Who Owns Ophthalmology?

By Howard Larkin

In the wake of COVID-19, ophthalmology is undergoing a profound shift in practice patterns. Private equity companies and large clinic groups are rapidly buying up independent, surgeon- or partnership-owned practices. Many acquirers are international, including Ramsay of Australia and Aier of China, or regional, such as Miranza in Spain, Artemis Augenkliniken in Germany, Optegra in the UK, and Euro-Eyes across Europe.

It’s not hard to see the attraction. Over the past two decades, rapid—and expensive— technology advances have made ophthalmology one of the most capital-intensive of medical specialties, leaving new surgeons hard-pressed to strike out on their own and retiring surgeons unsure of how they can cash out. And COVID-19 shutdowns showed just how vulnerable even established practices are to financial shocks.

“So, the question is, do we jump on the consolidation train, or do we continue as we are?” asked Sheraz M Daya MD in the Practice Management programme at the 40th Congress of the ESCRS in Milan.

For Dr Daya, the answer comes down to why he founded his private clinic—to care for patients the way he felt best, work in an enjoyable environment without compromise, and master his destiny. Compared with public practice or working itinerantly in corporate-owned clinics, he sees ophthalmologist-owned or directed clinics as better able to achieve critical quality goals, including safety, timeliness, effectiveness, efficiency, equity, and patient-centeredness.

But quality also depends on consistent execution, which requires access to capital, business knowledge, leadership skills, and effective operational management. These are strengths experienced corporate managers can bring.

“I think there can be a happy marriage between the corporate role—who bring money, marketing skills, knowledge of management and building teams, and business expertise—and doctors, who understand colleagues and the value of giving patients what they need based on evidence and professional ethics,” Dr Daya said. “They can work together toward the same goals.”

Motives matter

Dr Daya pointed out private equity investors generally are not interested in patient care, per se, but in making profits buying and selling companies, which he finds unsustainable. But if a group came along that was interested in partnering to solve the problems of public health systems and financing, “I’d be there in a flash, because then we’d be seeing eye-to-eye. I’m optimistic things will change.”

In many ways, the current private equity boom echoes the practice management company wave in the US in the 1990s, said Kris Morrill, a management consultant. After buying practices for 15 to 20 times annual revenues, most of these deals collapsed. The firms had no experience running medical practices, and the theorised economies of scale never materialised. That most of the deals were transacted in stocks instead of cash was only reason some doctors didn’t lose their practices. “It was a Ponzi scheme,” she said.

However, some firms currently consolidating ophthalmic practices are not traditional private equity operations but have demonstrated a commitment to improving clinical practice efficiency and effectiveness—bringing the management expertise needed to add value to physicians’ clinical ethos. But these firms may be unable to generate this added value needed to sell off to a bigger company, which is the typical private equity model. Still, “they may be a viable option for [ophthalmologists] looking for an exit strategy,” Ms Morill said.

For those planning to stay on, Ms Morrill advises getting ready for changes. “It’s not yours anymore. That’s the part of this that sometimes gets lost,” she said. “At the end of the day, you are answering to somebody else.” Surgeons used to calling their own shots should think long and hard before committing to such an arrangement, and due diligence is required.

A third way

Yet, scale and management skills are needed to successfully address the quality and access issues presented by hybrid public/private systems, Dr Daya said. He believes the solution is for surgeons to band together rather than move from hospital to hospital as freelancers.

“If doctors could very single-mindedly start to work with each other and pull in the [management] resources available, I think they would fly. The paradigm has changed, and we need to change with it,” Dr Daya said.

“With the money sloshing around that they don’t have a home for, and the problem that exists, there is a marriage that could be made.”

Sheraz M Daya MD, FACP, FACS, FRCS(Ed), FRCOphth, is founder and medical director of Centre for Sight, based in London, UK, and a leading researcher and practitioner in cataract, refractive, and corneal surgery, stem cell transplantation, and tissue engineering.

Kris Morrill is founder and lead consultant with Medevise Consulting, based in Strasbourg, France.