Becker's Spine Review

19 THOUGHT LEADERSHIP The questions private equity still needs to answer By Carly Behm A s private equity attracts many spine and orthopedic practices, there are still questions left unanswered about the long-term viability of investments. Four surgeons told Becker's the questions they still have. Editor's note: Responses were lightly edited for clarity and length. Question: Private equity continues to make inroads in orthopedics. What questions has this rising trend yet to answer?. Vijay Yanamadala, MD. Hartford (Conn.) HealthCare: Ultimately, on a societal level, we want to know about the value of care delivered. Does take-over by private equity encourage the realization of long-term im- provement in the care delivered, looking at outcomes, appropriate- ness and cost as drivers of value? We do know that there are numerous inefficiencies in private practices today, and unfortunately physicians are not necessarily the best man- agers. Insofar as private equity groups are able to come in and im- prove management efficiency, contract negotiation and scale across practices, there is a real potential for improvement of revenue and profitability. However, a focus on revenue could also lead to pressure on surgeons to increase the number of surgeries they perform, poten- tially leading to inappropriate or unnecessary surgeries. Ultimately, we must understand what metrics we need to use to judge the success of these endeavors. Are we delivering the right care? Are we improv- ing patient outcomes, satisfaction and access appropriately? These remain to be answered in the coming years. Brian Gantwerker, MD. The Craniospinal Center of Los Angeles: The rise of private equity firms into medicine has many people very ex- cited. I for one see it as another pump and dump scheme and think patients and doctors will be left in the aftermath. I am really not sure whether people just choose not to believe this is a thing or not. In my mind, buying groups then cutting costs to the bone will not lead to better care, just more profits. Nicholas Grosso, MD. The Centers for Advanced Orthopaedics (Bethesda, Md.): The obvious question that has yet to be answered by private equity is "What's next?" Private equity groups are coming in to raise the value of orthopedic groups with the ultimate goal to sell the practice, and the process then repeats itself. This business model is not sustainable long-term, as at some point there will be no addi- tional money to be made. So the question remains: Where do they go from here? And more importantly, how is the patient impacted by this change of control? Shouldn't there be a third option that keeps care in the hands of the providers? Jeremy Smith, MD. Hoag Orthopedic Institute (Irvine, Calif.): Although private equity in orthopaedics has become more commonplace with enticing opportunities, the long-term viability of practices involved is questionable. Younger partners participating take significant risks with no certainty of a long-term plan. n How the 'Neiman Marcus' of spine practices plans to compete with large groups, MSOs By Carly Behm W hile some practices are looking to expand across state lines, Spine Center Atlanta plans to focus on the Georgia market, founder and spine surgeon James Chappuis, MD, said. Dr. Chappuis spoke with Becker's Spine Review about his practice's plans and strategies for 2022. Editor's note: This conversation was edited for clarity and length. Question: How will Spine Center Atlanta grow? What strategies is the practice implementing? Dr. James Chappuis: We've added a satellite location in Au- gusta (Ga.) and one in Macon (Ga.) in 2021. We've teamed up with a medical clinic, and that deal is just about to be com- pleted. When that's done, we'll have an additional 14 satellite clinics because we'll be associated with them. We've added a few new physicians and we've started a traumatic brain injury program called Concussion Center Atlanta. Q: What's your strategy in choosing locations for satellite offices? JC: We like to feel like we're a regional practice, so we like to stay within Georgia. But we want to try to cover metropolitan Atlanta and areas that are within a three- to four-hour drive in areas that are underserved with spine and orthopedics. We just bought a medical office building in Valdosta, Ga., and we'll be up and running there in September. Q: Would you ever consider expanding out of Georgia? JC: Maybe. When you're growing, you really have to be care- ful because you don't want to grow with operating capital. So you need to find either a bank or credit line where you can grow so you're not using your operating capital. at's a mis- take I think a lot of practices have done in the past. So you have to grow strategically. You have to grow with financial wisdom because if not, then you can really get into trouble, especially with reimbursement like it is today. It's less than it used to be, it's unpredictable, and you have to really factor that in with your growth plans. Q: What's the key component of your strategy in 2022? JC: With reimbursement like it is with private insurance, it's most likely going to be less to some degree than it was the year before. I think our strategy is to make sure we watch our overhead, keep our expenses conservative and well supervised. en as far as the growth piece goes, we're expanding our out of network work we're doing with insur-

• Cover