Vail, Colo.-based The Steadman Clinic recently partnered with orthopedic practice company Orthopedic Care Partners.
OCP is the holding company for five practices including The Orthopedic Institute in Gainesville, Fla., and is backed by private equity company Varsity Healthcare Partners.
Rich Gilbert, MD, CEO of OCP, discusses The Steadman Clinic partnership and how private equity will develop in orthopedics.
Note: Responses are edited for style and clarity.
Question: Is The Steadman Clinic the biggest coup for Orthopedic Care Partners to date? Are there any financial terms of the deal you can share?
Dr. Rich Gilbert: We are ecstatic about our transformational partnership with The Steadman Clinic with its internationally recognized surgeons and world class reputation for clinical innovation and excellence. The Steadman Clinic will serve as Orthopedic Care Partners' western platform for operations and growth. Terms of the transaction were not disclosed and are private.
Q: What's the next step in this partnership?
RG: First and foremost, we will continue The Steadman Clinic and OCP's shared culture of clinical excellence and focus on providing world class patient care. Both parties bring robust resources and capabilities to enhance operations and fuel growth. Together we will identify and operationalize synergies (i.e. a single EHR). OCP will provide additional infrastructure, operational support and resources — which, combined with The Steadman Clinic's global network of alumni/trainee fellows — will greatly accelerate our growth initiatives.
Q: What are OCP's goals for 2020?
RG: OCP will continue to integrate our business infrastructure with The Steadman Clinic, share clinical and operational best practices among practices and accelerate the already commenced growth initiatives we are jointly pursuing in Colorado, while continuing to grow our clinical footprint in Florida. OCP will continue seeking leading independent orthopedic practices in other key markets and recruiting talented top tier physicians.
Q: Being backed by a private equity company, what advantages does OCP have over its competition?
RG: Varsity Healthcare Partners has been a phenomenal partner creating a culture of teamwork and success and has been instrumental to OCP's growth since inception. The Varsity team has provided its deep experience and demonstrated track record of successfully supporting and growing specialty based medical practices on a national level. Foundationally, OCP and VHP share a core principle that delivering high quality patient care and an outstanding patient experience are essential to our success. Beyond bringing growth capital and strategy, VHP has further helped source business operational expertise and greatly supported OCP growth initiatives.
Q: How do you see private equity developing in orthopedics?
We believe orthopedics will remain a sector of strong private equity interest for a long time driven by:
- Demographic and secular growth drivers such as shift to outpatient procedures, aging of the population and shift to value-based care
- Attractive industry characteristics like multirevenue streams, economies of scale and benign reimbursement environment
- Desire of orthopedists to band together to protect private practice model in relation to managed care and hospitals
On the provider side, we have spoken to many physicians across the country whose needs and concerns can be met by the right private equity-backed company. They include:
- Continuing to practice quality medicine their way
- Security
- Taking some chips off the table
- Assisting practices in taking advantage of the benefits of scale and capitalizing on expansion of service capabilities such as ancillaries, ASCs and urgent care
- Operational and business expertise such as negotiating managed care contracts to offset downward pressure on reimbursement, recruiting providers and expanding locations
- Remaining independent physician owners rather employees