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Speaker 1: This is Carly Beam with the Becker Spine Orthopedics podcast. I'm thrilled to be joined today by doctor Michael Menaggini of Indiana Orthopedic Institute. Doctor Menaggini, thank you so much for being here today.

Speaker 2: Well, thank you for being on and for having me.

Speaker 1: Absolutely. So before we dive into some questions, could you introduce yourself and tell us a bit about your background?

Speaker 2: Sure. Yeah. My name is Michael Mannagini. I'm the CEO, and founder of the Indiana Orthopedic Institute. I'm a hip and knee replacement surgeon.

Been in practice for twenty years. Did my residency at Rush University in Chicago and my fellowship in hip and knee replacement at Mayo Clinic.

Speaker 1: Thank you. And, you know, today, we're recording this on February 14. And yesterday, Indiana Orthopedic Institute had cut the ribbon on its new location in Noblesville, Indiana. Can you talk about, this milestone and some of the goals you have in terms of growth, especially with this new location?

Speaker 2: Yeah. Absolutely. And thanks for the opportunity to talk about it. We, about two and a half years ago, we, started the Indiana Orthopedic Institute with, myself, my team, two nurses, my physician assistant, our director of anesthesia, perioperative medical physician, and our director of research. Really, that foundation two and a half years ago, if you look at who those who those stakeholders are in the patient care continuum, it's really about creating vertically integrated model of orthopedic care that's also supported by research, and education.

And take bring it forward two and a half years, and we now have a statewide program, three, three markets in Indiana, Terre Haute, Indianapolis Metro, which is Noblesville, which is a a northern suburb of Indianapolis, and then another market in Fort Wayne. We have 14 surgeons, 20 providers, 52 employees as of today. And so that growth, has been spectacular. And, and then to to cap that off yesterday was the opening of our flagship facility. And that and that flagship facility is 40,000 square feet.

It has a four room ambulatory surgery center. It has, it has a medical office building above it that, has 20 exam rooms, enough for, you know, up to, you know, five, physicians, to see patients in a day, has its own physical therapy, its own education and conference center, and its own biomechanical gait laboratory, for our research, on, knee replacements. And so it's really that facility is our flagship where we can really take that vertically integrated care model, at which the health care needs right now. I mean, the ambulatory surgery center is a lower cost of care than hospitals, and so non acute orthopedic procedures, which the majority are really, should be performed in an ambulatory surgery center, not in a hospital. So we're able to do that all under one roof, encapsulate that entire vertical integration.

Speaker 1: Sounds like a really comprehensive location. And, you know, when you think about the way things are in health care this year, what excites you about overseeing this orthopedic group, and what makes you nervous?

Speaker 2: Yeah. So that's a great question. So what excites us is that I think we're being innovative in how we deliver health care. I think we're gonna see, and and all the signals from this current government administration, from the major payers in health care, we're going to start seeing finally a shift towards value based care where instead of just a fee for service model, we're gonna start being, compensated, and even rewarded, for taking risk and delivering high quality care at a lower cost and a lower site of service. And that's what excites us about the model that we've built, and now two and a half years into it, being able to open up a facility that can that can accomplish and be very successful in value based care.

What makes me nervous is probably what makes everybody nervous, which is being an independent orthopedic group, in an era of high labor cost and high inflation and decreasing overall reimbursement. So we have to be we have to run a practice and business and orthopedic group, very lean and very efficient. And I think the advantage we have and why we're excited is we just started this two and a half years ago. And so we started it in the era of high cost, of labor, high inflation. So we've built ourselves in our practice lean, and I think that's that's helpful in the modern era.

Speaker 1: And can you dive into some more strategies on supporting margins, you know, amid all these rising costs in health care delivery?

Speaker 2: Yeah. It's a challenge. And I think the way we we go about it in in multiple ways. For us to keep our margins reasonable, we have to be really judicious about what we do in this in this facility, in our other facilities, and in our programs. So take take something really expensive like a robot.

Now, certainly, the industry is trying to bring the cost of robots down, but we may not be able to do that immediately, because it's a really high cost, technology, and we have to be very thoughtful about how we do things like that. The other thing is is, quite frankly, getting enough scale to to offer and cover enough patient lives where the payers will give us, you know, reward for the quality that we perform on our patients. So, like, we have nine hip and knee replacement surgeons. And when you have nine hip and knee surgeons, you have enough scale where you can at least come to the payers and say, don't, you know, crush us financially. We're trying to do a great job, taking care of your patient lives and your insured lives, and delivering high high quality care at a low cost.

Now those, obviously, that's not a guarantee, but I think so far we've been reasonably successful doing that.

Speaker 1: And, you know, I know you guys are part of HOPCO. Can you talk about how this partnership has benefit the practice so far?

Speaker 2: Yeah. You know, Opco has been a huge asset for us, and you talk about how you maintain margins. Well, that's just the margins in the business. How you maintain surgeon compensation so that they remain employed or remain not employed rather, and that they can be in private practices to is to bring other revenue streams to the practice, to supplement their compensation. And Hopco is such a versatile company.

They've helped us on the comp payer contracting side. They've got a whole value based care arm that our value based care team works in concert with, and that's another revenue stream for the positions going at risk. They have the ability to do clinically integrated networks with other groups in in the area. They, have the complete, digital integration and a tech platform that we utilize that we're utilizing this facility that helps bring down the cost and also streamline efficiencies because they're all on one under one umbrella. For example, most ambulatory ambulatory surgery centers, have a disparate, electronic health record.

Some of them are still on paper in The United States. Well, what we've done in this building through HOPCO is we have our Ascena EMR both in the clinic and integrated in the ambulatory surgery center, as well as patient engagement, the MyRecovery, patient engagement tool that Opco, brings to bear in their technical platform. And all of this is integrated. And then finally, our business people, we use their practice vitals, which gives us real time feedback on how the practice is doing, whether it's RVU metrics, financial metrics, collections. We can see all that in real time, which helps our business team, optimize the practice.

So I think, you know, Opco brings all that to bear and that, you know, rather than us going to eight different individual companies and trying to get all this, Opco can can do that for us and partner with us. And they are they also can be a source of capital. So they've been a they've been a very, very valuable partner, and I don't think we could have launched this, really special group and, without them.

Speaker 1: Sounds like so. And do you think partnerships like this, in any kind of, like, consolidation, do you think it'll be necessary for orthopedic practices to remain independent?

Speaker 2: Yeah. I think, you know, consolidation is an interesting thing, to talk about. We're we're using, we you know, our partnership with HOPCO is to get practice resources, scale, and capital, but we don't we don't really think of it so much as consolidation per se because we remain an independent practice. I think in some models, consolidation is different, and I think that's an important distinction. Hopco, it provides practice management features, but they don't they don't, overtake and own the practice.

And that's really, that's really an important distinction. They they do have private equity backing in them, but they are not a private equity run company like many others that you see that are that are doing a traditional roll up model and consolidating in health care. So I think that's what's special about them, and they remain, physician run and led, which is really attractive to our group. Our surgeons were really attracted to that aspect of Opco, which separates them, I think, from other, PE backed institutions and also from hospitals. You know, the consolidation you see in hospitals, that is certainly real.

And when they buy practices and the physicians become employed, that that's the most, dramatic, and stark form of consolidation. And, you know, there's the market here in Indiana that's been in the news recently, for its consolidation and its resultant very high cost of care. And so we're trying to avoid that. We're trying to bring the cost of care down. But you bring up a really important point, which is how the market is adapting to the health care stresses, by consolidating.

That that is true.

Speaker 1: Absolutely. And, what other health care trends are you following the closest, especially in orthopedics?

Speaker 2: Yeah. The you know, you let's talk about the consolidation orthopedics because that's definitely, definitely a trend. You know, here where I am in Indiana, there are three three large groups formed a conglomerate called called Ortho Indiana that they recently launched and termed. And and so you're seeing that occur in to get scale to to, you know, to be able to negotiate with the payers, try and drive down the their cost, internally by consolidating resources. And I think that's just the the financial pressures that are occurring.

I think we're gonna continue to see more of that over time, to be honest with you. I do think the other trend that we're gonna see and it's it's surprising to me because I thought it would be faster. We've been we've been doing outpatient hip and knee replacement for over a decade. We've published a lot about it. We've developed protocols.

And I thought we would see more of The United States over the last decade, more transition out of the hospitals into the ambulatory surgery centers. So I think that's a trend that you're finally gonna start seeing happen a bit faster because of because that site of care is lower cost. The payers are gonna push it. The government, continues to encourage it. And then as these groups can, can have ownership stake in, in these ambulatory surgery centers, they can have control and help drive down the cost to perform value based care in those facilities.

So I think we're gonna see that trend continue to pick up depending on the state and their CON laws, but I think you're gonna see that pick up.

Speaker 1: Yeah. My and my last question for you, doctor Managini, can you talk about, you know, when you decide to partner with HOPCO, know, you talked about a lot of the green flags with them. Were you looking at any other were you considering any other partnership options? And if so, why didn't those work out?

Speaker 2: Yeah. No. That's that that there there was definitely another, another capital partner that was well, let's talk about partnerships. So there was another capital partner that I had worked with and was actually on the executive team in the past. And I think the the struggle with a capital partner when they really just provide capital is they're not bringing any of any of those other resources to bear that I mentioned that help us go to the next level and help us build this vertically integrated, network and also create the value based care platform that we need, to to thrive in the modern health care environment.

And so if they just provide capital, that's great, but a bank can provide capital or, you know, you can get surgeons to provide capital. So I think the what's unique about Hopco is that they not only can they provide capital, but they provide all those other resources that help your practice thrive. And so, yeah, we that's we did not we declined to partner with that capital, with that particular capital partner because of those limitations. I do we do have hospital partners. So, for example, we partner with Union Health in Terre Haute, Indiana, and, we started that, two years ago when our hip and knee division, the Indiana Joint Replacement Institute, launched in in Tarot, Indiana 2 Years ago.

And we continue to have a great partnership with them. It's expanded. But, again, we remain independent, and we do we we partner with them through a PSA and a management agreement, and that's been very valuable. We've we have a great relationship with their administration, and they have employed surgeons that we work with, and that's been a really good partnership as well. So I think the the survival of the independent orthopedic practice, we're gonna have to be creative.

We're gonna have to have hospital partnerships. We're gonna have to have capital partner partnerships, and we're gonna have have to have really good resources at our disposal to help us, take better care of patients, and most and many of those resources are gonna be digital.

Speaker 1: Well, be creative. I love the way that you word that. And doctor Banagini, thank you so much for all of your time and insights today. It's been a pleasure speaking, and I look forward to connecting again down the line.

Speaker 2: Great. Thank you as well. Have a great rest of your day. Likewise.