Exclusive: Investment Dollars Favor Certain Medical Specialties, Experts Say

By Tami Kamin Meyer

Dr. Cary L. Copeland, 63, a podiatrist in Cincinnati, wasn’t committed to retiring after more than 30 years in the field, but when a private equity firm came knocking, he took the money and ran.

Copeland, the founder and CEO of Foot and Ankle Specialists, which had three offices throughout Greater Cincinnati, says he was approached by three different entities who expressed interest in purchasing his well-established podiatry practice. The first contact was in 2020. That went nowhere.

The next was in early 2021, when a private equity firm made an unsolicited offer he deemed unacceptable. In that instance, the would-be buyer was a PE entity “going around the U.S. buying podiatry and optometry practices. Prior to that, he bought ophthalmology groups,” says Copeland.

A third potential suitor was a different PE firm that approached him in late 2021. By the time Copeland was contacted, he says that entity had purchased over 130 podiatric practices across the country. His burnout after three decades of practicing medicine, coupled with a sweet deal, persuaded Copeland to sell and retire. He declined to disclose the financial details of the transaction, although he did say it was a “one-to-one return on what we (he and his partners) brought in.”

Why is podiatry attracting financial investment?

“We were the first podiatry practice in Ohio they bought. They wanted to be in Ohio,” says Copeland.

Furthermore, adds Copeland, “Their impetus is to sell to the next PE” firm.

According to Copeland, the company that bought his practice is moving an increasing number of states to “hopefully gain a voice in insurance contracts.”

He laments that as an individual podiatry practice, he was never able to crack the code for “negotiating contracts” with insurance carriers. However, “with PE entering the market, they will likely have more leverage. Their money talks.”

But why podiatry?

Copeland, who not only practiced medicine for over three decades, but also taught residents at both Cincinnati’s Jewish Hospital-Mercy Hospital and at the University of Cincinnati Medical Center, has his theories for why the podiatric specialty is attracting investment dollars.

“Podiatry is attracting more financial investment because the doctor can perform additional procedures using different Current Procedural Terminology (CPT) codes” than other physicians, says Copeland. The practice of podiatry “has a lot of peripheral opportunities for billing, so it can be financially appealing if you’re passionate about podiatry. You can earn a decent level,” he says.

In 1993, he started the residency program at Jewish Hospital-Mercy Hospital with one resident. Today, it staffs six residents with six more at UC. “That’s proof the practice is growing and attracting more people to it,” he says.

A healthcare investor’s perspective

Christian Seale is a healthcare investor and a serial entrepreneur. He is also the founder of Vitruvia, a recovery platform focused on a non-surgical approach to healing and pain management. His investment portfolio includes over 30 innovative health-tech companies, seven of which have been acquired.

In his mind, there are two categories of healthcare that are attracting financial investment. They are value-based care and cash-pay care. In the value-based world, “you as a provider get a lump payment (for healthcare services provided), and then you have to manage your patients to incentivize them to take care of themselves,” says Seale. “Investment dollars in healthcare are going towards both categories,” he adds.

In the value-based world, risk adjustment gives healthcare providers additional payments for less healthy patients. When a patient presents with multiple diseases, the total payment given to the provider increases based on the risk-adjustment score.

“That’s because, with pre-existing conditions, healthcare costs are likely going to be that much higher,” says Seale.

In the cash-pay care world, out-of-pocket expenditures not covered by insurance are borne by the patient. “Consumers are taking more responsibility for their healthcare and displaying a willingness to spend money out-of-pocket to take care of themselves. With deductibles as high as they are, “if I’m going to pay anyway, I might as well use my money as I want it to be used,” he says.

According to Seale, Oak Street Health is one example of a publicly traded value-based healthcare company. Iora Health, an early value-based care entrant, was purchased by One Medical and then Amazon. Another example is CVS, which recently acquired Signify Health, a leader in value-based care. On Nov. 2, CVS released its Third Quarter Earnings report, which showed it earned nearly $7.5 million in that quarter than in the same quarter in 2021.

Direct-to-consumer healthcare providers such as Forward Health, Parsley Health, and Sollis Health are three more examples of membership-based cash-pay models.

View from a venture capitalist

Michele Colucci is the founder and CEO of Silicon Valley-based DigitalDX Ventures, a venture-capital investment fund investing in solutions that help doctors make better decisions using technology.

According to Colucci, four medical specialties are currently attracting the most investment dollars. They are Alzheimer’s, Cancer, Imaging (radiology), and Pulmonary.

She says Alzheimer’s research has invited a great amount of financial investment due to the discovery of a bio-gen treatment for the disease. Researchers are “really close to a therapeutic that can be mainstream to stave off memory loss,” says Colucci.

Funds are used for diagnostics, such as eye-tracking, language processing, memory loss, and mental/brain health.

Technology, such as Artificial Intelligence (AI), plays a key role in understanding the mechanics of the body, which Colucci calls “a Big Data problem.” Fortunately, technological advancements assist medical and research professionals to extract information on cells and their movement, she says.

There is a “Big Data” movement to “find researchers to detect the disease and discover which drugs can assist a patient. Big Data and AI” are huge partners in that investigation, says Colucci.

Because “images are data,” AI is playing an ever-increasing role in the specialty of AI, she says. “Those images are processed to correlate digital bio-markers with the disease,” she says.

And that’s spurring greater investment.

Not surprisingly, the specialty of pulmonary medicine is also ripe for investment dollars. “COVID-19 has had a huge impact on lungs, so anything related to COVID, such as lung and kidney problems, coupled with the impact of the environment on our lungs and the use of aerosols,” attracts monetary interest, says Colucci.

“AI will have the biggest impact on healthcare” Colucci predicts.

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