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Private equity window open now for specific types of practices
NEWPORT BEACH, Calif. — On a panel about private equity at the OCTANe Medical Technology Innovation Forum here, two ophthalmologists agreed that the time is now for going the private equity route but only for the right types of private practices.
“For the right practice, the private equity window, if you want to call it that, is open right now,” Richard L. Lindstrom, MD, founder of Minnesota Eye Consultants and Chief Medical Editor of Ocular Surgery News, said. “It’s a great opportunity today, and I don’t think it will be the same opportunity in a couple of years, so it certainly is a good time to take a look at it.”
Lindstrom cautioned that while it is a good option for some practices, it is not for everyone.
“There’s only a small number of practices and style of practices, other than tucking you into a larger practice that they are interested in, so you may say, ‘I’ve finally decided to sell to private equity,’ but no one may want you,” he said.
Practices that attract private equity are generally practices with physicians of a wide range of ages, with continuity in their community and looking to grow, he said.
William De La Peña , MD, founder and medical director of De La Peña Eye Clinic, agreed that there are certain cases in which private equity is the right move, but it is not possible for every type of practice.
“If you’re a practitioner in a big city, I would certainly look to see if there is an opportunity to join a larger entity,” he said.
He said the larger entity will have better management and resources for things such as electronic medical records and being able to deal with all of the complications of human resources.
“Most of you know how complicated it is just to have employees in California,” he said. “All of that is taken away, and it just makes it easier for you to practice medicine.”
De La Peña said one of the things that he has learned is that private equity is not interested in practices such as large refractive surgery groups that are all private pay.
“What they are interested in is the large practices that have good contracts and provide basic community health,” he said.
“It’s not really an exit strategy — it’s a growth strategy,” Lindstrom said. “It’s a build something greater strategy with private equity’s capital. So, I think a lot of my colleagues are getting surprised by wanting to have private equity, but private equity doesn’t want them.” – by David W. Mullin
Reference:
Lindstrom RL, De La Peña W. Disruption in investment and private equity panel. Presented at: OCTANe Medical Technology Innovation Forum; Oct. 28-29, 2019; Newport Beach, Calif.
Disclosures: Lindstrom reports he is on the board of directors of Unifeye Vision Partners. Healio/OSN could not confirm relevant financial disclosures for De La Peña at the time of publication.