Eyeworld

18 Ophthalmology Business • September 2017 representatives didn't come back to them with a dollar figure; instead, Mr. Wilde said, they responded that they would consider the partnership a success if the physicians were hap- py and said they would do it again. "Four or 5 months in, that is still the driving force," Mr. Wilde said. David Alpern, partner, Varsity Healthcare Partners, Los Angeles, said at OIS@ASCRS that it's important to do your homework on private equity firms you're in discussion with, contacting other ophthalmic practic- es they've partnered with and other businesses outside of the specialty as well. "If you don't end up feeling like there's alignment, good partnership, and transparency, go in another direction," Mr. Alpern said, adding that while there is a lot of capital out there, it's more difficult to ascertain which partners will help you get to where you want to be. Chris Graber, principal, Waud Capital Partners, Chicago, echoed this thought but added that he would recommend partnering with a firm that has done this before. Mr. Wilde said it's important to have a strong transaction/legal counsel represent- ing you. Mr. Maller said it's important to make sure that not only are the prin- cipals at the investment firm aligned with the partners of the practice, but the partners need to be doing it for the right reasons as well. "Another thing I want to know, from the group's perspective, is if the business model you're creating and the partner you're choosing is going to position your practice so that you have a stronger, more sustainable business model that will foster you staying as independent practitioners in the future," Mr. Maller said. "For your business model to be sustain- able, you must have an eye on the next generation of surgeons. You not be for you. But if your goals are in focus and your practice is posi- tioned for expansion and/or con- solidation in your medical practice marketplace, the returns are reward- ing," he said. Dr. Lindstrom explained at OIS@ ASCRS that his practice had looked at creating a "mega-group," but the other doctors they spoke with in the area had their own brand and culture and wanted to maintain that. Still, seeing a lot of opportunity to work together, Dr. Lindstrom said private equity provided the model for them to do so while maintaining their own brands. If bringing in private equity could further your practice goals, then Dr. Katzen and Mr. Wilde dis- cussed the importance of picking the right partner. "You want to focus on—beyond dollars and cents—what is the reputa- tion of your potential private equity partners?" Mr. Wilde said. "Ask a lot of questions, do a lot of reference checks." A big driver for the decision to partner with Waud Capital Part- ners, Mr. Wilde said, was when they asked the firm what their measure of success would be within the first year or two after partnership. The firm's Mr. Wilde said that on the flip side, younger physicians, coming out of training with hundreds of thou- sands of dollars in debt, do not seem as keen to take on more debt to buy into a practice as they have in the past. In May 2017, the American Med- ical Association (AMA) alluded to this trend, reporting that for the first time the majority of physicians working at least 20 hours per week (and not employed by the federal government) were not practice owners. According to data from the AMA's Physician Practice Bench- mark Survey, 47.1% of physicians are practice owners; only 27.9% of physician practice owners are under 40 years old. Providing some compar- ison points, the AMA stated in a press release that 53.2% of physicians were practice owners in 2012 and 76.1% were owners in 1983. Finding the right fit Before starting to pursue a partner- ship with private equity, Mr. Kothari said a practice needs to review its goals. "You need to honestly assess your situation, future plans, and your financials. If you are not interested in growth, pursuing private equity may continued from page 17 " No less than 20 to 25 private equity investment firms are seriously interested in the ophthalmic space, and it begs the question, why? " —Bruce Maller

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