In this Q&A, meet Hector Torres: a former investment banker, an M&A lawyer, and a healthcare consultant. Learn how Hector’s robust background helps him provide multifaceted solutions for clients.
Q: How did you get into healthcare management consulting?
A: As a young investment banker, one of my prior firms asked me to select my top three industries. My first choice was consumer products (I love buying things!), my second was technology (who doesn’t want to represent Apple in their initial public offering?), and my third was healthcare (my mother always wanted me to be a doctor). I got my third choice. Although I was disappointed at the time, it has worked out well, because the last 5 to 10 years have been robust times to be an M&A adviser within healthcare thanks to the unbelievable velocity of change, level of consolidation, and number of new entrants that aren’t traditional investors or healthcare industry participants. I expect the next 10 to 20 years will be equally exciting.
Q: How did you become interested in strategy and business advisory and, more specifically, M&A transactions and affiliations?
A: I’ve been doing M&A advisory work within healthcare my whole career. I have a background with texture and perspective because I’ve done it as an attorney, an investment banker, a private equity investor, and now, for the last five years, as a consultant. Having that deep subject matter expertise from all those different vantage points lends itself to providing comprehensive value to our clients.
For example, we represent many physician group clients in potential affiliations or acquisitions by private equity groups. Having been a private equity investor, I can tell clients what is typical in terms of structure, terms and conditions, and other considerations, helping them to understand what are certainly some of the more complex and nuanced transactional concepts and structures that are being developed on a national scale.
I’m also an active attorney in New York State. Very few industries are as highly regulated as healthcare, so having a working knowledge of the legal aspects of M&As, and being able to speak the same language as the attorneys who are involved in the types of engagements I lead on ECG’s behalf, again adds value for the client.
Q: What’s the biggest challenge in your service area facing healthcare organizations today, in your opinion?
A: M&A clients on both the hospital health system and physician group side are organizations that have come to a definitive chasm in their life cycle. Although they’ve sustained themselves through prior storms, the velocity of change in terms of the shift from fee-for-service to value-based care; the heightened competitive dynamics within almost every US market for healthcare services; and the tools, infrastructure, and intellectual horsepower that go into being successful in tomorrow’s healthcare delivery model are all pressures they must address.
From their perspective, the question is, How do we get all the capabilities, resources, and capital we need to sustain our market relevance? The typical conclusion is that they can’t do it on an independent basis. For a hospital, that may mean finding an M&A adviser who understands these nuances and can identify their objectives and then go into the market to find the right partner organization. From there, they can negotiate, memorialize, and execute terms and conditions that are aligned with the hospital’s objectives and acceptable to the partner.
Q: What is one of the most interesting challenges you’ve faced as a consultant?
A: I like to say that if you’ve done one healthcare M&A project, you’ve done one. There’s no sense of I’ve seen this movie before and I know how it ends—and that’s what’s exciting. As an attorney, I sometimes did the same exact tasks over and over again, and the same to some degree as a junior investment banker. In those roles, you’re sort of doing one part of the transaction, and you get good at it and become the go-to person for that particular function or deliverable. The rich tapestry and confluence of factors our clients face lends itself to a dynamic project and engagement every time. Even though we’re doing very similar types of work, every partnership has unique facets. It’s perpetual learning. Clients need very specialized expertise around executing these transactions in a way that is minimally disruptive to ongoing operations. So what interests and challenges me is marrying my skill set and experience in an environment that’s ever changing.
Q: Is there a particularly rewarding project that you’ve worked on?
A: In 2015, I worked with a very large community-based health system whose leaders realized that long-term financial metrics and the need for capital investment in everything from IT infrastructure to de novo sites, physician recruitment, and EHRs really challenged the organization’s long-term independence. As they were contemplating that dynamic, their market shifted very quickly from fee-for-service to one increasingly dominated by value-based reimbursement arrangements. They were literally on the cusp of closing their doors. We worked with them to formulate a comprehensive partnership development process and executed a best-in-class partnership transaction that made them the third founding member of a new health system, partnering with two other strong regional players: an academic medical center and another community-based health system. Today, not only have they remained relevant in the market, their overall position has strengthened.
That’s one of the most rewarding things we do: not only do we try to help the community hospital or independent physician group that’s undergoing systemic change, we try to find affiliations and transactions that position them for long-term success.
Q: What’s the best part of your work day and what you do?
A: It’s the fact that it’s never the same. One day I might be in front of a board petitioning their vote on the ratification of a merger, the next day at an industry conference presenting on key trends and considerations within healthcare M&A, and the next analyzing a financial model to understand a potential transaction’s financial and strategic viability. It is integral to understand finance, law, and the cultural dynamics of navigating a board to a decision that affects the organization’s long-term strategic direction. The “gumbo,” so to speak, of this multidisciplinary approach to facilitating solutions for our clients is what really makes it exciting for me.
Q: What do you do outside the office for fun?
A: I am a big Porsche 911 fan, so anything related to that vehicle is a deep passion, but I also have a seven-month-old baby boy named Hudson who is super cool and a saint of a wife named Joanna, so they collectively consume most of my free time. I wouldn’t want it any other way!