August 22, 2019
Cincinnati Business Courier
To read the full article from the Business Courier, please click here.
Beacon Orthopaedics and Sports Medicine, a large orthopedic practice in Cincinnati, took on a private equity investor in July to spur future growth.
The practice aims to become a regional and national leader in orthopaedics, growing its footprint with partnering orthopedic practices and ASCs. Beacon and its new investor, Revelstoke Capital Partners, also launched a management services organization, led by Beacon’s management team, to support clinical operations.
Here, Beacon CEO Andy Blankemeyer and President Peter Cha, MD, discuss why they chose Revelstoke as a partner for growth and how they expect to expand in the future.
Question: Why did you decide to take on a private equity investor?
Dr. Peter Cha: We wanted to take on a partner to help us grow. We have had tremendous growth over the past decade and wanted to continue with that trajectory to expand regionally and nationally. The partnership with a private equity firm will help us develop a larger footprint and continue on that growth trajectory.
Q: Why did you decide on private equity instead of a hospital partner?
Andy Blankemeyer: Typical consolidation in orthopaedics has occurred with hospital acquisitions of orthopaedic groups. While we continue to value our strong partnerships with local hospitals, we were not interested in a hospital acquisition. Instead, our partnership with Revelstoke will allow for more physician driven consolidation. We will continue to stay nimble in a constantly changing landscape. The platform we created will provide our patients even greater access to our comprehensive care model while allowing us to grow and become a tool for others to grow as well.
PC: It’s not a competitive market between us as an independent group and hospital systems. We look at the local health systems as partners in delivering high quality care. The alignment with Revelstoke will help us make care processes more efficient and we can translate those efficiencies to our relationship with the hospital. That way we can better improve our care process and outcomes for the patient, as well as develop direct-to-consumer healthcare that aligns with the health systems as well.
Q: As part of your partnership with Revelstoke, you created a management services organization. What role will that play in future growth?
AB: The MSO will provide other groups in the region with the tools they need to grow and thrive in their individual markets. Partnering practices would become part of the MSO alongside us and share resources and business functions. We are keeping clinical governance and decision making at the local practice level, not interfering with the work our physicians do on a daily basis for their patients.
PC: It was important for us to make sure that from the physician’s point of view, the physician would still drive the practice and patient care. That was paramount in choosing our capital partner as well, because we wanted to make sure the governance and ability to practice medicine was still on the physician level.
Q: What was the process of identifying and selecting a capital partner like? How long did it take?
PC: We went through a fairly thoughtful process and met with many capital partners. We were really looking for a group that understood orthopedics had to be physician driven and that we didn’t want them involved in the day-to-day patient care. Instead, their responsibility would be strategic growth and helping us make smart business decisions as well as providing better data analytics to help us understand and expand our markets.
AB: The overall process took about a year. We started talking about private equity entering the orthopedic space in 2018 and between then and now we did our due diligence to understand the PE market and why they were interested in orthopedics. We then met with potential investors and made a final decision as a group.
Q: In addition to your medical practice, Beacon has two ASCs in the Cincinnati market. What role do they play in this partnership?
PC: Orthopedics is vertically integrated, and the ASCs are just one cog in a wheel for physician groups to control the care delivery model. Some groups may think of selling off their ASC to a third party management company, but that doesn’t align with what I feel is a better care delivery model. Physicians have the patients’ best interest in mind.