Private equity is a mainstay in orthopedics. This group aims to change that.

Practice Management

Durham, N.C.-based EmergeOrtho, Indianapolis-based OrthoIndy and Seattle-based Proliance Surgeons banded together to form an orthopedic group free of private equity, and its leaders hope others will follow their lead.

PELTO Health Partners, which stands for Physician Empowered Leadership of Transformational Organizations, has more than 400 physicians in its network, and its formation has been a long time coming.

"We've been thinking about this for quite a while," Ed Hellman, MD, president and board chair of OrthoIndy, told Becker's. "We've had a number of groups who have been talking for at least a year, and as it came to pass, these were the three groups who were most aligned in terms of goals and processes that we could put together."

Frank Aluisio, MD, EmergeOrtho's physician president, said he felt PELTO's model is "the best alternative" to private equity investment because orthopedic groups would remain fully autonomous.

"If private equity becomes involved, then you're giving away a great deal of your independence," Dr. Aluisio said. "We feel that we're an excellent platform to help other independent groups that need help but do not want to go the private equity route. Going forward, we want PE to be synonymous with 'physician empowered' and not 'private equity.'"

Proliance Surgeons President John Pryor, MD, echoed that and pointed to increased pressures on physicians when it comes to the costs of healthcare.

"We don't think the solution is physicians giving up their equity and their control of what they've built," Dr. Pryor said. "First and foremost [the focus should be] preserving what physicians have built and being accountable to nothing other than patient care."

While all three practices are under PELTO, Dr. Hellman said the practices still plan to retain their own individual cultures while learning from each other. 

"We are in three very diverse areas of the country, and all three of our groups have our own cultures," Dr. Hellman said. "We're not trying to change that. We believe it's a strength that the cultures that have been developed in each particular area can be maintained. Yet we can learn from each other and choose some of the best things that we see in other parts of the country to bring to our own organizations."

Looking ahead, Dr. Aluisio hopes the founding practices can boost their efficiency and eventually grow in numbers.

"Short term, our goals are to improve the efficiencies of all the practices involved," Dr. Aluisio said. "[We plan] to look at best practices and leverage our size and strength to improve our efficiency. Once we could objectively show savings from that, we'll be in a position where we can expand."

PELTO Healthcare Partners is a new breed of orthopedic collaboration amid recent private equity growth in orthopedics. Since August 2017, 14 major private equity-backed orthopedic groups have hit the market, according to a report in the Journal of Orthopaedic Experience & Innovation.

Although private equity isn't going away anytime soon, OrthoIndy CEO John Ryan said he hopes more groups follow PELTO's example.

"We're the first of our kind to do it on a national scale," Mr. Ryan said. "I hope for the future of private practice that there are many more groups that come behind us. It would be the greatest compliment to recognize that we've created a model that's not just a model of the future for orthopedics or for surgical practices, but a model of the future for other practices across all disciplines in medicine."

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