Published in Health Care
Richard Leaver, COO of Alliance Physical Therapy Partners Richard Leaver, COO of Alliance Physical Therapy Partners COURTESY PHOTO

In relocating to GR, Alliance Physical Therapy plans national expansion

BY Sunday, May 13, 2018 07:00pm

GRAND RAPIDS — A physical therapy provider with nationwide growth plans now calls Grand Rapids home following an acquisition that more than doubles its size.

Alliance Physical Therapy Partners, owned by New York-based private equity firm GPB Capital Holdings LLC, relocated corporate offices from Tampa, Fla. to Grand Rapids this spring following the $45 million deal for Agility Health’s physical therapy operations.

After the transaction closed in February, Alliance Physical Therapy made the move to retain and tap into Agility Health’s corporate management team in Grand Rapids amid ambitious growth plans. The company intends to leverage that knowledge and experience to further build the business nationally.

“The Grand Rapids office has a wealth of existing talent and infrastructure that we benefitted from with the Agility Health transaction,” CEO Mark Andrzejewski told MiBiz.

Alliance Physical Therapy formed last year after GPB Capital Holdings, with $1.8 billion in assets under management and more than 160 portfolio companies, acquired practices in New Orleans, northern New Jersey, Washington state and northern Maine. The umbrella company, which handles backroom administrative operations and oversight, subsequently bought practices in suburban Milwaukee, Wis. and central Maine before acquiring Agility Health’s physical therapy operations in February.

GREAT EXPECTATIONS

After the Agility Health acquisition, the combined company has 73 outpatient clinics in 16 states and provides on-site therapy and injury prevention at 35 employers in 18 states. The firm also maintains contracts and joint ventures with 23 hospitals in five states and 25 long-term care centers in four states.

The acquisition came about as Agility Health struggled with heavy debt last year and sought to recapitalize. Alliance Physical Therapy plans to rebrand the Agility Health clinics as Armor Physical Therapy.

Alliance Physical Therapy employs about 1,300 people nationwide and wants to become “the premiere national provider” of physical therapy, said COO Richard Leaver.

The company “really is just starting down the path” toward that goal, Leaver said.

“We have great aspirations. We don’t want to be known as a local provider,” he said. “Agility had a good footprint and we certainly want to expand upon that footprint and become a significant national player.”

Leaver joined the company last month and previously led national provider ATI Physical Therapy’s operations in Washington state.

Alliance Physical Therapy wants to increase the number of clinics it operates either through acquisition or de novo activity and “grow significantly” over the next three to five years, Leaver said. However, the company has no specific target for the number of locations across the U.S. it wants to operate.

The company also will look to identify practices that want to partner with a larger management company and are “strategically and culturally a fit.”

“It may be rapid growth, it may be slower than we anticipate,” Leaver said. “It’s really finding partners and existing clinics, or groups of clinics, that we believe will fit the culture we’re trying to develop, and be able to assimilate easily and complement what we already have.”

MORE PE DEALS

GPB Capital Holdings’ initial acquisition last May of the four practices follows a trend of private equity investing in the health care sector. In 2017, private equity investments in health care in the U.S. totaled $83 billion, up from $72 billion in 2016, according to the American Investment Council, a Washington, D.C.-based advocacy group for the private equity industry.

The increase came “despite some uncertainty in the industry,” said Bronwyn Bailey, vice president of research and investor relations at the AIC.

Physical therapy has been a highly fragmented and growing industry that’s consolidating and drawing interest from private equity firms, said Raj Kothari, managing partner at Southfield-based Cascade Partners LLC, an investment banking firm.

Private equity firms also are considering deals in health care specialties such as urgent care, ophthalmology and dermatology.

“There’s a lot of interest by folks who are active in the sector,” Kothari said.

In a recent report on the trend, Cascade Partners noted that investors are drawn to health care by an aging population that requires more care and the need for providers to drive efficiencies to lower costs and achieve scale.

“Buyers, especially private equity firms, are capitalizing on a historical lack of focus on efficient business operations within many segments of the health care sector,” according to the Cascade Partners report.

CONSOLIDATION CONTINUES

In West Michigan, Chicago-based Sterling Partners a year ago acquired a majority stake in Grand Rapids Ophthalmology. The management company formed with the acquisition, Blue Sky Vision — formerly Great Lakes Management Services Organization, made subsequent acquisitions, including a January deal for Muskegon-based Shoreline Vision.

In the physical therapy field, Leaver sees consolidation continuing, especially for small, independent practices that are open to becoming part of a practice management company.

“It’s very difficult for the mom-and-pop stores with smaller businesses to run efficient health care services nowadays because of the administrative burden, the compliance component, and cost of services associated with running the clinical side,” Leaver said. “It almost forces you to partner.”

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Editor’s note: The photo caption in this story has been updated from a previous version.

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