Private equity firms target orthopedics and ophthalmology — why?


Orthopedics and ophthalmology are rocking the private equity market, peHUB reports.

Here's what you should know:

1. While dermatology and dentistry have been market mainstays, the private equity market has seen an uptick in partnerships between firms and orthopedic and ophthalmology practices.

2. MHT Partners' Patrick Krause wrote the healthcare industry is attractive to investors because of the amount of high profit procedures. Investors place premium valuations on orthopedic and ophthalmology practices.

3. Mr. Krause points to a recent investment by Frazier Healthcare Partners and Princeton Ventures into Phoenix-based The CORE Institute, as an example. CORE Institute's Chief Executive Officer David Jacofsky, MD, told peHUB,"Musculoskeletal care is the fastest growing segment of inpatient hospital admissions in the U.S. This exponential growth is expected to continue for the foreseeable future."

4. The details of the investment were not disclosed, but Mr. Krause believes orthopedic and ophthalmology practices could be worth 10 times more than recent dermatology practice valuations.

5. Mr. Krause compared ASCs to big-box retail chains; by offering consumers surgeries at a cheaper cost, he believes ASCs are one of the most attractive aspects of both specialties.

6. Mr. Krause added many practices view private equity investors as the key to remaining independent, making them more inclined to partner.

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