Private Equity in Ophthalmology and Optometry: Analysis of Acquisitions from 2012 through 2019 in the United States

doi:10.1016/j.ophtha.2020.01.007

Ophthalmology

Volume 127, Issue 4, April 2020, Pages 445-455

https://doi.org/10.1016/j.ophtha.2020.01.007 Get rights and content

Purpose

To identify temporal and geographic trends in private equity (PE)–backed acquisitions of ophthalmology and optometry practices in the United States.

Design

A cross-sectional study using private equity acquisition and investment data from January 1, 2012, through October 20, 2019.

Participants

A total of 228 PE acquisitions of ophthalmology and optometry practices in the United States between 2012 and 2019.

Methods

Acquisition and financial investment data were compiled from 6 financial databases, 4 industry news outlets, and publicly available press releases from PE firms or platform companies.

Main Outcome Measures

Yearly trends in ophthalmology and optometry acquisitions, including number of total acquisitions, clinical locations, and providers of acquired practices as well as subsequent sales, median holding period, geographic footprint, and financing status of each platform company.

Results

A total of 228 practices associated with 1466 clinical locations and 2146 ophthalmologists or optometrists were acquired by 29 PE-backed platform companies. Of these acquisitions, 127, 9, and 92 were comprehensive or multispecialty, retina, and optometry practices, respectively. Acquisitions increased rapidly between 2012 and 2019: 42 practices were acquired between 2012 and 2016 compared to 186 from 2017 through 2019. Financing rounds of platform companies paralleled temporal acquisition trends. Three platform companies, comprising 60% of platforms formed before 2016, were subsequently sold or recapitalized to new PE investors by the end of this study period with a median holding period of 3.5 years. In terms of geographic distribution, acquisitions occurred in 40 states with most PE firms developing multistate platform companies. New York and California were the 2 states with the greatest number of PE acquisitions with 22 and 19, respectively.

Conclusions

Private equity–backed acquisitions of ophthalmology and optometry practices have increased rapidly since 2012, with some platform companies having already been sold or recapitalized to new investors. Additionally, private equity–backed platform companies have developed both regionally focused and multistate models of add-on acquisitions. Future research should assess the impact of PE investment on patient, provider, and practice metrics, including health outcomes, expenditures, procedural volume, and staff employment.

Section snippets

Identification of Private Equity–Backed Acquisitions

Typically, PE firms initiate investment in ophthalmology with the establishment of a platform company; this can be accomplished through acquisition of a large so-called platform practice, buyout of a pre-existing ophthalmology management group, or aggregation of smaller practices or platforms into a new company. Next, the platform company or associated practices within the platform acquire additional practices, through add-on acquisitions, with PE capital. In this study, we characterized both

Description of Acquisitions

From January 1, 2012, through October 20, 2019, this study identified 29 platform companies acquiring 228 practices associated with an estimated 1466 total clinical locations and 2146 ophthalmologists and optometrists (Table 1). Acquisitions of ophthalmology practices over time are depicted in Figure 1. Among acquisitions of ophthalmology practices, 25 platform companies acquired 136 practices associated with a total of 841 clinical locations, 973 ophthalmologists, and 590 optometrists (Table 2

Discussion

This study’s findings demonstrate a dramatic growth of PE-backed acquisitions of ophthalmology and optometry practices in recent years with an associated increase in financing frequency of emerging platform companies. Currently, literature characterizing PE involvement in ophthalmology is limited to editorials, non–peer-reviewed news journals, and magazines.24, 25, 26 To our knowledge, this is the first peer-reviewed study to describe trends in PE investment within ophthalmology.

Although PE

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Association of Private Equity Firm Acquisition of Ophthalmology Practices with Medicare Spending and Use of Ophthalmology Services
2024, Ophthalmology
Private equity (PE) firms increasingly are acquiring ophthalmology practices; little is known of their influence on care use and spending. We studied changes in use and Medicare spending after PE acquisition.
Retrospective cohort study.
Seven hundred sixty-two clinicians in 123 practices acquired by PE between 2017 and 2018 and 34 807 clinicians in 20 549 never-acquired practices.
We analyzed Medicare fee-for-service claims (2012–2019) combined with a novel national database of PE acquisitions of ophthalmology practices using a difference-in-differences method within an event study framework to compare changes after a practice was acquired with changes in practices that were not acquired.
Numbers of beneficiaries seen; intravitreal injections and medications used for injections; and spending on ophthalmologist and optometrist services, ancillary services, and intravitreal injections.
Comparing PE-acquired with nonacquired practices showed a 23.92% increase (n = 4.20 beneficiaries; 95% confidence interval [CI], 1.73–6.67) in beneficiaries seen per PE optometrist per quarter and no change for ophthalmologists, while spending per beneficiary increased 5.06% ($9.66; 95% CI, –2.82 to 22.14). Spending on clinician services decreased 1.62% (–$2.37; 95% CI, –5.78 to 1.04), with ophthalmologist services increasing 5.46% ($17.70; 95% CI, –2.73 to 38.15) and optometrists decreasing 4.60% (–$5.76; 95% CI, –9.17 to –2.34) per beneficiary per quarter. Ancillary services decreased 7.56% (–$2.19; 95% CI, 4.19 to –0.22). Intravitreal injection costs increased 25.0% ($20.02; 95% CI, –1.38 to 41.41) with the number increasing 5.10% (1.83; 95% CI, –0.1 to 3.80). There was a 74.09% increase (8.38 injections; 95% CI, 0.01–16.74) in ranibizumab and a 12.91% decrease (–3.40 injections; 95% CI, –6.86 to 0.07) in bevacizumab after acquisition. The event study showed consistent and often statistically significant increases in ranibizumab injections and decreases in bevacizumab injections after acquisition.
Although not all results reached statistical significance, this study suggested that PE acquisition of practices showed little or no overall effect on use or total spending, but increased the number of unique patients seen per optometrist and the use of expensive intravitreal injections.
Proprietary or commercial disclosure may be found in the Footnotes and Disclosures at the end of this article.
Increases in Medicare Spending and Use after Private Equity Acquisition of Retina Practices
2024, Ophthalmology
Private equity (PE) firms increasingly are acquiring physician practices in the United States, particularly within procedural-based specialties such as ophthalmology including retina. To date, the potential impact of ophthalmology practice acquisitions remains unknown. We evaluated the association between PE acquisition and Medicare spending and use for common retina services.
Retrospective difference-in-differences analysis using the 20% Medicare fee-for-service claims dataset from January 1, 2015, through December 31, 2019.
Eighty-two practices acquired by PE during the study period and matched control practices.
We used novel data on PE acquisitions of retina practices linked to the 20% sample Medicare claims data. Retina practices acquired by PE between 2016 and 2019 were matched to up to 3 non-PE (control) practices based on characteristics before acquisition. Private equity-acquired practices were compared with matched control practices through 6 quarters after acquisition using a difference-in-differences event study design. Data analyses were performed between August 2022 and April 2023.
Medicare spending and use of common retina services.
Relative to control practices, PE-acquired retina practices increased the use of higher-priced anti–vascular endothelial growth factor (VEGF) agents including aflibercept, which differentially increased by 6.5 injections (95% confidence interval, 0.4-12.5; P = 0.03) per practice-quarter, or 22% from baseline. As a result, Medicare spending on aflibercept differentially increased by $13 028 per practice-quarter, or 21%. No statistically significant differences were found in use or spending for evaluation and management visits or diagnostic imaging.
Private equity acquisition of retina practices are associated with modest increases in the use of higher-priced anti-VEGF drugs like aflibercept, leading to higher Medicare spending. This finding highlights the need to monitor the influence of PE firms’ financial incentives over clinician decision-making and the appropriateness of care, which could be swayed by strong economic incentives.
Proprietary or commercial disclosure may be found in the Footnotes and Disclosures at the end of this article.
Private Equity and Medicine: A Marriage Made in Hell
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Salary Negotiations: Gender Differences in Attitudes, Priorities, and Behaviors of Ophthalmologists
2024, American Journal of Ophthalmology
To investigate attitudes, priorities, and behaviors of ophthalmologists in salary negotiations.
Cross-sectional study.
A Qualtrics survey was disseminated to U.S.-based practicing ophthalmologists between November 1, 2021 and March 31, 2022 and assessed attitudes, behaviors, and priorities surrounding salary negotiation during the respondents’ first negotiation as a practicing physician and currently. Optional case-based scenarios were also included.
Of 424 respondents, 155 (36.5%) identified as male (M) and 269 (63.3%) identified as female (F). Men were more likely to negotiate salary for their first position as an independent ophthalmologist (M 78.3%, F 68.2%; P = .04). Respondents of both genders assessed their success similarly; 85.0% of men and 75.7% of women (P = .07) felt that their negotiation was very successful or somewhat successful. Women were more likely to select “flexibility in clinic/OR schedule for personal commitments” as a priority during salary negation for their first position (M 14.8%, F 23.1%; P = .04). Women ophthalmologists reported feeling more uncomfortable (M 36.1%, F 49.1%; P = .01), intimidated (M 20.0%, F 43.5%; P < .01), and were less likely to feel well-trained (M 24.5%, F 13.0%; P < .01). Most respondents never received formal training in negotiation.
We found significant gender differences among ophthalmologists in attitudes, priorities and behaviors surrounding salary negotiation. There were low reported levels of formal negotiation training, which appears to disadvantage women more than men. These gender disparities suggest that incorporating education about negotiation skills and career development early in training may be impactful.
Changes to reproductive endocrinology and infertility practice, research, and training as investor mergers increase
2023, F and S Reports
Private equity investment in fertility clinics has rapidly increased and is leading to unprecedented changes in the field of reproductive endocrinology and infertility (REI). The goal of this paper was to review private equity’s current integration in REI and discuss both benefits and challenges of investor involvement. We found that at least 25% of fellowship programs and medical schools were affiliated with private practice fertility clinics, not free-standing academic clinics. Approximately half of medical schools and nearly all REI fellowship programs that were affiliated with private practices were also backed by private investors. Research participation remains robust in private equity-affiliated REI clinics. With the changing infrastructure, we discuss the potential influence on trainee experience and research while also acknowledging the unique advantages that investor involvement may offer.
Ophthalmologist Turnover in the United States: Analysis of Workforce Changes from 2014 through 2021
2023, Ophthalmology
Physician turnover is costly to health care systems and affects patient experience due to discontinuity of care. This study aimed to assess the frequency of turnover by ophthalmologists and identify physician and practice characteristics associated with turnover.
Retrospective cross-sectional study.
Actively practicing United States ophthalmologists included in the Centers for Medicare and Medicaid Services Physician Compare and Physician and Other Supplier Public Use File between 2014 and 2021.
We collected data for each ophthalmologist that was associated with practice/institution and then calculated the rate of turnover both annually in each year window and cumulatively as the total proportion from 2014 to 2021. Multivariable logistic regression analysis was used to identify physician and practice characteristics associated with turnover. We also evaluated turnover characteristics surrounding the Coronavirus disease 2019 (COVID-19) pandemic.
Ophthalmologist turnover, defined as a change of an ophthalmologist’s National Provider Identifier practice affiliation from one year to the next.
Of 13 264 ophthalmologists affiliated with 3306 unique practices, 34.1% separated from at least 1 practice between 2014 and 2021. Annual turnover ranged from 3.7% (2017) to 19.4% (2018), with an average rate of 9.4%. Factors associated with increased turnover included solo practice (adjusted odds ratio [aOR], 9.59), university affiliation (aOR, 1.55), practice location in the Northeast (aOR, 1.39), and practice size of 2 to 4 members (aOR, 1.21; P < 0.05 for all). Factors associated with decreased turnover included male gender (aOR, 0.87) and more than 5 years of practice: 6 to 10 years (aOR, 0.63), 11 to 19 years (aOR, 0.54), 20 to 29 years (aOR, 0.36), and ≥ 30 years (aOR, 0.18; P < 0.05 for all). In the initial year (2020) of the COVID-19 pandemic, annual turnover increased from 7.8% to 11.0%, then decreased to 8.7% in the postvaccine period (2021).
One-third of United States ophthalmologists separated from at least 1 practice from 2014 through 2021. Turnover patterns differed by various physician and practice characteristics, which may be used to develop future strategies for workforce stability. Because administrative data cannot solely determine reasons for turnover, further investigation is warranted given the potential clinical and financial implications.
Proprietary or commercial disclosure may be found in the Footnotes and Disclosures at the end of this article.

View all citing articles on Scopus

: See Commentary on page 456.

: Supplemental material available at www.aaojournal.org.

: Financial Disclosure(s):

: The author(s) have made the following disclosure(s): R.N.K.: Consultant – Alkahest, Allergan, Clearside Biomedical, Regeneron, Genentech; Financial support – Chengdu Kanghong, Allergan, Roche, Santen, Clearside Biomedical

: HUMAN SUBJECTS: No human subjects were included in this study. The requirement for informed consent was waived because of the retrospective nature of the study.

: No animal subjects were included in this study.

: Author Contributions:

: Conception and design: Chen, Cox, Begaj, Armstrong, Khurana, Parikh

: Analysis and interpretation: Chen, Cox, Khurana, Parikh

: Data collection: Chen, Cox, Begaj, Armstrong, Khurana, Parikh

: Obtained funding: Study was performed as part of regular employment duties.

: Overall responsibility: Chen, Cox, Begaj, Armstrong, Khurana, Parikh

View full text

Original ArticlePrivate Equity in Ophthalmology and Optometry: Analysis of Acquisitions from 2012 through 2019 in the United States

Purpose

Design

Participants

Methods

Main Outcome Measures

Results

Conclusions

Section snippets

Identification of Private Equity–Backed Acquisitions

Description of Acquisitions

Discussion

J Am Acad Dermatol

Am J Ophthalmol

Ophthalmol Retina

Ophthalmology

Hospitals, market share, and consolidation

JAMA

Physician practice management and private equity: market forces drive change

Clin Gastroenterol Hepatol

The emergence of private equity in ophthalmology

JAMA Ophthalmol

Trends in private equity acquisition of dermatology practices in the United States

JAMA Dermatol

National and Regional Projections of Supply and Demand for Surgical Specialty Practitioners: 2013–2025

The Medicare Access and CHIP Reauthorization Act and the corporate transformation of American medicine

Health Aff (Millwood)

Potential implications of private equity investments in health care delivery

JAMA

Dermatology practice consolidation fueled by private equity investment: potential consequences for the specialty and patients

JAMA Dermatol

Private equity acquisition of physician practices

Ann Intern Med

Skin cancers rise, along with questionable treatments. New York Times. November 11, 2017

Original Article
Private Equity in Ophthalmology and Optometry: Analysis of Acquisitions from 2012 through 2019 in the United States