MSOs becoming attractive option for physician-owned orthopedic groups

Alan Condon -  

Aligning with musculoskeletal management services organizations is becoming a more attractive strategic option for some orthopedic practices as economic, payer and administrative hurdles continue to challenge physician-owned groups to maintain independence.

The list of tasks medical practice managers must address — coding, billing, compliance, payroll, revenue cycle management, etc. — requires a significant amount of time. Ensuring a practice is getting the best pricing for supplies, implants and services as well as tending to day-to-day issues can prove overwhelming, which is where MSOs aim to help out.

MSOs are designed to alleviate the increasing administrative burdens independent practices face and are typically owned by hospitals, groups of physicians, hospital-physician joint ventures or, increasingly, private equity investors and commercial payers.

Arguably the most significant benefit to orthopedic groups joining larger networks — as healthcare continues its push from fee for service toward a value-based care model — is the ability to share cost and outcomes data with like-minded practices, essential in contract negotiations with commercial payers.

In addition, MSOs seek to ensure best pricing on supplies, implants and services. MSOs aggregate volume and as such, they acquire economies of scale that allow them to secure preferred pricing from insurers and vendors.

Consolidation is occurring at an accelerated rate during the COVID-19 pandemic, with independent practices selling to hospitals and corporate entities. However, many physicians are increasingly attracted to MSOs that allow them to "maintain their brand identity, clinical autonomy and a level of income that they're accustomed to," said Graham Young, vice president of mergers and acquisition at U.S. Orthopaedic Partners, an MSO formed in the Southeast in October 2020.

USOP acquired Birmingham, Ala.-based Andrews Sports Medicine & Orthopaedic Center in December and penned letters of intent with two more practices, Mr. Young told Becker's. The MSO has six affiliate practices that operate 22 locations across Mississippi and Alabama, and it aims to double in size by the end of 2022. The platform is also targeting expansion into the Midwest.

Meanwhile, in Ohio, Cincinnati-based MSO OrthoAlliance kicked off 2022 by adding New Albany-based JIS Orthopedics, expanding its network to more than 70 physicians and 1,100 employees.

OrthoAlliance, jointly owned by private equity firm Revelstoke Capital Partners and Sharonville, Ohio-based Beacon Orthopaedics & Sports Medicine, has more than 25 affiliate offices across Ohio, Kentucky and Indiana, with growth plans for the Midwest and Southeast.

In the South, the newest MSO to enter the U.S. market is private equity-backed Novum Orthopedic Partners in Dallas, which was formed after closing partnerships with three physician-owned orthopedic practices in December. Georgia's largest orthopedic group, Atlanta-based Resurgens Orthopaedics, also secured private equity investment to build a company that seeks to affiliate with "like-minded, entrepreneurial orthopedic practices around the country," CEO Alex Bateman said in December.

The expansion of these musculoskeletal-specific MSOs, and the births of new ones, is a strong indicator many independent physician groups are considering such partnerships over affiliations with hospitals, health systems or other corporate entities, where brand identity and clinical autonomy is often sacrificed.

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