Private equity eyes billions in eye care as firms aim for more profitable procedures

ST LOUIS – Christina Green hoped cataract surgery would clear up her cloudy vision, which worsened after taking medication to fight breast cancer.

But the former English professor said her 2019 surgery with Ophthalmology Consultants did not reach 20/20 vision or correct her astigmatism — despite a $3,000 out-of-pocket charge for the stigmatism surgical upgrade. . Green, 69, said she feels more like a dollar sign for the practice than a patient.

“You’re a cow among the herd when you just go from station to station to station to station,” he said.

Ophthalmology Consultants is part of EyeCare Partners, one of the largest private equity-backed US eye care groups. It is headquartered in St. Louis and has approximately 300 ophthalmologists and 700 optometrists in its networks in 19 states. The group declined to comment.

Switzerland-based Partners Group bought Eyecare Partners in 2019 for $2.2 billion. Another eye care giant, Texas-based Retina Consultants of America, was formed in 2020 with a $350 million investment from Massachusetts-based Webster Equity Partners, a private equity firm, and now has its own The website says it has 190 doctors in 18 states. Other private equity groups are building regional footprints with practices like Midwest Vision Partners and iSouth Partners. Acquisitions have become so rampant that private equity firms are now routinely selling practices to each other.

Dr. Robert E. Wiggins Jr., president of the American Academy of Ophthalmology, said that in the past decade, private equity groups have gone from acquiring a handful of practices to more than 8% of the nation’s ophthalmologists.

They are practicing eye care physicians across the country as the American population ages, along with increasing opportunities to make money in medical eye care. Private equity groups, backed by wealthy investors, buy these practices — or consolidate them under franchise-like agreements — hoping to cut operating costs or increase profit margins by changing business strategies. with. They then often sell the practice to the next bidder at a higher price.

The profit potential for private equity investors is clear: Like paying to upgrade airplane seats to first class, patients can opt for expensive add-ons for many eye procedures, such as cataract surgery. Surgery. For example, doctors may use lasers instead of manually cutting the lens of the eye, offer multifocal contact lenses that eliminate the need for glasses, or recommend an astigmatism fix called Green said it was sold. Often, patients pay out-of-pocket for these extras — a health care copay that is unrestricted by insurance payment negotiations. And such services can be performed in outpatient and stand-alone surgery centers, both of which can be more profitable than a hospital setting.

Private equity groups that provide capital can help doctors market and expand their practices, as well as negotiate better prices for drugs and supplies, Wiggins said. But he warned that private equity firms’ pursuit of maximum profits risks compromising patient care.

“The problems are accumulating and driving up costs,” said Aditi Sen, director of research and policy at the nonprofit Healthcare Cost Institute, which provides data and analysis on health care economics.

Yashaswini Singh, a health economist at Johns Hopkins University, and colleagues analyzed private equity acquisitions in ophthalmology, gastroenterology and dermatology and found that post-acquisition practices paid an additional 20%, or an average of $71, more on insurance. charged According to their research, published Sept. 2 in the JAMA Medical Journal, private equity-owned practices also saw substantial increases in new patients and more frequent returns of older patients.

A KHN analysis also found that private equity firms are investing in doctors’ offices that prescribe two common macular degeneration eye drugs at higher prices, meaning doctors are potentially seeing more patients. And thus they are more profitable.

KHN analyzed the top 30 prescriptions for the macular degeneration eye drugs Avastin and Lucentis in 2019 through the Centers for Medicare and Medicaid Services database. Private equity firms invested in 23% of the top Avastin prescribers, and 43% of the top Lucentis prescribers – far more than the 8% of ophthalmologists that private equity currently owns. For example, Retina Consultants of America has invested in four of the top four prescription practices of Avastin and nine of the top prescription practices of Lucentis.

“The private equity model is a model that focuses on profitability, and we know they’re not choosing methods randomly,” Sen said.

He noted that the patient volume would be attractive to private equity, as well as the idea of ​​investing in ways to use the expensive Lucents prescriptions, which cost about $1,300 an injection. Additionally, he said, after being acquired by private equity, doctors could potentially shift their prescribing habits from cheaper Avastin that costs about $40 to Lucentis.

Retina Consultants of America did not respond to requests for comment.

Last summer, Craig Johnson, then 74, decided it was finally time to get cataract surgery to fix his deteriorating eyes. He decided to go to CVP Physicians in Cincinnati, calling it “the cream of the crop for eye surgery locally” as they perform “100s a day.” The practice was already part of a private equity investment but has since been acquired by another investor, behemoth EyeCare Partners, for $600 million.

Johnson, while pleased with the results of his surgery, didn’t know about the manual cutting version of the surgery — a cheaper but equally effective alternative to using a laser. Johnson was using private insurance because he was still working, and he said that resulted in more than $2,000 in out-of-pocket costs for each eye. According to the American Academy of Ophthalmology, laser surgery generally costs more than manual surgery and may not be covered by insurance plans.

Johnson explained that a salesperson as well as a physician ran him through options for improving his vision.

“Seniors are a vulnerable population because they’re on a fixed income, they’re younger, they trust you … you’re wearing a white coat,” said Dr. Arvind Saini, an ophthalmologist with an independent practice in California. “. San Diego County

Many patients do not know whether private equity investors have a stake in their chosen practices because they are often referred to them by another doctor or have an eye emergency. .

David Zelenziger, 70, felt fortunate to get a quick appointment with one of his NY practice Vitreoretinal Consultants after his retinal detachment. Zelenziger, a former business journalist, didn’t know it was affiliated with Retina Consultants of America. He loved his doctor and had no complaints about the emergency care he received – and continued to go there for follow-ups. “Medicare covers everything,” he said.

“It’s a very busy process,” he said, adding that it has expanded to more locations, which should make investors happy.

In 2018, Michael Crone co-founded Physician Growth Partners, a group that helps physicians sell their practices to private equity firms, to capitalize on the explosion of interest. Eye care is one of the biggest areas of investment, he said, because specialized health care services cover such a broad market of people.

A KHN analysis found that sixteen of the 25 private equity firms identified as the largest healthcare investors by industry tracker PitchBook have bought stakes in optometry and ophthalmology practices.

Krone expects private equity investment in practices to continue to accelerate only because of competition from the “1,000-pound gorilla” of hospitals that practices are also acquiring and the red tape of bureaucracy pushing more doctors out. Compelling to seek help. “If you’re not growing, it’s going to be hard to survive and make the same income as you did historically,” he said.

Some health care experts worry that private equity firms could eventually be left with an overleveraged portfolio if other firms don’t want to buy the practices they’ve invested in, which could lead to those practices becoming more expensive. can lead to closure and ultimately even greater stability.

“I don’t believe most physician practices are so inefficient that you can get 20% more profit from them,” said Dr. Lawrence Peter Casalino, chief of the division of health policy and economics in Weill Cornell Medicine’s Department of Population Health. said Sciences and, he said, investors rely on reselling to a buyer who will pay more than they paid. “If it doesn’t work, the whole thing unravels.”

KHN investigative reporter Fred Schulte contributed to this article.

Related Topics

Contact us Submit a story suggestion

Leave a Reply

Your email address will not be published.