Philly's Richard Rothman turned a talent for replacing hips into a medical empire

Back in 1969, when the young Richard Rothman traveled to England to learn how to perform hip replacements from surgical pioneer John Charnley, Philadelphians with bad hips had "only bad choices," he said.  They could use a walker or have surgeries that didn't do much good.  "You were really out of luck."

Rothman, who was among the first surgeons in the city to embrace hip replacement, was only a couple of years into his practice when Walter Annenberg, the publisher and philanthropist, decided to do something about his arthritic hips. Like other wealthy Philadelphians at the time, he sought out Charnley.  But, in a move that would transform Rothman's career, Charnley persuaded Annenberg that his young protégé in Philadelphia would do a fine job.

Rothman replaced one of Annenberg's hips and, a few years later, the other. After the first, Annenberg asked Rothman what his goals in life were.  To build a "center of excellence in hip surgery," Rothman replied.  Annenberg donated several million dollars to Pennsylvania Hospital, and the Rothman Institute was born.  Rothman was in his early 30s.

In the years since, the Rothman Institute — now affiliated with Jefferson Health System and seven other health systems — has grown into one of the world's largest orthopedic organizations, with 755,000 patient visits a year.  Its 176 physicians and their operating-room teams performed 60,000 procedures last year.  Annual revenue is half a billion dollars.  The organization ranks second among orthopedic groups in research grants from the National Institutes of Health.

The institute, which has 29 locations in Pennsylvania and New Jersey, signed a strategic affiliation agreement with Northwell Health to move into New York in April.  Rothman hopes it will go national. The institute also invests in young companies such as Force Therapeutics, which developed a way to coach patients through post-op physical therapy on the internet.  "It's disruptive, it's convenient, and dramatically lowers the cost," Rothman said.

Meanwhile, the second generation of a hip implant that Rothman helped design remains one of the world's top two artificial hips and has brought in more than $1 billion in sales.

Rothman, who is 80, still performs surgery two days a week and still gets a kick out of helping people feel better.  He no longer runs the business but is involved in its operation as a partner. He goes to New York once a week to work as an adviser with the Riverside Co., a private equity firm.  He teaches medical students at Jiao Tong University in Shanghai and is helping to start two new companies there. He is vice chair of the board of Thomas Jefferson University.

Somehow, he finds time to collect art by the Wyeth family and to hang out with his own family, including five grandchildren.

He says he doesn't see himself as the smartest guy in the room and credits his success to hard work, an innate understanding of what motivates coworkers, and good guidance.

Rothman grew up in Cheltenham, the son of a Polish immigrant business owner with a fourth-grade education, who died when Rothman was 16.

He guesses that his life would have been quite different without the intervention of Annenberg, who fostered the careers of several people after his own son committed suicide.  "I think my horizons would never have been as broad and my goals probably wouldn't have been as high," Rothman said.

Annenberg introduced him to five presidents — Ronald Reagan, Richard Nixon, Gerald Ford, and both George Bushes — and gave him good advice: "Focus on quality, whatever you do."

Among his other mentors, Rothman counts another patient, Philip Caldwell, who ran Ford Motor Co.  Caldwell gave money for research and taught Rothman organizational skills.  Like Caldwell, Rothman tries to keep the desk in his office clear of clutter.

Now Rothman says he finds it "immensely satisfying" to mentor younger people.

Rothman is a rarity: a doctor who excels at teaching, research, clinical care — and business. Ego, he said, keeps many surgeons from being able to grow large organizations. They act like a "king and his court" and "rarely build big organizations because they're so focused on themselves."

Rothman made a key decision to share power, going with a partnership model where everyone has the same contract he does. He hired physicians he thought were smarter and harder-working than he is. He brought in people who understood business.

All along, he said, the guiding principles would be to provide quality, compassionate, affordable, and convenient care.  The compassion mattered, he said, because  "that's what people feel." It's harder for patients to evaluate a surgeon's technical skill.

Daniel Grauman, managing director and CEO of health-care consulting firm Veralon in Philadelphia, called Rothman a "visionary" and praised his ability to attract and retain top managers and clinicians. "Orthopedics lends itself to self-referral, more so than many other specialties, and the Rothman organization recognized the opportunity to build its brand among consumers and patients," he added.

Béla Szigethy, CEO of the Riverside Co., said Rothman "brings experience and insights which, really,  nobody else can match. … I think he's absolutely brilliant."

He said Rothman speaks sparingly, but "on point" in investment meetings.  "He tries to add value where he actually does add value."

Rothman jokes that getting a job at the Rothman Institute is a "life sentence" because few leave. That comes, he said, from understanding what makes people stay.  It's not money.  What employees want most is control of their destiny, positive (mostly) feedback, and the ability to get really good at their jobs. Money comes after that.

"It's the shortest term,"  he said. "It's ephemeral."