The orthopedic sector faces challenges from increased costs for compliance and regulatory overhead combined with potential declines in reimbursement under value-based care payment structures. The market is also seeing an increase in musculoskeletal expenditures as a percentage of healthcare spending.
The orthopedic healthcare space is ripe for consolidation as private equity sponsors turn attention to the sector.
“If you look at when consolidation kicked off in other specialties, like dermatology, it started after there was a big rate cut. Ortho hasn’t had it yet, but they sense it may be coming,” said John Riddle, managing director and head of Brown Gibbons Lang’s healthcare and life sciences advisory.