United Musculoskeletal Partners has taken a different approach to private equity, something that has been widely debated among independent orthopedic surgeons and groups.
UMP formed in 2021, and has grown significantly. CEO Alex Bateman discussed how private equity benefitted the MSO.
Note: Responses were lightly edited for style.
Question: Private equity has been polarizing among some orthopedic surgeons. How has UMP and its practices benefitted from private equity from a physician and leadership perspective?
Alex Bateman: For us it is important that we differentiate the UMP model from other PE-backed models. UMP has capital partners that invested in the MSO based on our early successes and growth trajectory. We then invested that capital into high-performing practices in Georgia, Texas and Colorado and helped support them with additional resources, infrastructure and strategy.
Two-and-a-half years into UMP's development, we remain steadfast in our commitment to high-quality patient care being delivered at the local level and the continuance of private physician practice.
It is also important to note that declining reimbursements, increasing overhead and administrative burden are often the primary drivers for many musculoskeletal groups to enter the PE model. Consequently, many independent practices have sought the PE-backed model to maintain autonomy and leverage economies of scale to remain financially viable and better control costs.
Q: What advice do you have for private equity groups who want to grow in orthopedics? What changes can help PE be more trusted as an option?
AB: For PE groups looking to partner with MSK practices, the importance of understanding culture cannot be overstated. Additional infrastructure and support are imperative for growth but should not come at the cost of sacrificing the culture within the practice. Both the PE sponsor and the physician group should take time to understand one another's culture to ensure they are the right fit.
Q: Some orthopedic groups have formed alliances to support each other that don’t have private equity backing. When you think about the future of independent orthopedic practices, how important will PE be?
AB: Many practices want to grow while still maintaining independence and, for some of them, the PE model can be the right fit. For others, the alliance model can be a viable alternative for groups who are looking to grow through collaboration and shared knowledge. One of the challenges some practices have faced when considering the alliance model is the lack of meaningful data to obtain true insights into their operations, specifically for small to mid-sized groups.
Also, some alliances have had varying degrees of success primarily as a result of a lack of investment or capitalization.
As far as the future, it is critical that there continue to be multiple partnership options for MSK groups looking to scale. Different practices will have different needs and different goals, so having differentiated models will ensure practices can choose the best partner based on their unique needs.