Orthopedic practices trending toward independent supergroups

Alan Condon -  

Independent orthopedic practices are weighing partnerships that will provide a launch pad for future growth as increasing administrative and economic hurdles continue to plague small to midsize physician groups.

The orthopedic landscape is changing, with physician-owned practices increasingly trending toward large "supergroups" with wider networks of physicians, practice locations and ancillary services. For many smaller practices, this option presents the best path to remain competitive and independent.

Four such groups with 100 physicians or more were formed in Texas, Florida, Tennessee and New Jersey in the last two years.

Most recently, three orthopedic practices in California merged to create Golden State Orthopedics & Spine, the third-largest specialty group in the western U.S. With 60 physicians and 19 locations, Golden State began operations Jan. 1 and is looking for opportunities to bring more practices and physicians into the fold.

Supergroups are becoming an increasingly attractive option for smaller practices. The integration of many practices into a single entity can provide significant advantages when it comes to combining resources, leveraging payer contracts, decreasing costs and accessing economies of scale. In this way, supergroups can shield themselves from reimbursement reductions and address patient concerns about the rising cost of care.

"Many of the supergroups that have formed understand the leverage that exists when it comes to referrals and contracting with insurances and payers. With such a large network of physicians and facilities, they are better able to control access, cost, quality and outcomes," Tim Ekpo, DO, an orthopedic surgeon at Henry Ford Health System in Detroit, told Becker's. "I believe over the next few years, the positive economics of being part of a supergroup will become more apparent, and we will see continued trends in their formation as we deviate from the smaller group practices."

At a time when big hospitals and practices control regional markets, supergroups offer a strategic advantage, enabling more modestly sized practices to maintain independence and position themselves for growth.

Tampa-based Florida Orthopaedic Institute became the largest independent orthopedic practice in the state and the 12th largest in the U.S. after merging with MD Healthcare Partners in 2019. Since the merger, the supergroup more than doubled its revenue and number of physicians.

Though the benefits of a supergroup can be enticing, there are some drawbacks. Establishing these entities can be costly and complex. As with all large organizations, the bigger they are, the more challenging they can be to govern.

"Smaller groups who are feeling these pressures must ask themselves where they want to be in three to five years, what strategy will best get them there, and who might be the best partner to most predictably execute on such a strategy," David Jacofsky, MD. CEO of The CORE Institute in Phoenix, told Becker's. "One issue with consolidation is that studies have shown that without existing infrastructure, costs can actually increase rather than decrease with size, and payers no longer respond well to scale alone when groups try to leverage fee-for-service rate increases without objective claims data that proves a return on investment for the payer."

In any case, the starting block for practices considering forming a supergroup should be the alignment of cultures and practice values, according to Nader Samii, CEO of National Medical Billing Services. He said the success of such groups is built on the following foundations: financial integration, clinical integration, managed care contracting, IT, revenue cycle, costs, marketing, legal and corporate structure.

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