OVER DEZE AFLEVERING
Alex Fernandez, CEO of Synergy Orthopedic Specialists, is driven by a mission to help physicians Build a Multi-Site Medical Practice that creates wealth, equity, and independence beyond their personal labor. By bringing independent physicians together, building scalable organizations, and expanding access to integrated services, Alex helps doctors operate as entrepreneurs while delivering a more convenient and cost-effective patient experience.
In this conversation, Alex introduces The Multi-Site Scaling Framework—Visualize Your Target EBITDA, Align With Your Partners, Remove Yourself From the Center, Build Systems, and Build Margin Around Your Core Business. He explains why starting with the desired enterprise value creates a clearer path for growth, why alignment must be a gate for every partnership or acquisition, and how strong systems allow a business to operate without depending on its founder. Alex also shares how vertical integration, company culture, geographic expansion, and AI-assisted processes can improve profitability while preserving independent medical care.
— Build a Multi-Site Medical Practice with Alex FernandezGood day, dear listeners. Steve Preda here with the Management Blueprint Podcast, and welcome Alejandro “Alex” Fernandez, the CEO of Synergy Orthopedic Specialists, a team of surgeons and specialists that believes in providing patients with an integrated approach to musculoskeletal—I’m glad I could pronounce this—medical care through 15 locations throughout San Diego. Alex, welcome to the show.
Thank you. Thank you. Yeah, I appreciate that. I’ve enjoyed your show, and I’m happy to be here.
Well, I’m always interested when I meet with medical provider companies or CEOs who have been doctors, because I grew up in a family of two doctors, and so I was exposed to some of the challenges of being a doctor and running a hospital. So that’s going to be interesting. So my favorite question that I ask recently to all our founders is, what is your personal why, and how are you manifesting it in your practice and in your business?
Yeah, for sure. And so my why, as you put it, comes from where I started. I actually don’t come from a family of physicians. I started not where I ended up. I’m a son of Cuban immigrants. My parents fled Castro in the ’60s, and I was born in Puerto Rico. Later on, my family took a lot of our family in the Mariel boatlift in 1981 and took hundreds of people out of Cuba. But in reality, the concept or the reality is that my parents didn’t have a lot of money. They had some connections, but they believed that I should have a college education.
But I had to work my way through eight years of college to get my bachelor’s. So I landed in healthcare as an accident. It was a small medical practice. I was basically doing front desk and medical records, and then later on learned how to do the billing, all by hand at that time. There were no electronic medical records. And I started basically at the front desk, and I watched something that I never really forgot, which is, you have these brilliant physicians, people that can diagnose patients and help them and cure them, but when it came to business, they were never taught anything about business.
So this is where I believe I have generated value over the years: basically, built companies that actually create wealth, and the wealth for the physicians in particular.
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I think physicians are very entrepreneurial. At least that’s the idea to begin with, is, “I’m going to go into the practice of medicine and have my own business.” But somewhere along the line, the business becomes almost like an ATM machine. It’s no different than any other entrepreneur that starts a business. They are the business. Without them, if they go away for a couple of days, the business doesn’t make any money, and they don’t really know how to do that. So what I’ve done over the years is I have gotten smaller groups of physicians to come together, form larger organizations, larger groups, and eventually built larger private businesses that can have EBITDA, equity earnings that can basically provide some additional wealth.
Particularly, I try to help them think of themselves as capitalists, not as day laborers. Because in reality, in most businesses, and particularly physicians, they’re cranking the wheel, and the more they produce, the more they work, the more they earn. But in some cases, they don’t understand how to get away from that. How to earn from all the other things that they control. Because physicians do control 80% of the spend in healthcare but earn probably no more than 5% of it.
Wow. That is shocking. So they’re not using the leverage properly, probably.
Yeah. Sometimes they know it’s there, but physicians in general are risk-averse. Just starting their own business is hard enough. Then having to figure out how to capitalize from all the levers that they have, that’s completely different. And they’re no different than, I would say, lawyers or accountants that start a small business. At some point in time, you have to figure out, how do you make the business big enough that it operates and works without you?
Yeah, I love that. I love that. And what makes you feel strongly for physicians?
Well, particularly independent physicians, I think it’s a dying breed. Years ago, I would hear the stories of my parents where they’d say, “Hey, we took you to the pediatrician,” and my dad would be friends with the OB-GYN that took care of my mom and the pediatrician. And I remember them naming them by first name or even meeting them at the social club. But nowadays, it’s very transactional. It’s very fast. There’s no connection.
So I think that’s why there’s been this whole surgence of concierge physicians where you pay extra. Because in truth, in order to make a living, the business of healthcare is compressed by downward pressures from the government and from other institutions that say, “We’re going to pay you less, but you have to have a significant amount of compliance, and you have to spend more money on this, and you have to do that.” And then at the same time, the cost of living goes up.
The employees need to make more money. Your rent goes up. The supplies continue to increase. So you have the static or lower reimbursement from the different payers, whether it’s Medicare, the government, or private institutions, and then an increase of expenses happening. That’s very strange to any business. In any other business, you say, “Well, if my costs go up, I increase my prices, and then maybe my margins are a little bit less, but I still have a significant margin.” In healthcare, you almost have to just work more in order to generate more revenue, and the expenses hopefully will increment a little bit more, but your earnings will be the same or less. So it’s a very tough situation for an independent physician.
That’s why more and more, especially physicians coming out of training, look for jobs with health systems, with the Kaisers of the world or the different large institutions in the United States, so that way they can go ahead and just go to work and take care of patients and not worry about the business of healthcare.
Yeah. But then these big hospitals turn into bureaucracies, and then they still have to worry about that in a different way.
And that’s personally the second part to that question you asked me. That’s why I like working with physicians and not necessarily with health systems. I’ve never held a job with a hospital. Not that I haven’t wanted to. It’s just, I think the nature of the bureaucracy of a health system creates some things that I’m not personally interested in.
Yeah. Well, I can see that. So Alex, this is a podcast of frameworks, as you know. So what’s a framework that has helped you build your business, maybe generate an insight, understand situations, maybe influence these physicians to come together in your roll-ups? Whatever framework you developed, could you share something with our listeners?
Yeah. Yeah, for sure. Most owners in a business—and I’ll talk in generic terms. I’ll try to make sure I don’t use any slang for healthcare—but most businesses build their business for income. They want to make income for their families, for themselves. They want to be able to take care of the people that they’re with. But they don’t really think about it from a perspective of, “Let me build a business that can multiply.” Maybe they want to, but in a lot of areas, it’s just hard for them.
I actually grew up in the bridal business. My parents had bridal stores. They basically did wedding packages, and that’s the business that I grew up in. Every summer, I would go and do the cash register or help rent tuxedos and things like that, or do filing and bookkeeping. So that’s where my entrepreneurial spirit comes from. It’s my parents. But I always saw them where maybe they built one or a couple stores, two, three stores, and they would kind of stop there. But I think I learned a lot from my dad in particular around multi-site operations in a retail industry, and I took that back into the healthcare business.
So one of the first things I think that a business owner has to do is they have to underwrite their own exit first.
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They have to think of growth and particularly of the value of the business if they were ever going to sell it. Figure out what your EBITDA or enterprise value is going to be, and then go from there. Then make the alignments first, but don’t make it the goal. Most people chase the volume, the customers, more locations, more deals, spend years fixing what they bolted on in order to flip it, but they don’t really take the time to align it. So I think the client, the partnership, the acquisition—you have to figure all that out at the beginning and then fix it later.
If I run into an acquisition that we’re looking at, and I don’t see the alignment from whoever I’m going to partner up with, I know it’s going to be a deal that’s going to go bad eventually. We all have to be thinking the same way. Then the other thing, like I already mentioned this a couple of times, but you have to take yourself out of the center. If you’re the CEO, you’re the business owner, and the business depends on you—you can’t go on your two- or three-week vacation to Europe or wherever you want to go, and when you come back, the business is in disarray or didn’t survive—you don’t really have a business.
You just have a job that costs you a lot of money to maintain. I think that’s where operating systems earn their keep. I haven’t really run the EOS program, but I’ve read the book, and I really like the idea of the scorecards, and I used it particularly when I came to this opportunity in San Diego. Getting everybody to row in the same direction. A business that runs with a founder and a single thing, it’s one that won’t get very far.
But on the other hand, if the founder figures out a way to build systems around them and bring in the right people, that’s going to make the business way more successful. And the last one I would say is own the margin around your core. Don’t just sell the core service. Figure out what else you have. And I think in healthcare in particular, I was mentioning this: doctors control a significant amount of what happens to a patient, but they don’t figure out ways to vertically integrate the business to have access or have the opportunity to earn some revenue and some earnings from the actual business they refer to.
So what I’ve done over the years, particularly in gastroenterology, I grew a medical practice of gastroenterologists. A couple of them came together, and it was around 50 million in revenue when I came in. And one of the first things I started doing was figuring out, how do we add, let’s say, imaging services? So we added CT. How do we add infusion services? Because back then, there were some significant drugs that were coming into market around infusion. But later on, we said, “Hey, we have an investment in an ASC, but why don’t we do the investment so the investment’s part of the group? So all the doctors can benefit from that.
And when we actually equitize the business in the future, that could be part of our exit if there’s equity there.” And then the next question was, “Well, why don’t we sell the prep that we give people before they get the colonoscopy?” So we got licensing around pharmacy, and then we said, “Well, what about anesthesia? What about pathology?” And so on and so on. So when I went to New York City and I ran a dermatology group, we built a path lab for the derms. When I came here to the orthopedic group, we had PT locations, expanded to multiple PT locations, improved the contracts around durable medical equipment, the bracing, even added anesthesia and started our own ambulatory surgical center.
So always trying to figure out, how can you vertically integrate the business to try to capture as much as you can from the client that’s in front of you? Not only just from a money perspective, but also from an experience perspective, being able to provide it all under one roof and being able to give the patient, the customer, a great experience. You want to provide outstanding medical care. Quality medical care is kind of like a base. If you go to a doctor, you expect to get better. But what we see in healthcare a lot is that people don’t think about it.
Like, in our offices, we say, “Thank you for choosing Synergy Orthopedics.” We know patients have a choice, so we have to develop a model that allows the patient to say, “Hey, I want to go here because these guys have it all under one roof.” But more importantly, that’s typically what the hospitals have. But hospitals charge for the same thing I provide two and three times more because they have a different type of leverage with the contracts. So I always say, “Why did the duck cross the road? Oh, because they went from the hospital to the ambulatory surgical center to get a colonoscopy to save 700 bucks.” I mean, it’s literally that simple.
And I don’t think patients in general know that, but I think the doctors have a great opportunity to control the delivery system, provide a great experience for the patients, and at the same time, make some money from things that they don’t physically have to do. They can hire the physical therapist, et cetera.
Yeah. Okay, so that’s great. So what I’m hearing, the framework is: think of growth first—what’s the EBITDA you want? Then create alignment, take yourself out of the center, build systems, and build margin around your core business. So that’s wonderful. Now, step two, I’m not 100% clear on. So you said make alignment with partners, but don’t make it the goal. What do you mean by that?
Well, because particularly I’ve been involved in private equity medical groups. So with private equity, you have cash, you have leverage, so you can go and buy, buy, buy, buy. In private equity, to a degree, they want growth. But I’ve been in deals where the thesis was, for example, we’re all going to be rowing in the same direction with the same flag, same brand, and we’re going to transfer from having—there were four medical groups, so four different, distinct medical groups—and we’re putting them together under what’s called a management services organization, a management company, and basically form one larger group.
But that was never aligned because the doctors, in their head, said, “You’re acquiring me, so you’re buying this magnificent, outstanding business. Now why do you want to change my electronic medical records? Why do you want to change the way we do our, let’s say, revenue cycle management or billing? Why do you want to change our brand? Our brand’s fantastic.” Even though they were all called Dermatology blah, blah, blah, something and something. So you have to make sure that the people that you’re going to bring on board, whether it’s through acquisition, merger, or just employment, that they really believe in your story, that they believe in the core vision of the business.
Not just try to put people in there and make more deals, get more locations, spend more years, and then you put all these things together and you bolt them up, but you spend more time trying to fix it. In my Gastro Health and in the ortho business, we always started with, “Let’s make sure we have our house in order before we go out and start growing the organization and adding more to what we have.” The last thing you want to do is add more and then find out that you have to spend more time fixing it.
No, that makes sense. But then you qualified it. You said, “Don’t make it the goal. Don’t make alignment the goal.” So how does it become the goal? What’s the risk there?
So no, make it the gate, not the goal. Meaning, alignment is extremely important, but you want the alignment to be the one thing that puts you together. But at the end, everybody has to be buying into the idea. It’s not the only goal. Their goal is also money. The goal is growth. But it has to be one of the key things. In healthcare, I tend to think, and particularly with private equity, that’s not perceived. It’s more about getting deals done.
Yeah. They don’t care about the mission. They don’t care about the vision, the alignment.
I think they do. In their thesis, they do, and they want it. But it’s kind of like, at the end, you’re looking at this business. They want to sell, you want to buy, you have money, they want money, and sometimes it’s just easier to say, “Well, we can grow from $30 million to $60 million, from $10 million of EBITDA to $20 million of EBITDA. We’re going to get, instead of a 10 multiple, we’re going to get a 15 multiple.”
So sometimes that gets in the way. And I would say, by the way, I worked with great and fantastic private equity firms, so I’m not saying they all think that way. But for sure, the perception is that they’re going to go in and try to make deals happen because they do have an end goal. Their end goal is to their investors that gave them funds, that they told them they were going to get them a four-, five-, seven-times multiple on their investment.
So in your own business, Synergy Orthopedic Specialists, is this a private equity-funded business or is it bootstrapped?
No. No, it’s bootstrapped. The physicians, when I came on board—at that time, I started with them six years ago in 2020, and the market was really hot still, ’21, ’22, ’23, and then the interest rates went up, and then things have softened. I think also they got softened for what we’ve been discussing earlier. There’s been a lot of deals that have been done where acquisitions were done in multiple states. There’s not a lot of synergy or a lot of things that were worked out to try to make sure that the organization was working together, the multiple organizations that were acquired.
And the idea was, if we buy four million-dollar businesses, they will be, instead of an eight-times multiple, they’ll be a 10- or 12-times multiple. So I think there’s a lot of deals that are stuck in the marketplace right now, and the groups are trying to figure out how to evolve the organization after five, six, seven years from, “Hey, we let you alone. We let you be. But now we need to start integrating. Now we have to start building an enterprise. Now we have to start building a real platform.” And I think that the organizations that did that earlier have been able to exit and done a much better multiple and growth.
And also the key is, in these transactions where people get together, a lot of times it’s all about the fun. “Hey, we go out to dinner, and everybody’s well, and everybody’s happy, and how much money we’re going to make,” and blah, blah. But nobody really asks the tough questions, or some people do because they actually don’t want the deals to get done. But I think it comes from the buyer. The buyer needs to be very upfront with what they want to accomplish with a transaction, whether, again, a merger or an acquisition.
You want to make sure that you’re extremely transparent about what the end goal is going to be. And if the end goal is like, “Hey, I’m going to leave you alone for a year, but in a year and one day, your name’s going to change, your software’s going to change, your HR is going to change. And by that time, we’ll figure out about your staff, and we might probably cut 25% of your staff because you’re bloated, and we actually have to make you a little bit more fit and trim so you can actually be able to grow and provide better care to your patients.”
So what I’m seeing is, it’s quite impressive. You have 15 locations, you have a huge service mix. You have, compared to the number of locations and service mix, a limited number of people. So how do you maintain the Synergy standard? And how do you manage this complexity with such low—low per— It took— How many people?
Yeah, it’s—right. Yeah, I agree. It’s taken some time. Again, I wouldn’t say that it’s perfect. We’re always evolving, changing. I mean, I always say the only constant thing in healthcare is change. But it started with the company culture. When I first got here, there were four or five organizations that came together, and they were still using their old names. Synergy Orthopedics was like this little kind of byline under their business cards. It wasn’t really the brand.
And then over time, we got people in the organization rowing in the same direction, using the same flag, and over time we started to dominate the market. We started to be perceived, and we are today, the largest independent medical orthopedic group in San Diego. So when people think of MSK, we take care of the hockey team, we take care of the soccer team, we take care of professional players. The larger organizations reach out to us about developing contracts, direct contracts to provide services to them.
So that took a long time, but it started with building that company culture. And along the way, some people left. Some people just didn’t fit what we were trying to build. And it wasn’t just me. I didn’t do this by myself, of course. The reality was we built a team around what we were trying to create. Physicians, in this case, are the leaders. Physician leadership was there, and this is what they wanted as well. So I think, yes, when we’re now in other counties we’re in Riverside County, so we’re north of San Diego. We’re all the way to Palm Desert and looking to grow into Orange County and L.A. County eventually.
So the goal is also in growth, and size allows leverage and negotiation power with the different payers. And that’s very different than in other industries where you have a payer, let’s say Blue Shield or Anthem or United, that kind of controls how you’re going to provide service, how much they’re going to pay you, et cetera, et cetera. So the only way to really have any type of seat at the table is that your organization has to be large enough and a market leader and basically be something, or an organization, that they can’t say no to, that they want to have in their network. So that’s how we’ve been able to do this over the last five, six years now.
So what drives the growth? Is it the acquisitions? Is it geographic expansion? Is it payers refer business? What’s the driver?
All of it. You have to do everything. It’s like that movie, Everything Everywhere All at Once. It’s like you have to do everything. We started by first creating the brand and the company culture, expanding that brand and company culture by figuring out who having the right seats on the bus, making sure the right people that wanted to be with us were there. And then we said, “Okay, we don’t have a spine program. Let’s figure out how we recruit a spine doctor. Let’s figure out how we recruit a pain doctor.
Let’s get a foot and ankle specialist because we don’t have one. Let’s expand our sports medicine program.” So we took over a fellowship training program in San Diego that was probably going to expire, and then we took it over and continued the legacy of the physician that started it from the beginning. We’ve done some mergers. We’ve done some acquisitions. We’ve done some new locations. We’ve expanded our physical therapy footprint. We built out an ambulatory surgical center. That was a big endeavor. These things cost millions and millions of dollars. Just in construction alone, it was like $600… I think our overall investment’s somewhere around $12, $15 million, so highly leveraged. We brought in a partner, a national partner, to help us run and fund the enterprise.
We started an anesthesia division. So I would say you have to do everything, and all of it together, as time goes by, creates that vision. As long as you have the vision, like I said, the beginning thing is you have to start with the end goal. And the end goal is we want to build a business that’s independent. That’s our goal. We don’t want to be sold or be part of the hospital system. So you have to build the end goal, work through the process, grow it, and do all the things at the same time, which is extremely hard, I would say.
Yeah. This is fascinating. So you have a lot of complexity. You have a lot of locations, a lot of services, 50 providers. I mean, sometimes doctors can be cats, hard to manage them.
Eagles, eagles. I always say, try to get eagles to fly in a straight line. Impossible. Yeah.
But if you had a magic wand and you could fix one thing in your business in the next 12 months, what would it be?
I will be honest, it’s expenses. Expenses can and I’ve talked about this before the pressures in the healthcare industry really are driven around expenses. We just got an increase in minimum wage in healthcare, specifically in California, where a physician practice now has to pay $23 an hour for a minimum-wage job, where minimum wage is almost half of that if you’re in any other industry. So I think everybody should make more than $23, particularly in San Diego. It’s a very expensive place to live.
But I think it’s more around the pressures that are put on the industry, but the levers are not there to increase revenue to be able to support or subsidize those expenses. So, for all intents and purposes, we’re looking at how we increase revenue by keeping expenses the same, or fixed, or a little bit higher than what they are, by augmenting with AI, like every other industry is doing. Figuring out whether it’s using AI in your MRI to be able to process the imaging faster, clearer, better, and be able to add three or four more patients a day. That profit goes straight to the bottom line.
It might be before we had people that are scribes that basically did the documentation of the history, the notes, and the medical records. Now doctors are using—well, they’ve been using voice recognition for a while—but now you’re doing ambient AI, where basically it’s listening to the conversation with the patient, of course with the patient’s approval, and being able to document all that information into the record much faster, quicker, better, and more precise. And so on. Answering the phones, being able to—when the patient gets statements, we typically send out statements every two weeks.
But when we send them, we send thousands of statements, so we get thousands of phone calls. You can’t get all those phone calls when somebody says, “I owe $50, and I don’t know why,” and being able to have an AI that tells you, “The $50 is because you had a copayment or you had a deductible, and it’s due to your insurance program with whatever the insurance is.” And they’re like, “Oh, okay.” “You want to pay that right now?” “Yes.” It sends you a text to your phone, qualifies who you are, you click on it, you put your payment information. The information goes in, the payment gets posted. Nobody got involved. AI took care of the whole process. So we’re trying to figure out how to assist the staff without having to let go. At least my intent is not to let go of people.
My intent is to try to make sure that we do the best job possible and use AI to augment the process, not to replace the staff. I get very worried, in general, about what’s going on with AI as an industry, where people are saying, “Well, I use it as my assistant. I use it as this.” Well, I started at the front desk. If there are no front desk jobs, how could I have been CEO of this multimillion-dollar organization if I didn’t get a foot in the door to begin with? So I feel very worried for my kids that are growing up. One’s studying to be a psychologist, the other one’s in marketing. How are they going to learn and grow in an industry or a business if they can’t get their foot in the door?
Yeah. That is a concern. I don’t know if we can fix it, but I’m worried about it too. So Alex, who would you like to listen to this podcast and to take action? And what kind of action should they take?
Well, I think it’s generic. I always say, I have an MBA in healthcare administration, but I could have gone and done any type of business. Like I said to you, I grew up in the retail industry. So I think it’s more around, if you’re an entrepreneur and you have talent and you’ve worked really hard at doing something, you have to figure out how to hire the right people so that they can do a job that maybe you don’t know how to do, how to scale up a business by investing in it, making sure you don’t look at your business as an ATM machine or a salary that pays you every week or every period of time, but look at it as you’re an entrepreneur, a capitalist.
You’re building an organization. You’re providing jobs for people. But at the end, the business has to give you more than your salary. There has to be equity in the enterprise, and that’s the money you’ll be able to use to maybe have leverage or to use in order to add that next location or look at what’s the next opportunity, whether you’re, again, a doctor or you’re running a retail organization that wants to have multiple locations. The key is, think of the end goal. And the end goal, not necessarily that you’re going to sell, but what is it going to be? What is the business that you want to have valued at, and how have they grown?
Look and listen to other people like yourself, Steve, and all the different things that you do in regard to building that journey of the business, and figure out how to take the next step and the next step and the next step. It doesn’t happen overnight. You don’t get from a $50 million company to a $150 million company. It took me seven years to get there. But it’s done by augmenting and adding features and adding services, but doing it very intelligently, thinking it through, not just adding it for the sake of adding it, then, like I said before, having to bolt it on and try to fix more of the problems, creating more problems.
No. Fix your house, figure out where you’re at, make sure it’s earning equity. Maybe you have to reprice. Maybe you have to figure out how the business needs to run a little bit nimbler. Maybe you have to use technology, whether it’s AI answering the phone because you’re the guy that—you have a pizza shop. Why do you have to have people answering? Have the AI take the order, have the AI tell people to go to the website, and so on, so you can have pizzas going out of your store every five minutes. So for sure, there are great opportunities. And if you’re a business owner, I want you to think that you can. It’s not impossible. It can be done. You don’t need an MBA. You just need to work hard and think it through and come up with a business plan and an idea on how you want to get there.
Yeah. Well, this is very inspiring. So if you are a founder, you’re running a business, or you’re about to start a business, look at what Alex has done. He was a son of Cuban immigrants, came to this country, built from nothing a 15-location, 50-provider medical group, and works with private equity, advises companies as well. Follow his example.
So Alex Fernandez, thank you for sharing your wisdom on the show. And if you’re listening and you enjoyed this conversation, stay tuned because I have a couple of exciting entrepreneurs every week who come on the show and share their secrets and frameworks with you. So thanks for coming, Alex, and thank you for listening.
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