tell me a little bit about that. So first

Chris Raphaely  14:48  

15 years I spent in private practice, you know, and honestly, I was at a another large firm prior to this great firm, i. Still, still, you know, close to a lot of people there, but, you know, at some point I was probably, I don’t know, 1012, years out, I’ve been a partner for a number of years, maybe a little farther out, maybe 1314, years out, and and realized, you know, ultimately, this business is about kind of getting in the C suite, or understanding what leaders of these organizations think, the way they think, the way they analyze things, the way they conduct business, and even just the way they relate with to each other on a day to day basis. And you know, people don’t realize that, but when you’re in a private law firm, you don’t get a lot of insight into that unless you’re fairly senior and you’re rubbing elbows with those folks. And one of the tough things for young lawyers is, you know, when you you come out of law school, you’re 2324 you work, you know, your first job, whatever, to your 30s. Even at that point, there’s not a lot of you know, and it was even less back then. Now we’ve had the tech, tech and all that stuff, but there any, but even still, there’s not a lot of your contemporaries, early, you know, in that early stage, that are running companies and on boards and stuff like that. Or, you know, you get the, you know, sure, someone on entrepreneur and stuff, but generally in the law of numbers. So, you know, when I had, you know, had a great, you know, great run there, learned a ton, but also felt, to a degree like, you know, I need to get into the kind of, into the C suite, understand how, you know, leadership on the executive side works, and then leadership on the governance side works, and was fortunate enough to really end up in a job where dealt with that. When I was Jefferson health system, was the name of the organization dealt with that in spades. I was kind of at the corporate parent level, and I got to see how, you know, most importantly, how people related to each other on a day to day basis. You know what I mean, and how how decisions were made. But also, you know how you how you communicated, how you transaction, how much information you give somebody, how much information you didn’t give them. You know what I mean, all those things that nobody really thinks about, unless you’re kind of on the outside looking in, and then you got to think about those things. So had that opportunity, ended up working with some fabulously talented people that I’ve learned a lot from there, and realize, you know, I could stay in house, but if I go back into private practice, which I ended up getting the opportunity to do that, I would know how to do it. And then in those eight years I was in house, quite honestly, then your contemporaries start moving into those positions where they’re in leadership positions and stuff like that. So it kind of came together. But that was why I went in house, and it was an invaluable experience, and it was a big transition, honestly, very big transition, because it’s a much different way of doing business in a large companies, you know, than than in a law firm. Law firms are typically, you know, management is flat, you know what? I mean, there’s only a couple layers in our whole law firm. And we’re a large organization, the layers of management might be two or three. That same size organization might have, you know, 10 layers of management on the, you know, in the industry sector, so

Zak Eisenberg  18:34  

and it’s because, you know, so valuable from an operational perspective, too. I’m sure Chris just yeah, you know is what? Like you said, it’s one thing looking into a company and sort of analyzing what they’re doing, but it’s a whole nother being a part of those conversations, part of the decision making and understanding. You know, even outside, I’m sure, of general, you know, legal decision making, things that come up when you’re advising clients. Now, you may have been privy to conversations that were truly operational or clinical in nature, that were just problems coming up at the company, and because you were in the in the C suite, you were in the know a bit, and maybe you were part of those conversations. And I’m sure learned a decent and

Chris Raphaely  19:19  

I’ll also add, because it’s one of the most highly regular, appropriately so highly regulated industry, both from a quality and, as you mentioned, when the government’s involved, from a financial perspective, which puts a whole different, you know, spin on it. You know, the you know, the operational issues very often have a big legal overlay as well, because it’s so heavily regular. So you know, you’re bumping up against the regulation, whether it be related to the dollars or whether it be related to the quality of care. You know that ends up. You know, that ends up a lot of times these operational issues do become legal issues. So another kind of, you know, get that type of experience, yeah,

Zak Eisenberg  20:11  

Chris, honestly, that’s a great transition to what you’re doing now. And actually, some of the things we were talking about before we started the recording is we were just commenting on the, obviously, the when you have a change in administration at the federal level, there’s always new regulatory approaches and legal approaches. But I think especially, and this isn’t, I think political statement. I think it’s reality. The Trump administration is taking some very big leaps on the regulatory side, which is creating a lot of uncertainty, I’d say, in the health care market. And this is, this is very apropos of what you were just saying. I’m curious your view on what is happening right now, how operators are thinking about this, and what do you think, whether it’s large health systems or smaller companies, private companies, physician founders or entrepreneurs working in the health care space, what do you think are some of those internal conversations that folks are having right now about what’s happening at HHS, what’s happening at FDA and CMS. Maybe you can comment, yeah,

Chris Raphaely  21:30  

sure. So couple of my perspective on a couple things, the issues that we’re talking about, you know, the issues that are being dealt with in these executive orders, for example, which will be dealt with in connection to the with the budget that’s coming up, you know, in the tax the tax situation, or the tax cuts that the administration is going to try and make permanent or continue beyond the end of this year, the issues regarding health care are not new. You know, what’s this? What’s this, what’s the size of the Medicaid program? How do we rein in the Medicaid that’s been in there? You know, that discussion has been, had been being had, you know, since I became in the field, and long before that, I’m sure. So none of it’s new. What’s who accesses health care. I started, you know, said back a couple of minutes ago. It’s, it’s a unique thing, because everybody gets it to a degree. We don’t allow, you know, for to be a little bit crass about it. We don’t allow people just to die in the street. We just don’t do that, you know. And it’s different. If you can’t buy that fancy car, you don’t get that fancy car. If you can’t buy any car, you don’t get the car. That’s not the way it works in healthcare, because it’s not that simple and so. So my only point being, none of the issues are new. The speed at what you know, the speed at which the things are coming at, folks, I think, is really what they’re talking about right now. I mean, you know, the executive orders, you know, I will say what the, you know, there’s always been a debate over kind of the DEI thing and all, but again, there’s a big push back, you know, I think you and I have grown up a world where, you know, probably, you know, I’m gonna not to, it’s not to say politically, but probably things move were steadily moving left in that area, you know, you know, for a while, gradually, but pretty steadily. This is a big swing back the other way. That’s, you know, the debate is not new, but kind of this big swing back the other way. And it’s kind of mathematic of the whole it administration’s whole approach is and it’s no different in health care. You know, these issues are new, the speed and the you know, the way it’s being done with this kind of speed the industry has never seen before. You know, these are big issues, big changes. You know, big view from, you know, paradigm shifts, you know, as far as what the government wants to see, you know, some of the players in the government to the idea, you know, you mentioned, like, what’s going on at HHS, when you start from the top, you know, our current secretary would not be a traditional candidate, obviously, under any administration would not be a typical candidate, but never the less, you know, but very strong views on some things that are not you know. What you would, you would see, is typical governmental view of things. So you know, the speed the use of the executive order like it’s being used has really for a couple of weeks, I think it, it almost did, I’m not going to say paralyzed, because it wasn’t like they had no reaction to it, but there was a wait and see, like we’re not going to react to everything, because if we did, we’d just be all over the place, and who knows where stuff’s going to fall out. Now I. Think people are getting a sense of, you know, where stuff’s falling out, where stuff’s going to fall out, and there’s still litigation. There’s a long way to go on a lot of stuff. So, you know, the first couple of 61st, 60 days or so, 6090, days that we’ve been in, it’s just been kind of an onslaught, which I don’t think the industry’s ever dealt with before, and then we look long term. And I mentioned some of these issues before.

Zak Eisenberg  25:25  

And Chris, I can’t say the enough, my view of the health care industry, I think you share this is, for the most part, it’s very slow to react and to change. And well, we’ll come back to this with some other topics later. But I interrupted you, you were, you know? Yeah,

Chris Raphaely  25:41  

no, right? I mean, it’s slow to react. And again, it’s a, it’s a, it’s a somewhat fragile system, right? So, you know, it’s naturally slow to react, because if you change one thing over here, then there’s effects that you might not even understand. So, you know, there, there’s that piece. And then, you know, and then I think, get, just getting back to what folks are talking about. Then I think, you know, when things turn to the budget, federal budget, uh, you’re looking at, you know, long term, systemic, broad, systemic changes we talked about, you know, looks like, although the plan is not in place, like looks like, there’s going to have to be substantial dollars pull out of the Medicaid budget, how they’re going to do that, how that’s achieved, a number, you know, a number of different things. Then the other area of, you know, kind of really writ large, is people aren’t paying as much attention to as the ACA subsidies. But it’s the same issue. Those are expiring at the end of the year. If those get kind of pulled out of the system, there’s going to be a lot more. We’re going to go back to kind of pre 2010, environment, where there’s, you know, a lot, you know, probably likely, millions of more people who don’t have coverage. Again, we’ve lived in that world before. We lived in that world for most of my career, more than not. But, you know, to go back to that in a matter of a year is another story, because we build up to that. You know, the ACA was passed in 2010 but you know, the enrollment probably didn’t, may have just crested. You know what? I mean, it’s so, you know, you’re, I think that’s what folks are looking at, and then, depending on what the sector is, right? You know, you’re looking at different things in that. I mean, when we talk about Medicaid, you know, obviously that’s a concern for hospital. When we talk about ACA, that’s, you know, that’s a concern for more than just hospitals, because, you know, a lot of businesses we work with which are in the M and a space, they’re not really focused on Medicaid. They’re approached on private insurance or Medicare Advantage and stuff like that. But there will be, but even for those folks, there’s going to be a ripple effect. There has to be, because when you pull that much money out of the system, you know the net, you know what we should, what we would expect, absent some type of other intervention, and we could talk about that is, you know, you might see some providers get pushed out of the system. You may see some hospitals, more hospitals closed, but you’re also going to likely see but those hospitals, we still have EMTALA, they’re still going to have to treat people that aren’t insured. And how do those costs get distributed. They get distributed from the government to the private insurance so, you know, there’ll be a ripple effect there. And you wonder, you know, the more you and and so then will the next thing? Well, you know, because we’ve taken all the pub a lot of public money out, the question is going to be, well, is the private commercial insurance market gonna gonna really see steep inflation. And then, you know, one of the levers that can be pulled, though, is right, is, is, you know, under the ACA, what’s required is, kind of for employers to get that credit for coverage is pretty, you know, fairly, you know, fairly comprehensive, let’s say, I’m not going to say rich, but fairly comprehensive benefits, so you can bring costs down on that side, if you skinny the benefits, right? You do skinnier benefits, yeah,

Zak Eisenberg  29:07  

it seems like there’s going to be a big pushback from the employer community writ large, because, as you’re saying, it’s actually partially a subsidy to businesses, because there are many businesses out there who pay their employees under the federal minimum to qualify for these subsidies. You know, Walmart, for example, is a huge beneficiary of Medicaid, right? Yeah, just to use them as a

Chris Raphaely  29:33  

Yeah, that would be more the TA, probably more the ACA, that expands. Oh, you’re right. Expansion, exactly. You got the part timers, yeah, yeah.

Zak Eisenberg  29:41  

So I think you have this issue coupled with also, I think there’s the other large macro change in the US, but I think this is also just happening again. This is a global issue which we haven’t talked about yet, the push to move. Move care generally, from higher cost side service to lower cost side service. And again, not unique to the US. Certainly, there’s been a lot of experimentation in this globally, especially with the advent of telehealth technologies and more mobile unit technologies for for example, bench top pathology units, etc. And in a bunch of ways, you know, Medicaid, it’s interesting you say, you know, in the private space, it’s, it’s not really being tapped very much. Only in the last five years or so have there been many, I’d say, private operators that have start to open, that are focused on negotiating with Medicaid insurance at the state level, because the model has finally gotten to the point on the provider side where the cost, the unit economics and the gross profit model can actually make make sense. So I, you know, thinking, No,

Chris Raphaely  31:01  

I think that’s right. I mean, I’m not to say, I’m not to say that there aren’t folks for your businesses that focus on the Medicaid because it’s a, it’s a big population. There is a lot of aggregate dollars there. It’s not, doesn’t pay well on a per unit basis. But, you know, there’s, there’s the population has particular challenges, you know, in certain sectors you know, to manage. And so there’s, there’s certainly a need for people in that space who can, you know, think of new ways to manage care, can bring technology to bear in a cost efficient manner, to bring costs down. So not to say at all that that space doesn’t warrant a look and that people aren’t doing it, but I think still more people focus on the commercial, insured space.

Zak Eisenberg  31:49  

No, of course, yeah, of course. I guess part of my point in this is, and you said it earlier, it’s hard to tell what the ripple effects will be, because it’s a totally different market now than when the ACA was passed, where I think most of this was being handled by hospitals, and that isn’t necessarily the case anymore. Yeah, our private practice has stepped up, maybe, you know, medical groups, etc. This is actually a good, good transition, Chris from, you know, the regulatory environment, which, as you said, the really different aspect the Trump administration isn’t that they have a different political view. And again, that’s, you know, totally, totally good. They won the election. It’s, it’s really the speed at which they are, are changing things. Is a big is a tsunami of uncertainty. Thing is a good way to think about it, the but it goes into a larger trend discussion I want to have, which is thinking about the last and we started to touch on this a little bit over the last 10 years. In your view, what are the big and it could be socioeconomic trends or trend regulatory trends in healthcare in particular, that you think are affecting the healthcare system here in the US or globally. It could go as broad as you’d like. And then the second part to that is looking out over the next next five to 10 years, what are and again. You know, prediction questions are often challenging for people, yeah, but, but, but just curious your thoughts. Because I think lots of folks who listen to this podcast, lots of them are, you know, health care entrepreneurs or providers, but most of them are focused much more on their business. What’s happening in their micro level? Maybe they read about the news. What’s interesting about having folks on like you is that part of your job is really think broadly, and you get a lot of data through your clients and through conferences you go to, and just people you’re speaking to, you’re really have a broader data set of what’s happening in the market. So maybe you can comment on that a bit, sure,

Chris Raphaely  34:12  

so kind of on the for the past 10 years, and I’m going to say this generally, technology was an issue 10 years ago, bringing technology to bear. That’s an important piece of the health care system, obviously, and I’m going to touch on this a little bit when we talk about the next 10 years. But, you know, so technology remains an important, an important aspect of the trends that are going on. But when you look, you know, I think we’ll start, we’ll go back to the ACA. I think there’s been the kind of the trend, or the, if you had to capture the last 10 years, it was, you know, a macro financing. New ways to look at macro financing, expanding Medicaid, creating the ACA access, creating access, how we create access? And. You know, that was pretty LA, it was a landmark legislation, and it’s 15 years ago. And we could probably hedge a little bit and say it was the last decade, because by the time it was done with challenges and it really got implemented, you know, it was probably 2014 2015 so it’s been just about a decade, you know, we’ve seen value based care. I and we do, I’ve always done a lot of work in the value based care area. It was probably tout in. And again, statistics can be, can be, can can show what you want them to show. And value based care is important, but has it been that? And that was a trend, if you would talk to somebody in 2012 or, you mean, 2014 I would have said it’s gonna be a lot more important piece than it is. I mean, there are a lot of value based deals, but I think as overall revenue, we’re still a fee for service model, okay, but it’s been about access and and basically using the insurance system to cover as many people and spread the cost as much as possible. And that’s made insurance even to a degree, even more expensive in a lot of ways, but a lot of it’s how much you count it. You know which way you count it, right? So you know, it’s made the premiums more because the benefits are a little bit more comprehensive. So I think, you know, one of the big folks has had to be what the ACA did. And, you know, like I said, the Medicaid expansion, Medicare Advantage, another area, it’s, it’s about, you know, that’s similar to kind of value based care, because it’s managing, it’s giving a third party the financial responsibility to manage a health care spend in its entirety. You know what I mean? That picked up. You know, it wasn’t, it’s not a new concept, but it picked up, and certainly picked up in the you mentioned it before, in the Medicaid space. So I think, you know, those are trends that I would say the last 10 years were the earmark of the last 10 years. From a kind of healthcare writ large perspective, I’m probably missing something in there. But, you know, I think that was a big piece. You know, telehealth, that’s where that goes. That became a big issue by necessity, during COVID and in the where I think the Jerry’s still out, I think it’s obviously going to be used more and more, the ability that just the technology associated with it, it has to be used more and more, but like to see their they do, but they also like to see their doctor in person. So it’s a magic deal, and it’s, again, figuring out how to pay for that. Because on you know, I’ll give you the example. The debate is, wait a minute, so if I’m the provider and I do the exact same service, and I’m on the phone with you, but I give you the same analysis, and let’s assume I have, because the technology have the same, you know, virtually the same diagnostic capability than I would have. Is I sit in your office, why wouldn’t I get paid the same amount for the offices? That’s how I look at as a provider, seems fair, but as an insurer, and I’ve had folks who work for payers that I know say, you know, fine, but you know, I know you’re going to have three tele health meetings or three tele health encounters. You know when you used to have, you know, for every one you used to have when they have to come and sit in your front of the office, just because the barriers are less so, why am I going to pay for three when I’m getting what I got for one you know what I mean? So there’s that back and forth tug of war, you know. And also, so it’s been, you use the tool, not to get too wonky here, but it’s been a tool to generate fee for service revenue. But it can also be used as a tool when somebody’s at risk to pull costs down. You know what I mean, I still

Zak Eisenberg  39:03  

preventative measure, yeah, yeah, or, yeah, or, you

Chris Raphaely  39:08  

know, just a cost saving matter. So by and large, I think it’s the jury’s still out a little bit. What side is it going to fall on? You know what I mean, it’s probably going to fall on both right, and then the technology will get better. So I think that’s what I would see. You know, the hallmark of kind of the last 10 years has really been the macro financing. I’m

Zak Eisenberg  39:28  

looking forward. What do you what are you seeing? I mean, we already talked about Trump administration impacts over the next five years, let’s say but you know, outside of that, what are you seeing, just as a general industry trend? Yeah, so the

Chris Raphaely  39:47  

industry trend, you know, again, financing, just like I said, going backwards, technology is always there. Going forwards, I’ll use the same disclaimer, financing is always going to be an issue. But, you know, and this is a. A space that I know, you know, we both work in, and we both work together in. You know, when it comes to, you know, the speed of innovation, particularly that’s going to be enhanced by AI in the pharma, life sciences, you know, gene therapies, that is going to be, it is going to be so transformative. Now it transformed. As far as you know, efficacy, how it’s paid for, is going to be another thing entirely. So I think you know, the GLP ones are the perfect example, right? I mean, life changing drug, incredibly effective, can be used by a lot of people, and wasn’t on the scene five years ago at all, right? Wasn’t on the scene, right? So now it’s on the scene. And how do we pay for it? And it’s very effective. And you know this, we’ve got clients who have cures for things, right? How, you know. So how are we going to pay for that? You know, they’re not cheap. So how are we going to, you know, and ultimately, it’s the employers who pay for it, you know, by and large, right? You know, in the main right? Sure,

Zak Eisenberg  41:18  

yeah, I think of this payment issue as a kind of a timing question, because the savings and it kind of flows into value based care as well. But to me, it’s, it’s a little bit of a, how do you design the payment mechanism so that both the payer and the, you know, drug provider, let’s say the pharmaceutical company are both winning so that the patient can get this, this care. Because, yeah, expense is key. We you know, practically, it needs to get paid for. But if you can save the system, the payer X percentage of cost related to that patient over a 30 year period. It’s really about how you structure those payments over a long period so that the the payer realizes that, yeah, that cost savings and yeah, go ahead, yeah.

Chris Raphaely  42:19  

I’ve worked with clients who you know, really look at that aspect, just the financing, just to kind of, you know, stretching up that time period to pay for it. But, you know, I think it come back to true. It’s ultimately, you know, the employers to pay for it. And that’s the challenge, though, because we’re still in a by and large, again, not entirely obviously, but still by and large, an employer based system, and people don’t stay at jobs 30 years Zak, and you know that right anymore, they never, if they ever did, but they certainly don’t now. So you know when you it, when we say the plan, the plan is locked in for as long as that got persons, an employee, and you know what? What’s the average term now and with an employer, and then they’re off. So great. I just paid for that person’s cure, and they’re off and running so they can go work for somebody else. So there’s a little bit of that. So there has to be some way to spread it out actuarially. And look, if you in a real sophisticated view, and in looking at you can say, well, yes, you’ll lose that employee, but you’ll also get that employee who you got no, you know, cost for because they were using five years before they came. And so it’s more actuarial, but that’s not the way it’s looked at now, because that, you know, that really expensive treatment hit hits my books. And the only thing I’ll come back to on the technology space is, I think the GLP ones are the tip of the iceberg. You know, I think there’s going to be, you know, it’s going to come at us so fast. And so I, you really want to, you go back to that kind of, the social issues that you talk about, you know, many countries and I, we do a lot of work. We’re, we’re, we’re based in the US. We do a lot of work in the our legal works. We’re, you know, our legal work is all in the US, but, you know, we, we do a lot of work in South Florida, and we’re familiar, you know, it’s a little bit different market, because a lot of folks there are used to a Cash System. You don’t have insurance covered. So that changes a lot of different things. So are we going to, you know, are we going to end up, you know, down the road, because we can’t really saddle employers with with kind of the explosion of costs that could come with this technology. Are we going to turn into more of a, you know, two tiered system, where, where there’s a cash system, and it’s you know, and unfortunately, which you know will go back and forth, right? It’s going to be ebb and flow, which way the government positions. But you know, if you end up with a bifurcated system, you’re going to have the folks that that can afford, really life saving, cheap treatments, and their life will be saved, and you’ll others. Unfortunately, if you, if you go as far as that go, they. Won’t have access to it, and, you know, and it’ll be dramatic, dramatic in the difference of health. And again, it never in this is, might be the, you know, again, it to me to have too much of a disparity from the top and the bottom, so to speak, is always dangerous, whether it be financial society or health society. You know what I mean? Is always dangerous, and it’s going to go back and forth, right? It’s going to go back,

Zak Eisenberg  45:26  

yeah, of course, of course. There’s just the practicality of, I think what you’re getting at of paying for not only these treatments, but just newer treatments with, you know, again, you mentioned AI. There’s a lot happening even on the provider side there. Forget about drug discovery. And actually, I think this is a good way to transition, going from the very macro that we’ve been talking about, regulatory changes and macro changes to more of a micro on a day to day basis. So you have experience working in private practice, in health care, also sitting on a C suite, when you engage with a client and they’re going through some sort of strategic partnership transaction process, whatever it might be, a deal process, how do you how do you approach that process with them? How do you help them navigate this very complex, rapidly changing landscape, and like we talked about, highly regulated in business with the government. So there are a lot of lot of challenging aspects to operating in this space, and especially if you’re, you know, a mid sized company, even one making a few 100 million dollars in revenue. These can be very, very challenging questions to tackle at that size of company. It’s, it’s challenging for the biggest insurers who are, you know, many hundreds of times larger than that. So how do you think about this?

Chris Raphaely  46:58  

Well, I Yeah. I mean, you the first thing is, first of all, the very first thing is, who’s your client, right? If it’s a, if it’s a large, you know, a large company, you’re probably going to be dealing with a number of different folks, right, who are pretty sophisticated in their area, and so in that case, often, you know, you’re less of a strategic advisor to a degree, right? It’s not a broad strategy. You may advise on discrete issues, but, you know, as opposed to maybe an entrepreneur who’s never gone through a sale process before, you’re really kind of, you know, they may rely on you, and very often we’re in there with an investment banker. So they, you know, you’re the team. You know, you and I have been the team for the client, and we are the team, you know, the deal team, where, you know, when you’re working with a large company, you know, you’ve got, your team is is already kind of in a lot of that team is already in place. So a lot of times you’re working like, I’ll be working with a lawyer, you’ll be working with a CFO, right? These people are as accomplished in their field, probably, as you are, right? And in the same field, so little bit different depending on how the client, who the client is, right? So you got to under know your audience. It’s true here. So that’s the first thing. But then at the end of the day, you have to figure out what’s important to them, kind of, what their style is. And you know, when you’ve had experience, you, you, you know, you, you know, you kind of, there’s a couple of different flavors, and you kind of get a quick, pretty quick sense of how they like to operate. You know, whether you know, and then, and then you figure that out, and figure out, Okay, where am I going to be most helpful? Where am I going to deliver value for this person as quickly as possible and as efficiently as possible, based on what I know, based on what my experience is. So that’s what you kind of think about from the or I think about from the tactical side, and then, you know, and there is you want to try and relate to the person. I mean, people again, I’m not saying you got to be their best friend, but people work. I’ve had so many clients in the pitches say, yeah, they ultimately decide it’s not all fancy. Like, where you go to law school, or how many you did? Like, yeah, I think I can work with you after a couple of conversations, it boils down to that. So you want to be, you want to be human in the process, but you and then, and then, you know, like you said, figure out what their goals are. Always be as efficient as possible. Never I, you know, get I’ve seen it too often. Gas lighting is not cool in this space, right? Because, you know, they’re relying on you as the lawyer, and if you tell them something’s a huge issue, they’re going to take it seriously, so a better day and be a huge issue. You know, ultimately, it’s not about the lawyer in deal work, right? It’s getting the deal done. You know, you got to protect your client. And you know, clients are big, often, big boy. And big girls, too. They understand risk, so it’s not to de risk everything for them, you know, as long as they understand it and you feel that they are taking informed risk, that’s your job, you know, and not to tell them what risk to take. So real important to understand that your jobs, they wouldn’t be doing the deal if they didn’t want to get it done. You know, you’ve all, you’ve worked with clients that you know they want the deal and they need that deal so they don’t want to hear all the ways that it can’t get done, or all the ways that they’re going to sidetrack you that you got to help them,

Zak Eisenberg  50:33  

especially in health care. Chris, yeah, because if you look for a reason not to do something in health care, you’re usually going to find one. Well, that’s great. There’s so much compliance and and regulation. I mean, it’s actually kind of similar to the space I work in, in finance. Really, we joke internally, there’s no space more regulated than finance, except our client space, which is the health care market. So yeah, so it look, it is a great point. I think, certainly you know, keeping, what I’m hearing, is keeping efficiency in mind, yeah, collaboration with the other side and while, at the same time, making sure your clients are informed about all the potential risk, without, without necessarily even making it into a deal killer situation, because ultimately, this space is very challenging to operate in. And like you said, if they’re going through the transaction, they probably have a good, good reason for doing so.

Chris Raphaely  51:36  

And you know, that’s why, you know experience in the field, you know, a lot of you know, since, since I’ve entered law, you know, the you have seen some real young people in other industries and in the law doing really big things really early on their career. But, you know, the one thing is, like, a lot of this stuff, is you could tell a client what the risks are, but it also helps to say, you know, and this is what we’re seeing. This is where the market is, because a lot of this stuff is, look, you could, there’s so many arrangements that you could say violate, for example, something we deal with all the time, any Kickback Statute, right? Because it’s vague. It’s a vague survivor statute. When did I, when did I give you a gift? Because I wanted businesses from you, other than that, the fact that we’re just friends that I like to give you again. So who knows where that is? So you want to be able to, you know, it’s a much better conversation where you can say, Look, these are the risks. This is where the market is. Okay, this is what the market’s doing. Is the whole market at risk? Possibly, but you understand that if you’re with the market. You know, you’ve got less chance of of having an issue. Do you know what I mean? Again, doesn’t guarantee anything, but, but particularly seasoned executives, are used to dealing in that all the time. They under, you know, they deal with financial risks. They deal with business risk all the time. So, you know, sometimes, you know, you can be a little bit too like, oh, you can’t do this, or you can do that. So, you know, you have to set the tongue. You have to set the context. A lot. You can’t skip context, you know, you got to set the context for the client. And a lot of it’s kind of interpreting your world into theirs, especially when you’re talking about you’re dealing with, like, a more sophisticated team at the client, as opposed to, we’ve seen this, you know, when you’re working with entrepreneurs. We’ve been on calls at 11 o’clock at night where you’re basically the cheerleader for the for the person. You know what I mean, like, this is how you should do it. Hang in there. This is how deals go, you know. So it depends, again, who your client is and what the industry is. But you know, I think the thing is, know, your client always keep that objective in mind, that the point is to close the deal. They don’t bring a deal to you if they didn’t think it was a good deal. Now, you may think it’s a crack deal. It can happen, but that you’re not, that’s not your role is to tell and not not my role. It may be your role because you’re on the you’re on the dollar defense side, so it certainly probably is your role. Now, if I see legally, it’s a crap deal, then I’ll say it, and I wouldn’t expect you to say, Oh, that’s a shitty legal, bad legal deal.

Zak Eisenberg  54:20  

Yeah, Chris, I actually think that’s a great place for us to to end. In short, it sounds like and like i We’ve known each other for a while, so just candidly, what’s so interesting about how you think as an attorney is that you you really think from a top down perspective. And lots of attorneys don’t do this. They don’t they don’t really look at the playing field. They just look at what’s right in front of them. They’re looking at the tree, not the forest. And I think it’s very valuable to as you’re going through this process, also from a legal perspective, because I think it helps you. So think about future proofing your partnership for all these very rapid changes that are coming towards health care. And we didn’t even get into AI, for example, in detail, but like, it’s a, yeah, it’s a really interesting perspective you bring to the table. And I, I hope the audience enjoyed this, another episode of always great to talk to you. Yeah, yeah, yeah, absolutely, another episode of transaction healthcare, and appreciate you coming up. Thanks,

Chris Raphaely  55:29  

absolutely. Thanks so much, Zak.

Outro 55:31 

And that wraps up another episode of Transaction Healthcare. Hit the subscribe button to get notified when we release new conversations. And if you are someone interested in learning more about these topics, visit us at merrittadvisory.com or send us an email at contactus@merrittadvisory.com.