Private equity, the state of ophthalmology ASCs & more — Dr. Ben Cohen shares his thoughts

Ophthalmologist Ben Cohen, MD, founded New York City-based Retinal Ambulatory Surgery Center of New York in 2010, growing the surgery center into an independent force with more than 30 physicians performing more than 4,000 procedures annually.

Here, Dr. Cohen speaks about the ophthalmology ASC market and private equity investment.

Note: Responses were edited for style and clarity.

Question: What is the state of the ophthalmology surgery center market?

Ben Cohen: Despite the fact the government pays hospitals about 2.4 times more than independent ASCs for the same cases (and even then covers some of the hospital's associated case expenses) hospitals are doing fewer eye surgery cases, opting to focus their attention on big cases requiring extended stays in hospital beds.

Whereas, hospitals today are sending ophthalmology cases to hospital-owned ASCs, both hospital administrators and physicians know the limitations multispecialty ASCs face for ophthalmology. Ophthalmologists frequently state that working in a multispecialty ASC resembles working in a hospital, in that there's less time efficiency and greater paperwork.

With the government desperate to reduce the cost of healthcare, there is some indication that, within the next few years, what for-profit hospitals and hospital-owned ASCs can charge will be decreased to the level of independent ASCs. If this happens, one can only expect hospitals will send as many ophthalmology cases as possible to independent ASCs, which understand how to control costs in ways which do not affect care quality.

Q: What are your thoughts on the recent boom of PE activity in the market?

BC: Whereas there is interest from private equity-backed healthcare firms in ophthalmology-specialized ASCs [in the U.S.], there are only a handful of potential acquisition targets in New York. There have been some interesting acquisitions over the past few years, but the degree to which these acquisitions will be accretive to the physician-owners is unclear.

Q: Five years from now, what does the ophthalmology market look like?

BC: Based on the current trajectory, five years from now most private physicians in the New York City area will be performing ophthalmic surgery out of ASCs. Consolidation will continue with most physicians joining hospitals or private equity-backed healthcare companies. Despite their inability to control costs, hospitals will continue spending big money on multispecialty ASCs. Even though the independent ASCs will remain the most efficient and most innovative players, the New York market is unlikely to see any new ophthalmology-focused ASCs built due to the excessive costs of operating in this market and the regulatory environment.

Q: Could you elaborate on the importance of staying independent in this day and age?

BC: Private equity-backed healthcare companies will have made progress with their acquisitions of smaller independent ASCs, but will have a hard time convincing the physician-owners of more successful ASCs on the benefits of partnering with them. With current demographic trends and changes to the healthcare system, if physicians are able to remain independent, they will be well positioned to capitalize on the increase in demand for their services.

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