Issue #6: Why the Buzz About Private Equity?
There’s been a boom in private equity interest in the medical field recently, with a laser-like focus on physician practices. Larger medical groups are being bombarded with solicitations of interest to buy their practices. For example, ophthalmologists tell me they are getting phone calls on a weekly basis and even flyers in the mail from interested parties - typically “brokers” who are just fishing around.

What on earth is going on here? 

While private equity (“PE”) developed as an investment vehicle in the mid-20th century, its popularity in medicine is newer, and comes as investors see an opportunity to consolidate and streamline a highly-fragmented system for the delivery of healthcare. For physicians who own their practices, this new buyer is often paying more than a young associate can afford or than a hospital can offer.

Specialties including dermatology, radiology, anesthesiology and now ophthalmology have become fertile ground for PE firms.
Those of you wanting to learn more about this phenomenon should check out my article in the current issue of Ophthalmology Management . While selling to a PE firm might be a good option for some practices, it’s not the best solution for everyone. A key issue for doctors is control. Selling your practice means loss of control. 

Other alternatives exist, including capital partnerships, regional mergers and corporate debt for practice expansion or refinancing (similar to a “refi” on your home mortgage – a future TeeTime topic).  

To this end, you can request a private consultation with SM2 Strategic to help guide you and your practice.  Let us know, we’re glad to help!
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About "Tee Time"
Shareef Mahdavi has been helping doctors enhance their practices for years through technology, patient experience, and better economics.

Tee Time  provides answers to specific pain points within medical practices, offering advice and solutions from companies that have been reviewed and evaluated by SM2 Strategic.