**Transcript was automatically generated by artificial intelligence.**

Paul Martin
Good afternoon and welcome to another episode of Paul Martin's Crucial Conversations. Today, we are going to have a crucial conversation session with John Gallucci. John is a physical therapist and an athletic trainer, and John is the CEO of JAG One physical therapy. JAG One, based out of Bridgewater, New Jersey. But, man, you guys have really grown over 100 clinics in New Jersey, New York and Pennsylvania. John, it is great to have you with us today.

John Galluci
Paul, thank you so much and I appreciate the opportunity to be here this morning.

Paul Martin
I've been looking forward to this conversation, John, because you guys, you know, again, we're we're doing a little series with what we're claiming are the newer companies backed by private equity, maybe three years or less at this time. And, you know, I know you're not an infant and you guys have really grown up. But you are one of the newer companies. And what we're finding is some of the newer companies have new ideas, new strategy. And, you know, John, when our clients want us to describe, you know, what the newer acquirers in a new acquirer kind of enters the market, they typically ask us three questions. And the first, which I will ask you, is what is JAG? One strategy for becoming a successful company in this industry? How is that different from some of the larger legacy companies and the strategy that they're following?

John Galluci
Well, that's a great question, and I appreciate the opportunity to be here, as I said. Ultimately, when we look at JAG one and look what I bought, I built Legacy was it was a true component of utilization of research, evidence, base and outcomes and my legacy company, JAG physical therapy. We had a great opportunity to work with the payers, work with the referral sources to really combine that concept of outpaced outcome based physical therapy and collaborate with not just your physicians but also the payers. We took that to the next level, keeping our culture. As you know, my first transaction was with my dear friends and colleagues on the other side of the river, which was one on one, and that's what made JAG one. And we wanted to make sure that every step we built, we maintained our culture, but most importantly, making sure that the payers and the physicians collaboratively still work together with us for the best outcome based physical therapy, as you know, being in an industry for years. Some of these companies have come together and it's really been a direct numbers game. Our strategy is it's to grow within a catchment area that we're successful in, reach out with our fingers, continue to grow. We're not looking to take over the world, looking to work within our catchment area and really give good outcome based care. Now, as you know, the industry as a whole, not just physical therapy. Health care as a whole. All of a sudden, the pendulum is swinging. We're all transaction we're going through and all these different specialties and outpatient specialties. But now the equity partners are getting more and more intelligent and that's what's important. And I think JAG one physical therapy is structured, personal perfectly for that aspect of equity, health care together, working collaboratively. But never forget it's about patient care.

Paul Martin
Yeah. John, I heard you say outcomes at least three times, which, you know, certainly is part of the culture that you're building and part of what you want to create. So I took what you just said as very state focused, get really good in New Jersey, New York and now Pennsylvania so that you can show those outcomes and increase your reimbursement, which we all should be doing.

John Galluci
So it's very advantageous that we truly know the markets where right now, you know, some of the giants out there are in multiple markets. And, you know, you can't be a specialist in every single market. Yes. On a business side, it's great to brand on a national level. But how great is it New York, New Jersey, Pennsylvania, look at that catchment area. Look at the demographics. Look at the populace of people that are there, but then also look at the players that are in the area that now know the name JAG, one physical therapy over the last 18 to 20 years. And really nothing has changed in people that have come and joined us and partnered with us and have come under our flag are the same people the payers have dealt with for years. They're just doing it now under our flag and then the de novo opportunity is really just filling in the blanks. So as you said, we sit over 100 clinics right now in the demographic wherein we can grow to more than 200 clinics and not overspend, not over market and really work collaboratively with the health care systems, the payers, the physicians that already know who we are in the in the area. So it's really been a very good, perfect formula. And and think about it, we've been able to grow and succeed in the last two years, which has been very difficult just because of the pandemic.

Paul Martin
Yeah, absolutely. John, I remember one of the first times I met you in person. It was at an ASCEND roundtable and you were sitting directly across from me and you said, Well, we all should be talking about here is how we can get better reimbursement from our payers. That's what we should be talking about here. And you had a jumped in because there was some conversations. It didn't have a whole lot of interest. And I looked across I remember I said, John, tell us, how do you do that? And tongue in cheek you said, I punch him in the mouth. And then you said, because I show better outcomes. And when I can show outcomes, I can show insurance companies how they will save money based on the way in which we treat. I was always so impressed by that. I can remember coming back talking. I said, Hey, I finally met this John Belushi in person. This guy is dead on.

John Galluci
Well, as you know, it's all about relationship management. And when we're dealing with payers, they only care about one thing. They care about their stockholders, they care about generating capital. And ultimately, although I am a business man, a CEO and president, never forget I am a provider and a caregiver. And ultimately what I was seeing, especially in the New York New Jersey market, which the legacy company was in, I saw everybody opening up and trying to do all these different types of relationships to pay their bills, who was out of network, who is in and out of network? And I'm like, Well, why are we partnering with these payers and giving them what they want and showing them results? Not only showing them results, showing them the research that goes with the results, showing them the importance of physical therapy. I mean, remember and listen, you and I are old enough to know Marilyn Moffat's push for the Vision 2020. Vision 2020 wasn't just an academic vision. It was a vision to let the populace of America know that physical therapists are the experts of rehabilitation. And ultimately, I took that concept and kind of went to our partners, which are the payers that have the participants and said, Listen, I could save you money on simple musculoskeletal cases that you're spending thousands of dollars on. And here's the evidence. And as you know, the conferences now are coming out with the research on workman's comp 81st before Specialist 81st, you know, before pharmacological intervention. And ultimately now we're starting to limit the limit. The pendulum has swung so positively. Now for the profession of physical therapy that as long as all of us collaboratively work together for Marilyn Martin's Vision 2020, that we are the expert to rehabilitation, we will continue to succeed. And again, now translated to business, the equity partners do not want companies that are on the teeter, on the edge, where is they want to know where the revenues coming from, they want it identified and how better to be 100% in network working collaboratively with your payers in the marketplace.

Paul Martin
Hallelujah. Yeah, very well said. So what are the characteristics of a company that would really thrive, really succeed by joining Jaguar?

John Galluci
So that's a great question. And I just met with with someone that's joining us and we were talking about philosophy and cultures and and ultimately, if you look at all of the partners that have joined us over the last three and a half years, it's people that have had legacy success based on a provision of care and visibility in the community they serve. If the community doesn't know you're there, how can any business succeed? Better yet, the community has to know your best at your craft. And ultimately we try to partner with people that have good followings, not just referral based violence, but community based followers. You know, we we partner with a great group in Pennsylvania, as you know, Phil Gregory over. But Pete, Bill has been a guy that's been in that community for 25 years. But not only is he in the community, he's children's in the community. They're in the high school, they're working. His wife has been in the community. And collaboratively, we've had the opportunity to basically say, Bill, it's exciting. You're on the right flag. We don't want you to change a darn thing. You're in the community. Keep it up. Make sure the referral sources collaborate with you just as they had the last 25 years. And what we do with the Novo, it's that same concept of growing within a clinical director that understands our culture, understands the drive for outcome based physical therapy, understands though you have to be in the community and we ask our clinical directors to have a five mile radius of of connect. And that could be anything from knowing the mayors in every town to knowing the PTA president, every town to knowing who runs the little leagues in every town. You can't just stay in your clinic. We're treating the community and the community needs to know who we are. But they also need to know how successful we are with outcome based physical therapy.

Paul Martin
We know Bill and he brings that same passion, I believe that you do for what he does there in his local market. Have had many conversations over the years with Bill. And yeah, you got a great business there and a great person for sure.

John Galluci
The only thing a team can stand is Bill and I in the same room, because a 30 minute meeting goes about an hour and a half because we both have so much passion and drive. So it's great to have Bill as a teammate and a partner. Very exciting.

Paul Martin
Absolutely. So let's talk about the nuts and bolts of an acquisition process. How do you see that you're acquiring a company, the process that you use, how is it different from some of the larger legacy companies in the industry?

John Galluci
So some of the giants out there have these advanced teams that go out there. There's no personal touch. There's no, you know, hey, give us the list of information. We'll get back to you. What an elbow line. If you're interested, come back from our meeting with each individual company that has an interest in you joining. I want them to know who I am, what we built, what we want to continue to do. And ultimately, what is your place within our company as a teammate and partner? You know, again, listen, it becomes a game of numbers. And luckily enough, based on our success in our market, we don't have to chase, you know, five, six different states to try to get to numbers. Our budget is very easily, tragically done on a year to year basis based on bringing in good culture and good people. So one thing most of the owners love is their meeting JAG of JAG one. So on the first, the first day I'm on the phone with them having a conversation within two weeks where at a dinner or a lunch or a breakfast, and they're spending time with me to understand what is our vision and where we go. The other thing that I think that makes us a little bit different is we are 100% in network because we want to be able to give care to every single patient that needs care. And everybody loves to hear that we don't have a difference in New York versus New Jersey or Pennsylvania versus New York. We are an in-network company. We work collaboratively with our partners on in-network utilization. We work very, very good in presenting research. Again, as you know, I'm involved in the UI. I think them gathering evidence to show Medicare, Medicaid, CMS, evidence based research on why physical therapy helped save costs will help us over time stop the cuts, but actually give us increased this over time if you can imagine them as giving us an increase. I mean, look look what's happened in the workman's comp market. They were you they're reading the research. They understand that. They understand how important it is. And I think what's happening is, is when you take the providers we're speaking to and they were like, oh my God, it's a physical therapist run a physical therapy company with a presentation of taking care of patients and making sure we're doing right by patients everybody loves. That adds fantastic. And a really nice thing is if you look at my executive team, yes, we have a CFO that's not a physical therapist. We have a chief marketing officer. She's not a physical therapist, although she's in the marketplace 14 years. We have seven physical therapists on the executive team that surrounds me and they are still all practicing, including me. I'm still touching patients, as you know, I've always had my sports medicine niche. People want to see me, there's opportunity to see me. My chief clinical officer is treating patients today in Brooklyn. My two VP's are treating patients in Brooklyn, in New Jersey. So we have opportunity that everybody loves the fact that, yes, we're running the business. Yes, we have an equity partner, but we're physical therapists still in it each and every day.

Paul Martin
Yeah. And that's that's unique. And you do see a lot of companies that have elevated physical therapists out of management positions, up into executive positions to be putting their hands on patients. That that's unique. You know, John, something else that I think is very unique about JAG, one is the alignments that you have done with hospital and hospital systems. Just talk to me briefly about kind of that strategy and tell us whatever you can and want in regards to why that strategy seems to work for JAG one.

John Galluci
So as you know, Paul and I and I know that you and Jamie know me a long time and have watch me. I was raised in New York, New Jersey. I worked for some of the largest health care systems in the tri state area. I work for NYU. I worked for New York Presbyterian Columbia. I worked for our WJ Barnabas. I consulted to a bunch of other companies on an outpatient component. What we've been able to do is really look at the outpatient component, look at the demographics that these institutions are trying to touch, and we're just collaborating. We're collaborating with them on their in-network utilizations, especially some of the physician down groups. The larger positional groups are all in these utilization programs, and we've been able to fill in catchment areas based on in-network utilization concepts. And when it comes to the collaborative component, think about it. There, hiring physicians, but there's no opportunity. A young physician comes out of school and has no marketing background. As all we learn to be a doctor knows nothing about the community he moved into. Who better than collaborate with a physical therapy company that's been servicing the community for over 18 years? But two guys, me and Rich Boden, that have been in the industry in New York, New Jersey for 35 years, we know the demographic. We know the populace, we know the people in the area. We also know the hospital executives. Some of these people have colleagues of mine for years. So that collaborative works that we get phone calls to say, hey, we just hired to orthopedics, can you introduce them to the community? Possibly. And again, it goes back to we serve the community well, who's more entrenched in the community than health care systems then the hospitals, how better to relate. And then we have some great data set programs going on with several emergency departments on treatment of MSK. So we're very, very excited about that. So we're trying to put the numbers in front of the payers so who better than to collaborate with the institutions that have the communities going with them? And we've been very, very fortunate in both New York, New Jersey and now Pennsylvania. We're having the same conversations now in Pennsylvania, and it's just opened up the doors for our company to be successful in the communities we serve.

Paul Martin
Yeah, not coming from a background of building developing hospital contracts and seeing the value of that. It's been remarkable how how much growth you guys have achieved simply by through those relationships. And as you said, serving communities first hospital, we ever get a contract with, you know, Riverside, New Jersey, one of the teeniest little towns in New Jersey. And so yeah. And I just wanted to make sure that the folks out there realize that you guys are doing really, really great work with some of the major systems in your market. So John, in the initial discussion we had, you mentioned culture and the culture that you have. What's a business joins you guys? How has the view of the staff as well as the owners, how do you think they would describe your culture having been with you for a period of time, how would they describe you guys?

John Galluci
I think the best way to do it is engaging, friendly and keen. I think if you look at those three words, it's it's very exciting. Listen, change as we know, human nature, people hate change. And when you get past the business part of benefits and salary compensation, it really comes down to, do I gel with this company or are these people good people? Am I part of this team? Do they communicate well? And we from day one appointed I mean, literally from day one appointed an integral patient officer. Our name is Taylor Alder, Priscilla. And she has been a part of our team that makes our team integrate with any team that's joining us. And it's all about communication with all the departments. And as you know, listen, there's never a day you're going to make everybody happy, but you need to put your best foot forward to try to make everybody happy. We know that from patient care. So it's not hard to understand that employees have to be happy. And at the end of the day, I would probably say that our team is friendly. We want to bring you on the team and collaborate and show you where you fit on the team. And the most important thing, as you know, is the sustainability. We don't want to lose people on transactions. They've helped our legacy owners build their practices. We want them to be part of the team. But again, change is difficult. It's human nature. You know, somebody used to tell me all the time, the most consistent thing in life is change. We need to adapt and understand that some people just don't want to adapt, but we put our best foot forward to show them they're part of something better and the opportunity and growth is huge. If you look at some of the transactions we've done over the last three years, we've actually had physical therapists that were maybe, you know, treating patients, became a senior physical therapist, never thought they'd be out of the clinic, that they were with the legacy owner. All of a sudden now they're running and operating their own clinic with their name there in the community. Everybody knows them and pull you know, how you built your business was all about everybody knowing who Paul Martin was. And that's how I built my business. The first thing I had to go was, Well, who's John Gallucci? And then what's the JAG brand? Well, John Anthony Gallucci is John Gallucci. So it's all about making sure the community knows. And when you do an acquisition or you do a partnership, it's very, very important for everybody to understand. You have an opportunity now to stand on your two feet just with us waving our flag. So it's been very advantageous.

Paul Martin
Absolutely. So you touched on this earlier as well, but what's your job or strategy? I know you're in three states now. When you look at new geography or your current geography, what's the what's the strategy there, John?

John Galluci
So we have great opportunities still in the five boroughs of New York City. As you know, we're a New York, New Jersey company that is still striving to get there, get a stake in in the Bronx. And we're working very hard because as an I'm born and raised in the city and the city is five boroughs and we should be in the five boroughs. So very important, as you probably already know in conversations, we've had one flight. I come from Staten Island and we're about to open up two clinics in the next three months in Staten Island, which will double the original imprint from 4 to 8 over the last three years. And we've been doing very, very good with with with with the people. I grew up in Staten Island, in Brooklyn. As you know, the dense population there is is enormous. And we've had great opportunities to partner with people and their Westchester County. Rockland County have been very good for us. We are looking in Orange County. It's very important to us as far as are we going to another state. Everybody keeps asking me that question what's the next state? I don't know. If you count Greenwich, Connecticut or Stamford as another state, it's in Connecticut, but as you know, it's the referral sources of New York. So we'll probably be in the next 12 to 18 months ready for Stamford. And that means that we have opportunities in Long Island. We have opportunities in New Jersey. As you know, we made a big jump in New Jersey and now we're filling areas central and southern New Jersey. We've done a great job in Morris, Essex, Hudson and Bergen County. Now it's it's I had Monmouth and Middlesex. Now it's time to take care of Ocean and Mercer and really make sure our footprint is visible. And that in Pennsylvania. Listen, we're very excited to be in an area touching Philadelphia. And I'm not looking to throw a javelin and hit Delaware. I'm looking to grow next to Bucks County. It was I mentioned earlier for us to continue under an investing equity partner and be able in our area more than 30 miles outside our catchment area, to be able to grow to 200 facilities with good partners and good to know those. We should be able to do that over the next three years and we're excited about it.

Paul Martin
Yeah, that's really exciting. And you know, with, with, with Russia and Ukraine at we're right now Russia's the war but John didn't mean the javelins that they're using in Russia and Ukraine. John was speaking of the regular old javelin. Yeah, I know that again, you guys, it seems like anywhere you go, you want to be experts and you want to, because to be an expert is another payer's, you know, physicians community very, very, very important. But when you get to know the payers, everything changes. And it sounds like that's, you know, the goal of wherever you guys are going to go.

John Galluci
We've been very fortunate, so very lucky, especially in the last two years. So and the community has accepted us. Unbelievable job.

Paul Martin
That's awesome. Awesome. So what advice would you have for business owners who are considering doing something looking for a partner in 2022? What do you think is most important for them?

John Galluci
So I think it's important that they understand that the climate has changed to a component of don't fear the opportunity. You know, we're all physical therapist, we've all opened our own businesses and our business has just deviated a bit where where there's a consolidation component based on community and payers and you should not fear the opportunity. I think that's the most important thing. As you know, you've got people calling you and your partners each and every day. And I think your team does a great job in in calming the fear. But I think everybody gets intimidated with the accountants, lawyers as anchors understand, at JAG one, we are physical therapist taught physical therapist. At the end of the day, when the transaction is done, there's no lawyers, there's no accountants. It's all about treating patients and giving the best outcomes. And sometimes people fear the process because they think the lawyers are going to be here the rest of their lives once the deal is done and transacted. We don't see the lawyers again, and it's all about business as usual. So I think it's really don't fear the process, but also don't put yourself in a situation that the consolidation happens around you and you find yourself on a short sale. You have the opportunity to be partnered, you have the opportunity to grow, you have the opportunity to raise capital off of a transaction. You should definitely start having conversations and follow, you know, look at what's going on around the country in every outpatient specialty, not just physical therapy. And as you know, it's being driven by the payers wanting that consolidation factor and wanting it to happen. So.

Paul Martin
John, great, great, great advice. And you know, it's it's just so great. You know, I am a physical therapist. It's so great to see folks like yourself, physical therapists, athletic trainer that you know, John, you're a physical therapist, an athletic trainer at the core, but you have become a really, really great executive. And I've done a great job at managing something that's over 100 clinics. So, yeah, I certainly commend you for all of that. John. I appreciate your time today. I think our viewers got a lot of great information. And if any of you out there have questions on anything that John and I discussed today, click below. Let's talk. John, thank you so much for joining us today and I look forward to talking to you and seeing you in the near future.

John Galluci
Sounds good. I appreciate the opportunity. Thanks again. And everybody, have a great day.

Paul Martin
Thanks, John.