By Michelle Crouch
Co-published with The Charlotte Ledger
OrthoCarolina, one of the nation’s largest independently owned orthopedic practices, is close to a deal to sell its physical therapy business to PT Solutions Physical Therapy, an Atlanta-based private equity-backed company, Charlotte has learned Ledger/NC Health News.
OrthoCarolina CEO and orthopedic surgeon Leo Spector declined to confirm specifics Thursday, but he acknowledged the company expects to announce a sale in the coming weeks.
He said the sale of the physical therapy practice is part of a strategy to focus on what he said OrthoCarolina does best: treating patients and performing orthopedic surgery.
“We’re doing what a lot of businesses do — getting rid of the ancillary things of our core so we can focus on our core business,” he said.
The sale will also increase the availability of physical therapy services for OrthoCarolina patients, Spector said. Currently, the practice can only accommodate about 50 percent of its patients who need physical therapy.
OrthoCarolina employs almost 300 physical therapists in 24 locations, primarily in the Charlotte region. More than 90 percent are expected to transition to the new company, Spector said.
“What this means for patients is better access,” Spector said.
PT Solutions will be able to open more locations closer to where people live, Spector explained.
Physical therapy a hot target
The pending sale is the latest example of private equity’s growing presence in North Carolina health care — a trend that has sparked potential for growth and concerns about potential effects on patient care.
In October, the Ledger/NC Health News reported that Tryon Medical — Charlotte’s largest independent physician practice — was giving private equity firm TPG a stake in the business side of that practice.
Physical therapy has become a hot target for private equity investors in recent years, thanks to a fragmented market poised for consolidation and growing demand driven by an aging population, said Eileen O’Grady, director of programs at the Project. of Private Equity Stakeholders. self-described watchdog of the private equity industry.
In addition, compared to other health care sectors that have been targeted, physical therapy has less overhead and slightly less regulatory oversight, she said.
A 2024 Third Fifth Bank analysis said consolidation activity in the physical therapy sector reached an all-time high in 2021, but practices interested in working with private equity “should find no shortage of counterparties.” interested”.
The article added: “Indeed, EP competition for internships has pushed ratings significantly higher in recent years.”
Concerns about private equity
Private equity firms often take on debt to finance their acquisitions and pay dividends, O’Grady said, and the risk is that they may look for ways to cut costs to service that debt.
“This cost-cutting can erode the quality of care,” she said. “They can do things like pressure doctors to spend less time with patients or take a cookie-cutter approach to therapy, rather than spending time designing a more individualized approach. In extreme cases, there may be over-billing or 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 Physical Therapy patients will receive the same or better care under the new owner.
He noted that the new provider will have an incentive to provide high-quality therapy.
“This company needs to continue to win the business of OrthoCarolina’s patients, which means they need to make sure they are doing all the things that our patients and our practitioners expect,” Spector said. “Otherwise, our patients have a free choice to go elsewhere. Our providers have a choice to send people elsewhere.”
PT Solutions Physical Therapy has more than 550 service locations 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 an email and a phone message from Ledger/NC Health News on Thursday.
Coming soon: More ambulatory surgery centers
Spector declined to share financial details of the pending sale. However, he noted that any revenue would facilitate growth and help OrthoCarolina expand its network of ambulatory surgery centers. Recent changes to state Certificate of Need regulations make it easier for independent practices like OrthoCarolina to open centers.
Specialty centers offer same-day surgeries, often at a lower cost than patients would pay at a hospital facility. They are also a profitable stream for orthopedic practices.
OrthoCarolina already owns and operates Mallard Creek Surgery Center in Charlotte’s university area, and acquired Matthews Surgery Center from Novant Health in late 2024.
“We know that ambulatory surgery centers have lower costs and higher quality when it’s done for the right patient 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 healthcare reporting focused on the Charlotte area.
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