By Maria Sampalis, OD
April 17, 2019
Selling to private-equity-backed buyers can be financially rewarding for a practice owner, but could it have an adverse impact on the profession of optometry, and on your local community?
Independent businesses, owned by people in the community where you live, are often the businesses that know you best. You know the owners, and they know the products you order every week, and whether you need a bag to carry the purchase home with, or whether you’re one of those people who carries your own reusable bag.
Customer relationship management software can record customer preference and buying patterns, but the service isn’t as personable when it’s a computer database, rather than a person, who remembers what you like to buy and how you like to buy it.
Other Pieces to Explore
A local independent practice, owned by an optometrist, is no different from any other local business in the advantages to be gained by local, independent ownership. In many cases, the optometrist has lived in the area their whole life, and personally knows many of the patients. They may choose to create a financial plan for a patient going through hard times to manage the purchase of new glasses, or they might even drop by the patient’s home to see how they’re doing.
When a practice is purchased by a private-equity-backed buyer, the culture of personalized care provided by an OD, who owns their own practice, can be in danger of changing. Even if the OD continues to work in the practice, they are no longer the decision-maker on the instrumentation to buy, the contact lens inventory to stock and the office environment upgrades to make.
Decisions Made By People Who Don’t Know Your Patients & Community
The same OD may continue to see the same patients, but they lose their ability to decide that an instrument that may not immediately deliver a strong return on investment is still worth buying because, in the long-run it will help the practice grow by improving patient care. They may not be able to decide not to stock and prescribe a particular brand of contact lenses they don’t like, and if they notice the carpet in the reception area looking shabby, they aren’t able to decide to replace it next week.
Whether it’s working with struggling patients to find solutions, or maintaining the upscale office environment patients have become accustomed to, selling to a firm that does not have local ties to the doctor’s community, and may not even be owned by optometrists, can come with a steep cost.
Maintaining Doctor-Patient Trust
When you, personally, control your practice you also control the data that is collected about patients. You know whether proper procedures are in place to adhere to HIPAA regulations, and you know for sure that the information collected about your patients will never be used for anything other than providing healthcare.
When a private-equity-backed buyer purchases the practice, they also are legally bound by HIPAA regulations to protect patient privacy, but when you’re no longer owner, you lose the ability to provide oversight to ensure that the information is, in fact, being protected. You also lose the ability to ensure that sometime, down the line, the new owners won’t find a way to leverage a facet of the data to aid another business they own, such as by eventually using some of the information to sell products and services outside of optometry to your patients.
You Have Other Options
A new graduate can buy into a partnership immediately, and a new graduate can buy a one-doctor practice after two year’s experience. It is misguided to assume you won’t be able to sell to another independent optometrist based on a dwindling preference by the youngest ODs not to immediately buy. Plus, new doctors are not the only resource for buying a practice. There are doctors who have worked as employees for years, and now want to become an owner.
Another alternative to selling to a private-equity-backed firm is to bring in a young optometrist and have them gradually, over the course of as much as a decade, or longer, slowly increase their share of ownership in the practice.
Or you could merge with another local, independent OD to share overhead costs. You could share office space, instrumentation and other office resources to begin with, and then, as you get closer to retirement, you could slowly sell that other doctor your patient database.
Yet another emerging option is to have an optical company to take over management of the optical retail side of your practice, while retaining profits from a percentage of the optical sales. That’s a new option I’m just learning about myself from Vision Associates.
Corporate subleases, a mode of practice I’ve worked in for most of my career, can also be an alternative to selling to a private-equity-backed firm. There are many corporate sublease arrangements in which the practice stays independent and is only renting office space from a corporation like Walmart or LensCrafters.
Don’t Forget Your Patients and Community
As you consider your options for transitioning out of practice, the financial payoff you’ll receive is important, as it determines the quality of life you and your family will be able to continue enjoying.
However, there is another dimension to that decision: The impact on the level of personalized, accommodating, caring doctoring your patients will receive. Will that level of healthcare continue to be delivered by a corporation that may not be owned by ODs at the highest levels, and is based outside of your community? That’s an open question you have to decide whether you are willing to take a chance on.
Have you sold to a private-equity-backed firm? If so, what has your experience been like? Have you been approached by PE, but decided not to sell? Why did you decide another path would be better for you and your patients?
Maria Sampalis, OD, practices at Sampalis Eye Care in Warwick RI. She is also the founder of Corporate Optometry on Facebook. Dr. Sampalis is also founder of the new job site corporateoptometrycareers.com and www.corporateoptometry.com. She is available for practice management consulting. To contact: firstname.lastname@example.org