When he stepped into his role as managing partner of Chicago-based Midwest Orthopaedics at Rush in 2018, Brian Cole, MD, was faced with the question of scale and what strategy was the best fit.
“Some of the most challenging aspects have been the regional demands that are happening in terms of growth,” Dr. Cole said during a June 12 fireside chat at Becker’s 23rd Annual Spine, Orthopedic and Pain Management-Driven ASC + The Future of Spine Conference in Chicago. “Since 2019 all of us in this environment have been faced with discussions about modifying our practice organizational structure, including private equity versus maintaining an independent practice.”
Private equity was a viable possibility for Rush, and it was something Dr. Cole and his team explored for almost two years. However they decided private equity wasn’t a fit and turned to a new alternative.
“We made the decision to undergo an aggregation, which was probably the best decision I’ve ever made in my leadership position for private practice,” Dr. Cole said. “That was an initiative to create a very simple structure and create alignment with other groups that are like-minded who are fiercely loyal to maintain independent practice from a hospital system.”
The aggregation, called OrthoMidwest, launched in 2023 starting with Rockford-based OrthoIllinois and Midwest Orthopaedics at Rush. In January, the aggregation added its third group: Schaumburg, Ill.-based Barrington Orthopedic Specialists.
“We had immediate benefits on the payer side that positioned us to be optimally aligned,” Dr. Cole said. “We’re in a business where we have a free market on the expense side and a controlled market on the reimbursement side. I can’t think of a business I’ve ever come across that functions like healthcare delivery on the provider side. We’re forced to control expenses, which are often more than 50% to 60% depending on how you want to look at it, and those are things that the market provides us that we have to adapt to. What we lacked control over was the payer side, and what hospitals are painfully aware of is the payer mix.”
Growth is not always accretive when it’s based on single providers, Dr. Cole said. Through an aggregation and working under a single tax ID, OrthoMidwest and its groups have a seat at the table.
“We’ve been successful with the first two payers we came to, and we were very successful with the third one,” Dr. Cole said. “I think we’re much more positioned because of our size.”
The other advantage Dr. Cole has seen is the ability to scale.
“Right now if you want to open up a practice with 10 physicians or you want to open a practice with 100 physicians, the cost to get out of the gates are the same from an infrastructure perspective,” he said.
Looking back, Dr. Cole said he has no regrets about choosing aggregation over private equity.
“I’m frankly grateful we didn’t do it,” Dr. Cole said. “We might have had some other advantages [with private equity], but I think what we’ve achieved by our size, scale, scope and expertise, is more than we have for taking quick money off the table.”
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
