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Since everyone will need a hospital sometime Pacer Health is in
business to take over the failing ones, turn them around and make sure that quality care
is still available
Healthcare
Medical Facilities
(OTCBB: PHLH)
Pacer Health Corporation
7759 NW 146 Street
Miami Lakes, FL 33016
Phone: 305-828-7660
Rainier Gonzalez
Chairman and CEO
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
June 16, 2005
BIO:
Rainier Gonzalez
Chairman and Chief Executive Officer, Pacer Health
- A successful business owner
and merger specialist throughout most of his professional life
- Principal in two financial
services firms
- Prominent attorney in the
securitization and structured finance department of a prestigious Washington D.C. law firm
- JD, magna cum laude,
Indiana University School of Law
- BA, Florida International University
As chairman and chief executive officer, Rainier Gonzalez manages the long-term strategic
direction and overall growth of Pacer Health Corporation.
Gonzalez has been a successful business owner throughout most of his professional life.
He is a principal in two South Florida-based financial services firms and
previously served as principal and vice president of business development for Brick
Mountain LLC, a profitable Internet company that was sold to Jupiter Media (Nasdaq: JUPM).
Prior to co-founding Brick Mountain, Gonzalez was an associate in the prestigious
Washington D.C. law firm of Sidley Austin Brown & Wood, where he handled client
matters in the firm’s securitization and structured finance department.
Gonzalez holds a bachelor's degree in political
science from Florida International University. He earned his law degree, magna
cum laude, from the Indiana University School of Law and worked as a law clerk for the
Honorable Federal Judge Denny Chin of the Southern District of New York.
Company Profile:
Pacer Health Corporation (“Pacer”), a Florida corporation, is an owner/operator
of non-urban hospitals, medical treatment centers and psychiatric care. Pacer is a
provider of healthcare services for non-urban communities. The Company’s
mission is to become the leading independent provider of these types of facilities housed
in selected geographic markets through an acquisition based business model of turnaround
facilities.
Founded on the principals of providing quality healthcare with dignity and compassion,
Pacer Health Corporation aspires to set the standard by which quality of care is measured.
The Company is dedicated to the quality of care our residents receive and strives
to ensure each resident receives extensive quality healthcare from knowledgeable,
experienced, and dedicated healthcare personnel.
CEOCFOinterviews: Mr.
Gonzalez, what was your vision when you founded Pacer Health and how has that developed?
Mr. Gonzalez: “We were looking for the opportunity to
get involved in hospitals that are not acquired by traditional businesses within this
industry because they fall under a certain cap of revenues. This creates a scenario where
our company can provide a virtual CFO/CEO management team for each of these hospitals that
otherwise would not have access to this kind of management team within their
organization.”
CEOCFOinterviews: Where
are you with that today?
Mr. Gonzalez: “Our first acquisition was in January
2004. We picked up two facilities in Louisiana under the same license, a 24-bed geriatric
psychiatric facility in Lake Charles, Louisiana, and a 25-bed acute care facility in
Cameron, Louisiana who were struggling to meet payroll. Upon acquiring them, we
implemented various financial restructuring measures, based on a business model we have
found to be successful, to turn them into profitable operations. In June 2004, upon
completion of our turnaround of the facilities in Louisiana, we entered into an agreement
with a facility in Georgia in which the hospital authority that owned the hospital had
already announced they were closing the facility down. Although they were stilling looking
for options to keep the facility open, there were only sixteen days left to pursue that
option. We were able to operate via a management contract pending attorney general review
of the sale of this facility as required by the Hospital Acquisition Act in the State of
Georgia. This facility is a 25 Critical Access Hospital with a 24 bed nursing home located
in Greensboro, Georgia. At the time we arrived, the hospital was losing two million
dollars a year and we have been able to turn it around within the last eight months. The
latest financials of the hospital even show a small profit.”
CEOCFOinterviews: How
are you achieving the turnarounds?
Mr. Gonzalez: “We have an experienced management team
with extensive experience in running these particular facilities. We take a financial
analysis approach to the turnaround of the hospital. Additionally, we qualify the hospital
before we even acquire it; we do due diligence on the hospital to determine if it is the
kind of hospital we can fix because there are many hospitals in trouble that we
cannot.”
CEOCFOinterviews: Do you
have psychiatric and residential facilities as well?
Mr. Gonzalez: “We have geriatric psychiatric facility,
and are in the market for residential care facilities. We also have a nursing home
facility in Georgia.”
CEOCFOinterviews: How do
you give the quality care that you strive to provide?
Mr. Gonzalez: “The hospitals we are picking up are
usually the only hospital in the region. One of the things we strive for is to make it
very clear that we are in a service industry. Just as Toyota cares about the quality of
cars they make, we care about the quality of healthcare we provide. You have to take a
top-to-bottom approach to ensuring the staff understands that the quality of healthcare we
provide is our number one selling point of getting people to walk into the door. Before
considering the profit of an operation, you have to consider quality of health because to
make a profit, you have to provide good service. We have an operational phase of every
turnaround where all we really focus on is quality of health and risk management.”
CEOCFOinterviews: Do you
bring in a lot of new equipment and new personnel?
Mr. Gonzalez: “We try to work with the personnel that we
already have. There is some restructuring, but that restructuring is to ensure we can
provide the quality of care necessary to service our patients and ensure the facility
remains open and operational. In terms of equipment, we have found that initially there is
some capital investments that need to be made which will increase the level of care
provided at the facility. Creating that capital infusion also helps not just with the
local medical staff who may require new ex-ray or new lab equipment, but also with
creating a feeling of trust in the hospital with the community. We are not just here to
fix the hospital financially, but to create quality of care.”
CEOCFOinterviews: Will
you tell us about your funding to purchase all these hospitals?
Mr. Gonzalez: “We primarily self-fund everything and we
structure the deal accordingly to the situation. Luckily, in our early stages, since we
were taking over very troubled hospitals, we did not have to pay much and if we did, we
would use company stock as acquisition collateral. The only thing we would have to worry
about funding is on-going losses. We have been able to structure deals where counties or
communities help support their local hospitals financially in the process. We have been
able to use self funding as much as possible since what we are really funding is not
necessarily the acquisition phase but the turn-around losses.”
CEOCFOinterviews: What
is the marketplace for other troubled hospitals?
Mr. Gonzalez: “It is a deal-generation process as a
growing company. We take a two-tier approach; the first tier is where hospitals are not
necessarily in trouble, and from day-to-day, we go looking for these hospitals. They are
out there, it is a large marketplace and like any other industry we are just looking for
the right opportunity to buy. The other tier is the turn-around scenario where there is a
hospital a week from closing. With those, you cannot hunt or you do not know what the
marketplace is, you just are aware the minute they hit the press or someone finds out
about it. We have some proprietary software that we use to scour the internet and pick-up
on when something is in trouble and it makes the press. We go after those in a separate
‘swat team’ approach because we go in fast and try to close a deal as soon as
possible because time is of the essence because the hospital is about to close. From a
marketplace perspective for our company we look at every hospital as a potential target
market. There are two tiers; there are the ones that are not in trouble and those that you
just find out about when something happens.”
CEOCFOinterviews: Are
you primarily looking in the southeast?
Mr. Gonzalez: “We have focused primarily in the
southeast from an economy perspective since our corporate office is located in south
Florida.”
CEOCFOinterviews: What
do you see down the road for Pacer?
Mr. Gonzalez: “We are trying to double our revenues
every year. In our first year of true operation in 2004, we went from zero in revenues to
approximately eight to ten million. In July if our Georgia acquisition closes, we will
double our revenues effectively again to seventeen to twelve million dollars. I believe
2006, is going to be our most difficult year because we are going to try to double again
and that means that we are going to have to close either one large hospital or two
hospital acquisitions.”
CEOCFOinterviews: You
want to develop the Pacer health brand; is there much competition?
Mr. Gonzalez: “There are not many players in our market.
From the Pacer Health brand perspective, what we are branding in the Pacer Health name is
the ability of the company to come in and take over a facility and do a good job running
it. One of our most valuable assets is our references, meaning our ability to point to
other hospitals who we have acquired and point to community leaders in those areas and say
‘call them, they will say we have done a good job once we began operating their
hospital’. You can only do that by doing a good job, and effectively operating
hospitals for long periods of time and show the community that you are doing what you said
you are going to do. We do not try to impose the Pacer Health name upon the community. We
allow the community to dictate what the hospital should be for us. From a branding
perspective, all we really care about is branding our reputation by doing a good
job.”
CEOCFOinterviews: You
mentioned the expertise of your team. Would you tell us about what your team has to offer
at Pacer?
Mr. Gonzalez: “We have several people; we have Manny
Llano who is operational CFO; he has been running hospitals for over twenty years and; he
has run hospitals very profitably. We have GENE MARINI, who has been CEO of many large
hospitals that have over 200 beds and make over fifty million in revenues. From a
corporate standpoint, we have a CFO that we brought over from Auto Nation, who handles all
of our day-to-day corporate SEC compliance and so forth. We have established a core team
of both operational and corporate business individuals that can really make this happen,
and they are the key to every turn-around.”
CEOCFOinterviews: In
closing, why should potential investors be interested and what should they know that they
might not realize when they first look at the company?
Mr. Gonzalez: “I think investors should look at the
space; even though the hospital space goes up and down, everyone needs a hospital sometime
in their lives. It is an interesting market play. One of the things that I think is our
best asset is that we gain a reputation for quality of care, and we really care about the
care that is being given. We care about making sure that the communities have leaders that
are aware that we are there. We do a good job for them so that their community still has a
good and viable healthcare facility. Those references and the quality of care is very
important to us. That does not jump out when you look at the 10-KSB or one of our other
SEC filings but it is important to us as a company.”
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