Five Questions With Roger Holstein, Managing Director of Consumer, Media and Healthcare Groups for Vestar Capital Partners

1. What has been your biggest challenge going from being president and CEO of WebMD to being a private equity deal guy?

It’s a lot more consultative. When you’re no longer a CEO, you’re not in a position to pull the trigger, but it’s pretty rewarding to leverage your experience and to help others achieve their objectives. I’ve been doing it for about two years, and one of the reasons I made the move from a public company is because I like the long-term focus in private equity. It’s not so much a challenge as an opportunity to capitalize on what I know and to be effective in a different role. I’ve changed careers and industries six times over 30 years. You transform yourself personally, as well as professionally.

2. What do you see as the most significant, promising new segments in health services?

Our views on this are reflected in the investments we’ve made in recent months. In the health care services area, we’ve focused on companies that are high quality with strong management teams and with strong competitive barriers to entry. We focus on companies that reduce the cost of health care and/or improve the quality of care. We invested in MediMedia, a provider of health information services to consumers and professionals. Their Staywell Health Management unit helps employers reduce health risks and thus health care costs. We invested in Radiation Therapy Services, a company that has a track record of producing better clinical outcomes, and in Press Ganey, a provider of health quality measurement and improvement services to hospitals. We like to invest in companies that have a demonstrated ability to reduce costs and improve quality because that’s what’s really important in the sector today.

3. What are the key criteria for companies that Vestar finds attractive in this volatile market?

We’re a firm that sticks to our knitting. We’re conservatively leveraged. If you look at our portfolio, we’re under 5x levered. In our 20 years in business, we’ve sought out recession-proof, non-cyclical businesses. We invest in a prudent, measured and disciplined way. In the last 10 years, in the two funds we’ve had, where many private equity firms are doing nine deals a year, we do three to four. We look for quality, strong management teams and defensive sectors and areas where we have domain expertise where we can add some value working with our CEOs as partners.

4. Tell me about your most recent deal and what attracted you to it.

Press Ganey is the most recent deal. It closed in March. We have a controlling interest, about 70 percent. The company works with 40 percent of the nation’s hospitals and 7,000 medical facilities. It’s a company at the nexus of a couple of key trends in health care, one being consumerism and the other being quality. As consumers share a greater portion of health care costs, they become the arbiters of value, so you have to provide people with transparent access to information. It’s a growth business, with strong fundamentals, which is on trend.

5. What kind of new investment opportunities are you seeing now?

In today’s more turbulent marketplace, we’re looking to be more opportunistic but not stray from what’s worked in the past. There are opportunities in the media sector right now. We probably won’t invest in a traditional media company, but we are very interested in taking advantage of opportunities in the online sector. The ad business may be slowing this year, but the shift to online advertising continues. We are actively looking in the online space where prices have come down over the last couple years.