Private Equity in Ophthalmology

Discussion in 'Ophthalmology: Eye Physicians & Surgeons' started by dantt, Jan 25, 2019.

  1. dantt

    dantt Member
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    Ophthalmology and optometry is rapidly succumbing to acquisition and consolidation by private equity firms nationwide. The primary motive of private equity appears to be extraction of profit out of the practice and of older practice owners to maximize profit and exit strategy. Ophthalmologists will now become a commodity.

    Much has been said about the pros and cons of selling one's practice to private equity. There appears to be little upside for current associate doctors to stay or join a practice without any potential for partnership and profit sharing. Is anybody willing to share their experiences anonymously? Unfortunately, private equity's entry into ophthalmology has now created an environment where frank comment on the matter risks one's job. This is not right.

    A points of context I ask commentators to include.

    1. Position prior to sale. Fully vested partner? New partner? Partnership track associate? Non partnership track associate?
    2. Practice size. Single specialty? Multi specialty? Optometrists?
    3. Practice location. Urban? Suburban? Rural?
    4. Passive income opportunities before and after. Optical? ASC? Real estate?
    5. Compensation. Pre and post sale. Above market? Below market? Fair market?
    6. Contentment. Pre and post sale. Ability to practice medicine the way you choose? Satelliting? Vacation/flexible hours? Forced to sell patients optos photos/multifocal IOLs?
     
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  2. increscence

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    I second the request for people's firsthand experiences. As someone entering the job market, I have biased/preconceived notions about PE, but I would like to know whether my concerns are founded.
     
  3. LightBox

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    1) Full-vested partner. Not close to retirement age.
    2) General Ophthalmology practice with employee optometrists.
    3) Suburban
    4) Own ASC, Optical, and Real Estate before sale to PE. Own only real estate after sale to PE.
    5) Obviously, compensation is lower after the acquisition. After all, you get an 8-digit buy-out taxed at capital gains rate :)
    6) No pressure to upsell stuff. Practicing basically the same as before. It is annoying to ask permission to buy stuff (e.g. expensive equipment) now though.

    I'll probably retire after a few more years and just do something else. Or maybe just start anew! It's nice having the financial cushion of a PE buy-out to allow you this flexible in career. There is zero chance I will be grinding it out seeing patients at age 60.
     
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  4. Dusn

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    Thanks for your insight, LightBox. I'm glad it worked out well for you! If they're regularly paying out 8 figures, it still seems unlikely to me that PE groups will make money off of most of their acquisitions... but what do I know? For new grads it still seems to emphasize the importance of being a partner: either start your own practice or be sure the practice you join will not be bought out before you make full partnership.
     
  5. airplanes

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    Great stuff and glad it seems to have worked out well for you.

    What do you think about the potential and opportunity for new associates joining PE owned groups? The starting salaries tend to be higher (sometimes much higher), but passive income streams seem to be non-existent aside from the opportunity to eventually buy and flip shares.
     
  6. LightBox

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    I have no clue, but my inkling is that PE is basically a Ponzi-type scheme. These PE groups don't want to run Ophthalmology practices in the long-run. They have a 5-7 year horizon, and they all hope to sell to the next bigger fish (fund) for a 15-20%/year premium on the original share price. I probably would rank joining a PE group as a "better Kaiser model" since working for a private practice is much better overall than working for Kaiser in terms of efficiency, salary ceiling, etc.
     
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