Private equity investment is an evolving force in orthopedics and can give practices an advantage in the market, according to physicians part of the July merger of two management services organizations.
United Musculoskeletal Partners and Novum Orthopedic Partners merged, and Denver-based Panorama Orthopedics and Dallas-based Arlington Orthopedic Associates joined as founding partners.
Raj Bhole, MD; Eric Wieser, MD; and Mark Conklin, MD, are leaders of the founding partners, and they spoke with Becker's about private equity and their outlook for orthopedics.
Note: Responses were edited for clarity and length.
Question: What's your outlook for private equity in orthopedics? Do you think it's doing more good or harm to the specialty overall?
Dr. Raj Bhole. UMP Board Member and Chair of Resurgens Orthopedics (Atlanta): Private equity has successful roots in healthcare. Private equity in orthopedics is in an early stage, and it will certainly continue to evolve and mature. But the core principles of physicians maintaining leadership, decision authority and equity ownership are sound. As these markets continue to consolidate amongst hospitals, healthcare systems and managed care organizations, it is essential that patients seeking high-quality, cost-effective care, and physicians striving to practice medicine in an independent, private practice setting, have choices. UMP provides that choice.
Dr. Eric Wieser. UMP Board Member and Vice President of Arlington Orthopedic Associates (Dallas): I think private equity is good for the specialty because it allows physicians to really focus on what's important — practicing medicine and giving our patients the best care possible. Private equity gives us the advantage of having access to the capital that we need to expand and having people with business training take care of running our groups efficiently and growing the business.
Dr. Mark Conklin. UMP Board Member and President of Panorama Orthopedics (Denver): I think private equity is a great opportunity for orthopedics to really solidify our future. We compete against health systems and in some cases, managed care companies that are coming in and have really deep pockets. This is our way to solidify our future in the market and be able to grow with the capital that we need. Healthcare is a business, and it becomes complicated when we're trying to practice medicine to also focus on growing our business in order to compete in the market. Private equity provides expertise and experience in the business side, which is a huge plus.
Establishing value-based care is also very important, but is a very expensive thing to try to do. It involves a large number of physicians and a larger geographical area to accomplish that. Consolidation has been around for a long time. There are lots of large orthopedic groups around the country. In a lot of cases they're just a merger of smaller groups and probably not as integrated as we plan on becoming. So I see private equity being here to stay and I think it will continue to grow.