Private equity has completely revolutionized the culture of orthopedics, but has also opened surgeons’ eyes to their true value.
If executed properly, private equity’s involvement in the orthopedic space can actually provide value to both surgeons and patients.
Three orthopedic surgeons connected with Becker’s to talk about how private equity’s influence is showing up in the current delivery of care, as well as where it will steer the industry’s future.
Ask Orthopedic Surgeons is a weekly series of questions posed to orthopedic surgeons and leaders around the country about clinical, business and policy issues affecting orthopedic care. Becker’s invites all orthopedic surgeons and specialists to respond.
Next question: What do you wish referring physicians better understood about the orthopedic care you provide?
Please send responses to Cameron Cortigiano at ccortigiano@beckershealthcare.com by 5 p.m. Central time on June 8.
Editor’s note: This response has been lightly edited for clarity and length.
Question: How has private equity’s presence changed the culture of orthopedic practice, and what does it mean for the long-term identity of the industry?
Jeffrey Carlson, MD. Orthopedic Spine Surgeon at Orthopaedic & Spine Center (Newport News, Va.): Private equity’s presence has opened the eyes of orthopedic surgeons to their value. Orthopedic surgeons have been somewhat complacent about our positions, as we have a long history of stable employment. Hospitals were the main driver in consolidating healthcare, and many orthopedists joined the employed model as a way to decrease their workload. The hospitals took many of the headaches in running a medical practice away from physicians, and in turn physicians gave up control of their patients and autonomy. This tradeoff wasn’t great, but for some made practice life more pleasant.
With the entrance of PE’s interest in orthopedic practices, there has been an awakening of the value that an orthopedist brings to healthcare. Many were lulled by a steady paycheck, the steady flow of patients and the regular surgical routines to not ask if they are getting paid what they are worth. Not having anxiety over payroll, negotiating contracts with insurance or vendors was enough of an incentive to stop struggling to keep their practice productive.
Now, surgeons see the interest from companies that are willing to invest in their practice and find that they have been underselling their value. When PE is offering three to four times above what the hospital has provided, surgeons take notice. This enlightening has enticed orthopedists to at least investigate other opportunities, with the knowledge that their value is quite significant.
Ronald Gardner, MD. Founder of Gardner Orthopedics (Fort Myers, Fla.): My observation of the practices that have aligned with private equity is that they are more likely to focus on the diagnoses, procedures and clientele that are most profitable, to a degree we have never before seen. With that comes the aggressive marketing for those particulars and then the relative exclusion of care for the lesser profitable entities and modalities, though we all know those reduced focus problems are every bit as concerning to the afflicted patients.
Emeka Nwodim, MD. Orthopedic Spine Surgeon of The Centers for Advanced Orthopaedics (Bethesda, Md.): This is a very interesting topic, as we are in the midst of changes that impact the practice of medicine and more specifically the culture within orthopedic surgery. The emergence of private equity in orthopedics has spearheaded the transition from the traditional physician-patient relationship to corporate-patient relationship with the physician or surgeon as an intermediary. Orthopedics is a niche specialty and has been relatively resilient to this change. However, due to unique demands, including financial and administrative burdens, orthopedics is now also facing this cultural shift as well.
The emergence of private equity in orthopedics is more likely to impact us, physicians and surgeons in the private practice world, and less so those in employed models because employed physicians and surgeons are already vulnerable to the cultural norm of optimizing standardized systems, policies, protocols and algorithms for profitability, primarily for the benefit of the hospital or health system. In private practice, private equity is trying to accomplish this on an even greater, more scalable level.
As disappointing as this cultural change appears, I believe and recognize that this transition is not by chance, but in response to the reality of economic pressures and societal demands we as physicians and surgeons are facing in healthcare. Despite the threat it poses to our craft and autonomy, if done responsibly, private equity collaboration with orthopedic surgeons could benefit all parties (patients, surgeons and investors).
In essence, private equity and orthopedic surgeons can work together as equal stakeholders to reinforce the private practice model. The goal should be to preserve physician autonomy and enhance physician-patient relationships while optimizing systems that maintain good clinical care, healthy profitability and responsible entrepreneurship.
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