Private equity buying up orthopedic practices

“Dr. Paul Jeffords and his colleagues at Atlanta-based Resurgens Orthopaedics were worried about their ability to survive financially, even though their independent orthopedic practice was the largest in Georgia, with nearly 100 physicians,” Harris Meyer writes over at Kaiser Health News. “They nervously watched other physician practices sell out entirely to large hospital systems and health insurers. They refused to consider doing that. ‘It was an arms race,’ Jeffords said. … In December 2021, Resurgens sold a 60% share in United Musculoskeletal Partners, their own management company, to Welsh, Carson, Anderson & Stowe, a large New York-based private equity firm. … Details of the sale were not disclosed, physician-shareholders in deals like this typically each receive a multimillion-dollar cash payout, plus the potential for subsequent big payouts each time the practice is sold to another investor in future years. Orthopedic surgeons, long seen as fiercely independent, are rapidly catching up with other specialist physicians, such as dermatologists and ophthalmologists, in selling control of their practices to private equity investment firms. They hope to grab a bigger chunk of the surging market in outpatient surgery and maintain their position as one of the highest-paid specialties in medicine — $633,620 was the average compensation for orthopedists in 2021. … Proponents say private equity investment has the potential to reduce total spending on musculoskeletal care and improve quality by helping physicians move more procedures to cheaper outpatient surgery centers. … But critics warn that profit-hungry private equity ownership alternatively could result in higher prices for patients and insurers, more unnecessary surgery, and less access to care for patients on Medicaid or those who are uninsured or underinsured. A recent study found that in the two years after a sale, PE-owned practices in three other medical specialties had average charges per claim that were 20% higher than at places not owned by private equity. … There are now at least 15 PE-backed management companies — called platforms — that own orthopedic practices across the country, said Gary Herschman, a New York lawyer who advises physicians in these deals. … In 2022 alone, at least 15 orthopedic practices were sold to PE-owned management companies.” Harris Meyer, “More othopedic physicians sell out to private equity firms, raising alarms about costs and quality,” Kaiser Health News.