Private Equity in Ophthalmology: Should You Sell to a DSO? An Honest Assessment

The private equity pitch for ophthalmology practice acquisition follows a predictable script: a significant upfront liquidity event, continued clinical autonomy, management infrastructure that handles the business side, and a second bite of the apple at a future exit. The pitch is compelling. The reality is more nuanced — and for many ophthalmologists, more complicated than expected. This is an honest assessment, not a promotional one.

What Private Equity Is Actually Buying

Understanding the PE playbook in ophthalmology is essential for evaluating any offer. Private equity firms in healthcare follow a consistent strategy:

1. Acquire a platform practice — typically a well-run, multi-physician group — at a moderate multiple
2. Add tuck-in acquisitions — smaller practices in the region — at lower multiples, creating immediate EBITDA arbitrage
3. Reduce costs through centralization — billing, HR, purchasing, marketing centralized across the platform
4. Increase revenue through standardized programs — premium IOL protocols, ancillary service rollouts, volume growth
5. Exit in 5–7 years at a higher multiple to a larger PE firm or strategic buyer

The Real Trade-Offs

What You Gain

• Immediate liquidity — typically 60–70% of enterprise value at close, remainder in equity rollover
• Management infrastructure — billing, HR, marketing handled centrally
• Growth capital for equipment, technology, and expansion
• Reduced administrative burden (in theory)
• Upside participation in platform exit (if the deal performs)

What You Give Up

• Clinical and operational autonomy — employment agreements typically include production targets, quality metrics, and operational compliance requirements
• Staffing control — hiring, compensation, and HR decisions move to centralized management
• Long-term exit flexibility — post-close, you typically have a 3–5 year employment commitment with restrictive covenants
• Practice culture — the organizational culture that made your practice distinctive often doesn't survive centralization

The Questions PE Firms Don't Volunteer Answers To

When evaluating a PE offer, demand specific, contractual answers to:

• What happens to my staff if the platform is re-sold? Are employment terms protected?
• Who makes clinical protocol decisions — me or the management company?
• What are the production targets in my employment agreement, and what are the consequences of missing them?
• What is the management fee structure, and how does it affect practice EBITDA?
• What are the specific restrictive covenant terms — geography, duration, specialty?
• What happens to my equity rollover if the PE firm's exit doesn't materialize at projected multiples?

The Alternative Path: Maximizing Value as an Independent Practice

For many ophthalmologists, the decision isn't whether to sell to PE — it's whether to sell to PE now versus after operational optimization that maximizes enterprise value. A practice that implements revenue enhancement programs, operational systems, and growth initiatives over 24–36 months before going to market frequently achieves a 30–50% higher sale price than the same practice sold in its current operational state.

The strategic question isn't "Should I sell?" — it's "Am I selling from a position of maximum strength, or am I selling because I'm exhausted and taking the first offer?" Those two scenarios produce dramatically different outcomes.

Diana Andre's practice strategy consulting includes pre-sale operational optimization planning for ophthalmologists considering a PE transaction — ensuring you go to market with the strongest possible practice, on your terms, at the right time.