Cosmetic / Plastic Surgery Private Equity FAQs

Cosmetic surgery private equity involves private equity firms investing in cosmetic surgery practices to enhance their operations, foster growth and eventually sell them for profit. This process includes acquiring multiple practices, integrating them into a larger network and leveraging operational efficiencies of the whole group. By consolidating resources and streamlining operations, the goal is to increase the overall value of the network, leading to a successful sale within a few years.

Olympus Cosmetic Group partners with carefully selected cosmetic and plastic surgery practices, using private equity to provide financial strength, strategic guidance and tailored operational support. Private equity funding allows those practices to be integrated into our Management Services Organization (MSO), offering centralized support for finance, Human Resources (HR), Information Technology (IT), marketing, compliance and other essential needs and processes in order to optimize efficiency and profitability.

This allows our physician partners to focus on patient care while benefiting from streamlined operations. Our private equity model emphasizes and ensures clinical autonomy for the providers, ensuring clinical decisions remain with those who understand patient care best.

Yes, Olympus offers a flexible private equity model that allows physicians to maintain some ownership and as much involvement as they would like during our partnership. This approach allows cosmetic surgeons to stay actively or passively involved with the management and decision-making of the practice. This close collaboration with surgeons is a core part of our business model.

Equity participation means that physicians can maintain an ownership stake in their practice while benefiting from the financial and operational support of the private equity partner. This arrangement aligns interests and allows physicians to share in the practice’s growth and success.

Generally speaking, most MSOs will buy a practice for anywhere from 3.5 to 8 times earnings before interest, taxes, depreciation and amortization (EBITDA).

However, the exact valuation of your practice is determined through a comprehensive analysis of a number of factors. These often include current financial performance including revenue and profit margins and the market dominance, the number of physicians working in the practice, the age of the providers, patient base and reputation of the practice. Growth potential and scalability are then carefully assessed, as well as assets such as medical equipment, real estate and intellectual property. This thorough analysis ensures a fair market valuation.

Risks of private equity partnerships include pressure to meet financial goals, potential conflicts of interest, loss of clinical autonomy, changes in practice culture and impact on staff morale. It is important to carefully evaluate any partnership to ensure it aligns with your practice’s values and long-term objectives.

However, because Olympus is founded and owned by surgeons, we offer the unique advantage of understanding your perspective as a practice owner and surgeon. This vantage point helps to ensure a smooth transition and goal alignment throughout our partnership.

A private equity partnership can improve practice management in a number of ways, including streamlining hiring, payroll, onboarding and other processes, increasing office efficiency and providing access to necessary resources.

However, a private equity partnership can also introduce changes to management style and priorities that may differ from those of current office staff. Striking a balance between considering the current needs and goals of the practice and being open to innovation for long-term growth is a crucial aspect of a successful private equity partnership.

Ideally, a strategic partnership with a private-equity-backed platform should not interfere with patient care or clinical best practices. In fact, the goal is to improve operational efficiency and reduce the backend workload of the physician, often leading to increased patient satisfaction and retention.

While concerns around potential conflicts of interest or changes in practice focus that may indirectly affect patient care are valid, Olympus Cosmetic Group’s doctor-led-and-governed team takes great care to avoid interference with patient care and clinical practice.

Private equity platforms often seek to align the practice’s brand with their broader strategic vision, which might involve rebranding to enhance market appeal and consistency across multiple locations. With increased funding, practices have access to enhanced marketing and brand development strategies. Those strategies might include changes to logos, websites, marketing materials and patient communication – all with the goal of strengthening the practice’s market position and outreach.

Private equity influences practice valuation by acquiring practices at a multiple of earnings before interest, taxes, depreciation and amortization (EBITDA). A customized long-term growth plan is then implemented with the aim of increasing the revenue and profitability of the practice. This can be achieved through improving operational efficiency, expanding into new locations, offering new services or bringing on new surgeons. Over time, the valuation of your practice is expected to increase as these strategies are put into place.

While staff may experience changes to management structure, processes and priorities in a private equity partnership, the goal is to improve efficiency and support existing staff in their roles. A private equity partnership also helps to improve human resources, payroll, hiring and other employee-centered tasks to ensure streamlined processes for all involved. However, clear communication and transparency about upcoming changes are crucial in maintaining a positive office morale and productivity.

The timeline for seeing financial benefits after entering into a private equity partnership can vary, depending on a number of factors. Initially, there is typically an infusion of capital and resources to support practice efficiency and growth. Over the medium-term, that strategic planning and financial boost will continue to increase profitability. Full financial benefits, however, are typically realized over the course of anywhere from 3 to 7 years, as the practice fully integrates the private equity partnership’s resources and strategic initiatives.