More orthopedic physicians are selling out to private equity firms, raising alarms about costs and quality.
. The soaring demand of aging Americans for joint replacements, the high rates insurers pay for musculoskeletal procedures — such as nearly $50,000 for a knee replacement — and the lucrative array of orthopedic service lines and ancillary businesses, including ambulatory surgery centers, physical therapy, diagnostic imaging, pain management, and sports medicine, make this a tantalizing line of business.
Through their sale to Welsh Carson, the Resurgens orthopedists in Atlanta got a capital partner and executive expertise to help them expand by acquiring other orthopedic practices in Georgia and other markets. Soon after the deal,large orthopedic practices in Dallas and Denver, and brought in a second private equity firm as an additional investor. Several other acquisitions are imminent, said Sean Traynor, a general partner at Welsh Carson.
"Other physicians ask what's changed [since the sale], and I say nothing, which is great," said Dr. Irfan Ansari, one of the Resurgens orthopedists. At least two PE-backed orthopedic groups, however, are working with insurers on cost-saving value-based care programs. U.S. Orthopaedic Partners and HOPCo tout their partnerships with insurers, boasting that they've built systems to deliver entire episodes of care at lower costs under fixed-payment models.
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