Another major Cincinnati doctor group to expand via private equity deal
July 22, 2019
Cincinnati Business Courier
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Beacon Orthopaedics & Sports Medicine, one of the largest physician groups in Greater Cincinnati, expects to get even bigger with an infusion of capital from a private equity firm.
The Sharonville-based group of 26 doctors revealed today the launch of a national management services organization, which Beacon formed in partnership with Revelstoke Capital Partners of Denver.
Beacon, which has eight locations and employs about 550 people, expects to approach other orthopedic groups in the region to explain the benefits of joining the management service organization.
Andy Blankemeyer, CEO of Beacon as well as the new management service organization, told me acquisitions are expected in the near future on the regional level. Eventually, Beacon intends to become a national powerhouse as a result of the management services organization, also known as an MSO.
“We are launching an MSO to leverage our expertise and patient-centric care model to become one of the nation’s premiere orthopedic management companies,” Blankemeyer said.
Established in 1996, Beacon provides orthopedic care and sports medicine coverage for more than 30 local high schools, five college athletics programs and professional teams such as the Cincinnati Reds.
Blankemeyer declined to say how much Revelstoke Capital Partners had invested in the MSO, but he noted that the Beacon practice remains 100% owned by the group’s physician partners.
Revelstoke seeks $10 million to $250 million opportunities and invests out of a $1.4 billion fund.
I previously reported that the same private equity firm had struck a similar deal with the Cincinnati Eye Institute, which subsequently made several acquisitions both regionally and on the East Coast.
“This transaction is a continuation of our multi-year outbound search effort to partner with leading physician practices in specialties that are well-positioned for growth and consolidation,” said Andrew Welch, managing director at Revelstoke. “Beacon has developed the infrastructure and capabilities to provide patients and payors with exceptional and cost-efficient medical care and services.”
Beacon doctors and Revelstoke each have seats on the board of the MSO, which includes Blankemeyer.
No changes to Beacon’s relationships with local hospital systems or referring doctors are anticipated, Blankemeyer said. And Beacon patients will continue to see the same doctors.
In addition, the Revelstoke deal won’t affect Beacon’s current employees in terms of job descriptions, work hours or benefits.
However, “we will be looking to grow and expand our employee base locally,” Blankemeyer said.
Dr. Peter Cha, president of the region’s 18th-largest physician group, expects Beacon to grow from recruiting more providers, opening new clinical facilities, expanding patient care and business support services, and aligning with market-leading provider groups.
“It leverages the processes and the efficiencies that Beacon already has in place,” Cha told me. However, “it’s a consolidation effort whereby the physician is still managing and controlling all of the practice’s clinical duties. This partnership allows us to continue to put the patients on a pedestal.”
It’s hard to predict how big Beacon could get, Cha said.
“The thing about private equity as a capital partner in orthopedics is it’s really in its infancy – although well established in radiology, dermatology, GI and ophthalmology,” Cha said. “I think the orthopedics surgeon model is unique because of the complexity of our offering.”
The quality of the doctors in groups that would be acquired is of the utmost importance, Cha said.
“It’s not simply an acquisition strategy to grow – it is getting scale with like-minded orthopedics physicians who would fit into our model of access, quality and value,” Cha said.
Proskauer Rose was legal counsel to Beacon, and Coker Capital Advisors was financial adviser. McGuireWoods was legal counsel to Revelstoke.