Is absorption inevitable? How orthopedic groups are fighting to stay independent

Alan Condon -  

The battle to remain independent is among the top challenges physician-owned orthopedic groups are facing, primarily because of declining reimbursements, increasing regulatory burdens and competition from larger organizations.

Naturally, smaller practices have fewer resources to address increasing administrative burdens by Medicare and commercial payers. They also have far less negotiating power with insurers, generally receiving lower reimbursement for the same services than larger practices. Consolidation to larger groups is one of the most common ways smaller practices can mitigate these challenges.

"The problem with that solution is that the bigger the practice gets, the less independent each individual provider becomes," Vladimir Sinkov, MD, of Las Vegas-based Sinkov Spine Center, told Becker's. "Eventually you are just one of many employees following the orders from the board of directors or executive board."

Consolidation in healthcare is nothing new, but the ways in which practices are consolidating has evolved.

Hospitals and health systems across the country continue to snap up smaller practices, particularly as they look to bolster their outpatient strategies. But two entities that have sparked interest in the industry recently are private equity groups and commercial payers.

Private insurers are partnering with or employing physician groups to keep them independent of hospitals. One of the most recent examples is Blue Cross Blue Shield of Michigan adding a physician management services business to its portfolio in August. Supporting more independent practices is a paradigm shift for insurers, whose traditional business primarily focused on complex contracts with hospitals.

Private equity groups are also partnering with independent orthopedic groups, offering business acumen and efficiencies that could allow them to maintain autonomy and avoid hospital employment. However, one potential downside to this type of partnership is decisions could be forced upon these orthopedic groups by non-clinicians solely for monetary gain — which is the antithesis of how most independent practices operate.

"I think private equity contribution to allow private practices to stay independent is something that is not to be discouraged," Kornelis Poelstra, MD, PhD, of the Robotic Spine Institute of Silicon Valley in Los Gatos, Calif., told Becker's. "The philosophy in most practices is still very much: 'The patient comes first, monetary reimbursement is second,' and I am hopeful that that will not get turned upside down with the ever-increasing role private equity will play also in our world."

At least nine orthopedic groups affiliated with private equity firms in 2021, including a December deal inked by Resurgens Orthopaedics, a 100-physician group with 24 clinics across metropolitan Atlanta.

Many smaller practices will continue the fight to retain their autonomy into 2022, but other physicians see it as a losing battle.

For mom-and-pop practices to stand a fighting chance, Brian Gantwerker, MD, of the Craniospinal Center of Los Angeles, believes the focus should be on excellent outcomes and partnerships with local surgery centers and like-minded specialists.

"I would encourage those that wish to remain independent to partner with a nearby ASC and other like-minded pain and internal medicine physicians," Dr. Gantwerker said. "Demonstration of good patient care, careful case selection and good follow-through are powerful ways to belay the onslaught." 

Copyright © 2022 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

Featured Webinars

Featured Whitepapers

Featured Podcast