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Paul Martin

Good afternoon and welcome to another episode of Paul Martin's Crucial Conversations. Today, we are so excited to have with us Ray Wall. Ray is the chief operating officer for ATI physical therapy. And as many of you know, ATI is now a publicly traded physical therapy company with close to 900 clinics in 24 states and they are based out of Boeing Brook Illinois Ray it is great to have you with us today.

Ray Wahl

Good morning Paul thanks for. Thanks for letting me on.

Paul Martin

Right start if you could for our audience and tell us a little bit about your background and how you have risen to hold your current position of chief operating officer at ATI.

Ray Wahl

Sure, sure. So I'm an athletic trainer and physical therapy by background. Physical therapist by background. So I finish my athletic training degree and I practice for about four years in Iowa and an outreach clinic working at a local high school did that like I said for for a period of time and then went back to physical therapy school, got my DPT from Temple University in Philadelphia here and after I finished school, I went on to join a company called Pro Physical Therapy. So at the time Pro had, I'd say eight or ten clinics in that Pennsylvania, Delaware, Maryland market and joined as a staff therapist. This is roughly 2003 work there for a few years and became a clinical director in our North Wilmington office, which is a place very special to my heart and in my opinion, that the crown jewel of A.I., but I'm a bit biased there, so. And then with pro we I actually joined Aetna in 2006 Pro Pro was ATi's first acquisition. So so at the time I was a clinical director. We had, like I said, about ten clinics was acquired by 80. I think that same time they had roughly ten or 14 clinics at the time. So, so lti doubled from, from 14 to 28 ish clinics and just kind of grew from there. I've had an opportunity to take on various roles and responsibilities, mostly within the operations function, whether it's in the tri state area of where Pro was and then had an opportunity to start to branch out a little bit. Spent most of my career on the East Coast, whether it be Massachusetts or down in South Carolina, helping out with the integration of the different acquisitions that we've done. I spent a lot of time in Michigan as well and so it's really been an exciting, exciting career and in really, really interesting opportunities. And so in I had the opportunity to step into this role that I'm currently in and about midway through 2019 and continue to learn every day and interact with the clinics, which is one of the one of my favorite things to do is get in the four walls and just see how things are going. Reminds me of North Wilmington back in the day right.

Paul Martin

That's awesome. And again, for our audience, the story is that Ray was a physical therapist, then became a clinic director and now is the chief operating officer of a 900 clinic business. That's a real testament to A.I. Physical therapy. Now a publicly traded company that they have a physical therapist who was once a staff physical therapist and a clinical director, literally operating all of their clinics. So, Ray, tell me a little bit about what the responsibilities of a chief operating officer are at 80.

Ray Wahl

Oh, well, it's a it's a long conversation, Paul. A lot of things go into the role. And like I said earlier, I'm learning. I'm learning every day. But you know, simply put, ultimately, you know, I'm responsible for, for all aspects of of our operations within the clinics from the staff there professional growth and development to ultimately the overall patient experience. Right. I work with a lot of different departments. It's not just me. It's not just operations it's it's H.R., it's talent acquisition, it's growth in the facilities department. So ultimately, you know, the patient experience comes down to what occurs in our in our four walls. And that's something that I take pretty seriously. And in that I own, I'm also pretty involved in the de novo process and work closely with the growth team terms of where we want to go, what type of clinics do we want to have, and making sure those clinics have the resources that they need, whether it's staff equipment, whatever it might be. And then I'll say lastly, but the list is much more exhaustive than that. I play a fairly strong role in developing the integration plans as we perform M&A. So as we bring on people in new companies onto the platform, I want to make sure that they have a seamless experience that they they feel good about the decision that they made, and they feel like they're part of something that might be a little bit bigger, but they feel like they're part of it. So integration is something you know, I said earlier, some of my background, I've had an opportunity to be part of a lot of different acquisitions and the integration of them. So it's really, really important that you get that right. So I spend quite a bit of time working on that as well.

Paul Martin

Absolutely. Absolutely. So Raine going to bring you back to an announcement that was made on June 17th, and I would imagine it gives you chills. It gives me some chills as well. But here it is directly from Yahoo! Finance. The transaction, which was approved on June 15th, 20, 21 by your SPAC Fortress Valley Acquisition Corp's shareholders further positions 80 to lead the rapidly growing physical therapy industry with an emphasis on delivering predictable outcomes for patients with musculoskeletal issues beginning June 17th 2021 the company will operate as atai physical therapy inc and eighties. Shares of class a common stock will trade on the new York Stock Exchange under the symbol 80 IP. Ray can you walk us through that briefly how that came about, what that means now walk us through that a little bit.

Ray Wahl

Sure. You know, as you probably know, 80 eyes had several private equity partners since 2005. Most recently we partnered with Advent International in 2016. We we've had an awesome growth experience with them and we started to go through the SPAC process which you know we were thinking about the IPO and the opportunity probably in early 2020. We all know what happened in 20, 20 and we had to put a lot of our plans I think everybody did on the side burner while we try to just take care of the day to the day to day through the pandemic. But so, so you know, the beginning months of 20, 21 we went through the SPAC process and like you said, you know Fortress brought us on June 18th to the New York Stock Exchange and turned us into a public company. It's an exciting milestone for T.I. You know, hopefully it's something where it's going to provide future opportune opportunity, not only for internal, you know, 80 folks, but also, you know, the patients that we treat and the communities that we're in. And hopefully we can continue to expand that You know, ultimately, as it pertains to today's conversation, I think the IPO is going to allow us to pay down some debt and turn up some some free cash that will allow us to invest in the business even more than we have done in the past. And, you know, one thing we think about when we talk about investment is to know activity and specifically acquisitions as well. So so we're really excited to be in this position.

Paul Martin

Yeah, we're excited for T.I. to be I say back in the acquisition game, but I know that, you know, Advent had a real strategy of new startups. And you guys have done just a phenomenal job in filling in markets where you needed, you know, additional resources, etc. So now you guys have done just an unbelievable job over the last five years without really doing any acquisitions. So it's remarkable.

Ray Wahl

Yeah. You know, when we partnered with Advent, we had a lot of runway in our existing markets, right? So we wanted to take advantage of that. We also wanted to kind of work on that to normal muscle a little bit, ensuring that, you know, we can open up a clinic, whether it's in a in a footprint that we already have a presence or maybe in a in a new market where we don't have a presence and be able to, you know, build out the growth team and ensure that we're picking the right locations, picking the right leaders. Right. When you open up a de novo in a market where you already have infrastructure, that's one thing. But but when you go to a new market and you have to build out a team from the ground up, it's exciting. It's exciting for me and it's it's exciting for the company and those involved. But but there's a there's a skill that needs to be developed there. And so we were really pushed and challenged by Advent to build that out. And, you know, to your point, Paul, we spent the last few years really focusing on that. And and I think we've we've gotten really good at that's a noble process. But all that said, we're excited to get back into the to the acquisition market. You know, it's something where, again, I have had an opportunity to integrate and maybe from this seed, I'll have a little bit of a different role. But but it's an exciting time to kind of look to for new partners and to grow even further into new markets.

Paul Martin

So let's talk a little bit about, you know, growth strategy and, you know, kind of the model as I know, you know, USP is the other pure play outpatient physical therapy, publicly held company, but two very different models with Pete, with USP being, you know, exclusively a partnership model and 80 being more of a 100% owned model What will be the strategy for 80 now as a publicly traded company and how do you see that strategy competing in this market? Going forward?

Ray Wahl

Yeah, so so I think everybody's familiar with us put in there that pure play comp we also think about the select is a public company as well. And you know I think it's I think we sit in a different part of that patient journey. And when I say that, you know, we're committed to being the leader in the prevention and treatment of the most key disorders, look, we still our core delivery model is within the four walls of our clinics. You set 900 clinics in growing, but we're expanding that. We're reaching outside of our four walls. We're using telehealth, we're using preventative services like sports medicine, working more with employer services through our U.S. service line, trying to get at the front of physical therapy. I mean, we think that when you enjoy yourself, the first person you should see is a physical therapist, right? We think that we have the ability to treat over 70% of those mask cages or disorders that that people experience. And, you know, we're able to to deliver consistent, predictable outcomes and we're able to meet or exceed those MSK predicted outcomes for those patients. You know, one reason we can do that is, you know, we've tracked over two and a half million patients since 20, 15 when we developed our 80 patient outcome registry. And that data, that data helps us develop our best practices and allows our providers to provide very consistent care throughout the entire platform, you know, because of our ability to manage that data and to share that data and share that knowledge with our providers. And I'm proud to say all of our API providers were recognized as exceptional providers by CMOs in their quality payment program. Last year. And so, you know, ultimately, as we think about strategy, Paul, we're committed to getting our providers to practice at the top of their license. We have the highest trained professional staff on the floor interacting with patients in the industry. Our support specialists they all have four year Bachelor of Science and Extra Science or kinesiology or above. So patients are interacting with degreed professionals throughout their entire experience. Within the four walls. So, you know, I believe because we've built that model, we're better or more capable of being that first in line must K provider, and that's where we think physical therapy should go.

Paul Martin

So Ray is 80. I continue to be committed to that 100% owned model moving forward versus a partnership model.

Ray Wahl

So, you know, that's a great question. And as you know, I'm the CEO, so I run the day to day operations. I don't necessarily make decisions in terms of how we want to structure, you know, our deals moving forward. I can tell you traditionally that's how we've done it. You know, we're always open to new ideas in different ways of partnering, whether that be through a partnership, a joint venture, whatever it may be. So I think we're open to it. But I do think, you know, we are very proud of being under one brand. We think that brings value. We think that brand brings brand recognition and it gives us leverage when it comes to interacting with payers, employers and other referral sources.

Paul Martin

Sure. Sure. You know, we've continued to be strong advocates of pooling together the national the large regional companies with the independent private practices across the country, whether that be acquisitions, partnerships or just you know, working together in markets. How do you believe that now? 80 going public? How will that impact the industry as a whole?

Ray Wahl

Yeah. I mean I think I hope it's going to give us the ability to increase the awareness of physical therapy and where physical therapy sits in the physical health landscape. Again, I said it earlier, I truly believe physical therapists should be the first person you see when you have an injury and in right now I don't think that necessarily happens. So so I hope that by being in this position, by interacting with more more investors in other folks with maybe outside of of physical therapy in general, it's going to allow us to maybe elevate that profession a little bit and, you know, be able to to get more patients have that opportunity. Right. I mean, when you enjoy yourself and you have a great experience in a physical therapy clinic, it's a it's an awesome profession to be. And I think it's a vital profession for health care overall. So so being in this in this situation where we may have a louder voice through the IPO, I think that allows us to be a stronger advocate for the industry overall and give us a louder voice in terms of influencing the industry and the profession as we try to develop in partner with others in forming where it sits in the future health care landscape.

Paul Martin

Yeah. Ray, you may never hear this, but I can tell you many, many times I have talked to companies that we're talking to, new companies that we're having conversations with, and they say, you know, I'll make this up. But, you know, Athletico moved into town or Guy or us moved into town. They opened up and we've never been busier. They seem to be busy. We seem to be busy. We're all getting busier. And so it does seem as though just pressing, you know, that model and as you said, kind of the physical therapy first model really is beneficial to all companies. So looking out now at-I going from primarily a new start up, you know, they call it de novo. You know, that the private equity groups, de Novo is now going to more of a, you know, combination new start up de Novo acquisition model. What type of opportunities is a on the acquisition side? What kind of opportunities is sticking right now?

Ray Wahl

Sure. So, you know, we're very interested in continuing to grow. I mentioned earlier by going through this IPO process will be able to free up some some funds to go and be maybe a little bit more aggressive than what we've been in the past. You know, when I think about growth there's really those three traditional channels. It's the we want to continue to expand our presence in the communities that we already serve. You know, how can we do a better job with with the clinics that we currently have, opening up to normal clinics, continuing to get better there, whether that's expanding to our existing footprint, but also grow into new markets, it'd be you know, we think we do a great job in providing physical therapy and we want to bring that to communities that we're not in currently. But I think most importantly, you know, this is going to allow us to to get back into that acquisition game and be able to partner with like minded folks who share our culture and share our vision on where physical therapy should sit in that health care environment. So, you know, acquisitions, whether that's within existing markets to kind of fit out, you know, a presence that we already have or, you know, there's you said we're in we're in 24 states. There's a lot of people that need physical therapy. We think we do a great job and we love to find, you know, right minded partners that want to maybe have a presence in a particular market, but don't necessarily have the funds or the resources to grow and expand and build upon what they have. I think we're a great solution for that, and we look forward to having more and more of those conversations as we go forward.

Paul Martin

Yeah, that's exciting. Real exciting for the industry. And we're so glad to have you guys kind of back in that part of the industry again. You know, look, as as thought leaders, you know, certainly your leadership team has some of the greatest thought leaders in this industry. What does your leadership team see are the greatest threats as well as some of the greatest opportunities for this rehab industry moving forward?

Ray Wahl

Yeah, Paul, I look in terms of threats, I think the obvious one is lower reimbursement relative, the cost to provide care, right? I mean, reimbursement is not getting any better. And every year there's some sort of headwinds, some sort of challenge. The cost of care is a challenge as well. You have to control the middle of your PNL. You know, it's been a long time since I've been to school, but school's not cheap and it's an expensive education. To get. And you know, those providers as talented providers, they have to cover that and they want to grow professionally as well. So, you know, that's I think probably the most obvious threat. I think, you know, there's a lot of other choices out there as well in terms of where do I where do I go for MSC disorder treatment. You know, when I think about telehealth, telehealth, I think telehealth could be seen as a threat or it could be seen as an opportunity You know, there's there's there's a ways to think about telehealth where it could start to commoditize physical therapy. And, you know, we don't necessarily see it that way. But but I but it's something I think the industry and the profession has to think about. We see it as an opportunity. We see it, like I said earlier, we want to be at the forefront. We want to be at the front lines of MSK injuries and disorder. So we think we could leverage telehealth to bring us to the front lines and be that primary care provider for MSK disorders. You know, I think we're a great option. You know, physical therapy is much more effective, in my opinion, than treatment, which involves opioids or other invasive, you know, ineffective low value treatments. So, you know, there's there's a way to leverage telehealth for four to make to grow your business and to get further up that that line in terms of the patient experience. So so, you know, all that said, you know, we're working to integrate, you know, a care delivery strategy that uses telehealth that uses remote monitoring in our clinics, in our 900 clinics, but also establish that hybrid model where we can meet patients where they want to be met and when they want to be. So, you know, there's there's a tremendous amount of opportunity is is hard as the pandemic was in 2020 on the industry and on the profession. I do think there's silver linings here of how we think about how we administer it. But we have to be thoughtful and we have to be careful because now there's there's other opportunities or other providers out there that don't have brick and mortar. And it's a it's a completely different model so it's it's something that we're keenly aware of and we think about. And, you know, we want to make sure that our strategy again, ultimately we want to be able to see the patients first. And if that's in their own home, we want to be able to have that ability if we need to get our hands on them and get them in the four walls of our clinic. We want that ability as well. So that's how we're kind of thinking about the opportunities in the industry right now.

Paul Martin

Yeah. You know, it's amazing, Rea, how, you know. Absolutely. Horrific COVID was and certainly to those who lost loved ones, you know, as physical therapist, what we have seen and I'm sure you have seen the same thing, it has really strengthened how we work cohesive we as a team to make sure that we're effectively treating patients with the resources that we have. And I think, as you said, moving forward I'm not sure we'll ever do it quite as we did it before March of 2020 again. I think some of these models and some of these things as you're describing are going to continue and we saw 80 athletic go upstream us all of these companies really kind of banding together, going through COVID and reaching out and having a real big impact on private practices as well kind of getting through this and I agree with you, I don't think it'll ever quite be the same.

Ray Wahl

Yeah it's you know, look it's a competitive space, right? Just like a lot of different businesses are. But I think you're right, we had a lot of conversations with a lot of different providers in terms of how are you handling it, not necessarily how the business is performing, but how are you dealing with your people, how are you thinking about your people? And, you know, we're a people intensive business. We all of our success, everything that we've received to this point is because our talented folks in our clinics, so we really tried hard to to do what's right for them and still continue to try to keep the business moving forward. So I do think of it brought the industry together a little bit more than what it has been in the past. And there's been some creative conversations that have come out of it. But ultimately, I think you're right how we think about P.T. in how how how payers think about it when they when they started to agree to pay for for telehealth, that's a big decision. Right. And whether it stays that way forever, we'll see. But how you administer those services, you know, did and could change for for a long time. So you you have to kind of think about that as you develop your strategy for the future.

Paul Martin

Absolutely. Absolutely. Well, right. Look, I cannot tell you how much I appreciate you joining us here today. You have given us so many things to really, really think on. And I believe that you've given a lot of value to independent practices with many, many clinics all the way to the independent single practices. You've been a huge, huge, huge benefit to our show. And I want to really thank you for joining us today.

Ray Wahl

I appreciate the opportunity to connect. And, you know, I love talking about physical therapy, so I appreciate the opportunity as well.

Paul Martin

We'll do it again soon.

Ray Wahl

Sounds good.

Paul Martin

So for all of you that have joined us today, I really appreciate your participation. Again, we have heard some absolute gems today from Ray Wall from 80 physical therapy. And if you have any questions or thoughts or feedback on what we discussed today, click below. Let's have a conversation. Thank you.