During a featured session, at Becker's 20th Annual Spine, Orthopedic + Pain Management-Driven ASC Conference in June, experts discussed the current transaction environment for spine, orthopedic and pain management groups.
Speakers included Gary Herschman, an attorney on the board of directors for the law firm Epstein Becker and Green, and Dana Jacoby, president and CEO of Vector Medical Group. Mr. Herschman and Ms. Jacoby discussed the significant increase in the number of strategic transactions, including mergers and acquisitions, within the spine, orthopedic and pain management space. This trend is attributable to various factors including the availability of private equity funding and other changing dynamics of the healthcare sector.
Key takeaways:
Consolidation
Mr. Herschman pointed out that the healthcare sector is experiencing a rise in consolidation, with numerous organizations working to consolidate or acquire orthopedic, spine and pain-driven ASCs. This consolidation provides groups with access to larger corporate infrastructure, capital for expansion, professional & sophisticated C-suite teams, economies of scale, and group purchasing benefits.
Challenges facing independent medical groups
Independent medical groups are facing several challenges including market consolidation, changes in reimbursement and increased competition. There's also the rise of retail medicine and value-based payments. Strategic transactions have the potential to help these organizations to successfully navigate these increasingly difficult challenges.
Private equity groups want "sophisticated" partners
When private equity groups consider their first “platform” orthopedic transaction, "they're looking for a group that has a certain level of sophistication and some systems in place," Ms. Jacoby said. "You have to have a reputable team of clinicians, but administrators and executive leadership is important too."
Regular valuations support growth
Regular valuations, even for those not planning to make any immediate changes, can provide valuable insights into an organization's market value and potential growth areas. This supports more informed decision-making when it comes to deciding whether to stay independent and double down on growth, or partner with a larger organization to improve and create additional value in the market.
Clinical autonomy is maintained in private equity partnerships
Despite fears among physicians, clinical autonomy is not compromised in a private equity partnership. Legal measures are in place in most states that prohibit corporate interference in medical practice, and regardless, physician decision-making on clinical matters is expressly protected in contractual terms. These partnerships focus on capitalizing growth, not changing clinical practice, often with clinical advisory boards in place to ensure this.