Seven things to know:
1. Orthopedics, a highly profitable specialty with a growing emphasis on outpatient care, provides an immediate avenue for health systems to offer comprehensive musculoskeletal services.
2. By integrating established practices, hospitals can also attract a wider patient base while improving care coordination — a critical factor in today’s competitive landscape.
3. Financial stability is another key driver behind these acquisitions. Orthopedic surgeons are among the most lucrative contributors to hospital revenue, with some studies indicating they generate six times their starting salaries annually.
4. By bringing orthopedic groups in-house, hospitals can secure these revenue streams and strengthen their financial resilience in an era marked by rising costs and tighter margins. Moreover, as private equity firms increasingly target orthopedic practices, hospitals are pursuing acquisitions to maintain market share, safeguard referral networks, and stay competitive.
5. The shift to value-based care models has further incentivized hospitals to acquire orthopedic groups and integrate these services. By managing patient care across the continuum and aligning with quality-based reimbursement structures, health systems can provide cost-effective, outcome-driven care. Orthopedic group acquisitions can better position hospitals to navigate the complexities of value-based care while meeting consumer demands for accessible, high-quality musculoskeletal services.
6. Recent acquisitions by Sioux Falls, S.D-based Sanford Health, St. Louis-based Mercy Health, and Los Angeles-based Cedars-Sinai illustrate this trend and highlight the diverse benefits of such partnerships.
7. The rise in private equity activity in orthopedics has further fueled this consolidation trend. Deerfield, Ill.-based SCA Health, Optum’s ambulatory surgery center arm, recently acquired OrthoAlliance, a management services organization with more than 200 physicians.
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