McKesson To Acquire Controlling Interest In PRISM Vision

[idkididk]

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https://www.nasdaq.com/articles/mckesson-acquire-controlling-interest-prism-vision-quick-facts

 

[RetinaDude]

Wow, some docs who signed on to PE who actually made it to a second round purchase. Wonder how much $$$ they received for their stock? Are there others? Will there be others?

 

[thedoctahfr]

what does this mean for the future of ophtho (future MS1 here)

 

[MstaKing10]

RCA sale to Cencora this year was $4billion deal. Now this. Big retina groups like RGW and NJ retina. Most likely there will be more depending on economic factors etc. Question is what is the end game?

 

[wysdoc]

what does this mean for the future of ophtho (future MS1 here)

Run your own office & don’t sell out to PE

 

[mjohnsonets]

RCA sale to Cencora this year was $4billion deal. Now this. Big retina groups like RGW and NJ retina. Most likely there will be more depending on economic factors etc. Question is what is the end game?

Talking way above my expertise but with the size of McKesson and Cencora (ranked 9th and 10th in Fortune 500), I doubt there is another sale. To parry the reduction in reimbursement, they likely capitalize on the drug and device market and value ophthalmology as a whole as part of their services.

 

[Slide]

Talking way above my expertise but with the size of McKesson and Cencora (ranked 9th and 10th in Fortune 500), I doubt there is another sale. To parry the reduction in reimbursement, they likely capitalize on the drug and device market and value ophthalmology as a whole as part of their services.

Agreed, this is the end game. Drug profits for these practices for partners and go to the big blob. McKesson is probably going to start aggressively acquiring practices to compete against Cencora. None of this bodes well for medicine long term but in the short term some partners are gonna get paid handsomely. No further sale at this point - these companies are publicly owned and have been the goal for these private equity groups (sell to a bigger corp for vertical integration).

 

[solitude]

I don't think a lot of people have really thought this through to figure out the end game, or care beyond the immediate future.

Judging by the number of vacancies at PE owned practices (e.g., multiple openings listed on ASRS for the same PE practice mentioned upthread!), and the cold calls and e-mails from these formerly lucrative and desirable practices, they are having a very tough time recruiting. It will only get worse as the senior partners cash out and retire. The junior "partners" are largely embittered and overburdened. Eventually, many will decide enough is enough and leave for non-PE practices, largely in less desirable locations. Some will return to the more desirable areas after their non-compete expires and open up a competing practice. Perhaps the government will even ban non-competes nationwide, so they can set up shop locally immediately.

As the remaining doctors become even more overworked with poor financial incentives to work hard, and the practice can't recruit high quality doctors, the quality of care will decline. First it will just be a little bit, hardly noticeable. But over time it will be marked. Referrals will fall, especially when the doctors are forced to stop doing surgery because it's less lucrative than injections. Retina patients eventually die so if you aren't constantly adding a lot of new ones, the practice withers on the vine. Slowly but surely, the value of the practices will decline. The "equity" owned by the physicians will evaporate, probably worth less than the paper on which it was issued.

Eventually, after the large corporations have extracted the maximum amount of value from the practices each year and repaid their debt and shareholders etc, the practices will be liquidated and written off. Some will be repurchased by physicians, some of whom are the same ones who sold to PE or joined the practice as associates. Many will be simply outcompeted by newer, non-PE practices. And a few decades later, the cycle may repeat, just as this PE cycle is a rehash of the 1990s PPMs.

 

[docdoc2012]

This is all assuming of course that injections remain lucrative, and huge cuts aren't coming.
The one thing that reassures me with this McKesson deal is that drug rebates don't appear to be going away anytime soon, and hopefully niether are injection reimbursements. They would know wouldn't they?!

 

[MstaKing10]

I don't think a lot of people have really thought this through to figure out the end game, or care beyond the immediate future.

Judging by the number of vacancies at PE owned practices (e.g., multiple openings listed on ASRS for the same PE practice mentioned upthread!), and the cold calls and e-mails from these formerly lucrative and desirable practices, they are having a very tough time recruiting. It will only get worse as the senior partners cash out and retire. The junior "partners" are largely embittered and overburdened. Eventually, many will decide enough is enough and leave for non-PE practices, largely in less desirable locations. Some will return to the more desirable areas after their non-compete expires and open up a competing practice. Perhaps the government will even ban non-competes nationwide, so they can set up shop locally immediately.

As the remaining doctors become even more overworked with poor financial incentives to work hard, and the practice can't recruit high quality doctors, the quality of care will decline. First it will just be a little bit, hardly noticeable. But over time it will be marked. Referrals will fall, especially when the doctors are forced to stop doing surgery because it's less lucrative than injections. Retina patients eventually die so if you aren't constantly adding a lot of new ones, the practice withers on the vine. Slowly but surely, the value of the practices will decline. The "equity" owned by the physicians will evaporate, probably worth less than the paper on which it was issued.

Eventually, after the large corporations have extracted the maximum amount of value from the practices each year and repaid their debt and shareholders etc, the practices will be liquidated and written off. Some will be repurchased by physicians, some of whom are the same ones who sold to PE or joined the practice as associates. Many will be simply outcompeted by newer, non-PE practices. And a few decades later, the cycle may repeat, just as this PE cycle is a rehash of the 1990s PPMs.

Your crystal ball is a lot clearer than mine. I’m not certain the implosion is coming nearly as fast or at all. these companies are huge, but the CVS, Walgreens and Amazons of the world are still seeking integration of healthcare networks into their portfolio. Not sure if the is the end game or just the beginning.

 

[RetinaDude]

You think insurance companies may be in the mix to be next in line to make deals for these PE ophthalmology organizations? I know ophthalmology is a small part of the medical world but the costs of these anti-VEGF injections has to be a noticeable percentage. I’m sure they’d love a way to control that

 

[MstaKing10]

You think insurance companies may be in the mix to be next in line to make deals for these PE ophthalmology organizations? I know ophthalmology is a small part of the medical world but the costs of these anti-VEGF injections has to be a noticeable percentage. I’m sure they’d love a way to control that

That certainly could be another play

 

[dantt]

You think insurance companies may be in the mix to be next in line to make deals for these PE ophthalmology organizations? I know ophthalmology is a small part of the medical world but the costs of these anti-VEGF injections has to be a noticeable percentage. I’m sure they’d love a way to control get a cut of that

Fixed.

 

[RetinaDude]

You are right about that. Insurance companies dont make any moves that will cost them money (and bring in more of it)

 

[solitude]

Your crystal ball is a lot clearer than mine. I’m not certain the implosion is coming nearly as fast or at all. these companies are huge, but the CVS, Walgreens and Amazons of the world are still seeking integration of healthcare networks into their portfolio. Not sure if the is the end game or just the beginning.

more a mirror than a crystal ball. This is already happening. Go talk to your junior "partners". The business model is not sustainable. It's not even designed to be. Some young people are willing to pay a premium to live in coastal areas, so you'll first start to see PE fully fail in less desirable areas which had trouble recruiting before they were sold to PE. Massive consolidation means these failures will have substantial secondary effects.

 

[LightBox]

Yes, they will all eventually fail. But not before many doctors make a LOT of $ from it. There will be fallout mainly in the form of patient care. So the cycle goes on again...

 

[idkididk]

As a retina fellow at a PE-owned private practice fellowship, the landscape of retina kind of sucks. Essentially most of the "prestigious" PP groups have all sold out, including the one affiliated with my residency and my current fellowship. I've been spoiled to only know retina groups with immense resources, so when I interviewed at smaller non-PE, retina-only groups near my hometown, I was initially disappointed by how "mom & pop" it felt. But news like this makes me glad I won't be working under PE overlords

 

[Slide]

As a retina fellow at a PE-owned private practice fellowship, the landscape of retina kind of sucks. Essentially most of the "prestigious" PP groups have all sold out, including the one affiliated with my residency and my current fellowship. I've been spoiled to only know retina groups with immense resources, so when I interviewed at smaller non-PE, retina-only groups near my hometown, I was initially disappointed by how "mom & pop" it felt. But news like this makes me glad I won't be working under PE overlords

Whatever you do, don't drink the kool-aid of about how wonderful joining a PE firm is. I have first hand knowledge that the PE groups are desperate to hire in order to meet their payout bonuses (it's based on if they can hire 100 new doctors or so) , and will say whatever they can to bait and switch you into joining.

 

[mjohnsonets]

I don't think things are as good as they seem or as bad as they seem with how this will end. PE groups do have more challenge with recruitment but the pay being offered has been ramping up and if these groups can find ways to control costs in other ways (they are the pharma company right). They can install mid levels (PAs for injections for instance) under the docs, a single doctor can then manage many more patients and the volume of recruitment could stagnate or go down. This would ride the trend where we see less aversion to PE in ODs and mid levels given the more medical focus they get and higher pay - as a whole they have way less expectations to be partners in a practice. I suspect we'll start to see some kind of mini-fellowships crop up for mid levels in ophthalmology soon within these groups.

I do think it's correct that physician owned opportunities will not be as plentiful and this will drive doctors to secondary cities and markets. This would actually ride the trend economically where things are going. These areas are where there is much more demand for ophthalmologists and building a practice is easier.

 

[jd123]

This post is why PE is going to horrible for the profession and patient care. But at least the old boomer docs who sold out got their big payday before screwing everyone else over.

 

[MstaKing10]

Mid levels doing injections is a scary thought. Only practices I've seen look at having OD's see retina patients or NP's/PA's do injections are Non-PE practices in my area. Btw the recruitment incentives I've seen for retina specific PE practices explicitly require retina fellowship trained MDs be hired to qualify for the incentive.

 

[mjohnsonets]

Kaiser is also utilizing PAs in some cases too. PAs are starting to come into ophthalmology more, problem is the lack of any ophtho training in PA school hence mentioning the mini-fellowships. Thus far I've encountered PA being used for injections, plastics practice, just general medical eye patients, and have heard of a PA running the femto in an OR.