Marketing in a Private Equity Environment

We don’t assume to know a single thing about your practice or your market. We are not familiar with your competitors or potential partners, nor do we understand what the health systems or major payers are working on. What we do know is a little bit about the corresponding trade-offs practices have made when growing their orthopaedic practices. We have been front-row witnesses to practices selling to hospitals and then the process of working themselves back out. We have seen the challenges and missteps taken in divisional mergers. And we are now talking directly to both private equity firms and their new management services organizations (MSOs) about marketing strategy and tactics.  

You and your doctors are smart people and don’t make big decisions without really studying the issue. You have years of decision-making experience that you lean on and leverage. What is relatively new, however, are the complexities and nuances of divisional mergers and private equity roll-ups. These involve new decisions and new approaches that dramatically impact marketing and the growth of your practice. 

If you are looking to merge with another practice or group of practices, there is no shortage of books to describe the challenges and complexities. There are thousands of articles and publications on the topic. Hell, every business school has courses on the subject. It is so common it has its own acronym: M&A. You don’t have to read very far to come across one of the most common pitfalls of any merger environment—unrealistic expectations. Tom Peters, one of the most famous U.S. business management consultants, refers to mergers by saying, “Why anybody thinks they will produce a gazelle by mating two dinosaurs is beyond me.” We wouldn’t refer to most orthopaedic practices as dinosaurs, but then again, I wouldn’t refer to most practices as clear-cut gazelles either. 

 In our opinion, the best way to be a gazelle is to start acting like a gazelle and start making gazelle-like decisions (access, service, innovation, measurement, documentation of quality, improved communications, etc.). And from a marketing perspective, focus more on true attribution—what really drives new patients.  

In the handful of discussions we have had with private equity firms, it is clear that most think orthopaedics is like selling candy bars with a heavy emphasis on advertising, promotions, awareness, and branding. For those of you competing with these types of practices, get prepared. You are going to see lots of marketing activity, but hold on to your dollars. There is no need to follow suit. Once they get that out of their systems, things will get back to normal. If you are one of the practices engaged in private equity, continue to ask the hard questions. How is an increase in advertising or developing a new logo going to increase volume to doctors who are already busy? How is an increase in promotions online going to generate better-paying patients? Then wait for the answers. It may be out of your control today, but it may help slow down the increase of marketing activity and expenses and help steer more appropriate and more effective marketing.  
  
Private equity is loaded with smart people, but few really acknowledge the nuances and challenges of finding individual patients who have knee arthritis, let alone matching them efficiently with one of your providers’ schedules, locations, and subspecialties. You don’t have open slots. You have very specific time slots, for specific types of patients, at specific locations. This isn’t even considering payer mix. Of course urgent care helps, but that can’t be the only answer. 

In short, marketing should be subservient to strategy. It should be a vehicle that supports and assists the practice in achieving more of the right objectives. Spending doesn’t equate to results unless it is on the right things, to the right people, at the right time. Outside of that, it is simply spending money. 

Venel is an AAOE Peer Reviewed partner that provides business-minded orthopaedic practices with unmatched business development and marketing expertise. Venel provides each exclusive market client with an annual documented return on investment (average 432 percent), orthopaedic-specific innovations, and a clear, competitive advantage. Since 1989, Venel has been solely dedicated to the marketing, promotion, and communication of orthopaedic practices and their surgeons.

To learn more about Venel’s research-based marketing approach, watch this video.