Three ophthalmologists in different parts of the same metro area were each running their own practices when the same management services organization approached them within a few months of each other. The pitch was the same for all of them. We'll handle the operational side which includes EHR, billing, call center, hiring and vendor negotiations while you focus on patients. They all signed, and for all of them, the first year delivered exactly what was promised.

Sell or We Open Down the Street

Then the MSO announced it had found a buyer. A private equity group was acquiring the management company, and along with it, every practice under its umbrella. The physicians were told they didn't have to participate, but the alternative was made clear in a conference call that none of them had expected. If you stay independent, we'll use the PE capital to build competing locations in your market.

The larger practices in the group wanted to cash out because they had stakes in shared infrastructure, higher volumes, and more negotiating leverage. The smaller practices had no say in the structure. One of the physicians described the experience as being told his practice was being sold to a buyer he'd never met, under terms he didn't negotiate, and the only alternative was watching a well funded competitor open down the street.

He signed because the number was fair relative to what he had, and because competing against a PE backed group with resources he couldn't match wasn't a realistic option.

The Real Price of the Payout

The structure was mostly cash with an equity rollover in the PE backed platform. Years later, that equity still has no posted value, can't be traded, and can't be sold. The platform is still looking for its next buyer, and the physician is still waiting to find out if his equity stake is worth anything.

But the equity isn't where the real cost lives. Every dollar he generates at the practice now flows through a corporate structure that takes its share before the physician sees compensation. The overhead that didn't exist when he was running the practice alone; regional managers, corporate allocations, and platform fees all gets funded by the work he does in the exam room every day.

Several physicians who went through this type of transition describe the math the same way. They didn't just sell their practice, they ended up selling a piece of everything they'd bring in for years to come. And, on top of that, the group had earned back what it paid them many times over.

The Schedule You Didn't Agree To

The schedule changed within the first year of PE ownership. The patient volume that had been manageable under the MSO became a mandate under PE. Physicians who'd been seeing a reasonable daily load found themselves routinely booked beyond what they considered clinically appropriate. The vacation policies tightened. What was originally described as flexible became a system of formal requests submitted weeks in advance and approved by multiple levels of management.

The clinical autonomy that was explicitly promised in the original MSO pitch doesn't exist in any practical sense. The physicians still make clinical decisions, but the volume required to meet the group's expectations doesn't leave enough time per patient to make those decisions the way they were trained to.

The MSO as Aggregation Vehicle

This pattern, an MSO that recruits physicians with promises of management support and then sells itself to private equity within a few years, isn't an isolated story. It's a model. The MSO functions as an aggregation vehicle and signs management agreements with as many practices as it can, centralizes the operations, and then presents the portfolio to PE buyers as a platform acquisition. The management fees the MSO charges are real, the operational improvements are real, and the physician's experience during the MSO phase is genuine. What isn't genuine is the implication that the MSO relationship is the endpoint and for many of these organizations, the MSO phase is the setup and PE is the payout.

The distinction matters for any ophthalmologist currently evaluating an MSO relationship. The question is who owns the MSO, whether the MSO can be sold without the physician's consent, and what happens to the management agreement when ownership changes. If the MSO's operating agreement allows the founders or majority investors to sell the entity at any time, then the physician is signing a management agreement with a company that may not exist in its current form within two years.

Why Ownership Structure Matters More Than the Fee

A management services organization with a permanent hold structure doesn't have this problem because there's no exit to plan for. There are no fund investors with a 7-year return timeline and there's no incentive to aggregate practices for the purpose of flipping the management company. The management fees are the return, and the operational relationship with the physician is the asset that generates those fees. Selling the MSO would mean selling the thing that makes the business work, which is the opposite of what a permanent hold operator wants.

For the ophthalmologists who joined an MSO for help with billing and staffing and ended up as employees of a PE backed platform, the lesson is structural, not personal. The people who ran the MSO may have been good operators and the services they provided may have been exactly what was promised., but the problem was the ownership and ownership was always designed to change.

This article is for general educational purposes and is not legal or financial advice.

Verdira is a healthcare acquisition platform focused on ophthalmology practices. Physician ownership. Transparent structure. No volume quotas. If you are evaluating the ophthalmology market and want to understand how different practice models affect transition planning, we are open to thoughtful conversations.

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