Becker's ASC Review

19 ORTHOPEDICS Orthopedic MSOs remain popular but other options show promise By Carly Behm M usculoskeletal management organizations have been a popular avenue for orthopedic practices to find support amid economic, business and payer headwinds. But in the last year, some physicians have also found success in other consolidation models. Fourteen major private equity-backed orthopedic groups have hit the market since 2017, according to a Feb. 14 report in the Journal of Orthopaedic Experience & Innovation. Big names include USOP, United Musculoskeletal Partners, M2Orthopedics, Spire Orthopedics, OrthoAlliance and American Orthopedic Partners. The past year has still been busy for orthopedic MSOs. Orthopedic Care Partners, OrthoAlliance and Healthcare Outcomes Performance Co. saw a slew of partnerships and affiliations in 2023. And groups like UMP, MedVanta and Spire Orthopedic Partners bolstered their leadership with new hires. "I absolutely believe we will see more MSOs in the future," Emil Engels, MD, CEO of Aligned Orthopedic Partners, said in 2022. "I follow the PPM market closely, and I have spent time as a business professional in two different specialties. I attend meetings with other physicians, and I can say without hesitation that orthopedics and spine is the most exciting and interesting specialty to be a part of right now. I think there will be tremendous activity with more private equity backed platforms entering the market … It's becoming a very competitive landscape, and that's good for physician practices. It's causing disruption. There are going to be companies that succeed and companies that don't. As a result, it's driving innovation and forcing platforms to differentiate themselves from others." MSOs were projected to be "the next big trend" among spine surgeons in 2022. And while they're still attractive, some physicians are changing their tune. In January 2023 Chicago-based Midwest Orthopaedics at Rush and Rockford-based OrthoIllinois combined to create OrthoMidwest — an aggregation free of private equity. The orthopedic groups invested equally in developing vertices including imaging, physical and occupational therapy, and ASCs. As an aggregated entity, they can file under one tax ID and continue operating individually. A month later, another orthopedic group rose without needing outside capital — PELTO Health Partners. The group was formed by Durham, N.C.-based EmergeOrtho, Indianapolis-based OrthoIndy and Seattle-based Proliance Surgeons and has more than 400 physicians. For some leaders private equity isn't worth the costs of its promises. "If private equity becomes involved, then you're giving away a great deal of your independence," Frank Aluisio, MD, EmergeOrtho's physician president, said. "We feel that we're an excellent platform to help other independent groups that need help but do not want to go the private equity route. Going forward, we want PE to be synonymous with 'physician empowered' and not 'private equity.'" n think we're still trying to figure it out because the bottom line. Becker's: So it sounds like not having a full definition of value-based care is the biggest thing healthcare needs to figure out. MH: To a payer it means one thing; to a patient maybe it means another, and to a provider maybe it means another thing. It's probably a Venn diagram where they all intersect in the middle. But the question is what is that intersection like? What are the key components of it for a provider, for a patient and for a payer? at's not easy to determine. It seems like it would be easy, but it seems like we've had a hard time really deciding what that overlap is. So I think we need to decide what is that overlap between the three parties: patients, payers and providers. en we have to ask, "What are reasonable goals?" I think the reason this confusion exists in part is because we're trying to fit a square peg into a round hole in that we're taking the existing incumbent healthcare system with all the headaches and inefficiencies and saying, "OK, here's this thing over here — value-based care — let's take that and layer it on to this old system or vice versa." I think that's been part of the challenge. When you talk about value-based care, you need to break it down into the simpler components of what is a bundle of healthcare? What's that bundle cost? What does that bundle include? Traditionally healthcare has been retrospectively priced. You go see the physician, they do a bunch of things, and they add up the cost of all those things. Let's say it's $1,000 but Medicare pays $150 for that and Blue Cross pays $200. It's just confusing to everybody. I think if an employer or a payer asks, "What's the cost to have an annual checkup?" it doesn't seem like that would be that hard to put a price on. But you really can't find transparent pricing for that 99% of the time. e same thing with specialty care. In my case, I'm an orthopedic surgeon. What's the cost for consultation with me? What's included? What's the surgery cost and what's included? If we bundle stuff now we have a product, and if we have a product now, we can put a price on it. Now healthcare can be prospectively priced, and if it's prospectively priced now you can actually have a marketplace for healthcare. at can potentially check the cost side of the equation, and when it comes to value, quality means a lot of different things to a lot of different people too. But the quality can be measured. If you know the cost in advance and you can look at quality metrics — even though many of them are imperfect right now — as a patient or a payer, you could say we're going to direct care in this direction. en as the provider, people are paying you in a timely fashion. If whoever's paying knows the price, and the providers know that the quality is a big piece of that now you can really see true value in healthcare. Ultimately, we can go down that path a little bit. n

• Cover