Roger Strode Discusses Intersection of Orthopedics and Private Equity

Foley & Lardner LLP Partner Roger Strode is quoted in the Levin Associates article, “Spotlight on Orthopedics, its Independent Culture, and the Role of Private Equity,” commenting on the widening intersection of orthopedics and private equity investment.

“It is common for orthopedic physicians to own ambulatory surgery centers. Moreover, a goodly amount of orthopedic doctors also own interests in standalone orthopedic hospitals,” Strode explained. “In those instances, physicians can leverage their practices because when a case is done in a freestanding facility two fees are paid for the procedure – the physician fee and the facility fee. In addition, many of these physician groups have ancillary service lines such as imaging and physical therapy, all of which add leverage.”

“So for groups with any significant size, with all this leverage, the attitude often is: ‘I already own all these things and I’m already making a lot of money, so why would I need to sell to private equity investors? What’s in it for me?’” Strode continued. “That’s why I think orthopedics is the specialty that has been the latest to adapt to the idea of private equity investment.”

Strode emphasized that for solo orthopedic physicians or for smaller groups, private equity may represent a chance to grow their business. “Physicians not only get cash upfront when they partner with PE, but they also get rollover equity in the MSO that buys the practice, and that can be appealing,” he added.