OSLI Retina

August 2020

Issue link: http://osliretina.healio.com/i/1279094

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424 Ophthalmic Surgery, Lasers & Imaging Retina | Healio.com/OSLIRetina Practical Retina Incorporating current trials and technology into clinical practice Private Equity's Game Plan and Why it Should Matter to Us by Veeral Sheth, MD, MBA; and Dilsher Dhoot, MD For this column, Veeral Sheth, MD, MBA, and Dilsher Dhoot, MD, were asked to comment on the implications of penetration of private equity (PE) into the retina landscape. During the last decade we have seen an accel- erating trend of PE deals in ophthal- mology. Where is the value to prac- ticing retina spe- cialists, our field, and our patients? To have this discussion, we first need to understand the PE viewpoint. During the past 5 years, retina has faced many headwinds that threaten our success. Declining reimburse- ments, increasing clinic volumes, con- version to EMR, burdensome compli- ance requirements, and ever-changing insurance coverage issues have made the practice of retina more complex than ever before. PE firms supposedly create efficiencies through economies of scale, negotiate better contracts with payers, and standardize our prac- tices with the end goal of helping us to provide more efficient patient care. Perhaps PE is the lifeline retina spe- cialists have been waiting for? Drs. Sheth and Dhoot generously share their extensive knowledge re- garding the controversial relationship with PE. They will dissect, analyze, and summarize the salient issues sur- rounding this important topic. I am certain that the insights regarding the pearls and pitfalls with PE presented in this piece will prove to be very valuable for our community. By now, most of us have come to understand, at least topically, what private equity (PE) deals mean in ophthalmology. We know that for providers, selling a practice to a PE firm offers the security of cash up front and can remove the administrative burden of running the practice. PE firms tell us that they are able to create efficiencies through economies of scale, negotiate better contracts, and standardize our practices, leading to better and more efficient patient care. Although many or all of these things can be true in any given deal, it is important to understand the PE viewpoint. Although many of us have spent time building and running practices, we have not had the opportunity to peak behind the PE curtain. As the number of deals between ophthalmology practices and PE continue in the post-pandemic landscape, it is critical for our patients and for ourselves to gain a better understanding of who we are making these deals with. THE LAST TEN YEARS PE activity is not only growing in ophthalmology; the trend is seen throughout the health care industry, with firms investing in everything from health care startups to hospital systems. Across the industry, the number of mergers and acquisitions has more than doubled this past decade with the PE activity, in particular quadrupling in that time frame (Figure 1). This represents a record number of PE deals in health care, totaling $88 billion in value. 1 Why is this trend accelerating? On a macro level, the pace of deals started to accelerate after the Affordable Care Act when hospitals started to align themselves with physician groups. This provided hospitals with greater reach into their markets and more leverage in negotiating with payers. During that time PE became an attrac- tive alternative for providers, and consolidation has been looked at as a way to insulate from potential headwinds such as lower reimbursements and disruptors like Amazon and Apple. 2 Another major reason the PE deal frenzy continues is the current financial market. High-net-worth investors that think the stock market is overvalued or that are looking for alternative investments are in- vesting their capital with PE firms. 3 With interest rates being at all- time lows, these firms are also able to tap into the debt markets. Veeral Sheth Dilsher Dhoot doi: 10.3928/23258160-20200804-01 Seenu M. Hariprasad Practical Retina Co-Editor

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