August 3, 2020
Cincinnati Business Courier
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One of the largest independent physician groups in Greater Cincinnati just got significantly bigger via the acquisition of a rival medical practice, which was made possible by an infusion of capital from a private equity firm.
Sharonville-based Beacon Orthopaedics & Sports Medicine, which already included 27 physicians, added seven doctors by acquiring Montgomery-based Reconstructive Orthopaedics & Sports Medicine Inc.
Andy Blankemeyer, CEO of Beacon, said the nearly 100 people who had been employed by Reconstructive Orthopaedics are now Beacon employees. They joined the more than 550 employees that Beacon already had.
With a total of 34 doctors, Beacon is now the largest independent orthopedic practice in Greater Cincinnati.
Financial terms of the deal that closed Friday night weren’t disclosed, but Blankemeyer told me five of the Recon doctors are now shareholding partners in Beacon. Another Recon physician is on a partnership track, and the seventh Recon doc is an employed physician.
The deal was made possible by the formation of a management services organization called OrthoAlliance, which Beacon created last July with an infusion of capital from a private equity firm, Blankemeyer said. Revelstoke Capital Partners of Denver is a partner in the OrthoAlliance MSO, but the Beacon practice remains 100% owned by the group’s physician partners.
Beacon hasn’t expanded in such a big way via merger in the last two decades, said Dr. Peter Cha, president of the medical practice.
“We’ve had multiple individuals come over from hospital systems and other groups over the years, but this is the first merger of its kind for Beacon,” Cha told me.
“We were happy to get everything accomplished to align like-minded surgeons who are very similar to the surgeons at Beacon,” Cha added. “In fact, many of us have trained with their surgeons, and we have known them for decades. They are fully aligned with our culture and our care delivery model.”
Recon’s doctors had previously been affiliated with OrthoCincy, which was created in 2017 by the merger of Northern Kentucky-based Commonwealth Orthopaedic Centers with Reconstructive Orthopaedics & Sports Medicine.
The merger agreement that resulted in the formation of OrthoCincy included a withdrawal option, said Dr. Tim McConnell, president of the Reconstructive Orthopaedics division.
“It’s been a very easy transition,” McConnell told me. “Beacon has bent over backward to accommodate any special requests or needs that we’ve had and to accommodate our schedules.”
The other Recon physicians who joined Beacon are:
The Recon medical offices in Montgomery, Fairfield and South Lebanon have been rebranded as Beacon Orthopaedics & Sports Medicine. Recon offers physical therapy at two of its offices as well as at a separate location in South Lebanon. However, no real estate was involved in the transaction.
The Reconstructive Orthopaedics practice has plugged into Beacon’s IT and management structure via the OrthoAlliance, which includes changing the electronic medical record, human resources and employee benefits.
Beacon previously had nine locations, including in Northern Kentucky and Southeast Indiana. Now, the practice has grown to 13 sites.
“We saw the benefit of merging our operations in Ohio, and it allows Beacon to continue to provide low-cost, high-quality care in more regions,” Blankemeyer said. “That includes areas we weren’t in before, such as Fairfield and South Lebanon and Montgomery. It helps expand our footprint, and it allows us to treat and provide physical therapy services to patients who otherwise would have a long drive to see us.
“The reputation of these docs is stellar,” Blankemeyer added. “We want to work with high-quality physicians, and these guys fit the Beacon mold. We’ve been in the same market with them for years. As we started discussing the strategic benefits of us coming together, it was clear it would be a good fit.”
The physicians who had been part of Recon are now able to operate at the two Beacon surgery centers. One is in Green Township, while the other is at Beacon’s headquarters in Sharonville.
Blankemeyer noted that the ambulatory surgery centers make operations less expensive than at hospital settings, which could benefit local employers with health care plans as well as individuals.
However, the former Recon physicians will continue to provide the option of surgery at local hospitals – as does Beacon. Sometimes that decision is payer-related because some employee benefit plans require a hospital setting, or it could be a matter of patient preference or because a patient has co-morbidities.
Recon’s surgeons operate primarily at Mercy Health-Cincinnati’s Jewish Hospital in Kenwood and TriHealth Evendale Hospital, with some surgeries at TriHealth’s Bethesda North Hospital in Montgomery, McConnell said.
The OrthoAlliance management service organization model provides Recon partners with the flexibility to tailor patient care how they feel is most appropriate while still having the ability to maintain relationships with hospital systems, McConnell told me.
“We value our relationships with local hospitals,” McConnell said. “This is the opportunity for us to develop direct-to-consumer health care that aligns with the health systems but at the same time provides us the flexibility and opportunity to change as we feel is appropriate for patient care.”
The Recon acquisition was the first group practice acquired via the OrthoAlliance. However, Dr. Mike Swank, who specializes in hip and knee surgery and had been part of OrthoCincy, joined Beacon in November as the first acquisition via the new management service organization. Swank is a past recipient of the Business Courier’s Health Care Heroes award in the category of innovation.
Despite the Covid-19 pandemic, more individual physicians and group practices are expected to join Beacon soon as part of the OrthoAlliance expansion plan, Blankemeyer said.
Some Recon employees had been furloughed amid the pandemic because of a state-mandated shutdown of elective surgery from mid-March to May 1, but nearly everyone has been brought back, McConnell said.
“One or two people found employment elsewhere, but there was a nearly 100% return,” McConnell said. “That we had that many employees that were willing to come back to us speaks toward the environment in which they are working and are happy to come back to what we call our family.
“We are up, running and firing on all cylinders,” McConnell added, noting that Recon surgeons have been especially busy in recent weeks.
I reported in March Beacon had temporarily furloughed 219 workers because of the downturn in business related to the novel coronavirus, but Blankemeyer said the practice has rehired nearly all those employees.
In addition, Beacon has cleared a backlog of surgeries, and patient volume has rebounded with new patients, Blankemeyer said.
“We continue to see growth in many areas, and our doctors are excited that they are back to work,” Blankemeyer. “We are continuing all of our safety measures and protocols as we keep moving forward.”
The Beacon CEO and the 20 doctors who owned the practice had reduced their pay to zero to help staff get through the financial hardship, but the compensation model has ramped back up along with business operations, Blankemeyer said. None of the seven doctors who weren’t partners in the group was furloughed, and Beacon had remained open despite the ban on elective surgery.
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.
Now, the focus is on additional growth. Beacon is in active negotiations with other groups at this time via the OrthoAlliance, including locally, regionally and nationally, Blankemeyer said.