Private Equity in Eye Care is Here To Stay
Private equity is one of the hottest buzzwords in eye care today, as private equity optometry groups and firms such as Myeyedr and Keplr Vision race each other to buy up as many optometry and ophthalmology practices as they can to grow their portfolios.
While some optometrists ponder the multi-million dollar question, “should you sell your practice to private equity?,” it leaves others uncertain how to tackle this multi-headed monster.
How does private equity affect the optometry and ophthalmology industry, and more importantly, what can individual practices do to ensure they stay competitive and solvent?
What Private Equity Is Doing to the Optometry and Ophthalmology Industry
Private equity in eye care is an exciting opportunity that is causing many optometrists to stop and rethink their exit strategy.
In the past, young optometrists would sign on as an associate to a senior optometrist, learn the ropes, and eventually buy out the practice. But this is becoming more uncertain and even unlikely as private equity firms and groups offer optometrists a lucrative exit.
In the larger business world, private equity firms and groups will make a purchase at 5-7 times the value of a business, so purchasing optometry practices at 3-5 times their inherent value is a great deal for an investor's portfolio.
However, this number is often larger than a young associate would be able to afford, leaving many optometrists feeling that private equity is the more lucrative option.
According to an article in the Optometry Times by Dr. Scott Moscow, “ODs who are currently employed and eventually want to buy an existing private practice may not be getting the “deal” they may have [had] in the past because purchase prices have most likely increased. However, there is value in purchasing an existing practice, if it’s the right practice for that OD.”
But as the competition increases, the landscape changes, leaving optometrists wondering if the industry will ever be the same.
Download the E-book on Competing with Private Equity Owned Practices!
Of course, it’s not just about new optometrists and rising costs— there is growing concern that patients will not receive the same level of care from a private equity owned optometry practice as they would in a private practice.
In fact, an article in Review of Optometric Business by Dr. Chad Fleming states that “PE has the cash to make a nice buyout if finances were all we were concerned about, but we’re also concerned about our patients. We want greater assurances that patient care wouldn’t suffer when the business owner becomes a large conglomerate.”
Private equity’s main goal is to extract value from their investment, by implementing efficiencies and economies of scale. Therefore, the patient satisfaction rate can get severely impacted as costs are lowered and patient booking volume is increased.
But as a private practice, optometrists have the ability to strategically prioritize patient satisfaction and continue growing and attracting new patients to the practice.
How To Compete with Private Equity Eye Care Practices
Competing with Private Equity optometry practices can be challenging. Private equity firms and groups often centralize management, EHRs, hiring, and operations, resulting in lowered costs and increased efficiencies.
But this can create many opportunities for private practice, such as using geotargeting in your SEO to effectively target local patients to the practice, or increasing the positive staff culture in the practice. It’s important to remember that as a private practice, optometrists have the ability to make decisions that are focused on patient care, and do whatever it takes to prioritize patients over the bottom line.
Download the E-book to learn how to keep your practice relevant and growing to compete with private equity optometry practices!
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