Amanda Streeter, Vice President of M&A with H2 Health, has supported H2’s impressive growth including over 20 acquisitions and 25 de novo locations. H2 strives to deliver a compassionate environment for both patients and employees. H2 partners with leading outpatient therapy providers across the country to collaborate and work together to deliver exceptional patient care.

Amanda Streeter, Vice President of M&A with H2 Health

The Pulse: I’d love to hear more about your role at H2. How has your role evolved as the business has grown organically and inorganically?

Amanda Streeter: I started with H2’s predecessor, Heartland, in 2006, in a regional director role for their Florida locations. I was managing and supervising staff at 20 clinics in that area at the time. It was a position that supported front end administration, touched on revenue cycle and electronic medical record software. It was mostly an operations focused role. From that point my role continued to grow and expand. After working for the Florida clinics, I was promoted to a national administration support for about  50 facilities. In this role, I managed many functions of the business including real estate, vendor relationships, payor contracting, and training. In my transition to H2, I was very involved as a seller representative, working through the diligence process, which exposed me to the transaction process. The combination of both that familiarity with managing therapy operations and then being part of a transaction really laid the foundation for my current role and allowed me to step into a role handling M&A for H2. 

The Pulse: Discuss H2’s De Novo playbook. How do you think through market selection and product market fit? Discuss key assumptions, criteria, and iterations.

AS: H2’s De Novo growth has had some aspects of market selection, but it also has had, I would say, a greater amount of relationship development as a driving factor in many areas. We certainly diligence the market, but oftentimes the conversation about a De Novo starts with a very talented and entrepreneurial clinician who is interested in establishing a De Novo in a given market. In my experience, this is a great way to start off with a De Novo. After this stage, we then complete investigative diligence, which includes understanding the market, understanding competition, and understanding the population dynamics. Additional diligence includes estimates of the initial investment costs that are going to be needed, ramp, and timeline to opening. The tightness of the labor market over the last couple of years has really made it important that we have the right staff members and have adequate staff as one of the foundations of our De Novo strategy. In terms of sequencing, we are identifying the clinician first. The second step or maybe in some respects, a concurrent step, is identifying the real estate. But I would say identifying the appropriate clinical staff is the top priority for us.

The Pulse: What have been the most significant challenges related to growth. How have you and your team worked to address these challenges and accelerate growth?

AS: I would say the labor market is probably the biggest challenge. The real estate market has also been challenging in some markets. Certain markets where demand for real estate has been high have created challenges. I would say there have also been challenges related to supply chain and timeline management. And by that, I mean we often find ourselves delayed with construction issues, which delays opening dates and timelines. 

The Pulse: Given increased private equity investment in physical therapy and occupational therapy, how has H2 maintained the pace and quality of growth?

AS: H2 has maintained its current level of growth due to its strong relationships and emphasis on aligning cultures. We put a lot of value in making sure that the groups that we partner with are a good fit for us, so that we can make sure that we’re aligned in terms of expectation of culture and have an idea of what operations are going to look like post-closing. We are upfront and very diligent about only partnering with groups that we feel are culturally aligned. It has certainly made it a process that allows us to keep momentum and to continue generating very strong and positive word of mouth in the community as well. 

That being said, there certainly has been increased competition in many transactions. Sellers in the market are certainly aware and will speak to the fact that they’re being approached on a regular basis by a number of strategics similar to H2. 

The Pulse: Walk me through H2’s integration strategy and the steps involved after closing an acquisition.

AS: We are committed to having as much integration done before closing as possible. In many of our transactions, several steps of integration are already completed by closing. We feel like that’s really important so that the groups can hit the ground running right away. Pre-closing integration starts with alignment between teams. It’s important that the seller and buyer are aligned on timeline and how we can accomplish the timeline as efficiently as possible so that it’s not a distraction from patient care. We tell all of our new groups that patient care comes first, and we want to make sure that that’s maintained throughout the process.

The Pulse: How do you think about balancing growth and profitability? Walk me through the thought process and how / if the mindset has evolved since you joined H2?

AS: I don’t really consider them to be at odds with each other. In terms of profitability, we certainly have expectations for our teams. We’re also a company that understands that the people are the business. With that in mind, we create achievable bonus programs throughout all levels of the organization so that there are incentives for growth for every employee in the company. As a result, we can make sure that the culture and values and expectations are aligned, which results in having a balance of growth and profitability. 

The Pulse: For aspiring entrepreneurs, what’s the single most important consideration related to sustainable and durable growth? What happens when growth doesn’t go as planned or is slower than expected?

AS: I would say having adequate systems and infrastructure to support growth is vital. In addition,  having a clear plan of how you want it to be executed is also very important. In terms of H2, we knew that we were committed to a very tight timeline for integration because we knew that having to support multiple systems for all of our groups was not going to be sustainable. We have a strong foundation in place to support integration. We committed to that and we invested in it. We also committed to accomplishing that integration in a very efficient and expedited way compared to other businesses, so that we were not taking away resources from the rest of the organization to maintain growth. In terms of the second question, I would say issues arise when cultures aren’t aligned. Second is integration related issues, which can manifest in a slow integration, a distracted integration, and ultimately an inefficient process. All of those things are going to distract from patient care, which leads to employees that don’t want to stick around, which is a killer for our business. 

The Pulse: Given the recent consolidation in the physical therapy space, are there any other adjacent areas of healthcare where you expect to see a similar strategy?

AS: I believe there is opportunity in adjacent services where there are a meaningful number of owner operators.  A healthcare provider who is committed to quality patient care carries a heavy burden if they also have the complexity of needing to bill payers, train administrative support, perform human resources functions and offer benefit plans. The opportunity to realign provider interests and provide support for administrative functions creates opportunity. The seller/operator can focus on generating revenue, growing the business, and providing quality patient care.  Once you take some of the administrative work off of their plate, the business tends to improve.

Interviewed by Dan Varrichio, January 2024.

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On Feb 15-16, 2024, Wharton is excited to feature more expert perspectives at our annual Wharton Health Care Business Conference. This year’s conference is themed ‘The Resilience Edge.’ Conference details and tickets are available here.