Home-grown Katzen Eye Group has been acquired by a large private equity investment firm based in Los Angeles in a deal the eye care company hopes will help it to expand into a regional — and eventually national — brand.
Varsity Healthcare Partners announced Monday it had acquired Katzen, founded as a one-doctor operation in 1968, and will form a new eye doctor group called EyeCare Services Partners Holdings LLC. EyeCare Services Partners will serve as the umbrella organization and Katzen will retain its name locally. Financial details were not disclosed.
Together, the two companies hope to buy other eye care groups throughout the Mid-Atlantic region, with a goal of acquiring at least 20 in the first year, said Richard Edlow, CEO at Katzen.
Katzen spent the last few years building an infrastructure that will allow the new company to manage the back office duties, such as billing, of companies it acquires so that doctors can spend more time treating patients, said Edlow, who will serve as the new company's president.
As the demand for advanced eye care is expected to outpace the number of new physicians in the next decade, many doctors will be looking for ways to operate more efficiently, Edlow said. He believes becoming part of a larger company will help.
"All of that is about to hit like a tidal wave," Edlow said. "The supply of eye doctors is relatively fixed and not keeping up with patient demand. The way to manage the process is by developing a clinical work flow that is more efficient than the old way of doing things."
Katzen was among about 45 optical businesses that Varsity Health vetted as it looked for health investments, said CEO David Alpern. The optical business is one the investment firm saw as having good revenue potential because people can't ignore eye care needs.
The better-known eye care franchises, such as Pearle Vision and LensCrafters, focus on basic eye exams and glasses and contact fittings, Alpern said. More advanced surgical treatments and specialty care will be the center of the EyeCare Services business, he said. So while the company may acquire an optical practice, it will refer those who need surgeries to its own company rather than somewhere else.
"We want to own the revenue stream starting with optical, ending with surgery and restarting with the follow-up," Alpern said.
Less than a year old, Varsity Healthcare is ready to support a rapid expansion, he said.
"We have a very robust consolidation strategy that is well-designed, in place and will be done at an accelerated velocity," Alpern said.
EyeCare Services Partners will be based in Baltimore and headed by CEO Michael Fricke, who was formerly the CEO of Sante Pediatric Services, a Texas company that provided occupational and physical therapy services.
Other Katzen executives who will be retained under the acquisition are Melissa Pitchford, who will become chief financial officer; Janna Mullaney, who will serve as COO; and Brett Katzen, the founder's son, who will become chief medical officer of the new operation.
Dr. Leeds Katzen started Katzen Eye Group at Mercy Hospital with a secretary and one nonpaying patient, who also happened to be his father-in-law, according to the company's website.
Katzen is now the largest private eye care practice in Maryland, with 22 doctors and four offices in Lutherville/Towson, Rosedale, Bel Air and at Mercy Medical Center.