Wow good discussion. Lots of bright people on this thread. I mostly agree with the points made above. Here’s my blog post about private equity and ophthalmology:
Private equity and ophthalmology
1. If you’re a employee and are bought out by PE your contract can be assigned to the PE group of course you can quit without cause just give the notice in the contract. Good luck getting a new job or going solo. Yes the restrictive covenant would apply per the terms of contract.
Steps To Start a Medical Practice
2. If you’re a shareholder you have dissenters rights and can be bought out at fair market value. This could be litigated in court and can hold up the deal/ take a long time so sometimes they’ll pay you to get out of their hair
3. Mostly agree with Kaiser, VA and no good employment situations. I also stand guilty of making blanket statements. But some docs might not want hassle of starting and running practice. I thought I was one of those docs until I started my own out of necessity:
Why I Went Solo; My Story. My point is that you may think Kaiser or being employed is a secure job, but the new CEO can come and change things or even close your department (see item 5 below) and then you’re out of a job.
4. Private equity is interested in even buying solo practices. I’ve received at least four groups contacting me as have many folks in our google group. We’ve all told them to get lost. I opened solo for the autonomy, but quickly realized that the profits were much more lucrative than working for someone else. This was a secondary bonus, not my main motive for going solo.
5. Private equity wants to grow the profits over 5-7 years and then resell. So how are they gonna do it? If your practice is already run efficiently then you don’t need them. And as it has been stated, they’re not there just to do your admin tasks.
By making you work more hours or do unethical stuff that is financially lucrative but doesn’t benefit the patients? Losing docs will decrease their revenue so they will use both carrots (reasonable compensation, taking your feedback into account) and sticks (non compete, lawyers, agreement to stay as employee for five years) to achieve this.
5. I agree with BS-Med finance. If you run your practice and life well from a financial standpoint, ANY doctor, even one that makes “only” $280,000 a year, can EASILY become financially independent. If you like being a ophthalmologist (granted, not everyone does) why practice your last few years on someone else’s terms and not yours? Indeed the group I worked for used to be physician controlled but sold out to the biggest group in town before I joined. The neurologists ended their careers by being told their department was shut down and they were being let go. How disgraceful is that? Another ophthalmologist (I had left) was too old to go solo (in 60s) but fortunately found a private practice to take him on. He’s employed but they know his situation and are just treating him well for a few years.
If someone gave me $5 million for my solo practice my lifestyle wouldn’t change one bit (I question whether those who spend to buy a lot of useless stuff, or own a second home that they never go to because they’re too busy working are really happier), but despite my net worth being higher I’d actually be unhappier because I couldn’t do what I like to do on my own terms. You couldn’t pay me any amount of money to be employed and have to deal with some nitwit administrator.
6. The big group in town that was bought by private equity last year I can see their office right out my window. Yet my little solo practice is growing and thriving, and patients still want to see me. A certain type of patient prefers the big box practices, other types prefer mine.