PUBLICATION EXCLUSIVE: Heads or tails: Will headwinds or tailwinds prevail for private equity firms buying ophthalmic practices?

“Physicians Resource Group Inc. is the nation’s leading provider of physician practice management services to ophthalmic and optometric practices. PRG develops integrated eye care delivery systems through affiliations with locally prominent physician practices in strategic geographic areas across the United States. PRG acquires the operating assets of these practices and develops the practices into eye care networks by providing management expertise, marketing, information systems, capital resources and ancillary services such as surgery centers and optical shops.
— 1995: PR Newswire

“Throughout the country, solo practitioners and group practices are looking for partners with the necessary capital and organizational expertise and experience to help them innovate and grow.”
— 1998: The American Association of Family Practitioners

“In walks private equity, which is incredibly disruptive, but indeed a vehicle to assist in this consolidation effort. It is a high-risk/high-return venture that differs from that of the physician practice management companies of the past. While the window of opportunity may only be for the next few years, it is indeed something I encourage my colleagues to get educated about.”
— 2017: Elizabeth Yeu, MD, OSN Cornea/External Disease Section Editor

“A private equity firm makes investments in startup or operating companies. ... Private equity firms acquire a controlling position and then look to maximize the value of that investment. ... Private equity firms make longer-hold investments in target industry sectors where they have expertise. ... Private equity firms take on operational roles to manage risks and achieve growth.”
— www.wikipedia.org

“The fable told by the private-equity industry is that many companies are poorly managed and cost-savings could be wrung out. But in reality, very few private-equity owners are willing to play the role of both disruptive innovators and patient capitalists. They are interested in quick windfalls. What makes the entire business model viable is that companies can be bought and sold several times with borrowed money, using the subsidy of a tax break on the interest each time.”
— Josh Kosman

In 1995, I was in the bedroom, the birthing room and the nursery as an adviser to Physicians Resource Group, the red-headed, “Hey, your baby’s ugly” poster child for great ideas gone bad. A couple of years later, I was also in the morgue.

PRG was part of a swarm of so-called physician practice management companies, or PPMCs, that tried to colonize virtually every medical specialty, along with large multispecialty practices.

I still remember my first discussion with one of the venture capitalists involved with PRG’s debut:

Click here to read the full publication exclusive, By the Numbers, published in Ocular Surgery News U.S. Edition, September 10, 2017.