Consolidation has snowballed among orthopedic groups over the last two years as independent providers strategize to maintain autonomy and capitalize on the shift to value-based care.
Since 2020, the orthopedic sector has seen a spike in the size and scope of private equity-backed management services organizations, which are building strong regional and national brands by aligning with high-quality surgeons and practices.
MSOs typically assist their affiliate practices with time-consuming administrative responsibilities, including coding, billing, compliance, payroll and revenue cycle management. MSOs aggregate volume and as such, obtain the best pricing for supplies, implants and payer contracts. They are increasingly owned by private equity investors and commercial payers, but hospitals, groups of physicians and hospital-physician joint ventures are also involved in the space.
"What we hear time and time again is that this option allows for [independent practices] to maintain their brand identity, clinical autonomy and a level of income that they're accustomed to," Graham Young, vice president of mergers and acquisition at U.S. Orthopaedic Partners, told Becker's. "It allows them resources over a fairly broad network that's more broadly defined, whether that's the ability to tap into payer or employer opportunities, hospital partnerships or individual de novo opportunities for that practice — those are all still on the table."
Many smaller orthopedic groups have joined MSOs in recent years, and larger orthopedic groups have partnered with private equity firms to form their own MSO joint ventures.
In December, Atlanta-based Resurgens Orthopaedics affiliated with New York City-based private equity firm Welsh, Carson, Anderson & Stowe to build an orthopedic platform led by CEO Alex Bateman. Frank Aluisio, MD, physician president of Durham, N.C.-based EmergeOrtho, also told Becker's his practice is in the infancy stages of how it plans to "attack and develop an MSO."
Arguably the biggest advantage MSOs are offering smaller independent practices is the ability to collect and share data in a coalition with other like-minded practices. As healthcare moves from volume to value-based care, cost and outcomes data will be even more critical — not just in contract negotiations with payers but also to determine optimal care pathways.
"We're stronger together," Meredith Warf, vice president of ASC operations at U.S. Orthopaedic Partners, told Becker's. "One of the reasons why consolidation is a great choice in orthopedics is because of the size and scale that can be attained when you bring providers together. We're really looking at No. 1, value-based care. It's here to stay."
USOP considers the rising number of bundled payment procedures as one of the biggest challenges for orthopedic practices in the next five years.
"We collect data on all patients, and in bundled care, you have to follow up at certain intervals determined by your payer contracts and research programs," Ms. Wharf said. "That collection is extravagantly manual: having to aggregate that [data], pull it out, be able to benchmark it internally and externally and present it to the payer for your reconciliation in value-based care, as well as helping the patient understand the benefit in all of that."
Orthopedic practices that identify the most efficient way to aggregate data and "pull it together in the right way" without disrupting surgeons' clinical and day-to-day operations will be the ones who stand out in a crowded value-based market, Ms. Wharf said.