U.S. Orthopaedic Partners to grow brand, double in size in 2022

Alan Condon -  

Birmingham, Ala.-based Andrews Sports Medicine & Orthopaedic Center is the latest practice to join U.S. Orthopaedic Partners, a private equity-backed management services organization in the Southeast.

U.S. Orthopaedic Partners was formed in October 2020 after FFL Partners invested in Jackson-based Mississippi Sports Medicine. Now its six affiliate practices operate 22 locations across Mississippi and Alabama, and the platform aims to double in size by the end of 2022.

Graham Young, vice president of mergers and acquisition at U.S. Orthopaedic Partners, spoke to Becker's about the platform's growth strategy, consolidation in healthcare and the new era of private equity in orthopedics.

Note: Responses were lightly edited for style and clarity.

Question: Andrews Sports Medicine and Orthopaedic Center is arguably the biggest coup for USOP in terms of a brand. Was this a deal that had been in the works for a while? What were the keys to getting it over the line?

Graham Young: This is our sixth acquisition, our first being Mississippi Sports Medicine in Jackson. We identified a group like Andrews Sports Medicine Orthopaedic Center. Our focus at USOP is driven by our platform practice, Mississippi Sports Medicine. We're laser focused on quality patient care, superior outcomes and a commitment to education. Mississippi Sports Medicine has two fellowship programs, so from a fellowship standpoint, a practice with a global reputation for excellence in sports medicine and orthopedic care like ASMOC was very attractive as a partner. Furthermore, the fact that it also has a sports medicine fellowship that is recognized as one of the top programs in the country certainly met an alignment of our values.

The trend of consolidation in healthcare is not new, but private equity as a vehicle for consolidation in orthopedics is relatively new and helping orthopedic surgeons fully understand the impact, the benefits and what life is like post-partnership and post-acquisition is a process. We began conversations in Q2 and were able to move forward with a letter of intent in Q3 and close this partnership in December.

Q: What does USOP hope to achieve through partnering with a practice like Andrews Sports Medicine and Orthopaedic Center?

GY: When we look at the success that we've had over the last 12 months — completing six acquisitions and signing a letter of intent with two additional practices — I think there are many facets of our platform that have contributed to that growth and to attracting a practice like ASMOC. The main one is that we are fairly selective in our partnership process, which starts with our physician partners — the ones under the USOP partnership umbrella. They're looking to align with other surgeons who share their commitment to superior patient quality, commitment to research and world-class education.  

This enables us to build a strong brand and to attract best-in-class physicians or practices, which is something that attracted ASMOC — to be affiliated with a platform that is selective in how it targets other potential partners, not just expanding for the sake of expanding and is very specific about the way we do that. What ASMOC will contribute to USOP is certainly additional brand recognition, sharing in the commitment to fellowship training and in the data collection capabilities they have. Combining that with what is being done at Mississippi Sports Medicine will only increase the awareness of the USOP brand. Right now, we're in Mississippi and Alabama and the other two practices are within that geography, so that will be eight practices in total.

Q: Are there plans to expand into other states?

GY: We plan to expand our footprint into other geographies within the Southeast and the Midwest. Our focus is really to place an emphasis on operational efficiencies that improve patient access and data collection capabilities — neither of which are state-specific — but being able to use advanced opportunities for our partners in outpatient surgery is also a central focus, and that is something that can be limited by state restrictions. We're attracted to states where there are opportunities for the orthopedic surgeon-owner to be able to own an ASC where they can perform outpatient surgery, which is a benefit to patient satisfaction, outcomes and lower cost. Those are some insights into how we target where we want to move next.

Q: How do you approach conversations with potential partners?

GY: There are areas of the state or region that do not see consolidation occurring at the rate that it is. If you step back and look at it from a bird's-eye view — which is what someone in my position is able to do — you can see that consolidation is occurring very, very quickly.

My role is not to convince physicians that consolidation is occurring. If they're not convinced of that now, then there's not much else we can do. Private equity just offers another avenue for consolidation and oftentimes we find that when a practice is interested in some type of consolidation opportunity, it's usually too late. It's past the point where they have options. What we're trying to do is proactively have discussions with practices that have options on the table and present this as an option should they see the value in it like our other partners have.

Q: What are the benefits of partnering with a management services organization like USOP over other strategic options such as affiliations with a hospital, health system, payer or other entity?

GY: There are a couple of things that attract practices to our MSO type of model. What we hear time and time again is that this option allows for them to maintain their brand identity, clinical autonomy and a level of income that they're accustomed to. It allows them resources over a fairly broad network that's more broadly defined, whether that's the ability to tap into payer or employer opportunities, hospital partnerships or individual de novo opportunities for that practice — those are all still on the table.

Our type of model gives practices the opportunity to come together, have the benefits of consolidation — being part of a larger network — but still as this is playing out, be able to leave on the table what those other consolidation methods offer them. Oftentimes those decisions are locking practices into one silo, which dictates the direction they're moving in — whether it's aligning with a payer or hospital system, which then takes away from some of those other opportunities that you might still want on the table.

Q: How do you see consolidation with private equity groups developing in the coming years?

GY: I think there are a number of misnomers that private equity continues to battle. For example, the consolidation that occurred under private equity direction in the late 1990s/early 2000s really was not successful, but a lot has changed since then in terms of structure and strategy.

Q: To what do you attribute the lack of success in the late 1990s/early 2000s?

GY: There were a couple of factors. No. 1 is the growth opportunity that practices had. Whether that's in the outpatient space, partnerships with payers in a bundled arrangement, ancillaries, vertical integration opportunities, those were not on the table to the degree and to the openness of the opportunities today. I would also say that the structures of the late 1990s/early 2000s private equity era were not generally committed structures, which is what these MSOs are. Essentially, you could get in the group, get out of the group, change your affiliation, and this meant that it was more unstable than today's MSO structures, which bears full commitment from the partners moving forward under the USOP umbrella, allowing more stability for the platform than you would have generally seen with the other form of physician management models in the late 1990s.

Q: What does the next year look like for USOP?

GY: We're in the process of expanding our footprint and based on our growth over the last year, current interest level and the discussions we're having with practices, we anticipate doubling in size in the next 12 months. We feel that we have something very special that allows us to attract practices like ASMOC and we're looking forward to growing and continuing to build this orthopedic platform.

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