Becker's ASC Review

18 ORTHOPEDICS Private equity targets orthopedic ASCs: 5 details By Laura Dyrda O rthopedics has a unique position within the healthcare ecosystem as a highly fragmented industry ripe with potential for standardization and value-based care. ere is a strong demand for affiliation with orthopedic groups, according to a new report from VMG Health, and more transactions could be on the horizon. "Many orthopedic groups are considering whether now is the right time to pursue an affiliation or acquisition and how much their business could be worth to a potential buyer," wrote Sydney Richards, Clint Flume and Patrick Speights in the July 25 report. Private equity companies are among the most persistent suitors for orthopedic medical groups and surgery centers, especially those with imaging, physical therapy and other services to complement surgery. Surgeon owners with aspirations for regional growth are particularly suited for private equity investment. Five things to know: 1. Moving total joints from hospitals to ASCs could reduce the cost of care by 40 percent and commercial payers are taking notice. Medicare has also approved total hip and knee surgeries in the ASC for beneficiaries. 2. Medicare-certified orthopedics ASCs have grown 165.2 percent from 2015 to 2021, the second-fastest growing specialty behind cardiology. Orthopedic and pain management ASCs grew 69.2 percent from 2015 to 2021. 3. Orthopedic surgeon owners are also open to new deals amid inflation and rising costs of capital. e shi to value-based care, labor shortages and rising supply costs make partnerships desirable for owners as well. "In choosing the most appropriate alignment model for partnership, physicians will be interested in monetizing their business' equity and structuring their compensation package and strategic partner's future vision," the authors wrote. 4. Potential buyers examine many factors, including the orthopedic group's competitive position in the market and growth trajectory. ey will also compare productivity to national benchmarks and whether the group appropriately leverages mid-level providers. 5. Private equity deals for orthopedics-focused ASCs have increased in the last five years, and orthopedics has been one of the most active targets for private equity, according to VMG. n 'It comes to the point where you can't save': Why Rothman left bundled payments By Carly Behm I n 2018, Philadelphia-based Rothman Orthopaedic Institute dropped out of Medicare bundled payments for hip and knee replacements, and the practice's experience reflects broader issues in the healthcare landscape. For Rothman, bundled payments helped save Medicare and private insurers more than $100 million in the last five years, according to an Aug. 10 report from The Philadelphia Inquirer. But they bowed out of Medicare bundles after having to pay $6.7 million to the program. "We bottomed out," Rothman President Alex Vaccaro, MD, PhD, told the publication. "It comes to the point where you can't save more money." Ever since Medicare changed its benchmarking method for bundled payments, the number of physicians and hospitals participating fell to 749 in 2022 from 1,707 in 2020. The federal government has been proactive in trying to make the U.S. healthcare system more efficient for decades, and more than 50 experiments have been launched to reduce costs and improve quality. But according to the Centers for Medicare and Medicaid Innovation Center, only a few payment models have been successful in saving money for CMS, Rachel Werner, MD, PhD, executive director of the Leonard Davis Institute of Health Economics at the University of Pennsylvania, told the Inquirer. For Rothman, the practice is still expanding bundles in the private sector since those insurers offer more flexibility, Dr. Vaccaro said in the report. n ValueHealth, OrthoIllinois partner By Carly Behm Rockford-based OrthoIllinois is partnering with ValueHealth to expand the Muve orthopedics program and value-based care. Under the partnership, OrthoIllinois will implement the Muve program at two of its ASCs to augment total joint and spine services, ValueHealth said in an Aug. 17 news release. The Muve program offers peri- and post-surgical care. "We share a common goal in delivering the highest quality of care, in the right setting, at a more affordable price and believe that together we will be better able to do so in markets we serve," OrthoIllinois CEO Anthony Brown said in the release. n

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