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 company backed by private equity, the Charlotte Ledger/NC Health News has learned.
OrthoCarolina CEO and orthopedic surgeon Leo Spector declined to confirm specifics on Thursday, but he acknowledged that the company expects to announce a sale in the next few 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 surgeries.
“We’re doing what a lot of businesses do — getting rid of things ancillary to our core so we can focus on our core business,” he said.
The sale will also boost the availability of physical therapy services for OrthoCarolina patients, Spector said. Currently, the practice can accommodate only about 50 percent of its patients who need physical therapy.
OrthoCarolina employs almost 300 physical therapists in 24 locations, mostly 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 health care in North Carolina — a trend that has sparked opportunities for growth and concerns about the 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 that’s ripe for consolidation and growing demand fueled by the aging population, said Eileen O’Grady, director of programs at the Private Equity Stakeholder Project, a 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 a little less regulatory oversight, she said.
A 2024 Fifth Third Bank analysis said consolidation activity in the physical therapy sector reached an all-time high in 2021, but that practices interested in working with private equity “should find no shortage of interested parties.”
The article added: “Indeed, PE competition for practices has been pushing valuations substantially higher in recent years.”
Concerns about private equity
Private equity companies often take on debt to finance their acquisitions and to pay out dividends, O’Grady said, and the risk is that they may look for ways to cut costs to service that debt.
“That cost cutting can erode the quality of care,” she said. “They may do things like pressure clinicians to spend less time with patients or take a cookie cutter approach to therapy, rather than spending time to design a more individualized approach. In extreme cases, there could be overbilling or overtreatment.”
Spector said he and his partners made sure to choose a buyer that aligns with their mission, vision and values. He said he’s 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 deliver high-quality therapy.
“This company needs to continue to earn the business of OrthoCarolina patients, which means they’ve got to make sure that they’re 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 folks elsewhere.”
PT Solutions Physical Therapy has more than 550 points of service across 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 the Ledger/NC Health News on Thursday.
Coming soon: More outpatient surgical centers
Spector declined to share the financial details of the pending sale. However, he noted that any proceeds would facilitate growth and help OrthoCarolina expand its network of ambulatory surgery centers. Recent changes in state Certificate of Need regulations make it easier for independent practices like OrthoCarolina to open the centers.
The specialized centers offer same-day surgeries, often at a lower cost than patients would pay at a hospital-based facility. They are also a lucrative revenue stream for orthopedic practices.
OrthoCarolina already owns and operates Mallard Creek Surgical Center in Charlotte’s university area, and it acquired Matthews Surgery Center from Novant Health in late 2024.
“We know that ambulatory surgery centers are lower cost 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 health care reporting focused on the Charlotte area.