Like most surgeons, I entered practice focused on patient care, but it didn’t take long to realize that the business of medicine would demand equal attention. What I found was an environment for independent private practice that had grown increasingly unsustainable.
Reimbursements are failing to keep pace with inflation while overhead costs continue to climb. That is creating a relentless margin squeeze with no relief in sight. Even joining a well-established, reputable practice didn’t insulate us from the frustrating reality that small and mid-sized practices have little leverage in comparison to larger consolidated health systems. With value-based care reimbursements on the horizon, scale is a necessity that smaller practices simply lack. It is a David vs. Goliath dynamic, and the Goliaths are only getting bigger.
Beyond the financial pressures, the rise of hospital employment has also siphoned away a generation of younger orthopedic surgeons who, burdened with significant medical school debt, understandably prioritize financial stability over the risks of private practice ownership. Meanwhile, the capital requirements for staying competitive have become difficult to meet without institutional backing. Taken together, these forces have created an environment where true independence is no longer a viable option for most orthopedic practices, regardless of how well they are run.
We at Fox Valley Orthopedics in Geneva, Ill., reached this inflection point where the status quo was no longer a viable strategy. It forced us to take an honest look at every option on the table. We could remain complacent, content with our strong market position while watching larger, consolidated health systems quietly erode our market share. We could pursue a partnership with other independent groups (IPA model), but that path also risks bureaucratic gridlock and years of legal complexity, while leaving the underlying cost structure unresolved. Or we could sell to a hospital system, trading our autonomy for the comfort of a guaranteed salary, likely at a valuation lower than what we’re actually worth.
None of these paths felt right.
What became clear to us is that the problem wasn’t just operational, it was structural. The traditional independent model no longer had the capital, scale or negotiating leverage to compete in a rapidly consolidating healthcare landscape that rewards all three. This reality forced us to consider a path that many physicians approach with skepticism: partnering with a private equity-backed management services organization. That skepticism is understandable. There are well-documented cases where private equity investment in healthcare has been associated with excessive financial leverage, cost-cutting pressure and constrained clinical autonomy, particularly in hospital-based settings where staffing and resourcing decisions directly affect vulnerable patient populations. But those dynamics are not uniform across healthcare.
Orthopedics operates differently. Much of the care is elective, outcomes are highly measurable and physician reputation remains the primary driver of demand. In this environment, the most consequential shift in recent years has been structural rather than clinical, with the steady migration of procedures from hospitals into ambulatory surgery centers.
ASCs are not simply lower-cost sites of care; they represent a fundamentally different operating model built around efficiency, standardization and physician-directed workflows. When appropriately structured, they improve outcomes, enhance patient experience and significantly reduce total system costs. But scaling that model requires more than clinical excellence. It requires capital, operational infrastructure and the ability to replicate high-performing centers across markets. This is where independent practices often encounter their ceiling. Building and optimizing ASCs, standardizing operations and managing payer relationships at scale requires capabilities that extend beyond what most physician groups can efficiently develop on their own. In this context, outside capital becomes less about ownership and more about enablement, supporting physician-led organizations in building the infrastructure necessary to deliver care in the settings where it is best delivered.
When physicians are meaningfully embedded in those decisions, capital becomes a tool for building infrastructure rather than a force acting on clinical care. Based on my experience working within this structure at Sequel Ortho, one of the more meaningful distinctions is how clinical governance is treated as a central priority rather than an afterthought. Physicians remain actively involved in decisions around how capital is allocated and how growth is prioritized, including ASC footprint expansion as well as investment in related infrastructure such as clinic and therapy facilities. In that sense, the model is not about replacing physician leadership with corporate oversight, but about creating a platform where physicians can effectively run the operating model at scale with institutional support behind them.
That alignment around clinical direction and infrastructure investment is what distinguishes this model from earlier or more traditionally structured private equity approaches in healthcare. Those traditional approaches often prioritize financial optimization over physician governance, and in doing so struggles to sustain long-term physician alignment and, as a result, patient outcomes.
Not all private equity models are the same, and not all healthcare partnerships are structured in a way that preserves physician leadership. But with the right partner and genuine alignment with the physician body, a PE-backed MSO platform can function as a true strategic partner, aligning capital, infrastructure and governance in a way that strengthens rather than dilutes physician-led care delivery. In that setting, outside capital is not the end of independence, but a mechanism to sustain it at scale.
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.
