THE GOOD, THE BAD, AND THE UNKNOWN Past Lessons, Future Directions

CRST held a roundtable discussion of private equity in ophthalmology. Participants drew on their experience with physician practice management companies to advise doctors on the consolidation efforts of today.

STARRING ALAN E. REIDER, JD, MPH DAN CHAMBERS (MODERATOR)

BRUCE MALLER TRENT ROARK JEFFREY WHITMAN, MD

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45 PRIVATE EQUITY IN OPHTHALMOLOGY ------CATARACT & REFRACTIVE SURGERY TODAY

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AUGUST 2017 Currently, I am the executive director ofdirector executive the am I Currently, I am the president of BSM Consulting. WeConsulting. BSM of president the am I the Key-Whitman Eye Center. Actually, Key-Whitman was awas Key-Whitman Actually, Center. Eye Key-Whitman the [have]we and 90s, the in back regime PRG the of member thatcenters surgery and clinics other of number a bought I90s, the in Back time. that since PRG with associated were basicallyover PRG, of president vice senior the actually was states.26 in practices 140 had we time, the At operations. cen surgery 40 and ODs, and MDs physicians, 600 had We ofprocess the in were and dissolved we time the at ters restructuring. Bruce Maller: rangea provide we and people, 50 under just of team a have fromranging space, ophthalmic the in services consulting of firmour 1990s, the in Back support. strategic to operational ofboard the on was I and 21, Vision to consultant a was directors of Vision 21 until they went through a restructuring. interiman taking up ended I restructuring, that of part As primar 21, Vision of officer executive chief the as position restructuringin assist [to] company, the down wind to ily theirphysicians the to back sell to and debt, company’s the practices. Dan Chambers: - This roundtable discussion deals with the entrance of private equity into the ophthal the into equity private of entrance the with deals discussion roundtable This I have a practice in Dallas, the Key- the Dallas, in practice a have I The purpose of this roundtable is to bring in some of the professionals who lived through the PPMC experience andexperience PPMC the through lived who professionals the of some in bring to is roundtable this of purpose The Now, we see a similar trend with private equity emerging with similar promises of greater operational efficiencyoperational greater of promises similar with emerging equity private with trend similar a see we Now, know what went wrong. We hope to learn from them the mistakes that were made so that a practice that is consider is that practice a that so made were that mistakes the them from learn to hope We wrong. went what know theof each introduce to like I’d forward. going problems same those avoid to steps take can today equity private ing backdid they what today, doing they’re what on background brief a provide they that ask and panel the of members (PPM).management practice physician with relationship their and 1990s, the in ing a medical practice. Physicians complain that they are spending more time on administrative issues than they arethey than issues administrative on time more spending are they that complain Physicians practice. medical a ing messagethe than different bit a be to seems industry equity private the from message the Finally, medicine. practicing willthere that hope the is there certainly Although play. financial leveraged a not is This PPMCs. the from ago years 25 ophthal with working to committed be to seem firms equity private the time, this instead, benefit, financial some be bothof incentives the that so side revenue and cost the both on focus a with system delivery better a build to mology seen.be to remains time this work will it Whether aligned. are parties and higher returns. But somehow, it feels different this time. Part of the reason may be based on the uncertainty ofuncertainty the on based be may reason the of Part time. this different feels it somehow, But returns. higher and com by presented threats the as well as programs care health governmental other and Medicare the of future the access,patient about concerned are Practices panels. provider their on participation restricting are that payers mercial effectivelymore can that network larger a with themselves aligning by served better are they that believe many and operat of burdens regulatory crushing the about concern increased is there addition, In contracts. these for compete specialties, particularly oncology, anesthesiology, and more recently, dermatology, have been operating under thisunder operating been have dermatology, recently, more and anesthesiology, oncology, particularly specialties, manage practice physician the of midst the in was ophthalmology 1990s, the in fact, In years. many for model NovaMed,and TLC, 21, Vision Vision, Prime companies—PRG, many where phenomenon, (PPMC) company ment higher and efficiency operational greater of promise the with practices pursuing actively others—were among burned.and crashed ophthalmology in market PPMC the began, it after shortly But, owners. the for return Alan E. Reider, JD, MPH: JD, MPH: Alan E. Reider, Somephenomenon. new a not are management centralized and practices medical of Consolidation space. mology Today, we’re in a large private group practice. We haveWe practice. group private large a in we’re Today, upfront. companies and Medicare are affecting our economyour affecting are Medicare and companies insurance itof part and ophthalmology, in system payment the within payto willing is equity private what at ahead looking also is Whitman. I think that we will again look at safety in numbers.in safety at look again will we that think I Whitman. inquirythat started we’ve equity; private at look a take We’ll andeconomy the way the with do to has [reason] One already. center. We recently completed a new building for both ourboth for building new a completed recently We center. part are There center. surgery main our and clinic headquarters andoffice our of part are that some center, surgery the in ners Key- in partners not They’re clinic. our outside are that some our way out of that.of out way our surgerya and offices, six MDs, and ODs seven and six between in or you were going to be out. We wanted to be in. Whatin. be to wanted We out. be to going were you or in orefficiency of terms in out work didn’t time the at sense made boughtwe others, many like eventually, and income, increased involved with PRG, largely because of what I would term safetyterm would I what of becauselargely PRG, with involved wascare managed that thought we time, the At numbers. in beto going were you either and world the over take to going Jeffrey Whitman, MD: MD: Jeffrey Whitman, gotpractice our 1990s, the in Back Center. Eye Whitman 46

CATARACT & REFRACTIVE SURGERY TODAY CATARACT &REFRACTIVE SURGERY THE GOOD, THE BAD, AND THE UNKNOWN managed care pressures dissipated somewhat during the 90s. managed care pressures dissipated somewhat during the 90s. formed several individual physician associations, but they were relatively weak, as the as such, we really couldn’t negotiate pricing between different groups. We eventually assets of the practices, they really did not own the individual physician practice, and didn’t really know that at the beginning. [Moreover] just because PRG owned the rations, simply due to the Federal Trade Commission regulations on price fixing. We negotiate price across the individual professional associations, or professional corpo group. Probably one of the more interesting things [is that] it was actually illegal to and not having access to patients and the ability to negotiate more effectively as a What’s your perspective on why they failed? needed to be on building a great company, not taking the company public. time on casing the potential for an IPO []. Once again, the focus ultimately didn’t deliver on the promise. off the ball in terms of being able to execute their business plan. To Jeff’s point, they They grew through acquisition, they grew too rapidly, and they really took their eye by the desire to grow at too rapid a pace. I believe this was the case with Vision 21. structure to be able to deliver on the promise. I think part of that was exacerbated . Many of these companies struggled to invest in the proper infra the leadership. In addition, I also think that most of the companies lacked a strong in a disciplined and effective manner. This ultimately comes back to the failure of and the ability to execute a sound business plan and to operate the companies didn’t provide us with more patients. for patients. So, it was really a matter of efficiency. It didn’t make us more efficient. It each other and thereby, hopefully, save money and work on increased contracting my developed by having a network of closely spaced practices that could work with difficult to add a practice to your existing clinic. We found there was not any econo wasn’t advantageous to us. Because you’re going through a large system, it was very have good direct contact with how much we were even making. So, financially, it efficiency. We weren’t saving money in what we were doing, and we didn’t really oncology and anesthesiology? industry fail for ophthalmology when it appears that it did not fail for others such as WHAT WENTWRONG? general ophthalmology, refractive surgery, and retinal care. multispecialty ophthalmology practice providing laser cataract surgery, glaucoma, north to Lansing, south to Adrian, and including Toledo and Bryan, Ohio. We’re a a number of practices stretching across Michigan, from Ann Arbor to Kalamazoo, vice president of operations. Today, I am the CEO of Specialty Eye Institute. We have Trent Roark: Chambers: Reider: One last comment I would make is [that] there was too much emphasis at that Maller: Whitman: Reider: Whitman: Reider: Dan and Trent, you were both right in the middle of the operations. Dan and Trent, you were both right in the middle of the operations. Effectively, the promises weren’t kept. They weren’t able to deliver. Let’s start with the most fundamental question here: Why did the PPM As I reflect upon that time, there was a big gap between the “promise” As I reflect upon that time, there was a big gap between the “promise” Exactly. Exactly. I believe it did not offer economy of scale, so there wasn’t increased I was one of the founders of what became NovaMed and served as I was one of the founders of what became NovaMed and served as As Dr. Whitman said, the primary driver was the fear of managed care As Dr.Whitmansaid,theprimarydriverwasfearofmanaged care

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CATARACT & REFRACTIVE SURGERY TODAY CATARACT &REFRACTIVE SURGERY THE GOOD, THE BAD, AND THE UNKNOWN WARWICK, RHODEISLAND KOCH EYEASSOCIATES EYE PRACTICE: BOSTON CANDESCENT PARTNERS PE INVESTOR: JANUARY 2012 Some Private Equity DealS in Ophthalmology Since 2012 Since Ophthalmology Some PrivateEquityDealSin

PE INVESTOR: WAKEFIELD, RHODEISLAND SEACOAST EYEASSOCIATES EYE PRACTICE: BOSTON OF CANDESCENTPARTNERS) (AS APORTFOLIOCOMPANY KOCH EYEASSOCIATES JANUARY 2013

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AUGUST 2017

EYE PRACTICE: LOS ANGELES PARTNERS VARSITY HEALTHCARE PE INVESTOR: SERVICES PARTNERS) FORMED EYECARE BALTIMORE (DEAL KATZEN EYEGROUP

May 2014

VISION PARTNERS) (DEAL FORMEDUNITED BLOOMINGTON, MINNESOTA CONSULTANTS MINNESOTA EYE EYE PRACTICE: CHICAGO WAUD CAPITAL PE INVESTOR: February 2017

GRAND RAPIDS EYE PRACTICE: CHICAGO STERLING PARTNERS PE INVESTOR: MICHIGAN OPHTHALMOLOGY FEBRUARY 2017

49 PRIVATE EQUITY IN OPHTHALMOLOGY

DENVER (AS A DENVER (AS A ,

CATARACT & REFRACTIVE SURGERY TODAY

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July 2017 August 2017 CHICAGO EYE PRACTICE: GEORGIA RETINA ATLANTA EYE PRACTICE: SWAGEL-WOOTTON HIATT EYE CENTER PHOENIX PE INVESTOR: EYESOUTH PARTNERS, ATLANTA (AS A PORTFOLIO COMPANY OF SHORE CAPITAL] PE INVESTOR: EYECONIC VISION PARTNERS PORTFOLIO COMPANY OF CORTEC GROUP] AUGUST 2017

May 2017 April 2017 HARVEST PARTNERS NEW YORK EYE PRACTICE: EYECARE SERVICES PARTNERS DALLAS (ACQUIRED MAJORITY INTEREST FROM VARSITY HEALTHCARE) H.I.G. CAPITAL MIAMI EYE PRACTICE: SOUTHWESTERN EYE CENTER PHOENIX PE INVESTOR: PE INVESTOR:

March 2017 February 2017 EYESOUTH PARTNERS) GEORGIA EYE PARTNERS ATLANTA (DEAL FORMED CHICAGO EYE PRACTICE: PE INVESTOR: SHORE CAPITAL BARNET DULANEY PERKINS PHOENIX MIAMI EYE PRACTICE: PE INVESTOR: H.I.G. CAPITAL Some Private Equity DealS in in DealS Equity Private Some Ophthalmology Since 2012 50

CATARACT & REFRACTIVE SURGERY TODAY CATARACT &REFRACTIVE SURGERY THE GOOD, THE BAD, AND THE UNKNOWN duction drop by 20% after an acquisition. In addition, when we duction drop by 20% after an acquisition. In addition, when we senior doctors, and really, you often saw their individual pro competitive physician wages. It was an exit strategy for many was unacceptable for many. Basically, it lowered a lot of the vate equity company today. Taking 35% of the doctor’s income country, and that may now be an unlikely approach by a pri no synergy whatsoever when you’re buying them all over the public company as a brand-new organization. didn’t bring any major cost-saving advantages, but we were a ally added a lot of debt owed to physicians at the time. They ability nor any [information technology] capabilities, but actu have any initial infrastructure, didn’t have any strong accounting up” concept, from a capital structure perspective, didn’t really American Ophthalmic out of Orlando [Florida]. Now, this “roll- but also other corporations like EyeCorp, Equivision, and they acquired not only the original founding practices of PRG it was kind of challenging to effectively work as a group. herding cats. At the time, everybody wanted to be the boss. So, money. So, when you’re dealing with doctors, it’s a little like money, and the doctors figured out they had control of the the corporation didn’t really have any control of the incoming themselves and not to [the] PPMC corporation. Therefore, Medicare and the insured actually belonged to the physicians I can attest that buying a collection of practices really offers I can attest that buying a collection of practices really offers As Bruce said, PRG was really an acquisition company, and The other thing is that the money that was being paid by equity firm? center to a private ambulatory surgery your practice or the option of selling Have you considered private equity firm? interaction with a Have you had any CRST Exclusive:

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AUGUST 2017 Survey onPrivateEquityinOphthalmology 57% YES No 53% YES 47% 43% No - - - before retirement? do you plan to work How much longer ophthalmology? negative trend in to be a positive or acquisition option the private equity Do you consider equity can keep those things quiet. So, given all of those issues equity can keep those things quiet. So, given all of those issues the public domain with quarterly reporting, [whereas] private that a public corporation needs to disclose negative issues to poration, you are very different than private equity in the sense future value for the younger physicians. Also, being a public cor a lot of the senior doctors, who basically sold out and left no beyond the selling physician. Therefore, it was one and done for with was the issue that there was no rational succession value accounting system. financially worse when they were converted to an accrual tors, which led to mistrust. Generally, more practices looked many practices was extremely difficult to understand by doc Finally, the mandatory accrual accounting methodology for pliance actions, they simply increased expenses for the practice. labor laws. Therefore, when we implemented appropriate com with respect to coding, regulations, overtime, and other federal acquired practices, most of them were essentially noncompliant neurial. So, if you bring in a group of practices together and say, neurial. So, if you bring in a group of practices together and say, that, the practices we acquired, the doctors were entrepre when looking at the practices. What we quickly learned was said, and that is economies of scale. That was the first emphasis the industry. happening in a short span of a few years, it led to a collapse of Probably one of the most significant elements that I dealt Probably one of the most significant elements that I dealt Roark: I’m going to go back to something Dr. Whitman I’m going to go back to something Dr. Whitman Positive 48% years more 15 or 48% years 11 to15 6 to10years years 1 to5 20% 5% 27% Negative 52% - - - -

51 PRIVATE EQUITY IN OPHTHALMOLOGY - - - CATARACT & REFRACTIVE SURGERY TODAY

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—Alan E. Reider, JD, MPH JD, Reider, E. —Alan AUGUST 2017 The PPMCs really didn’t didn’t really PPMCs The and efficiencies, any create their key was that frankly, offering. Trent, you happen to have been affiliated withaffiliated been have to happen you Trent, I think one reason we survived was we went fromwent we was survived we reason one think I We also have to look at what’s different about the environ the about different what’s at look to have also We Reider: Reider: Roark: Generally speaking, most of the private equity firms are look are firms equity private the of speaking,most Generally sician in a practice. You have many specialty users of the ASC,the of users specialty many have You practice. a in sician changesthe make to easier little a was it so speaking, generally ASC.the in scale of economies implement to industry.PPM the in back was it what versus time this ment managedthat concerned all were we PPM, the in back Again, controlling by losers and winners create to going was care setdifferent whole a at looking we’re Today, direction. patient theof because management certainly is them of One issues. of ing for a platform practice with an ambulatory surgery centersurgery ambulatory an with practice platform a for ing forpractices additional on “bolt” to look they and [ASC], withdirection that forcing they’re think I synergy. and economy governanceof type the and control, financial capital, available powermore had you days, PRG In taking. they’re that approach workdidn’t really they and practices, individual the to given together.work to incentive an have didn’t really They together. ISo, approach. equity private a with today different very That’s equity.private with control enforced more seeing you’re think to willing are they [that] structure capital different a see also We acquisitions,practice local add to takes it what in invest and pay inwhereas profitable, become to equipment and service, new justto mostly out going was money the days, acquisition PRG infrastructure.the develop to wasn’t really it practices; buy ait’s although NovaMed, survived, that entity [PPM] one the fromlearned be to lessons any there Are [now]. different little survival?NovaMed’s managementASC an to management practice model PPM the isvaluable more became change that reason One company. haseither physician the where model traditional the it’s because weresult, a As ASC. the to or surgery do to hospital the to go to phy the by created was that culture a over stumbling not were - - There’s a very different market and a lot differentlot a and market different very a There’s There are a couple of key points that I picked up.picked I that points key of couple a are There Chambers: It sounds like they didn’t do their homework. For example,For homework. their do didn’t they like sounds It Reider: Reider: Finally, at the time, the big emphasis, as was mentionedwas as emphasis, big the time, the at Finally, Another lesson learned was that people don’t work as hardas work don’t people that was learned lesson Another the next group.next the equity is short term, and that’s often 5 years or even less. Asless. even or years 5 often that’s and term, short is equity theyso , on return on timetable a have they such, tosell to period 5-year a within value their maximize to want due diligence effort is trying to find out what failed in the 90s.the in failed what out find to trying is effort diligence due ofacquisition the in intent the 90s, the in that, mind in Keep privatefor intent the Today, term. long [the] for was practices WILL THE PRIVATE EQUITY SECTOR AVOID WILL THE PRIVATE EQUITY SECTOR AVOID THOSE PROBLEMS? equityprivate the of lot A today. occurring are that situations damental misunderstanding of the industry and the regulatorythe and industry the of misunderstanding damental environment. Dan’s comment that there was a lack of understanding thatunderstanding of lack a was there that comment Dan’s fun a reflects together prices set couldn’t practices competing all within a certain geographic area, they were dispersed all overall dispersed were they area, geographic certain a within all gotyou’ve when synergy get to difficult very It’s country. the places.different in practices multiple That didn’t happen. I also heard most of the panel members panel the of most heard also I happen. didn’t That factthe was it of part perhaps and synergy, of lack a about talk practicesgetting of instead because flawed, was model the that One was the fact that the PPMCs really didn’t create any effi any create didn’t really PPMCs the that fact the was One togoing We’re offering. key their was that frankly, and ciencies, profitable. more be to going we’re so efficiently, more operate for ophthalmic managed care, and it was hard to get thoseget to hard was it and care, managed ophthalmic for contracts. table. Acquisition of practices in the same market would createwould market same the in practices of Acquisition table. care managed for attractive be to us allowed [that] market a demanda wasn’t really there was out found we What contracts. earlier, was on managed care. That was going to be anotherbe to going was That care. managed on was earlier, theto brought company management the that added value the money upfront. As we continued to grow, more and more and more grow, to continued we As upfront. money the towas goal The money. less and stock some get would people inus hurt of kind that think I and stock, the of value the drive together.things pull to trying to the IPO level. It became a real push. Consequently, I think we think I Consequently, push. real a became It level. IPO the to anddoctor the of motivation the of misalignment some had ofmore get would doctors cases, earlier the In corporation. the for others as they do for themselves. That’s not to point at anyat point to not That’s themselves. for do they as others for let’swas emphasis whole the but equation, the of side particular thingthis take let’s and growth, some show let’s going, this get because it is the most efficient way to do it. Stepping back andback Stepping it. do to way efficient most the is it because important.very was practices these from learning find that it doesn’t work overnight. It takes a lot of time, andtime, of lot a takes It overnight. work doesn’t it that find is learn you thing second The accomplish. to expensive very it’s waycertain a done are market particular a in things some that we want to standardize the way we do things, you’re going togoing you’re things, do we way the standardize to want we 52

CATARACT & REFRACTIVE SURGERY TODAY CATARACT &REFRACTIVE SURGERY THE GOOD, THE BAD, AND THE UNKNOWN what it takes to build a terrific business. what it takes to build a terrific business. That requires patient, thoughtful investors who understand necessarily through acquisition but also in an organic fashion. to dig in with you and to build something and to not build it period of time. The truth is you need someone who’s willing of these firms want in, and they want out in a relatively short referenced a need for achieving a certain rate of return. Most I advise my clients [to] think like a financial investor. Dan of understanding of what it takes to build a great business. of that is fueled by greed and, in some cases, simply a lack because people are prone to repeat their mistakes. Some don’t know if it’s going to be any different this time around, objectives. partner who’s going to help me to achieve our long-term of things I’m looking for. I want to find a great business in the team, the vision, and the strategy? Those are the kinds you end up staying in a deal for 13 years because you believed you just sell out? Instead of staying in the deal for 5 years, did example, when a deal didn’t go right, what did they do? Did understand a bit about their history, their track record. For among those firms. Maybe that comes back to trying to at many different firms and to look for critical differences to achieve the promise that you referenced earlier. the growth in cash flow [that are] going to enable this entity and cash flows. Ultimately, it’s the growth in the business and a business plan that’s really going to create sustained growth physician and administrative leadership team, to help build for people that can come to the table, complement a great What you’re looking for is really the ingredients of leadership and create efficiencies, that’s what you should be looking for. your infrastructure as a platform to grow and, in turn, build you’re using the financial partner to help to fuel and develop If you have a great organization that you’ve developed, and build a great business. In the end, that will trump everything. looking for a partner that is interested in working with you to equity? EQUITY FIRMS? HOW SHOULDPRACTICESASSESSPRIVATE ment companies may be of interest to the younger doctor. From this perspective, I think the renewed interest in manage other interests to worry about the management of the practice. bad, but they are not going to sacrifice time with their family or today with a more balanced lifestyle goal. This is not necessarily that we have a different type of physician coming out of school the doctor is, I think, a powerful play. I think the other thing is ment who can take that risk and that problem off the plate for increased regulations. The need to have some top manage I’ll go back to the question you posed to Dan, Alan. I I’ll go back to the question you posed to Dan, Alan. I How does one go about doing that? You need to look Maller: Reider: What should practices be looking at in private What should practices be looking at in private The principal advice I would give is that you’re The principal advice I would give is that you’re

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AUGUST 2017 - - business. Alignment of the vision and values [is] paramount. business. Alignment of the vision and values [is] paramount. but they’re going to be alongside you to assist in building the social setting. Granted, they may be out of the deal in 5 years, firm(s) and to spend quality time, both in a business and [a] py—specialties that function in some ways in a similar fashion. instead would include dermatology, dentistry, physical thera specialties that would be germane are not hospital based but nantly hospital based or not, as the case may be? The types of the specialty areas they have invested in. Are they predomi service sector. If they have invested in physician services, study any good if they’ve never worked or invested in the physician equity firms specialize in health care, but that doesn’t do you deals they’ve done, or not, as the case may be. Some private public websites. You can go to them and identify the types of pretty good sense of what it takes to build a great business. They understand the third-party payer world, and they have a understand the different business models in ophthalmology. space in great detail. They know who the players are. They one is they’ve done their homework. They have studied the that I would say differentiate [them] from the others. Number field to three or four. There are certain elements about them these individuals, you can quickly take the 15 and narrow the one, and what does it sound like? When you’ve spoken to 15 of to understand the vision of the firm in the space. Do they have to between 15 and 20. I always start my discussion with trying interested in the ophthalmology space. I’ve probably spoken about 40 to 50 different private equity firms that are apparently The third dimension would be to meet the principals of the The third dimension would be to meet the principals of the The second dimension is their track record. These firms have Maller: Reider: How do you find those people? How do you find those people? What would I do knowing what I know? There are What would I do knowing what I know? There are investors. requires patient, thoughtful in anorganic fashion. That through acquisitionbutalso to notbuilditnecessarily and to buildsomethingand willing to diginwithyou You needsomeonewho’s —Bruce Maller - - Private Equity Insiders Offer Perspective and Advice

By Stephen Daily, Executive Editor, News through a network of six offices, including four that operate The medical field has seen a sharp increase in consolidation and ophthalmology-focused ASCs. private equity activity in recent years, particularly in the dentistry, Chris Graber, principal at Waud Capital, oncology, and dermatology segments. In the past 3 years, however, said the appeal of Minnesota Eye was the a new specialty has emerged with many of the attributes private strong culture that was already established equity companies long for—eye care. as well as the comprehensive offerings, After a 25-year hiatus, private equity companies have returned which included academics, research, clinical to the eye care market, this time better equipped to manage the practice, and business operations. obstacles that might have been mismanaged in the past. Private Matthew Owens, partner at Arnold & equity capital is flowing into the large, more established practices Porter in Washington, DC, has advised cli- first and seems destined to continue its outreach in the highly ents on all aspects of mergers, acquisitions, fragmented eye care space. and divestiture. Mr. Owens represented One of the first recapitalizations of an ophthalmology practice several of the ophthalmic practices involved occurred in May 2014, when Los Angeles-based Varsity Healthcare in private equity deals in recent years— Partners, a private equity investment firm focused on health care including the Waud Capital/Minnesota Eye services, acquired Baltimore-based Katzen Eye Group, one of the deal—and has a unique perspective on the nation’s largest ophthalmologic and optometric services practices. renewed interest. He says the number one Through the partnership, the two entities formed EyeCare Services reason for private equity’s interest is simple Partners Holding. Although such a private equity deal might have supply and demand. been uncommon at the time, the partnership has proven to be “The demand for ophthalmology is lucrative for both parties. Katzen Eye Group expanded its reach to increasing because of the aging popula- 46 practice locations and seven ambulatory surgery centers (ASCs) tion,” Mr. Owens said. “You’ve got the across five states. baby boomer generation, this 55-and-older generation, that’s start-

THE GOOD, BAD, AND UNKNOWN David Alpern, cofounder and partner ing to really increase. And so, demand is going up, but my under- at Varsity Healthcare Partners, was instru- standing is that the supply’s going down. There’s just not a lot of mental in that deal and in the revival of people getting into ophthalmology, and so it’s really creating these private equity’s interest in vision care. market dynamics.” “We had a thesis about ophthalmology Mr. Alpern agrees and said, when it comes to investing in vision and began looking for practices in early care, there is attractive secular growth, catalyzed by the aging US 2013,” Mr. Alpern said. “[We were] liter- population. ally going around the country looking at “There [are] roughly 18,000 licensed ophthalmologists in this different practices. [Katzen Eye Group] country,” Mr. Alpern commented. “That’s a really small specialty. had all the attributes of what we were Just to give you a point of comparison, there [are] about 180,000 looking for in a platform. Not only did it have primary, secondary dentists in the United States. So just fundamentally, there’s a sup- care, and an ASC, it had great diversification in terms of its provid- ply and demand imbalance with respect to need for treatment ers, meaning no one provider controlled all the collections of the and the number of people that can actually provide that treat- practice; it was pretty well diverse. The compliance, the culture was ment, which means practices should be very busy over the next fantastic in this practice.” few years.” Mr. Alpern’s foresight and due diligence paid off. In June 2017, Another key component, Mr. Alpern stated, is the multiple the so-called second bite of the apple occurred when Harvest revenue touchpoints with each patient. First, there is primary care Partners, a New York-based private equity firm, acquired Varsity’s and the optometrists. Then, there is secondary care, including the majority ownership in EyeCare Services Partners. The deal fur- ophthalmologic surgical services (cataract, refractive, glaucoma, thered the payoff of the deal made 3 years earlier and marked the and retina). Third, there are outpatient surgery centers that are first successful exit for a private equity firm in the industry. often required to perform these surgeries. Another high-profile deal occurred in February of this year when “All of those people are in a position to treat a patient to the Chicago-based Waud Capital Partners announced a partnership extent that [the] patient develops different and multiple chronic with Minnesota Eye Consultants, which formed United Vision eye abnormalities,” Mr. Alpern said. “So, if you own an integrated Partners. ophthalmology practice, you have the ability to participate in Minnesota Eye had established itself in the Minneapolis-St. Paul optometry, you have the ability to participate in all the different area and provided Waud Capital with a diversified eye care subspecialties within ophthalmology, and you can get paid by vir- portfolio, which included surgical and nonsurgical eye care services tue of the fact that you can have your own surgery center.”

54 CATARACT & REFRACTIVE SURGERY TODAY | AUGUST 2017 PRIVATE EQUITY IN OPHTHALMOLOGY

Mr. Graber explained, unlike some other medical specialties, In addition, keeping physicians and their staff motivated is criti- there are strong underlying demand drivers in the ophthalmology cal and what many believe is the key determining factor of the market as well as multiple avenues for growth. ultimate success of the deal. Private equity firms must determine “Our firm focuses exclusively on growth opportunities, so the the likelihood that the entrepreneurs who started the business will multitude of growth opportunities, including opening new sites, remain committed and continue to drive value for the practice expanding services and growth through acquisition, all make the once private equity has bought it. sector attractive from an investment perspective,” he said. “I think there’s real concern there,” Mr. Owens commented. “If Another allure of ophthalmic practices for private equity is the you give [the sellers] too big of a payday on a closing, there’s a lot pay structure—specifically the combination of insurance-pay and of risk and what’s their motivation? Are they all of a sudden going cash-pay models for premium services—along with diversification to put in 80% of the work? And then, all of a sudden, your models of offerings. don’t work, and all your projections are thrown out of whack.” “It’s a good mix that appeals to private equity,” Mr. Owens com- To mitigate some of the risk, private equity firms are more often mented. “I think the fact that a lot of these practices have surgery keeping incentives in place after the sale. centers, they’ve got these ASCs, it’s just a very appealing sort of “These days, private equity is putting so much on rollover diversification of the business model. [Private equity firms] can equity,” Mr. Owens said. “They want these doctors to take back a come in, and they can own these surgery centers, whereas with the significant chunk of the purchase price proceeds in equity, because practice, that’s a little complicated. They can’t own them outright, they want to align those incentives and make sure that these key but they have to manage them. … There’s a lot of opportunity physicians that were driving the value before closing have every here in terms of scalability and synergy or efficiencies.” motivation to drive value postclosing.”

RISKS OF PRIVATE EQUITY CULTURE AND STAFFING When it comes to risk and private equity, a lot of the focus Many physicians, particularly those who started the business, tends to be on the seller’s side. After all, in the 1990s, many oph- are used to calling the shots. Even with appeal of a large money thalmology practices aligned with private equity groups by selling infusion, giving up control is a challenge some physicians may find to physician practice management companies (PPMCs). Although difficult or even impossible. promises of greater operational efficiency and higher returns were “This is not , where you’re giving money and sit- made, the PPMC model, which focused more on a centralized ting on the sidelines,” Mr. Owens explained. “Private equity comes approach toward management, ultimately failed for a variety of in, they pay a lot of money, and they expect to run the show. And, reasons. A panel of experts participating in CRST’s roundtable in I think there is a lot of risk there, depending on the culture and the this issue attributed the failures of the PPMCs to poor econo- personalities with the practice you acquire.” mies of scale, failure of leadership/vision, and a lack of employee Sometimes, physicians may benefit, beyond financially, incentives. Mr. Owens said, if they are able to allow others to come in and The new round of private equity investment focuses more on take on some of the administrative roles. the short term, ideally maximizing value and selling to another “Doctors aren’t businessmen, right?” he said. “They’re really good group within 5 years, as demonstrated recently by Varsity at practicing medicine but not always good in running a business. Healthcare Partners. Another difference in today’s private equity And so, you come in, and you buy up three, four, five in a market, climate is that the buyers are paying much more of the sales price and you consolidate back office support in one area. You’re proba- in cash and only a relatively small amount in stock. bly going to drive some efficiencies and some synergies out of com- Although it is incumbent for eye care practices to do their due bining all of these practices. An outside management team comes diligence before partnering with private equity, there is also signifi- in and really knows how to drive things. And then, you just sort of cant risk to consider on the private equity side. Determining the build upon it, you build that scalability, and I think that’s appealing.” right practice, location, and price at the early stages of the sale is Mr. Owens noted that it takes a certain kind of private equity only part of the equation. Private equity firms must also carefully professional to come in and know how to find the correct balance. consider the postsale business model. This includes which prac- “Be as hands-off as you can but while making your strategic tices or assets are going to be integrated and whether the practice changes that you think you need to help grow the business,” he is going to be durable. advised. “And, really create a partnership, and don’t make it seem “The risk in the investment in any buy-and-build, really not like it’s too much of a dictatorship.” specific to ophthalmology, is how well you acquire those next Mr. Graber emphasized the importance of choosing partners practices, how well you integrate those next practices,” Mr. Alpern carefully—on both sides of the deal. said. “That’s where I believe all the money is really made and lost in “Determine why it is that you are interested in a transaction, these deals.” and then talk to the people with whom your potential partner

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CATARACT & REFRACTIVE SURGERY TODAY CATARACT &REFRACTIVE SURGERY THE GOOD, THE BAD, AND THE UNKNOWN in the future, too. Plus, if I can see my practice growing, I think in the future, too. Plus, if I can see my practice growing, I think to do that. It wasn’t all for the past; it was for what’s coming up hard. That is kind of a tit-for-tat action in that I’m getting paid thing significant upfront to incentivize me to continue to work and I think that I can stand back and say, I’ve been paid some partners. I think it goes both ways. I love doing what I’m doing, the work that you’re doing? ested if you’re not generating the revenue you used to from to be such a fundamental question. Jeff, how do you stay inter work very hard. How do you address that? That seems to me himself or herself, that tends to reduce [his or her] incentive to ting paid upfront and is no longer generating the revenue for keep the physicians incentivized? When the physician is get this in criticisms of the PPMC industry as well—is, how do you HOW DODOCTORSSTAYMOTIVATED? one-issue due diligence, which is: What’s the multiple? to take it where they want to go. Too often, it tends to be a the expertise, the strategy, and the vision—no pun intended— what the private equity firm’s plan is, to make sure they have stand what the private equity firm’s vision is, to understand be doing the same thing with the private equity firm, to under firm, as well it should. To your point, Bruce, the practice should tice] is going to get examined very closely by the private equity due diligence? When there’s a potential transaction, [the prac things that are most important. process and to stick to that process and not compromise the choose, the important factor is to have a well-thought-out with the process. Regardless of which path a practice may equity have hired an investment banker to represent them ity of practices interested in pursuing investment with private pros and cons to each approach. My sense is [that] the major firms or use some type of broker or intermediary? There are Whitman: Reider: Reider: How do you find them? Do you go directly to private equity new employment agreements with tighter noncompetes,” new employmentagreements withtighternoncompetes,” ers butsomeofthekeyemployedphysicianstosignup of thesedeals,private equityrequiresnotonlythesell transaction. tice iftheydonot seethedirectbenefitofprivateequity retention. Manystaffmembersmaydecidetoleavetheprac those objectives.” achieve, andsoyouneed tofindtherightbalanceinallof also hadavarietyofobjectivesthattheywereseekingto had manypeopleinterested inpartneringwiththem. They has worked,”herecommended.“AgrouplikeMinnesotaEye Private EquityInsidersOfferPerspectiveandAdvice “That’s a real risk and one of the reasons that, in a lot “That’s arealriskandoneofthereasonsthat,in a lot Beyond motivation,thereisalsotheissueofemployee A point that I heard much earlier—and I’ve seen A point that I heard much earlier—and I’ve seen What should the practice expect as a part of the Part of that has to do with selecting the right Part of that has to do with selecting the right

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AUGUST 2017 ------that may not see the advantage over time. that may not see the advantage over time. think the hardest thing still becomes for the younger partners that some of that accrues to me as time goes on. But, I agree. I models lowered with a lot of increased overhead, regulations, models lowered with a lot of increased overhead, regulations, it challenging. We are starting to see some income production physicians used to get and what they asked for, which makes hours, but they also want the same amount of money that ophthalmologists today. Not only do they want to work fewer make the move to private equity? thing that you see? Does this make it easier or more difficult to I’m outside, but you all are inside the industry. Is this some on the dollar as perhaps the entrepreneurial generation was. tive is more a work-life balance. Maybe they’re not as focused mologists today have different incentives. Maybe their incen they have any clue about what’s going on with private equity. bring younger physicians on board. Right now, I don’t believe demonstrated and be believable, I think, then, it’s easier to means growth for everybody in the company. If that can be talking about, that I believe can grow the company, which a company that would be a good partner, as we’ve just been this point. So, I think to be able to do this, I would have to find people. They really have not considered it for themselves at some kind of a roll-up, but only because they know other because I have friends in dermatology perhaps that have done going on out there. There are a couple who’ve asked me, for them. That said, I really feel like they don’t know what’s described in a way to younger physicians that it makes sense makes sense for me? younger physicians to say, this makes sense for you just as it How can we present this, or how do you present it to your tice. How do they react to all of this? What’s in it for them? what theyarereallygoodat,whichisgreatcare.” cal autonomyforthoseprovidersandnotgettinginthewayof Moreover, you’vegottobeverycarefulaboutpreservingclini the privateequityfundtosetupmechanismsdothat. lots ofdifferentpractices,andsoIthinkit’sincumbent upon constantly engagethatworkforceasalargerconsolidator of and fiercelyindependentthinkers,”heexplained.“Youneed to vider,” Mr.Alpernsaid. down togetting“insidetheheadofpsychologypro things tonegotiateinthesedeals.” Mr. Owenssaid.“And,quitefrankly, that’soneofthetrickiest Chambers: Reider: Whitman: Reider “I think [ophthalmologists] are fiercely independent people “I think[ophthalmologists]arefiercelyindependent people When evaluatingapotentialpartner,sometimes,itcomes : Trent said earlier that perhaps the younger ophthal You’ve got younger physicians as part of your prac If it makes sense for me, I think it can be If it makes sense for me, I think it can be I think there is a general difference in younger I think there is a general difference in younger (CONTINUED) ------

57 PRIVATE EQUITY IN OPHTHALMOLOGY - CATARACT & REFRACTIVE SURGERY TODAY

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—Alan E. Reider, JD, MPH JD, Reider, E. —Alan AUGUST 2017 While it is understandable it is understandable While to want physicians that know is, the multiple what to also should want they How know the plan is. what make 5 and this work do we now? from 10 years Bruce, what kind of a practice do you think fits bestfits think you do practice a of kind what Bruce, We’re starting to see a crescendo in activity here.activity in crescendo a see to starting We’re A common thread through all of the commentsthe of all through thread common A Reider: Reider: Reider: Reider: Roark: to capitalize your practice—money for hiring new staff, startingstaff, new hiring for practice—money your capitalize to growth?for practice another acquiring or service, of line new a Ifasked. be to have think I that things the of some are Those ques these to response your with comfortable not are you you.for not probably is model equity private the then tions, characteristicskey the of some are What equity? private with another][Put for? looking is [company] equity private a that the physician is to say, we want you to continue to have anhave to continue to you want we say, to is physician the yourthrough enterprise this of success future the in interest longlong, a for manager the and management the in equity theall because interested, stays physician the how That’s time. ofvalue the enhance to goes in puts physician the that sweat manager.the WHO IS A CANDIDATE? staypeople some should mean, I everybody? for model this Is practicea define you would How equity? private from away there?go shouldn’t just that whophysicians had I’ve thyself.” know “physician be to seems somebodyfor work never could “I me, to blank point said have aseeking from exclude to people are those Obviously, else.” practiceyour at look to have you think I buyer. equity private availabilitythe is What plan? successionyour is What well. as intobuy to able being and in coming doctors other some of debt?of deal great a have practice the Does practice? large a moneyborrow to willing you Are risk? to aversion your is What ------I think that one of the benefits of the private equityprivate the of benefits the of one that think I I think this comes down to the sustainability of anof sustainability the to down comes this think I Reider: I believe forward-thinking investors and executives are goingare executives and investors forward-thinking believe I alignmentcreate to best how consider to important also is It Maller: Maller: answer to that question, because the proper way to motivateto way proper the because question, that to answer physicians want to know what the multiple is, they also should workthis make we do How is. plan the what know to want gooda have should equity Private now? from years 10 and 5 Private equity can put together a very attractive package topackage attractive very a together put can equity Private con that discussed have we issues these of all address to try thatunderstandable is it While today. practices medical front model is that it provides opportunities for professional man professional for opportunitiesprovides it that is model inpractices medical multiple operating in participate to agers practice.medical independent an to available not is that way a of incentives with the executive leadership and senior manage senior and leadership executive the with incentives of overlooked.often is that area an is This teams. ment to develop the right structure to address this issue. this address to structure right the develop to of the younger surgeon and to have a compensation andcompensation a have to and surgeon younger the of themkeeps and market” to “marks that plan ownership equity motivated. participate in the financial transaction, versus the young phy young the versus transaction, financial the in participate isbut you joined already has or joined yet hasn’t who sician needsthe anticipate to important very is It associate. an simply young surgeons. If I’m a younger physician, what’s in it for me,for it in what’s physician, younger a I’m If surgeons. young needs my that ensure to work to going really this is how and thehere: stakeholders potential two really are There met? are mightwho partner, a already is who surgeon physician young ophthalmology practice and affiliated surgery center. The busi The center. surgery affiliated and practice ophthalmology retainand attract to ability the on predicated is model ness small fish in a big pond isn’t really an incentive for them, so youso them, for incentive an really isn’t pond big a in fish small organization.that structure you how in careful be to have is providing access to capital without personal guarantees thatguarantees personal without capital to access providing is tophysicians younger with think, I harder, be It’d require. banks aSometimes, critical. is that structure you how but equity, gain acquiring local practices to gain synergy. That’s going to taketo going That’s synergy. gain to practices local acquiring individualwhich , sizable maybe investments, some oneis That 90s. the in as easily as do to able aren’t physicians whichphysicians, younger incentivize to able be might you way private equity become the funding mechanism for organiza for mechanism funding the become equity private thatmentioned, Bruce way the to similar very grow, to tions andservices valued more adding by grow to is vision your risk for senior doctors with respect to their time frame. There’sframe. time their to respect with doctors senior for risk underbanks from money borrow to problem harder a also seeto starting you’re So, requirements. regulatory current the on those debt guarantees. When you want to really expandreally to want you When guarantees. debt those on amountfair a takes often it consolidate, or acquire or grow or ais world, today’s in which, investment, capital additional of thing that we really haven’t talked much about yet is debt. Indebt. is yet about much talked haven’t really we that thing ontaken have may doctors senior the of lot a where practices taketo want don’t doctors younger debt, excessive or debt and challenges with lowering reimbursement. The otherThe reimbursement. lowering with challenges and 58

CATARACT & REFRACTIVE SURGERY TODAY CATARACT &REFRACTIVE SURGERY THE GOOD, THE BAD, AND THE UNKNOWN alluded to, I don’t necessarily need a financial partner to help alluded to, I don’t necessarily need a financial partner to help ness. On the other hand, if you’ve got the element that I just might be a great vehicle to help you strengthen your core busi team, you can, of sound mind, determine that private equity vision and committed partners and a strong management nance, if you have a strong balance sheet, if you’ve got a strong statement. doing; run to a new opportunity. I don’t know if that’s a fair almost the same thing here. Never run away from what you’re adage that says, never run away from a job; run to a job. It’s I’m hearing, everybody is in a bit of a panic. There’s an old this environment.” It’s not for me, and I’m not worried. I can survive and thrive in would be a viable target for private equity. ber of practices across the country that meet the criteria and an outside investor. In my opinion, it’s a relatively small num where theycanborrowmoney,anddon’tnecessarilyneed earnings, are in the position where they can do acquisitions, larger, that have a strong balance sheet, that have retained growth through debt and/or equity. Some practices that are large practices are perfectly capable of financing their own make sense, or it may or may not even be necessary. Many to be when they grow up, a financial partner may or may not [and] see if they can’t gain consensus on vision. That’s step one. their market, understand their practice, understand their goals, look inward, do their own strategic assessment, understand deals. What a practice or a group of physicians needs to do is equity. Physicians are hearing about friends that have done you go down the path of entertaining discussions with private to look inward and do your own strategic assessment before everyone is interested in that. To Trent’s point, you really need is a vehicle to assist in facilitating market consolidation. Not addressing here is one of consolidation. A private equity firm infrastructure. platform. When I say platform, I’m referring to the operating operating cash flow. Achieving this objective requires a scalable this goal, the business needs to achieve significant growth in than one could get investing in a stock or a bond. To achieve High-risk capital demands a high rate of return, much higher vate equity to make myself more attractive? way, what should I do in anticipation of being looked at by pri Maller: Reider: Maller: Reider: To the extent that they have consensus on who they want You said it at the very beginning: the larger trend that we’re Maller: That’s an important message, because from what That’s an important message, because from what Are there practices that can say, “You know what? It is a fair statement. If you have strong group gover Absolutely. Not every practice is a target for private equity.

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AUGUST 2017 - - - - or four practices over the past 5 to 7 years for those very rea there for practices? they’re not interested in me.” What are the other options out thing, but private equity either doesn’t seem to be for me or about getting cut out of insurance panels. I need to do some overwhelmed by the administrative burdens. I’m concerned otherwise been targets for your practice. sibly bidding up the value of other practices that [might] have A private equity-backed practice will create disruption by pos investment in a competing platform, that could be challenging. my market, and again, I can finance growth and acquisition. me achieve my objectives. I know exactly what I need to do in areas. You get into high-density urban areas where there’s a very areas. You get into high-density urban areas where there’s a very much to fear, and managed care is not all that strong in rural and there’s a lot less competition in rural areas. You don’t have seriously if private equity is all that interested in the rural area, growth, and you just have to balance those two. Also, I doubt you can create enough harmony. However, debt may accelerate can run and keep your debt at a relatively low level, then I think location. able to retain a model of individual financial performance by maybe enjoy the “groupness,” collegiality, and yet [have] been lations. They feel isolated. They, I think in our cultural situation, sons. The physicians are getting tired of dealing with the regu Chambers: Reider I take a very neutral position on this. It is not for everyone. If I’m in a market where private equity has already made an So, I think that there are alternatives to private equity. If you So, I think that there are alternatives to private equity. If you reality of selling a practice to a private equity firm. American Vision Partners, about the opportunities and Rosenberg, now vice chairman of the Board of Directors, JD, partner at Arnold & Porter Kaye Scholer, and Mark Robert J. Weinstock, MD, talks to J. Matthew Owens, bit.ly/PrivateEquityCRST : [Suppose] somebody says, “I’m struggling here. I’m [Suppose] somebody says, “I’m struggling here. I’m WATCH IT There is consolidation. We have acquired three There is consolidation. We have acquired three NOW - - - -

59 PRIVATE EQUITY IN OPHTHALMOLOGY - - - CATARACT & REFRACTIVE SURGERY TODAY

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n AUGUST 2017 Be prepared to lose financial control over yourover control financial lose to prepared Be Know who you’re getting in bed with, so toso with, bed in getting you’re who Know Although I’d be the first one to say the multiplesthe say to one first the be I’d Although I’d stick with, physician, know thyself, because yourbecause thyself, know physician, with, stick I’d (202) 942-6496; [email protected] CEO, Specialty Eye Institute, with locations in Michigan and Ohio (517) 841-3007; [email protected] president and chief surgeon, Key-Whitman Eye Center, Dallas (214) 220-3937; [email protected] executive Eye Center, Dallas director, Key-Whitman (214) 738-8954; [email protected] Consulting, with offices in Scottsdale,president and CEO, BSM (800) 832-0609; [email protected]; partner, Arnold & Porter Kaye Scholer, Washington, DC Arizona; Incline Village, Nevada; and Orem, Utah www.bsmconsulting.com           n Roark Trent n n MD Whitman, Jeffrey n n Dan Chambers Dan n n Maller Bruce n n MPH JD, Reider, E. Alan n Maller: Maller: Roark: Roark: Chambers: Whitman: no-go on that acquisition.that on no-go seenot may we and attractive very are offered being are that tonot important it’s years, 20+ next the in this like anything some do to need you though as feel to or reactive too be isearlier, stated I as advice, of piece best The tomorrow. thing practice.your of evaluation objective own your in engage to youridentifying of exercise strategic typical the through Go your[and] opportunities, your weaknesses, and strengths practice,your understand market, your Understand threats. tothing right the it’s because ultimately, decision, a make and business. the for do attitude, your ability to comply with others, to be subservientbe to others, with comply to ability your attitude, com the owns [firm] equity private the because cases, some in experience.whole the break or make can now, pany inmade be will Decisions that. with live to and organization and organization the of interests financial the with cooperation done.traditionally have you what be not may ownyour in particularly someone, to talk can you If speak. ispartner that how see to already, it done has who specialty, advantage.tremendous a be would that think I with, work to der medicine, of area different a in they’re if least, very the At deala done already that’s somebody to talk say, let’s matology reallythat think I deal. the after was life how see to them with orgo you make can and expect to what of idea an you gives - - - - - Always. I think that’s something you have tohave you something that’s think I Always. It’s definitely been a plus, and again, it’s moreit’s again, and plus, a been definitely It’s I always think it’s important to try and project lifeproject and try to important it’s think always I If you had to give one piece of advice to a practicea to advice of piece one give to had you If Any governance or personality issues in connectionin issues personality or governance Any Jeff, you have already done some consolidation onconsolidation some done already have you Jeff, : : Reider: Reider: I’m not saying a financial partner can’t bring the much- the bring can’t partner financial a saying not I’m Maller Whitman: Whitman: Reider: Reider: Whitman: Whitman: Reider: Reider: considering private equity, what would it be? it would what equity, private considering WHAT ARE THE KEY TAKE-AWAY POINTS? TAKE-AWAY WHAT ARE THE KEY so we can hit our EBITDA [earnings before interest, tax, depre tax, interest, before [earnings EBITDA our hit can we so willthere me, trust year, this target amortization] and ciation, room.the in tension be accustomed to making your own decisions, and now you mustyou now and decisions, own your making to accustomed notis that you telling I’m partner, business a with collaborate theby oh says, partner financial the time first The do. to easy expenseoverhead in dollars million a eliminate to need we way, needed discipline. There are many benefits that private equityprivate that benefits many are There discipline. needed isthat group physician a you’re if But, table. the to brings very different, because the motivation of a financial investorfinancial a of motivation the because different, very ultimately,way, only the That’s flow. cash growing about all is investment.on return a see they sions will get made in this company will be different. It won’tIt different. be will company this in made get will sions previously.did it as control physician of level same the have feelmay that choose, you that partner the upon Depending is that the financial partner is going to have control goingcontrol have to going is partner financial the that is physicianwant will investor smart the granted, Now forward. deci way the but table, board the at leadership executive and hard to judge before you become partners. become you before judge to hard truth The equity. private with say transaction, a doing after look at [with] private equity [as well]. Governance and differ and Governance well]. [as equity private [with] at look very[are] ophthalmologists, amongst particularly opinions, ent with this kind of consolidation?of kind this with them, where we can offer them an efficient practice in morein practice efficient an them offer can we where them, area.one than geographic diversity regionally where we are. I think that canthat think I are. we where regionally diversity geographic hos networks, insurance different to yourself offering in help forproblem one than more solved you that networks, pital working more closely with other professionals, how has thathas how professionals, other with closely more working out?worked your own. From your perspective as the ophthalmologist nowophthalmologist the as perspective your From own. your dations will most likely represent improved negotiating power negotiating improved represent likely most will dations geographicaladditional with group existing an join can they if player.team effective an as coverage or cost-control issues or regional hospital systems, [and] I thinkI [and] systems, hospital regional or issues cost-control or are physicians Individual activity. more lot a see to going you’re consoli and longevity, their about concerned more be to going strong growth of managed care groups or [a] narrow networknarrow [a] or groups care managed of growth strong