Consolidation and private equity have found their way into almost every healthcare specialty and niche, including orthopedics.
There are differing views on the overall impact of consolidation in orthopedics, as some feel as though it can harm physician autonomy. On the other side of things, strong partnerships between practices and private equity firms can enhance scale and operational efficiency.
These five industry leaders recently connected with Becker’s to share how they view private equity’s influence and consolidation’s impact on orthopedics.
Note: Responses were lightly edited for clarity and length.
Bruce Ziran, MD. Orthopedic Surgeon at Atlanta Orthopedic Institute: The ability of hospital systems to merge will significantly impact orthopedics and other specialties. Consolidation turns large systems into corporate entities that commoditize physicians. This shows up in several ways: growth in costly administrative roles, physicians treated as replaceable, restrictive contracts, vendor decisions made without surgeon input, and underpaid but critical surgical support staff. Meanwhile, hospitals prioritize capital purchases like robots over investing in people.
Allowing more consolidation is not a good idea. While some younger surgeons are drawn to steady employment, many eventually leave what they see as exploitative arrangements. The best surgeons seek practices that offer support and autonomy, while corporate entities risk being left with less engaged talent. I see a grassroots movement toward medium-sized groups, though private equity poses its own risks. My hope is that independence will endure, but I fear many will be pulled into corporate or [private equity] models.
Andre Blom. CEO of Illinois Bone & Joint Institute (Des Plaines): I think consolidation is inevitable. But I actually view it as a positive for independent practice. If consolidation is what you need to do in order to retain that autonomy, that’s a good challenge.
We are and remain optimistic about independence and autonomous practice. We think that running the model we do is important for the community, important for society and important to keep a balance of availability for value.
Shobhit Minhas, MD. Orthopedic Hand & Upper Extremity Surgeon of Fox Valley Orthopedics (Geneva, Ill.): Independent orthopedic practices considering a partnership with private equity must recognize that success depends on more than just capital. It requires a foundation built on trust, alignment and a clear strategic vision. It is imperative that surgeons retain control over clinical decisions and care pathways, while allowing the MSO and the PE firm to control the non-clinical functions to drive efficiency and scale. As with any business negotiation, long-term success depends on both parties being willing to find common ground and make mutual compromises. The orthopedic practice depends on the PE firm for capital and expertise to increase margins and operational efficiency, while the PE firm relies on the practice to grow market share and deliver returns to shareholders and limited partners. Ultimately, both parties depend on each other to increase the overall value of the organization.
Madhish Patel, DO. Orthopedic Surgeon at Gardner Orthopedics (Fort Myers, Fla.): Consolidation is a “double-edged sword” in orthopedics. The success or failure is defined on an individual and personal basis, depending on what their goals and anticipated needs are versus the organization’s.
Christopher Nanson, MD. Orthopedic Surgeon at Oregon Surgical Institute (Beaverton): I think we’re going to see in smaller markets like ours, that increased trend of consolidation and formation of bigger groups. In certain places you’re going to see larger organizations moving in. For example, we’re seeing Rothman Institute expanding its footprint into Seattle. There are a lot of groups trying to engage more in population level management of orthopedic issues. I think payers are interested primarily in managing everything musculoskeletal, rather than just trying to manage the one small piece of musculoskeletal surgery. Being able to create an organization that’s responsive and has a good technology base and good partnerships so that you can manage not only the surgical piece through your ASC, which I think is vital, but also the nonoperative piece through your office, and managing that with your ancillary providers is crucial.
