Although the supply of orthopedic surgeons in the U.S. is low, the specialty remains attractive for private equity investors, according to a report in the Journal of Orthopaedic Experience & Innovation.
Seven notes from the Feb. 14 report:
1. Private equity investment in physician practice management and orthopedics remained strong through most of 2021 and 2022. Factors driving the pace include increased reimbursement, financial and competitive challenges, the desire to "jump on the bandwagon" among orthopedic groups and the opportunity to monetizing the value of practices.
2. Private equity investors are likely to consider factors such as size, locations and reputation when choosing who to invest in.
"Investors are attracted to orthopedic groups with a demonstrable history of success and have a shared vision for continued growth on either a regional and/or national basis," the report said.
3. Eight private equity platforms were formed in the last two years including United Musculoskeletal Partners, Triumph Orthopedics and American Orthopedic Partners.
4. More than 85 percent of orthopedic surgeons surveyed by Vector Medical Group said their practices have been "as expected" or "better than expected" after private equity partnerships. The majority of respondents also said physicians have been able to retain "true clinical autonomy" and that private equity partners have lived up to their promises.
5. All survey respondents said private equity investors didn't change day-to-day operations, extend work hours or lower benefits.
6. Private equity investment in orthopedics is expected to continue growth in 2023 as demand for inpatient and outpatient services to increase in the specialty.
7. Factors orthopedic groups should consider with private equity deals include cultural fit, the desire to increase operational performance, the need for working capital and "monetizing" the value of historical physician ownership.