Dr. Nicholas Grosso on why his practice avoided PE investment and how consolidation will impact orthopedics

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Nicholas Grosso, MD, is an orthopedic surgeon and president of The Centers for Advanced Orthopaedics in Bethesda, Md.

Here, Dr. Grosso spoke to Becker's Spine Review about why his practice steered away from private equity and how consolidation will impact orthopedics in the future.

Question: Is the emergence of private equity in orthopedics a positive or negative trend for the field?

Dr. Nicholas Grosso: The emergence of private equity in orthopedics is neither positive nor negative, it is simply where the market is going. The important thing is to approach the situation with eyes wide open, fully understanding the potential ramifications. And private equity is not for everyone. At The Centers for Advanced Orthopaedics, we chose not to move forward with private equity as we wanted to maintain complete control of the business we've built over the last several years.

Q: Why do you think PE has been drawn to orthopedic practices specifically?

NG: PE has been attracted to the orthopedic specialty because it is a growth industry where there is money to be made. It's a logical choice for PE because orthopedics is one of the top healthcare spends, particularly with baby boomers continuing to undergo surgeries such as joint replacements.

Q: How do you see PE developing in the field in the next five years?

NG: I believe that PE will continue to be a trend in the coming years but will then start to level off. As groups consolidate, their larger size makes them a better target for PE. Under the PE model, leadership looks to increase the value of the organization and then resell in the next three to five years. As a result, we will likely see those organizations that chose PE undergo a change in leadership that they may not have been planned for.

Q: What do you see as the next big trend in orthopedics?

NG: I anticipate that groups will continue to consolidate and then prepare for at-risk contracting. This is where the market is going and there is significant opportunity there for groups that are large enough to influence a designated area.

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