The orthopedic space is a treasure trove of opportunity for private equity investors, according to Provident Healthcare Partners Analyst Robert Aprill.
Four insights Mr. Aprill shared:
1. Mount Pleasant, S.C.-based Southeastern Spine Institute recapitalized with Candescent Partners in April 2017. The level of private equity interest this transaction generated indicated orthopedics would be the next specialty to undergo significant investment and consolidation.
2. With CMS approving more procedures for the outpatient setting, private orthopedic practices have been able to offer a broad range of services, including physical therapy, urgent care and pain management. This breadth of ancillary service offerings, along with increasing outpatient surgical volume and an aging population, make orthopedics an attractive opportunity for private equity groups.
3. As reimbursement rates for orthopedic procedures fall, private orthopedic practices face pressure to either join a local health system or a private-equity backed practice. To remain competitive, practices will have to grow to negotiate with major payers.
4. Private equity groups will seek to invest in orthopedic practices with a strong management team, community presence and range of service offerings. In markets where acquisitions don't seem viable, they'll likely look to open de novo facilities, like ASCs.