The questions private equity still needs to answer


As private equity attracts many spine and orthopedic practices, there are still questions left unanswered about the long-term viability of investments.

Four surgeons told Becker's the questions they still have.

Ask Spine Surgeons is a weekly series of questions posed to spine surgeons around the country about clinical, business and policy issues affecting spine care. Becker's invites all spine surgeon and specialist responses.

Next week's question: What is the biggest threat to spine surgeons today? 

Please send responses to Alan Condon at by 5 p.m. CDT Wednesday, May 18.

Editor's note: Responses were lightly edited for clarity and length.

Question: Private equity continues to make inroads in orthopedics. What questions has this rising trend yet to answer?.

Vijay Yanamadala, MD. Hartford (Conn.) HealthCare: Ultimately, on a societal level, we want to know about the value of care delivered. Does take-over by private equity encourage the realization of long-term improvement in the care delivered, looking at outcomes, appropriateness and cost as drivers of value?

We do know that there are numerous inefficiencies in private practices today, and unfortunately physicians are not necessarily the best managers. Insofar as private equity groups are able to come in and improve management efficiency, contract negotiation and scale across practices, there is a real potential for improvement of revenue and profitability. However, a focus on revenue could also lead to pressure on surgeons to increase the number of surgeries they perform, potentially leading to inappropriate or unnecessary surgeries. Ultimately, we must understand what metrics we need to use to judge the success of these endeavors. Are we delivering the right care? Are we improving patient outcomes, satisfaction and access appropriately? These remain to be answered in the coming years.

Brian Gantwerker, MD. The Craniospinal Center of Los Angeles: The rise of private equity firms into medicine has many people very excited. I for one see it as another pump and dump scheme and think patients and doctors will be left in the aftermath. I am really not sure whether people just choose not to believe this is a thing or not. In my mind, buying groups then cutting costs to the bone will not lead to better care, just more profits.

Nicholas Grosso, MD. The Centers for Advanced Orthopaedics (Bethesda, Md.): The obvious question that has yet to be answered by private equity is "What's next?" Private equity groups are coming in to raise the value of orthopedic groups with the ultimate goal to sell the practice, and the process then repeats itself. This business model is not sustainable long-term, as at some point there will be no additional money to be made. So the question remains: Where do they go from here? And more importantly, how is the patient impacted by this change of control? Shouldn’t there be a third option that keeps care in the hands of the providers?

Jeremy Smith, MD. Hoag Orthopedic Institute (Irvine, Calif.): Although private equity in orthopaedics has become more commonplace with enticing opportunities, the long-term viability of practices involved is questionable. Younger partners participating take significant risks with no certainty of a long-term plan.


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