Issue: May 25, 2020

Chen EM, et al. Ophthalmology. 2020;doi:10.1016/j.ophtha.2020.01.007.

Disclosures: Parikh reports no relevant financial disclosures.
May 19, 2020
2 min read

Private equity acquisitions of ophthalmic practices have increased significantly since 2012

However, the number of acquisitions declined in 2019.

Issue: May 25, 2020

Chen EM, et al. Ophthalmology. 2020;doi:10.1016/j.ophtha.2020.01.007.

Disclosures: Parikh reports no relevant financial disclosures.
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Private equity-backed platform companies acquired 228 ophthalmology and optometry practices in the United States between 2012 and 2019, but the trend may be slowing, according to a study.

The outpatient nature of the specialty, the ability to do numerous procedures and the increasing need for ophthalmic specialists make ophthalmology and optometry clinics attractive acquisition targets for private equity-backed firms, study senior author Ravi Parikh, MD, MPH, chairman of Manhattan Retina and Eye Consultants and faculty at New York University Langone Health/School of Medicine, told Ocular Surgery News.

“Private equity acquisitions of ophthalmology clinics have increased significantly since 2012, which has coincided with the trend of consolidation in health care. Despite the increase, there has been a decline in acquisitions in 2019. It’s important that we monitor these acquisitions along with future trends to see how they may affect patient care and physicians’ experiences with burnout, job satisfaction and compensation,” Parikh said.

Uptick in acquisition activity

Researchers gathered acquisition and financial investment data from six financial databases, four industry news outlets and publicly available press releases from private equity firms or platform companies to compile the study data.

Only 42 practices were acquired between 2012 and 2016, but 186 were acquired from 2017 to 2019. During the study period, 29 private equity-backed platform companies acquired 228 ophthalmology and optometry practices, accounting for 1,466 clinical locations and 2,146 ophthalmologists or optometrists. Of those private equity platform companies, 20 were formed between 2017 and 2019. Eleven of the private equity platform companies acquired 92 optometry practices comprising 625 clinical locations.

Consolidation a driving factor

The attractiveness of ophthalmology investments and the desire of many practice owners to “cash out” of their clinics before retirement has spurred private equity acquisition, Parikh said.

“Consolidation is happening. It’s happening all over health care. ... Some physicians, may find it difficult or unenjoyable to deal with insurance companies declining to cover appropriate services and administrative tasks while caring for patients. This can be an exit strategy for some practice owners if they’ve been working for a long time and aren’t going to pass on their practices to family members or mentees,” he said.

Despite the boom in acquisitions, the study data showed a decline in acquisition numbers in 2019 compared with 2018, as well as a diminishing rate of private equity platform formation.

This could be due to a number of factors, Parikh said. The number of attractive eye care practices for acquisition may be decreasing, as the potentially profitable practices have already been acquired.


Private equity firms may also be trying to grow or maximize the potential recapitalization of the clinics they have already acquired. “As this data is pre-COVID-19, our research team will want to see how the COVID-19 pandemic also affects these trends in the next 1 to 2 years,” he said.

Consolidation is driving many of the acquisitions, but research needs to be conducted on how they affect patient care and outcomes. Physicians often have long-term goals of caring for patients for many years, while many private equity firms often have short-term goals when it comes to obtaining return on investment for acquisitions, he said. For example, 60% of platform companies formed before 2016 had already been sold or recapitalized to new investors.

“The misalignment of incentives can lead to decreased physician autonomy, may lead to higher health care costs, a decrease in positive work environments for physicians and potentially compromised patient care. Physicians maintaining autonomy and leadership roles in health care will be essential for the health of patients and the profession,” Parikh said. – by Robert Linnehan

Disclosure: Parikh reports no relevant financial disclosures.