John Corcoran: 10:50
It’s interesting.
Zak Eisenberg: 10:51
Like it worked out. It’s almost like being in New York and San Francisco. Right. One of those two.
John Corcoran: 10:55
It’s almost like someone needs to take that angel network and put together a VC fund, you know, like for all the active angels there.
Zak Eisenberg: 11:03
That’s a great idea. I think I’ll have to follow up on that one.
John Corcoran: 11:07
Nevertheless. So you, you find your way eventually. Let’s take it to the modern day. So actually, I don’t think I got the answer on the health care piece. So it was what was the, the VC fund that you joined in New Orleans was focused on health care there.
Zak Eisenberg: 11:21
Yeah. That’s it. It was maybe 60% biotech life science focused, actually, when I left New Orleans and went to New York and went into growth, equity and private equity and spent a few years doing that, I was not in health care. I was just interested in exploring other spaces. But, you know, health care was always something I was sort of drawn to.
I thought about being a doctor at some point, and my mom is an acupuncturist, so Elk Grove was kind of always around my life a little bit. But yeah, I wasn’t particularly seeking. It was more like this was one of the three funds. And I was able to get that position right.
John Corcoran: 12:02
And now you’ve been with Merritt Healthcare Advisors is focused 100% on healthcare in the M&A space. You’ve been there for almost the whole time. It was about ten years old. So talk to me a little about like the early days of Merritt and what some of the challenges were to break into having an, you know, an advisory in that space, you know, because it’s, it’s, it’s kind of the, the industry that you’re in. Like there’s lots of players that have been around for a long time.
So it must be hard to break into.
Zak Eisenberg: 12:34
Yeah, it is, it is. And really we had to, and we still have a differentiated message. That’s how we’ve been able to break in. And this sounds odd, I’m sure to your listeners as well, who, you know, many of whom I’m sure are entrepreneurs, ten years is not that long in investment banking when most of the banks out there are, you know, 100 years old. It’s difficult often to compete with brands of that age.
But. What makes us quite different is that I’m not unique as a partner in terms of background, most people on the team really at the senior level as well as junior people have operational experience, most of us within healthcare. So I am different in that way and that my operational experience is not healthcare driven, but it’s really what attracted me to join the firm in the first place. The brothers who started the firm are serial healthcare entrepreneurs, and I know coming from education, which is a fairly regulated space, that healthcare must be even more challenging. At least that’s what I thought at the time.
And it’s true. It’s an extremely difficult space to operate in because it’s so regulated by each market within the US and also globally. It’s quite differentiated depending on where you are. And I thought that was pretty impressive that they had been so successful in a difficult space like this, not being physicians either. Both of them are, you know, operators only.
So that’s really our pitch to the market. And it’s really why I think we’ve been so successful is that when we’re speaking with mainly physician entrepreneurs, because that’s who most of the entrepreneurs in healthcare are, they’re usually physicians or PhDs or something like this as background. But you have operators as well, business people. When we go through our background of having operational backgrounds inside and outside of healthcare, and having been investors in the space for a long time, that really strikes a chord with people. And it really goes to our ethos, which is to be an investment bank by founders, for founders, by operators, for operators.
So we, we, we think that’s what has made us so successful and able to break into space as quickly as we have.
John Corcoran: 15:00
I’m curious. So with a background in operations and you can, it can naturally gravitate towards that, towards operations. And when you have companies that you’re advising, you know, is that a tension sometimes. Like how involved you should get with helping them with operations, how to figure out what your advisory role is and where the line where you draw the line or where, where you stop and they have to take over.
Zak Eisenberg: 15:27
Yeah. We think of ourselves really as ad hoc board members. So many of the best Board members. In my opinion, I usually have an operational background where they can offer sort of objective advice from the outside looking in, and that’s what we’re able to do for their operations, as well as help them run whatever transaction process they want, which is our, you know, core business. For me, the way I get my operational scratch these days is that when I joined Merritt, there were three people.
And now we’re growing. So Merritt is a, you know, I wouldn’t call it a startup, but an early stage company still. And we’re, we’re still trying to grow so that’s how I, at least on my end, still get excitement from participating in operations. But yeah, it’s a balance. It’s a balance.
And especially because our clients know that we have that operational background, they’re usually asking us more questions, strategic questions about how they can operate their business. If we know vendors or if we can help them with certain things. And we need to be pretty careful about how we set expectations up front with clients.
John Corcoran: 16:47
Tell me about, you know, we’re recording this in 2026 here. There’s been so much change over the last ten years in the health care space. What do you have your eye on right now? What, you know, for a layman who’s listening to this, who goes to the doctor and, you know, has their own, you know, relationship with their insurance carrier, what are some of the changes that you’re noting or those kinds of macroeconomic influences that are affecting the industry? I know that is a super broad question.
So take it whatever direction you want with it.
Zak Eisenberg: 17:21
Yeah, it is very broad. Let me put the AI topic to the side.
John Corcoran: 17:26
Yeah, we could get to that second. Yeah. After this,
Zak Eisenberg: 17:29
Yeah. Because of course that’s going to impact health care as well. and it’s starting to. When you think about what’s happening in healthcare, I think it’s important to not just think about what’s happening to healthcare only in the US because it’s a global phenomenon. Developed countries overall have a few similar trends.
Their birth rates are going down and their population is aging. Demographically, this is true across economies. And so they actually have very similar problems in healthcare in that as populations age, they need more treatment, more health care. And as birth rates decline, the share of younger patients. From a health system perspective, whether it’s government insurance or private insurance like we have in the US, or a combination like we have in the US.
Younger sets of the population offset risk from older sets of the population. So if you’re thinking about it from an insurance perspective, this is a big driver of what is happening in healthcare because here in the US, the silver tsunami is happening. The boomer generation, which is still the largest generation, I think millennials are a close second, but there are more boomers than there are millennials. And the first boomer I think just turned 80. So this is starting to really happen.
We’re in the midst of this. And over the next 10 to 20 years, the defining feature of US healthcare is that we have this huge cohort of boomer generation people who we need to take care of, and it will be expensive, and that will affect private companies as well as Medicare and Medicaid, etc. combined with that. And this is, again, not just unique to the US. There is a trend to try and deliver care at the lowest cost side of service possible. Now in the US, we’ve had a system of treating patients for a long time.
We had a system where we were treating patients for everything. In a hospital, you scrape your knee, you go to the hospital, you need a heart surgery, you go to the hospital, you need an X-ray taken, you go to the hospital. This is hugely inefficient. Hospitals are very inefficient. They’re very expensive to run.
They’re very large. So it’s a lot of facilities. And there are a lot of people and costs associated with that. What’s happened in the US, and I’m sure, again, most people can relate to this, is probably, you know, certainly over our lifetimes, John, most of the care that you now receive is what’s called outpatient, which means that you’re seeing even for some complex procedures, you’re seeing your doctor outside of a hospital. So for surgeries, for example, most surgeries now can be done in an outpatient setting called an ambulatory surgery center.
This has been the biggest trend over the last two and a half decades. On the surgical side, it’s why my partner’s business really has been as successful as it has. Developing close to four dozen facilities now is because hospitals have been pressured, partially, to move patients from the very expensive hospital or to this less expensive outpatient, or so I’d say. Those are the two very large sorts of demographic and operational trends that people in the industry pay attention to. The last one is Population health, which I think is going to be accelerated through AI and better data.
But this is the idea that other countries, frankly, are a little better off than we are, which is preventing disease as opposed to treating disease really as a way to improve people’s lives. Number one, of course, and then secondarily, to reduce the cost of the overall wellness system in a country. So in many European countries, they consider, you know, education and food as part of wellness and their wellness budget. Here in the US, we spend roughly the same amount as our European counterparts, but we spend a lot more on health care than we do on other aspects of this sort of health wellness ecosystem.
John Corcoran: 22:18
It seems like attitudes have changed towards that, but just the economics haven’t.
Zak Eisenberg: 22:24
They’re starting to. The economics are starting to. There’s.
John Corcoran: 22:27
Maybe it’s just because I live in, I don’t know, Northern California, a place where people talk about preventative terror and they talk about wellness and things like that. Maybe I’m more aware of it because of that.
Zak Eisenberg: 22:38
Yeah. I think where you are actually Kaiser, which is a huge operator in your area of the country, has been at the forefront of this change for a long time, where they because they’re a, they’re, they’re also an insurance company. So they insure patients as well. They’re able to really manage risk and span across the entire continuum and optimize for health outcomes and low cost, because that’s ultimately what we all want. And in the US, it’s really, it’s necessary.
It might be the single biggest issue of our generation for our budget is making sure our country doesn’t go bankrupt from runaway health care spending, which, you know, has been a huge political topic, but it is just an economic reality that, yeah, it’s continued to eat our economy.
John Corcoran: 23:35
Let’s talk about you. We were talking beforehand before the recording, and you said you had a cardiovascular business that you represented and you took them to market, meaning helped them to go out to either raise funds or to be sold. And, and we were talking about that. This was kind of illustrative of some of the challenges of, you know, in healthcare of businesses that want to scale or things along those lines. Can you take us through that case?
Case study?
Zak Eisenberg: 24:07
Yeah, that’s an interesting one. Not your, I’d say, fairy tale transaction. You know, lots of founders, I think, and operators expect that when they go to sell their company or raise capital, they’re going to have a, you know, fairly easy time doing it and kind of go out to market and they’ll have a bunch of suitors and they’ll close with the first one they pick. That happens sometimes. Especially if you’re smaller and you’re more of an add on size, meaning you’re selling to an existing platform.
If you’re a little bit larger, sometimes you run into issues, which is what happened with this client. So they were sort of at a size where they could be a platform. They could also be a regional extension. So as a physician, cardiovascular practice, they had some surgical service lines and some different facilities, imaging, etcetera, testing. So pretty sophisticated business.
And, you know, the first buyer they went into diligence with who was a great fit culturally, just couldn’t close out the round. It was a financial sponsor. They needed to raise some debt capital to fill out the round, and they just weren’t able to get it done. Not because they didn’t want a partner or client. I didn’t want a partner, it just didn’t happen.
And that set us back for months. And also sometimes when you go out to market and then you end up. Not actually completing the first deal you had signed. Sometimes there can be a little bit of a taint on the business, and then people start asking questions, oh, why didn’t that close?
John Corcoran: 25:59
Even if it has nothing to do with the business itself.
Zak Eisenberg: 26:03
Absolutely, absolutely. And this started to happen a little bit here, but thankfully this client had really stayed on top of operations, which can be challenging when you’re trying to sell a business or raise capital. I’m sure, again, any of your listeners who are operators or executives or founders relate to this. It’s very difficult to run your business while you’re raising capital because it’s a full time job. That’s why investment bankers as an industry exist, because it takes a lot of time to do this.
And it’s true for M&A as well. Probably even more time. So we ended up finding another partner. It actually became more of a merger of equals. It was a platform company that I ended up partnering with this client.
They had a pre-existing platform. And he ended up being the chief medical officer that, that platform. And they were relatively similar in size. So it ended up being a great fit. But you know, from start to finish, from the time we engaged with him, it took almost 20 months.
That’s a long time. Wow.
John Corcoran: 27:14
So you as a professional need to be patient and also need to manage the client’s expectations.
Zak Eisenberg: 27:22
Yeah, I’d say more than half the job is therapy. Therapy and counseling. Yeah. And you can call it what you want, but I’m sure you had this experience too as an attorney. Counseling comes in many forms, right?
John Corcoran: 27:38
And it’s truly a counselor. Counselor. Like you’re counseling them. Yeah, yeah, yeah.
Zak Eisenberg: 27:43
Advising. Yeah. You want to put it on. But that’s why we think of ourselves really as ad hoc board members. We’re a very trusted board member who helps with operations, we’re helping with this process strategically, etc. and we’ve been in their shoes too, which is different.
John Corcoran: 27:57
I’m mindful of the clock because we’re a little short on time. So AI, let’s cover that in like the 60s, right? So like, how’s AI affecting the healthcare industry?
Zak Eisenberg: 28:09
Yeah. Like everywhere else, it’s kind of started impacting healthcare mostly through chatbots and some sort of architecture. So scribing for physicians has been a big area. Yeah.
John Corcoran: 28:25
I’ve noticed a lot more of that recently. Yeah.
Zak Eisenberg: 28:28
Yeah. Which is great for providers because note taking is a huge part of providers days. It also leads to lots of burnout. Just the amount of documentation and scribing, the better and more accurate it gets, the, the more impact they’ll have on providers, which is good for all of us. Yeah, we need, we need the providers.
And secondarily, really what I’m excited about is over the next. I think it’ll take longer than most people think. But let’s say over the next decade, I would hope to see regulations loosen so that these AI systems can start to actually diagnose and provide care in some ways to patients. There are already studies, for example, with radiology. So you know, your radiologists, MRI, etc. several years ago from Google, they did a study.
This is before ChatGPT. The systems at that point were already better than your best panel of radiologists.
John Corcoran: 29:32
Wow.
Zak Eisenberg: 29:33
Now the issue is, of course, there’s a huge status quo. Do you really want an AI system doing absolutely everything? No, probably it’ll be a human in the loop. But yeah, you know, not to pick on radiologists, but I think that is a profession that will need to change dramatically for radiologists to have a place in the future, because the skill set of reading images is not going to have nearly as much value. And also patients will not want that, especially if the accuracy of the AI system is better.
So I’m very excited about that. You’re starting to see this a little bit in, especially in the imaging sphere where it’s not necessarily diagnosing, but there are intraoperative cameras now which can identify potential cancerous cells while the patient is under, which is very exciting. I know of one in the GI space. So when someone’s getting an endoscopy or colonoscopy or something, this system is telling the doctor, hey, you might want to look at this. You might want to take a sample of this or that, whatever they’re seeing in the image, which is very exciting because that improves patient care.
It will reduce complications and improve outcomes for people, which is ultimately what it’s all about. You know, I think there’s also a lot of movement on the business service side, which is, you know, less specific for healthcare, I would say, because you’re seeing it in lots of industries. But I think like, you know, collection cycles and accounting and and involve the back office services that you need HR functionality. You’re seeing that in healthcare too. But for me, I’m really excited about the science and the medicine aspect when we can actually start to see an impact on, on outcomes for patients.
John Corcoran: 31:27
Yeah, that is really exciting and ultimately what it’s all about. So that’s really cool to be able to watch that in the years ahead. Well, Zak, this has been great. Where can people go to learn more about you and connect with you and learn more about Merritt?
Zak Eisenberg: 31:41
Yeah, I’m very active on LinkedIn, so that’s a great place to get in touch with me or maybe a merrittadvisory.com is there. And yeah, thanks for the time today, John. It’s a great conversation.
John Corcoran: 31:54
Zak, thanks so much.
Outro: 31:58
Thanks for listening to the Smart Business Revolution Podcast. We’ll see you again next time. And be sure to click subscribe to get future episodes.