Would you like to expand your practice? But wonder how to pay for it?
Our guest editorialist this week is Robert Aprill, an analyst with Provident Healthcare Partners, a healthcare investment firm based in Boston and Los Angeles. Mr. Aprill offers both a framework within which to tackle this very important question and discusses an increasingly viable option for funding growth—Private Equity Partnerships.
Is Private Equity Funding an Option for Orthopedic Practices?
As 2017 draws to a close, many practice leaders are shifting their focus to the strategic initiatives they hope to pursue over the next year—if they can find the funds.
Looking to secure their practice’s future in an uncertain healthcare universe, more and more orthopedic groups are asking about alternatives to either debt or selling to a larger entity. One option is private equity.
Private equity consolidation in physician services is nothing new, but it is comparatively rare in the musculoskeletal space.
Private equity consolidation became a popular option for many dental groups in the early 2000s, when private equity firms began to work with multi-site, provider-based businesses. Other healthcare sectors that also gravitated to private equity are interventional pain management, dermatology, and ophthalmology.
Over the years, dozens and dozens of private equity transactions have helped nearly every large provider in these specialties.
An Alternative to Merging With Other Practices
Joining a health system or merging with a local competitor has been a reasonably common strategic option for practices that wish to grow. The obvious downfall of these options is that they have left many groups looking for a better path.
In contrast to merging with another practice, private equity is based on a partnership structure with management and physicians and a mutual execution (with the private equity funder) on a long-term growth plan.
While many groups fear that partnering with a financial sponsor will result in loss of control, in fact, such a partnership can empower the practice to execute on many different growth strategies that they otherwise would not have had the time or capital to accomplish on their own.
