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ORTHOPEDICS
Will physicians flock to large, independent
orthopedic groups?
By Alan Condon
L
arge independent orthopedic groups are becoming more
prominent across the U.S. as small and solo practices continue to
decline amid economic challenges that show no signs of slowing
down.
ough the number of physicians joining hospitals and health sys-
tems is on the rise — almost 70 percent of physicians reported being
employed by hospitals or corporate entities in 2020 — so too is the
number of physicians in large, physician-owned groups.
According to the American Medical Association, 17.2 percent of
physicians reported practicing in a group of at least 50 physicians in
2020, up from 14.7 percent in 2018, the largest two-year change for
this bracket and an indicator of a potentially accelerating trend.
Since the pandemic, four orthopedic "supergroups" comprising more
than 100 physicians have formed through mergers in Florida, Tennes-
see, Texas and New Jersey, with more practices likely to be weighing
similar consolidation strategies.
As of Jan. 1, three physician-owned orthopedic practices will merge
to form Golden State Orthopedics & Spine, which will be the third-
largest specialty group in the western U.S. e group will begin opera-
tions with 60 physicians and 19 locations and may look to add more
practices next year.
It's no secret why many independent physicians believe large specialty
groups may be the way forward.
Over the past two decades, reimbursements for professional ser-
vices have declined while reimbursements on the facility side have
remained high. The move toward value-based care has increased
downward pressure on cost of care while overheads — such as
malpractice insurance, IT systems and compliance — continue
to climb, with the COVID-19 pandemic exacerbating these
existing trends.
All these factors contribute to the reduced margins that independent
specialty groups operate under.
"I would not be confident if I were in a group of three or four physi-
cians," Ed Hellman, MD, president and interim CEO of Indianapolis-
based OrthoIndy, told Becker's. "I think they're going to find it really
difficult to maintain their income level and to be competitive. I think
there is a role for independent groups, but I think that size is going to
be important."
Advantages that large groups have over smaller practices can be
significant. Consolidation can provide opportunities for verti-
cal integration through ASCs or other ancillary services as capital
and additional practice resources become more readily available
through large groups.
Patient volume will also be driven by larger contracts, and larger
groups are typically able to leverage the commercial payers and
negotiate more lucrative contracts from a reimbursement standpoint.
ere are also the economies of scale that may be realized operation-
ally or through group purchasing of supplies, employee benefit pack-
ages and various insurance policies.
"Consolidation of [small to midsize] groups will probably become
more mainstream. However, there are some merits to the model,"
according to Andrew Cordover, MD, of Andrews Sports Medicine &
Orthopaedic Center in Birmingham, Ala. "e new, value-based pay-
ment models for both federal and private payers require sophisticated
management and data analysis that most practices do not have avail-
able. Additionally, collective negotiating and maintenance of quality
metrics may be easier to demonstrate."
ough recent years have seen a spike in the number of large or-
thopedic groups, many still cite maintaining independence as their
toughest hurdle. While other groups choose to affiliate with health
systems or corporate entities for added financial support, indepen-
dent groups will need to capitalize on the migration of procedures to
the ambulatory environment and expand their outpatient strategies.
"e successful groups have found ways to develop ancillary income
streams, whether it's ownership of therapy or imaging centers or
surgery centers," Dr. Hellman said. "In our case, we have a physician-
owned hospital that's part of that as well, and that has allowed us to
stay independent of the major health systems." n
ASC total joint
replacements set to
grow 95% by 2026
By Alan Condon
T
he ASC market is estimated to be worth between
$30 billion and $40 billion, with the projected
shift in musculoskeletal and cardiac care to the
outpatient setting to spark further growth in the coming
years, according to a report from Research and Markets.
Three details:
1. Total joint replacements at ASCs are anticipated to
increase 95 percent over the next five years.
2. Cardiovascular procedures in outpatient settings are
estimated to grow from 10 percent up to as much as 35
percent by the mid-2020s.
3. ASC surgical procedure claims decreased almost
10 percent in 2020, primarily because of the CO-
VID-19 pandemic. n
