Dallas Business Journal
By Bill Hethcock
April 27, 2012
First Choice Emergency Room has a new CEO and is launching a more than $100 million growth plan that includes six new facilities across Texas as well as the company’s first out-of-state project by the end of the year.
The Flower Mound-based freestanding emergency room company’s growth push is being backed by private equity firm Sterling Partners, which has taken a majority stake in First Choice. Chicago-based Sterling put about $59 million of equity into the business, said Dan Hosler, a Sterling principal and a North Texas native.
On April 16, First Choice announced the appointment of Thomas S. Hall as CEO. Rick Covert, First Choice’s prior CEO and founder, will continue to be active in day-to-day operations and remain on the company’s board of directors.
Hall joins First Choice from NovaMed Inc., where he had served as chairman, president and CEO since 2005. At NovaMed, Hall transformed the company from a single-specialty surgery center operator into one with multiple specialties.
Covert co-founded First Choice in 2002 in Flower Mound with Dr. Jack Novak, an emergency room physician. Under Covert and Novak’s leadership, the company has grown to 13 locations in Texas: four in the Dallas-Fort Worth area, eight in the Houston area and one in Austin. The company has about 400 employees, including about 80 at the headquarters in Flower Mound.
By the end of the year, First Choice plans to add two locations in Dallas-Fort Worth, two in the Houston area and one near Austin, Hall said. He declined to provide specific locations.
First Choice typically leases its ER clinics and looks for hard corners in high-traffic areas, Hall said.
Concept in its infancy
The company’s larger goal is to have 80 to 100 facilities in several states within five years, he said. Each one will employ about 25 people, including board-certified emergency department physicians, nurses, radiology technicians, ultrasound technicians, front-office workers and others, he said.
“The whole concept of freestanding emergency rooms is going to be a very large part of the health care industry going forward,” Hall said. “It’s just in its infancy today. This is an opportunity to be part of actually growing and molding and developing this part of the industry.”
Freestanding emergency rooms are open 24 hours a day and have the same medical personnel and diagnostic equipment available at hospital-based emergency rooms.
Wait times at First Choice facilities are typically less than five minutes, compared with hours in many hospital ERs, Hall said. Patients are typically in and out in less than an hour even if they need X-rays, CT scans or other tests, he said.
The state started licensing freestanding emergency rooms June 1, 2010, said Christine Mann, a spokeswoman for Texas Department of State Health Services. There were 16 freestanding emergency medical care facilities licensed as of Sept. 1, 2010, and there are 41 licensed facilities now, she said.
The state started licensing the facilities so patients needing emergency care would know what type of care is available from the centers, Hosler said. Freestanding emergency rooms offer more services and are open more hours than after-hours clinics and urgent-care clinics, and they can handle more serious cases, he said.
The number of freestanding ERs is on the rise because they provide faster care and a more comfortable experience for patients, said Dr. Toby Hamilton, CEO of Emerus Hospital Partners, which is based in The Woodlands and has freestanding ERs in McKinney and Aubrey.
In addition to the $59 million in equity, Chicago-based Sterling has reserved $50 million to $60 million more to fund First Choice’s growth, Hosler said.
Sterling likes the patient-centric focus at First Choice and the fact that it’s part of the trend of extending acute care outside the hospital to places where people live and work, he said. The private equity firm focuses on founder-owned or founder-operated businesses, he said.
“We were able to lay out a vision for a business that could be much larger, treat more patients and grow outside the state of Texas,” Hosler said. “The consumer demand around being able to access emergency care outside the hospital is strong.”