CONSOLIDATION NATION: THE RISE OF PRIVATE EQUITY OPTOMETRY
No matter where you look in its history, the profession of optometry has always faced challenges. The number of optometry schools has changed, as has the number of jobs available in the field. Legislation and technology alike have been in constant flux. Optometry has successfully overcome these hurdles and more. Now, a new trend is piquing the curiosity (and concern) of ODs: the rise of private equity optometry. Companies such as MyEyeDr., Clarkson Eyecare, and Acuity are acquiring and consolidating private practices. As each group expands, they gain more buying power. This concept has caused quite a stir in the profession.
In idealized circumstances, “the pitch” of private equity optometry is as follows: a large, consolidated group incorporates well-tested best practices across its entire network. If applied correctly, these changes increase efficiency, profits, and the quality of patient care. Private equity can be a powerful solution for doctors facing competition from big box optical brands.
Unfortunately, the outcomes of acquisition are not always as lustrous as promised. Practice consolidation can result in staff cuts, software updates, or procedural changes that negatively affect hardworking human beings. Handing over the keys to a business can be a difficult personal choice, especially if a practice has been in a doctor’s family for generations. For some, even the most successful private equity deals can later result in feelings of regret.
The future of practice management, thankfully, may not be a total mystery. Consolidation hit dentistry before optometry. According to a 2018 special report by Review of Optometric Business, “after some 20 years of consolidation in dentistry, still less than 20 percent of dental practices are affiliated with private equity.” Optometrists may be able to look at this neighboring profession for insight, as well as similar trends in primary care, dermatology, and anesthesiology.
In the face of a buyout offer, every optometrist makes their own, personal choice. Matthew Weinheimer, OD ’14, was recently highlighted in Carmel Monthly magazine thanks to his practice’s decision to stay independent. The doctor he works for is building a brand new facility for Zionsville Eyecare instead of selling to private equity.
One ICO alumnus who recently said “Yes” to private equity is Vasvi Babu, OD ’93. She currently sits on ICO’s Board of Trustees. You may remember seeing Dr. Babu alongside her husband, Tom Babu, OD ’93, in the “Made at ICO” video series produced by the College several years ago. Since their video debut, the couple sold their 5-location practice, 20/20 Image Eye Centers, to Acuity.
Acuity was not the first potential buyer to approach the pair. When a private equity firm made offers in 2013 and 2015, Dr. Babu’s family was not ready. Her children were still in high school. The interested company had also been entertaining the idea of a practice name change. Dr. Babu was hesitant. “It just didn’t make sense for us at the time,” she explains. If selling “the largest private practice in Arizona” was going to be on the table, the deal would have to be a perfect fit.
Over time, Dr. Babu reflected on her aspirations as a practice owner. She and her husband had “capped out as far as expanding a practice [themselves.]” To open another location would mean more hours of work than her family was willing to commit. Their goal as leaders, all along, was to own a practice that could run without them. However, 20/20 had grown so much that no single doctor could afford to purchase the entire brand.
Acuity approached Dr. Babu hoping to expand into the Western United States. The Babus’ kids were older, and neither of the doctors had actively practiced in over 5 years. The timing was right. Acuity offered other key differences, as well. Explains Dr. Babu, “They don’t change anything on the front end.” Individual practices under Acuity keep their names, but “act as a collective group for buying power as well as the patient experience.” Talks lasted for about a year and a half, with the deal finishing in March of 2018. At that point, Dr. Babu elected to be “100% out” of running the practice.
Many of the common fears associated with private equity optometry did not apply to Dr. Babu’s specific buyout. 20/20 kept its same staff, down to the bookkeeper. In fact, some of the practice’s “star people” found more opportunity after the deal. Says Dr. Babu, “Our General Manager is now the Regional Manager of this entire area. One of our doctors sits on an Advisory Board.” While she understands the hesitations many doctors have, Dr. Babu points out that private equity firms want to acquire successful practices. In her opinion, keeping great methods and employees allows Acuity to “get their money’s worth.” Dr. Babu does concur that a doctor seeking to keep more control may not have made the same decision.
The changes that have occurred at 20/20 have been behind-the-scenes. The practice has incorporated a dispensing system popular on the East coast, and there are talks of a major software upgrade. Though she no longer manages the business, Dr. Babu proudly notes that “our Chandler office is #1 in patient satisfaction and our Scottsdale office is #2” among the entire Acuity network. For her, selling was the right choice. The deal fit her desired lifestyle, and thus far, patient satisfaction remains on-brand.
Dr. Babu is not the only OD in her circle to go the private equity route. A friend of hers in Colorado Springs also sold to Acuity. ICO classmates in Illinois and Ohio are considering it. The trend isn’t just for younger graduates, either; Dr. Babu knows an alumnus who graduated in the ’70s who is on the same path. “It’s definitely on the forefront of a lot of our friends’ minds,” she says.
Dr. Babu does not see selling as a departure from the profession. “[Optometry] is something that you went to school for when you were 22 years old, so it’s always going to be with you. I will continue to go to conferences and service the Board,” she says. Changing climate or no, Dr. Babu still recommends optometry as a thriving, comfortable profession. She hopes optometry schools can offer high-caliber classes in business fundamentals. That way, when faced with a deal from a company like Acuity, a doctor can be well-equipped to make the best choice for them.
Scott Allison, OD ’96, MBA, feels so strongly about private equity that he made it the focus of his career. MyEyeDr. acquired Ossip Optometry, the 36-location practice where Dr. Allison had been Chief Operating Officer. He eventually became Vice President of Professional Services at MyEyeDr.
Above anything else, Dr. Allison stresses that “it’s always an owner’s decision to sell to private equity.” Dr. Greg Ossip had a similar experience to Dr. Babu, in that MyEyeDr. was not the first company to make an offer. Dr. Allison says that MyEyeDr. had “a very similar culture” to Ossip Optometry and was thus the right fit. Says Dr. Allison, “You want to make sure you share many of the same values.”
Once acquired by MyEyeDr., Ossip Optometry “retained almost 100% of [its] doctors.” The practice’s point of sale system and electronic health records changed, but Dr. Allison says, “the focus on the patient has never wavered.” By his observation, Ossip Optometry can now see more patients thanks to efficient practice management tools and improvements to business practices.
For Dr. Allison, MyEyeDr. became an opportunity for career growth. “I’ve always considered myself a lifelong learner,” he says. “To have the opportunity to join a large organization like MyEyeDr., where you have over 400 offices and 700 ODs with whom you can share and collaborate ideas and best practices with… that’s something very exciting.” His experience with private equity has broadened his knowledge of “marketing, accounting, operations, professional services,” and he gets to meet “doctors who have a wide range of experiences.” While Dr. Allison knows private equity may not be for everyone, for him, it opened a path upward. “You just never feel like you’re alone.”
For optometrists faced with the opportunity to sell, Dr. Allison has this advice: “Ask yourself, ‘Is my team going to be taken care of?’ and, ‘Will my patients be taken care of?’” Navigating these questions will strengthen your individual point of view. Whether you intend to sell or stay independent, your decision about private equity is highly personal. By staying thoughtful and well-informed, you can be confident in the future you choose.