Concentra's growing...

Now over 750 locations after the Nova acquisition

Last week I caught up Concentra CEO Keith Newton. Keith has been leading Concentra on and off for decades, and knows the business better than anyone. The impetus was Concentra’s latest acquisition - Nova Medical Center.

Quick update on Concentra - the company’s revenue for 2024 should be $1.9 billion in ;adjusted EBITDA (yeah I know…) is about 20% of revenue with net income of $170 million. When the $265 million acquisition is complete Concentra’s full year revenues will be around $2.1 billion.

The interview has been mildly edited for clarity. Any errors are mine.

MCM - Talk about how this came about.

Newton: This has been 10 years in the making of developing a relationship – After Concentra, Nova is the largest dedicated occ med provider...all 5 states [Nova is in] match up with current Concentra locations – complementary footprint – Concentra already has 99 locations in CA, when add we the Nova centers in TX we’ll have 100 in TX as well – for the most part Concentra is in large metro areas…we have avoided going to smaller cities where Nova has been very successful in south Texas so fills Nova out our foot print – will learn more from smaller locations.

What percentage of the nation’s work comp injuries will Concentra see in 2025 ?

Today [we are seeing] about 20% - guess there are 3.5 million or so – Nova will add 50,000 or so.

What are next steps in integration... IT adoption?
Started evaluation of IT and processes now, we want to look carefully at what Nova has for tech and its operating model…[over time] Nova clinics will] definitely be on Concentra branding and likely on Concentra technology…[In our platform] payor integration and communications are streamlined and data is integrated into payers claim system in almost real time – no paper chasing..

In every transaction we do we always learn something and then figure out how to integrate that into our model.

What are you seeing with health system based occ health/occ med?

Definitely some out there – have not seen them jumping into it, most struggle doing it – haven’t seen any system do it well, its not their priority, don’t commit resources or capital to it…we have been successful acquiring occ med facilities from hospitals – have some Joint Ventures (JVs) e.g. UPMC and 15 or 20 more – what we have seen in the last year is quite a few that want to get out of it but want to have a relationship with Concentra – [health systems are] hoping for downstream dx and sx referrals, they don’t want to deal with primary care part of occ med – Green Bay JV has been very successful last year or two.

Hospitals are trying to do urgent care – they want the referrals and want their ortho groups utilized, Concentra wants to control that patient as long as they can – there’s a percentage that need a referral to orthos – Concentra has built relationship either thru health system or done it themselves. Want to get them before and after sx.

We look for and there are opportunities to partner with health systems, but not necessarily a major growth driver for us.

What can customers expect in 2025?

Lot has to do w data and delivering it digitally and utilize it quicker and easier – biggest effort or lift for us

We are now 100% separated from Select [from ownership]– like any large entity some functions were still being provided Benefits and payroll admin, IT support, Accounting & Finance reporting, and some legal support– have 2 years to separate those functions to be completely separate. [Our focus is on] getting data to customers faster and where it needs to be...claims system in right place

Finished rolling out electronic whiteboards in all centers to replace dry erase boards – how long employees are in the center is a key driver to customer satisfaction – we installed electronic boards integrated to practice mgt systems that help move patients along much faster so clinical personnel can focus on patients and not administrative - TAT down, patient satisfaction and provider satisfaction are up. [We continue to work on] modernizing our systems as some legacy systems are still in place, so those will be improved to further improve clinicians’ and patients’ experience.

95% of revenue is bricks and mortar; we’re excited about on-sites – 150+ onsites where revenue model cost plus, there can be a variety of different models – using Epic from EMR – had focused on occ med are now looking more broadly at employee population management - advanced primary care.

My take - facilities should be doubling down on occ health - orthopedics is one of the most profitable lines at any hospital, which is a major reason facilities are focusing on capturing workers’ comp revenue.

Partnering with an occ medicine clinic makes sense, but owning the whole episode has a lot more benefits than just capturing ortho procedures.

Note - Concentra is not and has never been an HSA client.