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PUBLICATION EXCLUSIVE: Private equity offers new option for ophthalmology practice consolidation
Ophthalmologists and ophthalmology practices are steering toward consolidation in a fragmented market, and private equity firms may offer a new option for physicians as the firms look to invest in the field.
Private equity firms, investment management companies that make investments in operating companies or startup companies, have been focusing their attention more on the ophthalmology field over the last several years. For example, in May 2014, Varsity Healthcare Partners, a health care services-focused private equity investment firm, acquired Katzen Eye Group, one of the nation’s largest ophthalmologic and optometric services practices. Through this partnership, the two entities formed EyeCare Services Partners Holding LLC with the goal of consolidating successful vision care services practices and affiliated surgical centers in selected markets, according to a Varsity Healthcare Partners press release.
Because this was one of the first ophthalmology practice consolidators, EyeCare Service Partners Holding has been able to evaluate numerous opportunities and selectively partner with groups in specific markets. The company has successfully expanded into four states through new acquisitions since 2014, OSN Chief Medical Editor Richard L. Lindstrom, MD, founder of Minnesota Eye Consultants, said.
Consolidation is a reality
Lindstrom said Minnesota Eye Consultants realized private equity investment would allow for the practice to partner with other eye care services in the Minneapolis-St. Paul market and potentially other markets throughout the country.
Image: Shari Fleming Photography
Consolidation is a reality in the medical field and has been demonstrated in several markets with large hospitals acquiring practitioners, for example, and adding an insurance product as well, Lindstrom said. Mega-practices are also becoming a reality, in which multiple independent practices are consolidated into one large practice.
However, none of those consolidation models was attractive to the partners at Minnesota Eye Consultants, Lindstrom said.
“We were introduced to a private equity model, which had been used in other markets such as dermatology, dentistry and physical therapy but not so much in ophthalmology. But it looked attractive to us because it would allow us to consolidate with likeminded practices. It would allow each practice to maintain their own brand and independence but still share in best practices,” he said.
A partnership with Waud Capital Partners
After analyzing opportunities for nearly 18 months, Lindstrom said the practice chose Waud Capital Partners in Chicago to partner with for the future.
Waud Capital Partners, a 25-year-old private equity firm, largely focuses on the health care sector. The firm began investigating the eye care market more than 3 years ago and for the first 12 to 18 months studied the market in depth to identify its growth potential, Christopher J. Graber, a principal of Waud Capital Partners, said.
- Click here to read the full publication exclusive, Cover Story, published in Ocular Surgery News U.S. Edition, June 10, 2017.