Written by Michelle Crouch
Co-published with Charlotte Ledger
OrthoCarolina, one of the nation’s largest independent orthopedic practices, is nearing an agreement to sell its physical therapy business to PT Solutions Physical Therapy, a private equity-backed Atlanta-based company. The Charlotte Ledger/North Carolina Health News reported.
OrthoCarolina CEO Leo Spector, an orthopedic surgeon, declined to provide further details Thursday, but acknowledged that the company plans to announce the sale in the coming weeks.
He said the sale of the physical therapy business is part of OrtCarolina’s strategy to focus on what it does best: patient care and orthopedic surgery.
“We’re doing what a lot of companies are doing, which is eliminating the bells and whistles so we can focus on our core business,” he says. I did.
The sale will also increase the availability of physical therapy services for OrthoCarolina patients, Spector said. Currently, the clinic can only admit about 50 percent of patients who require physical therapy.
OrthoCarolina employs approximately 300 physical therapists at 24 locations, primarily in the Charlotte area. More than 90% of the companies are expected to transition to the new company, Spector said.
“This means better access for patients,” Spector said.
Spector explained that PT Solutions will be able to open more locations near where people live.
Physical therapy is a hot target
This pending sale is the latest example of private equity’s growing presence in North Carolina’s health care sector, a trend that has raised concerns about growth opportunities and the potential impact on patient care. .
In October, the Ledger/North Carolina Health News reported that Tryon Medical, Charlotte’s largest independent practice, was selling a stake in the business side of the practice to private equity firm TPG.
Physiotherapy has become a hot topic for private equity investors in recent years, thanks to a fragmented market ripe for consolidation and growing demand from an aging population, said Eileen O’Grady, program director at the Private Equity Stakeholder Project. He said he was being targeted. Self-proclaimed watchdog of the private equity industry.
Additionally, compared to other targeted medical fields, physical therapy has lower overhead costs and slightly less regulatory oversight, she said.
A 2024 Fifth Third Bank analysis found that consolidation activity in the physical therapy sector reached an all-time high in 2021, but practitioners interested in partnering with private equity are facing a “lack of stakeholders”. There shouldn’t be,” he said.
The article added: “In fact, competition for PE practices has driven valuations up significantly in recent years.”
Private equity concerns
O’Grady said there is a risk that private equity companies often take on debt to fund acquisitions or pay dividends and may look for ways to cut costs to pay down that debt. Ta.
“That cost reduction can come at the expense of quality of care,” she says. “They spend less time with patients or pressure clinicians to take a cookie-cutter approach to treatment, rather than spending time designing more individualized approaches. In extreme cases, this may result in over-billing and over-treatment.”
Spector said he and his partners made sure to choose a buyer that aligned with their mission, vision and values. He said he is confident OrthoCarolina’s physical therapy patients will receive the same or better care under the new management.
He noted that new health care providers have an incentive to provide high-quality care.
“This company needs to continue doing business for OrthoCarolina patients, which means they need to make sure they are doing everything that patients and practitioners expect,” Spector he said. “If not, patients have the free option to go elsewhere. Our providers have the option to send people elsewhere.”
PT Solutions Physical Therapy has more than 550 service points in 25 states, according to its website. Private equity firm General Atlantic acquired a majority stake in the company in 2022 for $1.2 billion.
PT Solutions did not respond to email and phone messages from Ledger/North Carolina Health News on Thursday.
Coming soon: Expansion of outpatient surgery center
Mr. Spector declined to share financial details of the pending sale. However, he noted that the revenue would spur growth and help OrthoCarolina expand its network of outpatient surgery centers. Recent changes to state certificate of need regulations have made it easier for independent practitioners like OrthoCarolina to open centers.
Specialty centers offer same-day surgery, often at a lower cost than what patients would pay at a hospital-based facility. They are also a valuable source of income for orthopedic practices.
OrthoCarolina already owns and operates Mallard Creek Surgery Center in Charlotte’s University District and acquired Matthews Surgery Center from Novant Health in late 2024.
“We know that ambulatory surgery centers have lower costs and higher quality when done on the right patients at the right time,” Spector said.
This article is part of a partnership between The Charlotte Ledger and North Carolina Health News to produce original health care reporting focused on the Charlotte region.
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