NATIONAL UROLOGY MEDICAL MANAGEMENT GROUP FORMED WITH PRIVATE EQUITY
A combination of two medical groups with robust plans for additional growth
Two medical groups largely focused in urology and associated patient care have joined together with the support of private equity and formed a medical management services firm. Solaris Health is a new healthcare organization launched by combining The Urology Group (TUG) based in Norwood, Ohio (a Cincinnati suburb) and Integrated Medical Professionals (IMP) headquartered in Farmingdale, Michigan. Lee Equity Partners is the private equity firm that engineered the deal.
Two well-established urology-centric practices with multiple locations
IMP was started in 2006 by forming an organization consisting of 31 physicians and 13 different locations that have now grown to roughly 100 physicians and nearly 50 sites. IMP is a clinical affiliate of The Icahn School of Medicine at Mount Sinai.
TUG began as a collaboration between physicians in 1994 that formed The Urology Group in 1996. TUG has Joint Commission (JCAHO) Gold Seal, Utilization Review Accreditation Commission (URAC), American College of Radiology (ACR) and College of American Pathologists (CAP) accreditations.
Solaris Health has multiple patient care attributes
Solaris Health aligns the clinical expertise and experience of over 150 providers that manage approximately 525,000 patient encounters annually. The organization will provide patient care at more than 60 sites in 4 states:
- New York
The focus on the present and future advancement of care aligned with urology will continue. Some of the treatments and services Solaris will offer include:
- Benign prostatic hyperplasia (BPH)
- Biomarker studies
- Clinical trials enrollment and participation
- Fertility issues
- Oncology (prostate cancer clinics, radiation therapy, surgery)
- Penile prosthetics
- Urinary incontinence
- Urinary tract infection (UTI)
Consolidation and upscaling of medical groups across the United States is an ongoing trend
The formation of Solaris Health is propelled by various market forces that impact numerous medical specialties and healthcare provider organizations. Many physician practices are comprised of multiple doctors that share a specific specialty. Everyday operations and plans for expansion are complicated by these and other challenges:
- Increased operating costs
- Sourcing and retaining medical professionals
- Rising competition from other large medical groups or those operated by hospitals and health systems
- Financing diagnostic, surgical and other medical equipment
- Additional government regulations with more complexity
- Reduced reimbursement from managed care organizations (MCOs) and government payers like Medicaid and Medicare
Through the formation of Solaris and by onboarding additional urology practices, it can continue to grow and reduce the burdens represented by these issues.
COVID-19’s impact on healthcare private equity and commercial trends
While the formation of Solaris was conceived well prior to the current pandemic, COVID-19 has exacerbated the issues wrought by these hurdles. While some private equity firms have exited their holdings in healthcare provider organizations prior to COVID-19’s emergence, more will follow as the cost issues that spiked as a result of it may encourage some private equity firms to cut their losses if they can provide buyers.
Conversely, COVID-19’s impact will also increase the demand for private equity resources in healthcare moving forward. Changes in patient care and the need to catch up with growth plans will foster interest in private equity as the right option to move past the clinical and cost quicksand of COVID-19.
Healthcare private equity can be a pivotal difference-maker in for physician groups and other healthcare provider organizations
To increase the scale of their organizations, even large medical groups have their limits as to what they can do based on their own finances and business management resources. Private equity firms can provide support in both of those areas of need and others for physician practices and other healthcare provider organizations seeking to grow their patient volume by offering more services in a wider geographic area. Private equity can boost this growth organizationally and financially with the goal of eventually selling them off and repeating the cycle.
Private equity firms have acquired hospitals and health systems but the scope and complexity of running them can be daunting even for the savviest private equity enterprises and their strategic management teams. They require very large sums of financial and staff resources at the onset then typically require more to stay competitive.
Medical group practices like TUG, IMP and Solaris Health are much easier for them to profitably engage with. It also helps when they are centered in a specific medical specialty like urology. There are roughly 12,500 urologists in the United States and by bringing clusters of them into a single organization economies of scale are brought to bear plus significant reimbursement leverage against payers is created.
Lee Equity Partners is a mid-sized private equity contender
Founded in 2006, Lee Equity Partners is based in New York City. They have over $1 billion in assets. Their usual range of financial commitment spans $50 million to $300 million. They focus on control buyouts, growth capital financing and other business transaction well suited for private equity attributes.
It has a diverse portfolio of holdings that include other healthcare investments. Through its formation of Solaris Health Lee Equity Partners has likely formed the largest urology patient care organization in the United States and it appears to be well-positioned for future growth.
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