Private Equity Trends in Eye Care
By Arthur Stone
Selected By: Stephen D. McLeod, MD
Journal Highlights
Ophthalmology, April 2020
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Chen et al. set out to identify temporal and geographic trends in private equity (PE) acquisitions in eye care in the United States. They concluded that PE-backed acquisitions of ophthalmic and optometric practices have rapidly increased since 2012, with some platform companies having already been sold or recapitalized to new investors.
For this cross-sectional study, the authors used PE acquisition and investment data from Jan. 1, 2012, to Oct. 20, 2019. They identified 228 ophthalmic and optometric practices that had been acquired by 29 PE-backed platform companies during that time. Of the 228 practices, 127 were comprehensive/multispecialty practices, nine were retina practices, and 92 were optometry-specific practices; they were associated with 1,466 clinical locations and involved 2,146 clinicians.
Acquisitions increased rapidly between 2012 and 2019: From 2012-2016, 42 practices were acquired; this grew to 186 from 2017-2019. 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 the study period, with a median holding period of 3.5 years. Acquisitions occurred in 40 states, with a majority of PE firms developing multistate platform companies.
Of note, the authors found a slight decline in acquisition numbers in 2019 and a lower rate of platform formations. They speculate that this decline in PE interest may be due to expectations of limited profit potential due to current health care and market trends. Finally, they emphasize that future research should assess the impact of short-term PE investment on patient, provider, and practice metrics. (Also see related commentary by David W. Parke II, MD, in the same issue.)
The original article can be found here.