'Healthcare is local': Resurgens Orthopaedics CEO on consolidation strategy in 2022

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Alex Bateman, CEO of Atlanta-based Resurgens Orthopaedics, is laying the groundwork for an optimistic 2022. Mr. Bateman will be at the helm of an orthopedic platform that was announced Dec. 9.

Resurgens received private equity investment from New York City-based Welsh, Carson, Anderson & Stowe to start the venture, which Mr. Bateman hopes will branch beyond Georgia.

He spoke with Becker's Spine Review about his plans for Resurgens, consolidation and why data is a key opportunity for practice growth.

Note: This conversation was edited for clarity and length.

Question: How did this deal come about?

Alex Bateman: Prior to COVID-19 and even prior to me coming on as CEO, Resurgens started to look at ways to grow the business and continue to expand. The history of Resurgens is pretty interesting. It started in the 1990s, and seven groups ultimately came together to form what we think of as Resurgens today. So Resurgens inherently is a combination of like-minded, high-performing orthopedic groups who are very entrepreneurial and want to remain independent but not isolated from alliances that benefit patients and health system partners.

The board brought me on to professionalize and form a business-focused leadership team. As we started to map out our strategy, we felt like there was a great opportunity to grow on a broader scale and essentially create a statewide network of orthopedic practices that are aligned to remain independent and work together to pursue higher quality care, value-based pricing and those sorts of things.

As we started to go down that path, we recognized that partnering with a really experienced healthcare investor like Welsh, Carson, Anderson & Stowe was the best way for us to execute on that vision. So once we made it through COVID-19 and came out the other side, we were able to start to really refocus on our long-term strategy of growth and alignment.

Q: Will this new entity focus solely on Georgia or are there plans to expand to other states?

AB: We are absolutely going to expand regionally and nationally. Georgia is certainly a strong focus for us, starting with Resurgens as the platform. So we're going to be working across the Georgia market. We're already in very active discussions with a few prominent groups that frankly, we want to be co-founders with.

We recognize, especially in orthopedics, transparency and parity are the only ways to do this. When you're partnering, everyone has to be on equal footing, and everybody has to be aligned the same way and incentivized the same way. We're working hard in Georgia, but we will replicate that in other markets. We are already in conversations with groups outside the state that are large and influential who can be the catalyst for statewide network development in their respective markets.

Q: Are there specifics you can share?

AB: We are under NDAs, but we're in active conversations with several groups. We have opportunities that we're looking at in the Western U.S. in addition to very active opportunities in Georgia and others in the Southeast.

Q: How would you advise an independent practice considering consolidation either with you or other larger groups?

AB: First, you have to have a vision and a plan for what you're trying to accomplish. Our group and our statewide network thesis is fundamentally built on the future. Resurgens has been a very successful organization for 30 years, and we think the way to remain successful is to remain independent but partner with like-minded entrepreneurial groups. We believe we will not only survive, but also thrive by coming together. This is not solely a liquidity event. There are other groups out there that, unlike us, are very focused on getting dots on the map rather than really aligning and creating value for the groups that join. It's one thing to participate in a private equity transaction, but the most important thing is to find a partner that can drive value to the practice going forward, whether that be through value-based care, new revenue strategies, cost takeouts, synergies and health system alignment.

Healthcare is local at the end of the day. That's why it's important that we go into a new market outside of Georgia and partner with another large, entrepreneurial group that can be the flagship and assist in delivering value to the groups around them. A differentiator is that we're very focused on the future and alignment with the groups we partner with. It's going to be a thoughtful, networked approach, not a shotgun approach.

Q: Has Resurgens considered dropping fee-for-service plans and moving to risk-based contracts?

AB: The shift to value-based care is very market-specific. There are certain states that are much more advanced on where they are on value-based care. There's not going to be a one-size-fits-all solution. We have to tailor our strategy to what the market demands. We want to be on the forefront of it, and we want to be proactive because we think we can have a strong hand at creating value-based care models that are sustainable.

Some of the plans and pilots that have been done call for hitting a target or hitting below a certain number. Then the goalpost moves. We fear that that can be more of a race to the bottom, to the detriment of the provider.

What we want to do is tailor our value based-care approach to the local market and partner with the payers to create a model that's sustainable, long term and a win for the payer and for us. We're going to take a very pragmatic approach. We're going to invest in these capabilities, both in people and in technology. So we will be actively pursuing value-based care arrangements where it makes sense and tailor the plans to the needs of the respective market.

Q: Where do you see the biggest growth opportunities?

AB: Certainly the migration of high acuity cases, total joints, spine surgeries and fusions will continue to be performed on an outpatient basis because of efficacy safety, better technology and highly skilled surgeons. That trend will continue. We see a lot of output growth in the surgery center side and specialty surgery hospital side, and we expect that will continue. We also see a lot of opportunity in partnering with payers and partnering with primary care groups, as well as dedicated primary care groups to the Medicare Advantage population. We can work together and ultimately drive volume to the groups that work with us and join us as partners.

Q: What do you feel is the most pressing issue for orthopedic practices?

AB: We have to remain relevant. We feel that private medicine is still the best medicine and that orthopedic groups must continue to compete with the tremendous amount of consolidation that's out there among the health systems in Georgia. HCA has exited, Tenet has exited, and the hospital systems are continuing to grow in both numbers of assets and also their employed physicians and their primary care groups.

So it's very important for the orthopedic community to do the same: to aggregate, to invest in ourselves, to invest in our data. We have a tremendous amount of data and information that comes through our practices, and even a group of our size hasn't really invested in a way to turn that information into intelligence that will in turn allow us to treat patients better, manage their health better, and create better economics for the provider and cheaper care.

There's just so much to be done, but it takes a lot of expertise, time and capital. With all the energy needed to run the day-to-day operations of a busy practice, we have to be very intentional with these efforts. As we aggregate partnership groups together, we can leverage that energy and spend and we can invest in those critical areas that are going to take us to the next level.

I think that the most pressing thing in orthopedics is to solidify ourselves, to make sure we're well-positioned to continue to be successful and a meaningful part of the healthcare ecosystem in the state.

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