Rothman Institute expands to central Florida, attracted by population growth and a dominant nonprofit partner

Rothman Orthopaedic Institute is following the lure of fast population growth to Florida, where it will open offices in the Orlando area in partnership with AdventHealth, a nonprofit health system with the largest market share there, the two companies announced Tuesday.

The chief executive of AdventHealth, Daryl Tol, said he wanted Rothman as a partner because of the Philadelphia company’s reputation for clinical excellence, data acumen, and commitment to teaching and learning.

“What they know about the consumer experience in their practices, about the clinical outcomes of every doctor, and about the systematic care that’s provided blows away anyone who is currently in central Florida, I can say that with assurance,” Tol said.

As part of the partnership with Rothman, AdventHealth plans to build a 12-story, 300,000-square-foot building in Orlando that will be Rothman’s home base in the state when it opens in 2023. The cost of the building, going up in partnership with a third-party developer, is expected to be more than $100 million.

Rothman plans to start in Florida next year with 18 physicians and hopes to expand to as many as 50 in five years. The company currently has 194 doctors in 38 offices in Pennsylvania, New Jersey, and New York. The company, founded in 1970 by Richard Rothman, who died two years ago, has 70 partners and employs 1,600. The company declined to disclose annual revenue.

Rothman’s president, Alexander R. Vaccaro, a spine specialist, said the company would self-finance the expansion to Florida, in part by moving patients who don’t have to be in a hospital to an outpatient setting and getting to keep some of the savings through special arrangements with insurers. In addition, Vaccaro said, AdventHealth will pay Rothman to run the health system’s orthopedics program.

AdventHealth has 13 hospitals in its Central Florida division. Its market share in the Orlando market was 43.4% compared with 33.5% for its nearest competitor, Orlando Health, according to a bond offering statement last year. The Central Florida division accounted for more than $7 billion of Advent’s $11.9 billion of revenue last year.

From 2010 to 2019, the population of the Orlando metropolitan has soared by 22%, to 2.6 million. The population of the Philadelphia region has barely budged in comparison, climbing by just 2% to 6.1 million. Over the same period, the number of people in the United States was up 6% to 328 million.

Rothman’s deal with AdventHealth is not happening in a vacuum.

Rothman initially looked at expanding into the Miami region, “which is a very concentrated area, populated by many different players,” Vaccaro said.

The Hospital for Special Surgery, a renowned orthopedic-care provider based in New York, formed a joint venture with Tenet Healthcare Corp. in 2018 to open a surgery center in West Palm Beach, north of Miami. Other well-known health-care providers that have set up operations in Florida include the Mayo Clinic and the Cleveland Clinic.

Nemours Foundation, which has long operated Wilmington’s Alfred I. duPont Hospital for Children, opened Nemours Children’s Hospital in Orlando in 2012.

Rothman ended up in central Florida thanks to a cold call from AdventHealth’s chief medical officer, who had heard that Rothman was exploring Florida as a place to expand, Vaccaro said. Advent’s cross-town competitor, nonprofit Orlando Health, acquired Jewett Orthopaedic Clinic, a local physician group, at the end of last year. Orlando Health is expected to break ground in November on a $250 million orthopedic hospital, according to the Orlando Sentinel.

Rothman already dominates the Philadelphia area through partnerships with Jefferson Health, Main Line Health, Geisinger, Northwell Health, and Capital Health. The institute’s six locations on the Jersey Shore cover from Freehold to Cape May Courthouse. Its last major expansion was in 2017, to North Jersey and New York in a partnership with Northwell Health. It now has eight offices in that market, including one each in Gramercy and Murray Hill in Manhattan. It plans another Manhattan location on Madison Avenue.

“The only hiccup we had is that COVID, as you can see in New York, kind of closed that operation down,” Vaccaro said. New York didn’t allow nonurgent medical procedures until the end of May, he said. “From a balance sheet perspective, it was a difficult time to go through. No one was working.”