Episode 39: It’s tough out there! How healthcare providers can grow (even in a challenging economy) with Bill Moschella of Definitive Healthcare

Justin Steinman:
Definitively Speaking is a Definitive Healthcare Podcast series recorded and produced in Framingham, Massachusetts. To learn more about healthcare commercial intelligence, please visit us at definitivehc.com.
Hello and welcome to another episode of Definitively Speaking, the podcast where we have data-driven conversations on the current state of healthcare. I'm Justin Steinman, Chief Marketing Officer at Definitive Healthcare and your host for this podcast.
So, we're doing something today that we've never done here before on Definitively Speaking. Our guest today is actually an employee of Definitive Healthcare, but wait, don't go anywhere just yet, because our guest is most definitely someone you'll want to hear from, and he's promised me that he won't try to sell anyone anything from Definitive Healthcare on today's podcast.
Bill Moschella is Co-Founder and CEO of Populi, a company that Definitive Healthcare acquired a few months ago. But more importantly, Bill is an expert, and you might even say an industry gadfly on the challenges facing healthcare providers and healthcare delivery systems. You see, Bill has founded and sold two leading companies that built and delivered solutions for providers and delivery systems.
Populi is a healthcare commercial intelligence company targeting providers and delivery networks with solutions for market, network and population intelligence. Before Populi, Bill started Evariant, which helped providers grow through smarter consumer acquisition, patient retention and network utilization strategies.
Bill's also an active investor in healthcare IT and frequently meets with and advises healthcare entrepreneurs. So if you've got an idea for a healthcare IT company, Bill is someone you want to listen to. Bill's been gracious enough to carve a few minutes out of his day-to-day to talk with me about the challenges facing healthcare providers, where he gets his ideas for his companies and what life is like as an entrepreneur inside a company after you've been bought. Bill, welcome to Definitively Speaking.

Bill Moschella:
Hey, Justin. How's it going?

Justin Steinman:
Glad to have you here. Let's jump right in. You talk to dozens of providers and provider organizations every week. What are the two or three biggest trends that you see going on in healthcare right now?

Bill Moschella:
Oh, trends. Well, some organizations, they're still under tremendous financial pressure. A lot of these systems are operating on thin margins, they're in highly competitive environments. They maybe haven't quite recovered financially from both a top line and a bottom line from the post-COVID world, which really sent a lot of these health systems into just really having to scrape the bottom of what was going on from a cashflow perspective, and managing just general access and demand and how their budgets are managed.
So I think that you're seeing a continued scrutiny on spend across the organization, but it's really interesting, because at the same time, they'll also say, "We need to grow and we need to recruit and we need to do things." So, I look at it like a startup. It's a startup organization, but it's not. Some of these folks are in the billions of dollars of revenue and they need to grow and they need to be innovative and think about how to manage the upcoming challenges in the world, but they're faced with financial scrutiny, so they're locking down on budgets, there's extra scrutiny on budgets.
I think that's just something that it's always kind of been there, but it's really, really in everyone's face on all angles across the board now. So I'd say that's one big one, that it doesn't matter who you're talking to, it's coming up in conversation at some point in time.

Justin Steinman:
So, it's funny to hear you talk about a billion dollar healthcare organization like a Geisinger or Mayo Clinic or Johns Hopkins as a startup. It's an interesting way. Why do you pick that word startup?

Bill Moschella:
Because a startup means that you're faced with a bunch of challenges that are being thrown at you in possibly a new light. So all different kinds of organizations go through change management, they go through market economic changes that might be affecting things, right? A lot of folks talk about there's headwinds or there's things that are happening in a particular industry that then affect everybody, and there's the point in the head of where it all happens and then it's all downstream, right?
So if providers are facing an issue because there's a government regulation on something and then funding is pulled back, now what happens? Well, that flows out, it flows down into vendors, it flows into the care organizations and the networks that get referrals and feed off them. So everyone can either find an opportunity or sees it as a negative, and that's what it is to be in a startup, because every single day is different, right? You start up with two people and then you're four people. That's an exponential increase, four to eight.
So when you have these large increases or changes that hit you all of a sudden out of the blue, you're dealing with a different situation. Then most of the folks who are in place are operationally watching just ones and twos move, and all of a sudden when you have major shifts and moves, whether it's at a financial level, at a patient increase or decrease, or just there's shifts and changes, they have to move quick to stay competitive to make the right decisions, and that's a startup mentality.
Most larger companies don't do well with having to move quick, because it's scary. If you move too quick, well, then that's not, oh, we can't move too quick. There's a committee and meetings about meetings and all these things happen at larger organizations, and I just think that that becomes its own inherent challenge of change management.
Think about it like the movie The Godfather, right? You've got wartime consigliere, right? There's wartime and then there's peace, and when you have leaders who are used to running things during peace and then you have wartime, it doesn't mean that they transfer well to a wartime scenario mentally, emotionally, what kind of leadership do they have?
When they have to make those decisions, it can be challenging and it hits the whole organization, and you could see sometimes people just pump the brakes. They're like, "We're not spending any money, we're not doing anything." Or other times you have leadership who says, "This is the time that we have to pick the one or two things and put the pedal to the metal and go."
It's a real true sign of leadership when you watch who digs in and leans in into innovation when things are really challenging, and who pulls the reins back and just goes, "We need to stop and think about this and get additional input." It says a lot about the leadership.

Justin Steinman:
So, is this a time for healthcare leaders to lean into innovation?

Bill Moschella:
I'm an entrepreneur, so every time something is a little wonky, it's the best time to lean in, but it carries a tremendous amount of risk. So like I said, you have to have that wartime mentality of how do you make these types of decisions in a different environment, right? Different set of variables, different set of things that are going on, it's a different chess board, so to speak, right?
If you look at it like it's the same chess board and you're just going to use the same strategies, you will fail. If you move too quick without thinking enough or having the right folks who know how to do this in these types of times, you'll be successful if you lack it. It can be tough and challenging. It's why so many just say, "We're just not good at this, so we're just going to pull back and we're going to do what we do really well and we're going to edge our way through it."

Justin Steinman:
Who's really good at it?

Bill Moschella:
Well, the ones who are really good at it, and this is probably unfortunate for a lot of healthcare systems, are the ones who have really consolidated and looked to really treat the business as a business as opposed to just healthcare. So, any larger organization that's gone through successful mergers and acquisitions. So, obviously HCA's been around for a really long time.
If you look at a lot of the mergers and acquisitions that have occurred out west, what CommonSpirit has done, they're really looking to treat the business as a business. Advocate, Aurora, that whole merger and now with Atrium. So, those are big, big powerhouse players. Some of those I named are becoming just a little bit newer to this exponential increase in market share, so they're going to have to find economies of scale and efficiencies from purchasing and supply chain. That takes a whole nother set of thought and mind power and think tank to really leverage that, so that often requires people to come in from out of industry to come in and run more horizontal functions and less vertical.
What I mean by that is I'm not looking for a lead in my cardiovascular service line, I'm looking for someone who really truly understands how to manage contracting and economies of scale across the way that we purchase and bring things in, whether it's a centralized recruiting, centralized marketing.
So you also see that start to come into play, centralization of common shared service functions, and then you'll hear some organizations refer to that as their shared services, whether it's, as I said, credentialing, recruitment, marketing, et cetera. Then the clinical pieces start to separate and they become their own kind of standalone units within a community or within a particular market area.

Justin Steinman:
It's almost like you're describing healthcare as big business, though.

Bill Moschella:
It is. You asked who's successful? They're successful, because in many cases you'll see head of innovation, chief innovation officer, you'll see a venture capital arm, like a very active venture capital arm. That to me is a really clear indication of who's thinking forward. If they're taking money off their balance sheet and they're investing it into venture capital, they've got a piece of that that they're diversifying their assets under management, and then they're starting to look at where they invest.
You see tech companies, analytics companies, service companies, right? They're thinking smart that way, because rather than invest in a company who's innovating an idea that you buy into and see where they go, maybe let them use one of your accounts as a test bed. Then if it throttles through, you put all the weight on the startup community to really go through all the pains of the innovation.
Then you benefit from both receiving the services if it's a successful company and also benefiting from your balance sheet, because when it trades, you're going to pick up a significant return over and above the normal returns. I mean, venture return's a little more risky, but they're significantly higher.

Justin Steinman:
But it's so interesting to hear you talk about this as big business and it's a little bit almost sad if you will, because look, we talk about Coca-Cola as big business, we talk about Warner Brothers as big business, we can talk about Mattel, the company making Barbie as big business. All important, but not really saving human lives.
I mean, I like Game of Thrones as much as the next guy, but if Warner Brothers disappeared off the face of the earth, I'll survive. If suddenly healthcare disappeared out of the greater Boston area, I could literally die. So, how do you balance this altruistic or important nature of taking care of people, really the ultimate mission of healthcare, with this big business dynamic that you laid out?

Bill Moschella:
It's to me the value chain in terms of a really true value of where the greatest market value return, EBITDA, all that, where does that really sit in the healthcare ecosystem? Who's at the top of the food chain? Pharma, right? Who's next in line? Payer. Who's at the bottom? Provider. Who actually does all the real work, hands-on, right? If there's a crisis, who's involved? Nurses, right? If there's a crisis, where are people going? Going to the hospital. We saw this in COVID, pharma came in, but who was treating all these people while everyone else was trying to figure out what to do?
It's an absolute reverse, right? The revenue and the margin and the EBITDA sits at the opposite end of the altruistic viewpoint here. Not to say that pharma doesn't do good and there's a lot of miracle drugs out there, but if you look at the money that's made, it's a little different. Then you put the payers in the middle and there's no problem there, right? I mean, you're seeing less and less providers every year, either through shutdown, bankruptcy or consolidation, right?
If you lay it all out on a map and you graph this out and you look at the trend over time, you can look at the overall revenue patient and then unit number of actual provider facilities and organizations, it's going to go in the opposite direction. So, I mean, these are just glaring everybody there, it's right in everyone's face. It's why everyone's so panicked about the financial situation right now.
For a healthcare organization to be in the red for over a year, that's an unbelievable strain on their balance sheet. Now take into effect the interest rates and the borrowing and how they normally might've leveraged money and their assets, what did they have to dig into to handle that? If you're digging in deeper into your balance sheet, you have to be careful of the assets that they have under management that's driving additional ongoing influx of capital, which means that there's less for them to innovate in, because they've got to really balance that.
Schools and colleges have gone through this where they've mismanaged endowment and then it's a catastrophe. The minute it starts going downhill, it goes downhill, they shut down, they're bought out, right? So, it is a very similar situation that I think the healthcare system is facing after a year+ of really being in the red, and some of them are still struggling.
There's a few that you hear about that have really kind of found their way, but they've done it in more of a growth mindset and just said, "We're going to take advantage and plow through this. We're going to take market share, we know where we make our money, we know what service lines are key, we're going to double down, triple down here."
They're watching the trends on how site of care is shifting, they shift more ambulatory. They're looking at population and looking at growth of population, and they're saying, "Hey, I'm going to focus on this part of the population a little more." And you've got, I know we'll probably talk about this, but those who are successful are balancing the total number of lives under value-based contracts.

Justin Steinman:
I want to come back to the comment you made about value-based care a few minutes ago, 'cause I definitely wanted to get your perspective on that.

Bill Moschella:
Yeah.

Justin Steinman:
Do you feel like we're at the inflection point right now between value-based care and fee-for-service? We've been talking about that inflection point coming for a decade at least. Are we finally there?

Bill Moschella:
I think that you'd be surprised at how many lives some of these health systems have under contract. I think some people might even be shocked to find out that it's over 50% or close to 70%, or maybe more. They're out there and it's not just like there's a few, they're out there. They're focusing on it in a different way, they're building real infrastructure around it. They're thinking about it from a clinical perspective, a population perspective, an analytics perspective. They're really doing the right amount of work, maybe they found really good partnerships and vendors.
There was a huge pop health movement, gosh, this is 2013, '14, '15, '16, there was that run there, and then you saw a couple of these companies attempt to go IPO. Go IPO, some failed, some didn't. Then that whole world, if you reflect back on that from the capital markets perspective, it didn't go well, only a couple really got there. Even so, they didn't turn into the next AWS Amazon, it didn't happen for them like that, right? There was this belief that it was going to be like that and then it wasn't, and so that was very telling.
So, that meant that a lot of folks had to go back and say, "I think we kind of actually have to do a lot of this on our own." Those who have figured out how to do it on their own and bring the right people together operationally, analytics, clinical, and then just the whole ecosystem have been successful.
Once you get it right, you kind of have a system for it, so it's just, hey, let's bring in this many more and let's do this and let's move this into our other markets. If you have a system that can bring people under contract and then they start buying other locations and merging with them, they can bring that system with them.
I think another point back to who's successful, a few of these organizations are building best in class operations around these different key areas, and those who build those operations who truly understand operational scale, right? I met with a CEO about a month and a half ago of one of the largest systems in the country out in the Midwest, and they are so hyper-focused on operations, to the point where when he was talking about what's successful for his management team, operations experience. Not just clinical, real operations experience. "We need to look at our service lines like P&Ls, we need to know how to function each of these things as their own separate units that all roll up into the parent."
That's operational efficiency, that's operational excellence, and knowing how to do that makes you more successful when you think about growth and scale, because you have a system and a playbook that you can put in place. You're not just buying it because of the EBITDA or because of the market, you're buying it because of those, and when you go in, you're going to make it better, or you've got an arbitrage situation and you've got a failing system in a fantastic market, and you know that if you come in and just drop your playbook in, it's game on.
I mean, that's how I look at the entrepreneurialism in general. If you're a repeat entrepreneur and you've got a playbook and you see a hurt industry or a hurt market, go for it, because if you go in with a real good playbook and a great group of people, it's lights out.

Justin Steinman:
It's interesting though, because to some degree healthcare is a little bit of a zero-sum market. So I'm sitting here in Boston, there are 600,000 people in Boston, and if we all have X amount of disease, whatever that disease percent per person is, if MGH takes patients away, they're taking them away from Beth Israel or somebody else. So, how do they balance this ... someone's growth is coming at someone else's expense. Talk to me a little about those market dynamics and how things are changing and who wins and why.

Bill Moschella:
Yeah, I would say it's even worse than that. It's worse than local competitive loss. There's true out migration that's constantly happening where people are just traveling. What reasons, why are they traveling? It varies. It could be a word of mouth and that they really feel like it's important for me to go for my cancer.
So example, if I live in Connecticut, what are my choices, right? I can go to Hartford HealthCare, you've got a center of excellence for oncology at Yale, or I might say, "I'm going to Boston, I'm going to go to Dana-Farber." There's an affiliate network and there's a brand recognition there, but there's also outcomes, and so you're dealing with a much bigger picture than what it used to be like.
Well, it's local, there's three acute hospitals in a 10-mile radius or 15 mile radius and I have to go pick one. It's now changed, it's much more than that, especially when you get into rare disease and some of these more key service lines. Cardiology, oncology in particular tend to be a big focus for this.

Justin Steinman:
So it's interesting, 'cause you bring that up and you talk about service line growth, and one of the questions I always try to figure out is do you invest in the doctors and the patients will come? Or do you attract the patients and try to go to the service line and then get the doctors to follow behind it? Do you have a perspective there on which one's better?

Bill Moschella:
Well, yeah, I think that there's also you throw a different set of variables over and above all that and say, are we doing that to be under contract and value-based? Are we doing that for fee-for-service? Are we going to split some of the panel across that? I think those are some areas that folks will think about when they're making that decision.
You're a marketer and so you understand the true power of brand. What is brand? What does brand equity really mean? What health systems have national brand equity? I mean, you can name them pretty quickly for not even being in the industry. I could ask my mom, just from TV and magazines and things like that, just a general opinion over the years, what do you think? Then there's those of us who are in the industry and we have an expanded list, but that expanded list doesn't necessarily cover some of these key brands that are outside of our local market. So, I think that the question goes down to service line level, right?
If you're talking about cancer, you've got a lot of different options. You've got probably great options locally and you've got great options within driving distance, and for whatever reason, you can fly somewhere too. It just might be the choice that's made. Why is that choice made? The brand is going to bring you there. Do most consumers know the specific name of a doctor that they've never met before, but all of a sudden come in contact with [inaudible 00:22:14] now have a rare disease or condition.
Are they like, "Oh, Dr, blah, blah, blah at Cleveland Clinic, I need to go, that's why I'm going to pick them."? No, no, no, it doesn't work that way. There's a, oh my, I have this issue and you're faced with it. Now we're talking about the world of the internet and research and rankings, physician referral, strength of physician referral, I think that that's where all this lies.
I'll give you an example. So we have health systems who do a lot of transplant, academic medical centers on both sides and all across the country. We have a pretty solid base of academic medical centers who focus on liver, lung and they're out there saying, how do I get more folks to come here? My recognition is definitely not local, 'cause I've got the local. This is high margin opportunity that's happening all across the country, and people are flying.
So if I'm in California and I've got a center of excellence for liver transplant, and I find out that everyone's stopping in Nevada and Vegas, 'cause they've got a pocket of that there, they're flying, why aren't they flying out here? Is that a brand issue? Is that a referral issue? What is that issue? Those are the things they have to solve for and you have to solve for them at the service line, and sometimes at the condition level. They have to know where's it going? Why? Who are the physicians that are in the longitudinal care pathway that would see that patient?
'Cause you've got primary care, you've got specialists, you've got super specialists of things, and it runs a chain where at some point there's a referral that takes place. Now, you bring in value-based care. How do people think about how they keep things in network? These are complicated thought processes for them, and much less so for pharma and payer.
They've got their networks, they've got rules and regulations set with what happens when you want to go out, and there's processes for that. For health systems to think about how they actually grow or what they bring into contract, it's one thing locally, it's another thing when it starts to happen out of market. So, it's a complex topic for them.

Justin Steinman:
We specialize in complex topics here on Definitively Speaking, so I like that.

Bill Moschella:
Right on.

Justin Steinman:
But it's interesting, because you mentioned the payers and the payers are actually driving some of this medical tourism too. Before I came here to Definitive, I was working at Aetna and we were signing contracts with certain healthcare provider systems to fly members from across the United States to Cleveland for example, or to Atlanta based on conditions, because frankly, those providers would guarantee Aetna a certain lower cost, and it was cheaper to pay these people's airfare and hotel than what it would've cost to put them locally at their hospital for that treatment.

Bill Moschella:
Yes, and I'm familiar with the systems that do this often and well, and if you look at what they're actually doing, it's operational efficiency. They've got a system for getting you out there, putting you up, onboarding you, communicating to you. It's like a concierge service of what to do, and it's broken down by the specific disease state and category. So, they've built a system around it.
So, some people might say, "Well, you know what? That's really unfair, because you're telling me that if I just negotiate with you and lower my rates, you're just going to create a pathway for an influx of patient volume?" Well, the response actually should be, if you're willing to put the operational efficiency around facility, people, processes and technology, then perhaps maybe they've earned the right, because the outcome and the experience will be better. What are they ranked on? Patient experience, patient outcome.
I mean, these are metrics that the health systems they sign up for, they do surveys, they have walkthroughs, they've got to meet all these different requirements all the time. So it shouldn't come as a shock that if somebody decides to take that on as a business in a particular therapeutic or disease area, that they're going to be able to negotiate a better contract.

Justin Steinman:
It almost sounds like an assembly line, if you will, to borrow an automobile analogy.

Bill Moschella:
The folks that I know who have experienced that and the systems I know who offer that would say that their customer patient satisfaction ratings are extremely high, because they know that if they're going to go out on a limb like that to fly people in, it better not be a bad experience, and the outcome needs to be predictable, so they're operationally efficient.
You can't take a health system that's really amazing in one particular area, take a health system in Boston that's at the top of their game or New York, or like a Prisma in the Carolinas, or down in Florida, you've got Orlando Health, you've got Advent, you've got amazing health systems out there. Some of them might have this, I don't know all who does or doesn't, but if someone decides that just because they have a great brand locally that they just want to take that on, that's a whole nother set of operational efficiency to be able to deal with people in concierge and get them in, you've got family members traveling with people.
So I go back to the business comment, treat everything like a business, build the people, process and technology around it, put the infrastructure in place, deliver high customer satisfaction and outcomes and build a business around it. If it's fruitful for the business, keep growing it and then you'll own that market.

Justin Steinman:
Yeah, but to come back to some of the stuff you were talking about earlier around taking risks and this challenge of budgets and growth. If you're going to build one of these specialty practices, if you say, "We're going to be the best for heart stent surgery and we're going to start flying people in for that type of stuff," that's a pretty big investment.
You got to recruit the right doctors, you got to build the right facilities, you got to build the right hotels, you got to get the best nurse practitioners, all the different types of stuff. That's a pretty big risk in this economy to bet on trying to be a service line leader for medical tourism.

Bill Moschella:
Well, I mean, medical tourism in particular is one aspect of this, but to answer that, it requires just a lot of well-rounded business-minded individuals dedicated to that, and these health systems are thin on operational resources. That's the problem. The only way that you get the ability to do something like that is if you've already hit economies of scale.
If you're a health system and you want to just start this from scratch, it's not just the idea itself, it's the infrastructure and the people to do the whole thing, 'cause someone's got to go specifically help and start negotiating those contracts, and finding out if you can actually negotiate that out and work on that. Then you've got to make sure that you've got the panels and the doctors and the access all set up, and you've got to have all the in town in city resources all dialed in with all the right negotiator. You got to treat this whole thing like it's a separate tourism business and not just a clinical process.
So it doesn't have to do just with medical tourism, it's like trying to do anything. Oh, I have an idea. You know what we should do? We need to stand up our own Medicare Advantage program. I hear this all the time, but I see people who are like, "We need to start up a Medicare Advantage program." Then you read the news right now and people are like, "It's not working, bail. Get out, bail." So that might have something to do with the area in the country, it might have something to do with their lack of operational efficiency.
So when you read these articles, it's like, oh, such and such health system is bailing on their Medicare Advantage program, it didn't go well, and everyone says, "Oh, Medicare Advantage is bad, we shouldn't get into that business." Is that really what happened? I can't say for sure, but one could say that if something's not going well, even if it's 5% or it's 95%, there's an operational failure somewhere there where someone or a group of people were overworked, too much on their plate, couldn't hyperfocus on this. So, what's going to happen? You spread yourself too thin so something's going to break. Rather than have it break in the core system, you just chop off the pieces of things that you try to do.

Justin Steinman:
This might be the first time in my podcast history here that I wish I had a video of the podcast, 'cause the passion exuding off of you about this topic, it's like hands are waving, you're getting up into the screen here. I love it. I love it, I love it, I love it.

Bill Moschella:
Well, it's because it's so frustrating as an entrepreneur, and most of anything that I've ever built, I have a certain scale. I don't know whether I'd call it a limit, but I have a sweet spot of revenue, employee size, market reach, vertical. I have a formula that I've just done a bunch of times, and so that's in my sweet spot.
So, it's not fair for me to criticize a multi-billion dollar organization and claim that they're operationally inefficient. That's not necessarily what I'm saying. I'm just saying that it's frustrating, because I do get inside these four walls all the time, all the time, and I have seen hundreds and hundreds of intimate situations across the country over the past dozen years, and it's still all the same. It's all the same.
It's just that if you have thin margin, you don't have the capital to invest in this. If you do invest, just the opportunity and timeframe that's allowed to say that it's a success or not is not the same way that maybe a venture capital would look and say, "We got to give this thing five or seven years before we're going to hit the next inflection point." Or then even at the private equity level, "We're going to bring these three entities together, we going to put a bunch of money. It's going to take a while, but we need to get through this market, because we believe that there is a market opportunity here."
That is not how these organizations think about growth. It's too thin of a margin and it's been around for so long, what is someone going to do that's really going to completely disrupt it and change it? It's a bit too scary. So as I said, it's not fair to compare it to tech and growth opportunity in tech and AI and whatnot. So anyways, food for thought.

Justin Steinman:
This has been awesome, Bill, and 35 minutes have absolutely flown by here, I feel like we're five minutes in. But I do got to ask you, it's kind of two questions before we go. So first off, you mentioned you got a formula. Do you want to share the formula?

Bill Moschella:
Yeah, I'll share the basis of the formula. The formula comes more from failure than it does come from success.

Justin Steinman:
As all good ones do.

Bill Moschella:
Yeah. Yeah, I've faced the death. I've faced death in companies and I've lost hair. No one else can see me, but I have none. It's a joke, but I've just had some of the most stressful moments in my life in business just thinking about the decisions that were made and where they went wrong, and how do you fix them and just how do you deal with the situation at hand? It's just a lot of learnings along the way, but the things that I have taken from my experiences to build something successful are the following.
This is a model that's in venture capital, this is a model that's really in anything from an entrepreneur, incubators will teach this kind of stuff. It's team, and in no particular order, team, TAM, product, right? These are fundamental underpinnings for success. You have to have the right people. If you have toxicity in your leadership, you're done for. It doesn't matter what happens, you're done for.
If you have a toxic leader, they bring in toxic people, they take people who are on the fence about being toxic and they turn them toxic, and then just the culture breaks down. The good people quit, everything is pessimistic and it infiltrates an organization. I've seen it happen, I've lived it, it's horrifying, and when it gets on your management team, it makes a real mess as a CEO or as any leader to work amongst that.
So team, having the team. I've been able to travel with some of the same folks for the past couple companies, and actually Populi was my seventh. This is my seventh business past three at real scale, but I've gone through this iteration many times and I've lived it, and so I've been able to get a good group of folks who can just come in and really nail it.
TAM, you have to understand the market and be really realistic about what the market is. When people put these pitch decks together and they're like, "It's a $3 billion TAM." Be honest, what does TAM mean? It means that if everybody in the whole entire market actually bought your product for the most expensive price that you can sell it for, yes, maybe it's a multi-billion dollar market. What's the reality? A fraction of that percentage is actually sellable to.
So I go TAM, SAM, ESAM, right? SAM is your serviceable market. Those are people who could buy, but your ESAM is the expected serviceable market, the percentage that you can actually sell to and service on any given year. Do that number and it's most likely single digit, and it's going to be at the lowest amount that you possibly can manage to sell your product for. If you can make that work, then you got a good idea, and so you have to understand how to manage the TAM and how to look at that.
Another important one is your product. So if you're not thinking about how to automate a product end-to-end, you're going to create a company that's a professional services company that says it's a product company, and I've lived this over and over and over again. So you've got to have real product leadership, you have to have real product discipline. You have to manage your roadmap, you must over-deliver and under-promise. That you must do, or you will die on the journey.
Because the minute you go up, everyone wants to get the hot thing, 'cause they're upset about all the other junk that's out there. The minute it turns and they're like, "You oversold and under-delivered," that's your mantra and that's what the market looks at you like, it's downhill, bye-bye. So, a good team has discipline and prevents that from happening. Really solid discipline around FP&A and around TAM and analysis and around building a budget and a model, that's what makes you not overspend.
Think about how you're going to take in your or someone else's precious capital and make the most out of it and get the most return. The more mistakes you make along the way, even if you've got a good company, you're going to dilute yourself, the shareholders and the employees, and then that's going to yield a really nasty outcome in the end if you do get an exit and everyone leaves and gets nothing, except for the investors and maybe some of the founders. Nobody feels good about that. You got to build that reputation and you got to live it or you're doomed. Sorry.

Justin Steinman:
I love it. All right, the last question. They always say you shouldn't ask a question in a public forum if you don't have an idea of what the answer's going to be, but hey, I'm a risk-taker so I'm going to ask it anyways, right? So you talk about successful exits, you're an entrepreneur, used to running the company, you get bought by a company like Definitive Healthcare. How does your life change post-acquisition when you're inside a company?

Bill Moschella:
Yeah, that's a great question. So, I'll give you my answer and I'll give you the relevant answer right now. My life hasn't changed that much and it goes back to my principles, which is team, leadership. There's great leaders here, so people understand how to see other leaders and give them autonomy. That's a big piece about what makes this not uncomfortable and makes it a success.
Here's what happens. When that happens and you have a good leader, or good leaders who know how to see other good leaders and give them autonomy on what they need to do, it permeates down through the folks who came along with the acquisition as well. So, they're like, "Oh wow, we actually are really getting to do our thing here." It's validation around why we think that we were acquired. Maybe on the other side is validation, we're like, "Yes, we bought a great team, we bought a great product, we bought a great engine, we brought a great playbook and process."
So, life isn't really all that different. I've lived different scenarios and it can suck, because if you've been on a long journey and you're an entrepreneur and you finally got an exit, and especially if it's a really good exit, you're not really thinking this could really not be fun on the other side. You're like, "We're getting out. We've had to raise capital, we've been diluted, this is a great outcome for everybody," and you feel like you're just going to have this weight of the world lifted off your shoulders, and maybe you don't think about that things are going to get completely smashed and destroyed and pulled apart on the other side.
So anyways, things have been great here, and like I said, it's because of the leadership and just the understanding and the autonomy and really just the collaboration. I love it.

Justin Steinman:
Awesome. Well, we are absolutely going to have to have you back on. I may even hire you as a new co-host for Definitively Speaking. I love the passion, absolutely love it. Thanks for coming on today, Bill. This has been absolutely great.

Bill Moschella:
Justin, thank you for having me.

Justin Steinman:
For all our listeners out there, thank you for listening to Definitively Speaking, a Definitive Healthcare Podcast. Please join me next time for a conversation with Jonathan Bush, Founder and CEO of Zus Health. Jonathan is somewhat of a legend in the world of healthcare IT. He was also the founder and CEO of Athenahealth, and he's invested in dozens of healthcare IT companies.
Jonathan and I will be joined by Definitive Healthcare CEO, Robert Musslewhite, for a far-ranging conversation on the role of data in healthcare, how we're watching data, but lacking in insight. Jonathan has some ideas on how to fix it, you do not want to miss this one.
If you like what you've heard today, please remember to rate, review, and subscribe to the show on Apple Podcasts, Google Podcasts, Spotify, or wherever you get your podcasts. To learn more about how healthcare commercial intelligence can support your business, please follow us on Twitter or X @DefinitiveHC, or visit us at definitivehc.com. Until next time, take care, stay healthy, and remember, there is so much opportunity to fix things in healthcare.