Private equity among spine and orthopedic practices has grown steadily over the past few years. Recently, a 21-physician spine practice in Lawrenceville, Ga., snagged private equity investment.
Here's how two spine surgeons see private equity affecting practices in the near future:
Note: Responses were edited for style.
Question: How do you think private equity investment will affect spine practices in the next two to three years?
Kern Singh, MD. Midwest Orthopaedics at Rush (Chicago): My hope is that spine practices learn that raising capital themselves and investing in their own group is the best path forward. Using private equity capital often comes with terms that result in a loss of physician autonomy, oversight and a general loss of decision-making. In general, while PE money is easier to obtain, the strings attached are prohibitive to autonomous physician practice. Furthermore, it is my belief that the physician is in the best position to understand the market and market forces leading to expansion. With that being said, many spine practices are looking to “cash” out oftentimes at the expense of younger partners.
Usman Zahir, MD. ScopeSpine-The Orthopedic Group (Dulles, Va.): The effect of private equity on spine practices will be one factor among many changes. With companies like Amazon, Walmart, etc., entering into primary care/urgent care services, the normal boundaries that have existed in the past will continue to change. It is only a matter of time before companies expand into surgical services or continue to link their patients with high quality health systems for surgical services. Size and scale do matter, and within this growth and interest, private equity is one way for spine surgeons to stay nimble in this dynamic environment by offering alternative cost effective, and efficient care. Over the next two to three years, this trend will continue.
Initially much of the incentive to sell out to private equity initially were from senior spine surgeons, who were four to five years away from retirement, who owned medium-sized groups that wanted to maintain some independence, but wanted to reduce some of the hassles with management. However, private equity is also attractive for smaller and newer practices that are looking for efficient ways for expansion while also managing costs and optimizing the patient care experience.
Spine surgeons are entrepreneurial and partnering with private equity can be a win-win strategy in lowering costs, bringing billing and collections in-house, better use of IT in delivering efficient care, optimizing ancillary services in-house: PT, imaging/diagnostics, DME, walk-in clinics, pharmacy services, and interventional procedures. I think over time, private equity partnerships will help spine practices that wish to expand in the delivery of consolidated care. The key is to balance the incentives of the private equity team and the goals of the surgeons. A patient-centered approach will remain key and central to any successful partnership.