Becker's ASC Review

81 ORTHOPEDICS 3 CEOs' predictions on PE in orthopedics, ASCs By Laura Dyrda P rivate equity firms are investing more in healthcare and specifically targeting orthopedic and spine groups with ASCs. ree CEOs of orthopedic and spine groups that took on private equity partners talked about their experiences and what lies ahead at the Becker's 18th Annual Spine, Ortho- pedic and Pain Management-Driven ASC + e Future of Spine Virtual Event June 9. Click here to view the entire panel. Below is an excerpt of the panel discussion. Question: What bold prediction do you have for private equity in the ASC, spine and orthopedics space? Douglas Wisor, MD. CEO and President of National Spine & Pain Centers (Rockville, Md.): ere's going to be consolidation on the PE side, and I think there's going to be some winners and some losers on investments made in the PE space in general across health- care. I think that will lead to some consolida- tion or a lot less overall healthcare investors than there are today. I'm actually surprised that it has taken this long, but the hospital world and site of service differential is huge and we've kicked the can down the road as far as it can go. We're all about removing cost from the healthcare system, and we can't afford to continue to foster site-of-service differentials that aren't competitive in nature. Andy Blankenmeyer. CEO of OrthoAl- liance (Cincinnati): e biggest prediction I have is the shi of healthcare out of hospitals and other higher cost settings into the ASC. Every group that has an ASC is rushing toward the door to invest in their own ASCs and grow them. I think there are going to be some groups that do that very well and are very successful, and others that won't be able to provide cost containment. But really what's going to drive a lot of the shi outpatient is employers in all of our markets, especially the self-funded employ- ers that are paying claims directly. ey are finally waking up to the fact that they could easily shi a site of service out of higher cost settings, such as hospitals, into more privately owned or joint venture surgery centers and save significant dollars on their employee benefits. at trend paired with Medicare continuing to allow more procedures in the outpatient setting every year, and the technology catch- ing up as well, makes physicians more com- fortable in that setting. When the cost data starts getting published showing costs at a surgery center versus a hospital setting, more than just their charge master reports and Medicare fee schedules, I think that's when you're really going to see the leadership of these self-funded employers saying enough is enough. We've got to move the volume. Glen Silverman. CEO of US Orthopedic Partners (Jackson, Miss.): I think PE will continue to choose the landscape of ortho- pedics. It's inevitable. If you're looking at where eye care and dental was five to seven years ago, PE has become very commonplace now. My dentist and my eye doctor are both PE-owned, and I still walk into the office and have a great experience. PE hasn't increased my costs one bit. If we can produce value to our owners or physi- cian owners, why shouldn't they retire with more than a gold watch and a set of golf clubs? at's what we're offering them. As a bold prediction, I would say that trend only ramps up here in the next two to four years. n Dr. Kornelis Poelstra on the upsides, downsides of PE in spine By Carly Behm P rivate equity has the potential to help keep spine practices independent, but it doesn't come without risk, according to Kornelis Poelstra, MD, PhD, of the Robotic Spine Institute of Las Vegas. He told Becker's Spine Review how he sees private equity playing a role in the industry in the near future. Note: Response was edited for style and clarity. Question: How do you think private equity investment will affect spine practices in the next three years? Dr. Kornelis Poelstra: I think private equity contribu- tion to allow private practices to stay independent is something that is not to be discouraged. It is certainly something that will become more important as we move toward a need for greater efficiency, and a more businesslike approach to sustain our practices in the ever- changing and more challenging healthcare environment of tomorrow. The upside will be the introduction of much greater busi- ness acumen and efficiencies that could allow us to stay away from hospital employment and possibly boost the bottom line for all. The downside would be that decisions could be forced upon us by non-clinicians solely for monetary gain, which is in stark contrast with the way we have usually practiced and approached the people we care for. The philosophy in most practices is still very much: 'The patient comes first, monetary reimbursement is second,' and I am hopeful that that will not get turned upside down with the ever-increasing role private equity will play also in our world. n

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