Don Peterson came out of the San Francisco bay area world of high tech and cutting edge software. The companies he started have been involved in 3D graphic systems, encrypted communications, predictive healthcare analytics and more. He founded what is now IVX Health – part of the McKesson Ventures portfolio – in 2012, opening 15 free-standing clinics for intravenous drug therapy. No wonder the executive chairman of Noble Health Corporation has received an Entrepreneur of the Year award.

Peterson now lives in the Kansas City area, but with Noble Health’s recent purchase of SSM Health St. Mary’s Hospital in Mexico, he is a frequent visitor to Audrain County.

1. The most important question first. You’re from Kansas City, so Cardinals or Royals?

[Laughs] We’re kind of split on that. Drew Solomon, one of our partners, is a diehard Cardinals fan. I grew up in Chicago, so I’m a Cubs fan. I have become a Chiefs fan.

2. You’ve been in Mexico a lot. What’s your favorite restaurant?

I’m developing a broader range. At first I thought Aussie Outback was the only restaurant. But Drew [Solomon, a Noble Health partner] took me to 581 yesterday. We had lunch and dinner there. But the cafeteria at the hospital – it’s wonderful. It’s actually pretty posh. When the public can come back, we’re looking forward to doing Sunday suppers, pancake breakfasts.

3. What was the attraction of this hospital?

It fits with our rural strategy. It’s in a vibrant community – a very engaged community. It’s also a half hour to the other hospital we own [in Fulton]. It fits our philosophy of sharing resources to achieve economies of scale. We will take key providers and split them between Audrain County and Fulton so we can offer their services in both facilities.

4. Most people have never negotiated a hospital deal. What’s it like?

Conceptually, it’s really easy. How we do it is incredibly complicated. We do our best to learn what to change to improve the hospital’s performance. Sustainability is the goal. It’s not hard to figure out what’s wrong. ‘Okay, how do we fix it?’ The due diligence is the hard part. Coming to terms on price is fairly straightforward.
 

5. And it’s a highly regulated industry.

You could argue that the most difficult challenge in acquiring a hospital are the regulatory hurdles. In a merger in any other industry you can go and talk to the employees, talk to the people. Here we were barred from it once we signed a letter of intent. We are talking with them now, but that’s the nature of healthcare. Also, we have to start delivering care the moment SSM stops. We have patients in beds and we have to maintain continuity.

6. How do you make a profit in the hospital industry?

Our incarnation of Audrain Hospital is not for profit. So how do you make a profit? You stop trying to. Hospitals are for the public good, and proximity to healthcare for the community matters.

7. Recruiting healthcare providers to rural areas must be difficult.

Recruiting is a lifestyle choice on the part of a doctor, and that’s what makes it difficult. But we think that there are unique attractions. Work-life balance is important. We think we can attract younger physicians because of that balance.

8. What drew you into healthcare?

My last company, IVX, was built around the notion of providing high quality products to patients. It’s the most gratifying thing I’ve ever done. That inspired me. Tom [Carter, Noble Health president] and I met some years ago when he was working with John Nickens, who was passionate about saving rural hospitals. I thought ‘what a worthwhile thing to do.’

9. You started Noble a year ago. You work fast.

You’re either all in or you’re not. Many management companies have a checkered past. Our thesis is we own first and manage second. Owning a hospital is different than owning a property. We actually have real asset value as long as we have a working hospital on it. We established three subsidiaries to oversee management operations, real estate and employees. We structured things to achieve economies of scale and efficiency, even in the way we’re organized.

10. That’s smart.

It’s just the way you’d build a tech company.