Gary W. Herschman, Member of the Firm in the Health Care & Life Sciences practice, in the firm’s Newark office, was featured in the whitepaper “Private Equity Driving Consolidation Across Orthopedic Healthcare: Q&A with Dana Jacoby and Gary Herschman,” published by Vector Medical Group with data provided by Pitchbook.
Following is an excerpt (see below to download the full article in PDF format):
In this series, we’ve chronicled how PE firms have grabbed a growing share of overall dealmaking in healthcare. What do financial sponsors find so appealing about the orthopedic space and which opportunity sets are unique to this corner of the market?
- Financial sponsors find the orthopedic space very appealing due to a variety of factors:
- Hospitals lost an estimated $10.9 to $11.9 billion in reimbursement and $2.6 to $3.5 billion in net income due to canceled elective musculoskeletal surgery during 8 weeks of the COVID-19 pandemic.1 Orthopedic practices, which spend more than $33,000 per month per surgeon to maintain overhead in addition to ancillary, medical malpractice, and capital expenditures, also experienced a financial loss with the pandemic.2
- The physician services subsector within the musculoskeletal space is extremely fragmented, with multiple medium and small orthopedic practices in most major regions throughout the country.
- Demand for orthopedic services has grown consistently over the years and is expected to rise at an even faster pace over the next decade as baby boomers aging through retirement require substantial orthopedic care.
- Large orthopedic practices offer a wide range of subspecialty care, including sports medicine, joint replacement, pain management, bone cancer treatment, or physical therapy.