Ophthalmology and eye-care practices have become a new target for private equity investors.
The specialty is still very fragmented, with lots of independent practitioners and small groups deciding whether they can benefit from tying into a larger organization, said Bill Hughson, CEO of Grand Rapids (Mich.) Ophthalmology, a practice bought in February by Chicago-based Sterling Partners.
Hughson was brought in by Sterling in April with a mandate to expand the footprint of Grand Rapids Ophthalmology through other acquisitions and organic growth, Hughson said.
Earlier this month, Sterling acquired Lakeshore Eye, adding the East Grand Rapids optometry practice to the 11 ophthalmologists and 19 optometrists that Grand Rapids Ophthalmology employs, he said.
“There are very few large regional (eye-care) groups today,” Hughson said.
Private-equity is stepping into that void.
In the first quarter of 2017, out of eight physician practices purchased by private equity groups nationally, four were eye-care practices, according to data compiled by healthcare financial services company Kaufman Hall.
In addition to Sterling’s acquisition of Grand Rapids Ophthalmology, Waud Capital Partners bought Minnesota Eye Consultants. Shore Capital Partners bought Georgia Eye Partners. And Flexpoint Ford acquired Southeast Eye Specialists.
Sterling bought a majority stake in Grand Rapids Ophthalmology, but the doctors continue to hold equity and participate on the company’s board of directors, Hughson said.
Eye doctors, like other physicians, are looking for help with business practices, information systems to prove cost and quality, and negotiating contracts with payers, Hughson said.
Some are willing to cash out at least part of their equity in the practice by selling to an operating group that will take those operational burdens off their hands, he said.
“It’s difficult to run a small business in today’s healthcare arena,” Hughson said.
Dr. Richard Lindstrom, the founder of Minnesota Eye Consultants, said much the same when his practice was sold to Chicago-based Waud Capital Partners in February.
“This partnership provides us the operating resources and growth capital to continue our commitment to excellence in an evolving healthcare market, in addition to positioning our business for rapid growth and differentiation,” Lindstrom said.
Like Sterling, Waud said the deal with Minnesota Eye provides the foundation to grow under a new corporate umbrella named United Vision Partners.