MONTGOMERY, Ala. — The Alabama Certificate of Need Review Board approved plans for a proposed surgery center in east Montgomery Wednesday after a lengthy hearing that included opposition from local hospitals.
Southern Orthopaedic Surgery Center will specialize in orthopedics, or treating injuries and diseases affecting the musculoskeletal system through both surgical and non-surgical means. The center would also be wholly owned by its orthopedic surgeons, many of whom currently provide trauma coverage through Baptist Hospital.
Local hospitals, however, including Jackson Hospital and Clinic, Jackson Surgery Center, and Baptist Hospital and its subsidiary Montgomery Surgical Center, have fiercely opposed the project citing financial sustainability concerns.
“In 2023 and 2024, we lost money on operations,” said Jim Williams, an attorney for Baptist Hospital. “…The facts are the facts, and we’re not profitable!”
Baptist and Jackson have struggled financially in recent months, with Jackson Hospital having had its bond rating lowered to a “D” after defaulting on bond interest payments last September. Were a new surgery center to be allowed to open in Montgomery, Williams and his colleagues argued, it could lead to the shuttering of services at the existing facilities.
Swaid Swaid, the chair of the CON Review Board, pushed back on Williams citing Baptist Hospital’s inability to generate adequate revenue as a legitimate argument.
“If we say we’re not profitable, now we’re getting into a new area of discussion that I don’t think we want to get into because then I can say how well are you managing, are you wasting a lot of money, are you a poor group to be running the thing,” Swaid said.
“Let’s not go there, please, because the issue before us is will the existence of a surgical center like that be out of the ordinary for what’s happening in the country, and the answer is no, it won’t be out of the ordinary.”
However, Swaid did tell Williams that “some restrictions” were “reasonable in order to protect significant harm to your side,” and asked that those proposing the new surgery center agree to limiting their practice to only orthopedic services, a request that was agreed to by the surgeons behind the proposed surgery center.
Another matter of contention with the proposed surgery center was the involvement of private equity. U.S. Orthopedic Partners, a management services organization owned by private equity firms, holds minority ownership of the new company, something Williams expressed concerns over.
Swaid asked for assurance that the proposed facility not fall into the hands of private equity, that the surgery center would not “be flipped,” or sold the moment it becomes profitable to do so.
“I’m from here, I was born and raised here,” said Dr. Perry Hooper III, one of the orthopedic surgeons behind the proposed facility. “We’re doing this for the next 20, 25 years, 80% will be funded by us. This isn’t a flip, this is a long-term thing.”
Swaid ultimately proposed that the board vote to approve the surgery center’s certificate of need, but on two conditions; that the center limit its practice to only orthopedics, and that they shift total ownership to its founding surgeons. The board voted in favor of the measure with a vote of 4-1, with Ormand Thompson III, president of Thomas Hospital in Fairhope, being the sole dissenting vote.
Hooper later told Alabama Daily News that despite what he called an “arduous process,” he was excited to “be on the other side of this.” He also said that the surgery center would likely be operational within two to three years.
As to the impact on Montgomery, Hooper said he believed that the new surgery center would not only help recruit new surgeons to Alabama’s capital city, but also provide more options for local residents.
“There are people that live in Pike Road, that live in Greenville, that live in the east side of Montgomery that want to come to Montgomery to have a safe, state-of-the-art facility to get their hip and knee replaced robotically, so these people that were going elsewhere are now going to stay here for their health care,” Hooper told ADN.
Regarding the concerns over the involvement of private equity, Hooper pointed to the conditional approval requiring ownership of the surgery center to be shifted entirely to its founding surgeons.
“We own 100% of the surgery center,” he said. “We’re in charge, we make the vote. We rely on the private equity, which is the minority ownership of (U.S. Orthopaedic Partners), to help us with marketing, electronic medical records, malware, all these costs that are just growing incrementally.”