The university district in Kiel. A sign is placed in front of a new four-story white building. On it to read: the name of an ophthalmologist. There is no reference to the owner of the practice. The doctor is not self-employed, but employed. A London financial investor bought the practice and now belongs to the “Sanoptis” chain. And not just this practice: According to NDR research, more than half of all outpatient ophthalmologists in Kiel now work for the investor-managed group.
Medical practices: “buy and grow” strategy
Sanoptis was only founded in 2018 by a private equity company. Such capital companies collect money from investors and invest it in various industries. They buy small companies, merge them into a larger company and then try to sell it on as profitably as possible a few years later. “Buy-and-build” – “buy-and-grow” – is the name of the strategy. And apparently it also works with medical practices.
Sanoptis has now taken over three regional practice groups in Schleswig-Holstein and has evidently become the largest chain of ophthalmologists in Germany in a short space of time – apparently with well over 150 locations. In northern Germany, many ophthalmologists are now also employed by the chain in the region around Hanover, Braunschweig and Wolfsburg. However, exact dates are not known. In response to questions from Panorama 3 about various figures – such as practices purchased, operations performed and sales – Sanoptis said it “generally does not answer such inquiries”.
Ophthalmologists expand with investor money
Another large ophthalmologist chain bears the name “Artemis”. It was founded by three doctors in Hesse. In 2011, they sold what was then a small group of seven clinics and practices to a French investment company. In 2015 a new investor based in London took over. According to its own statements, the chain now has 140 locations in Germany, including around 20 practices in and around Hamburg.
It was similar with the “Ober Scharrer Group”. It was founded by two ophthalmologists in Fürth. In 2011, they sold their seven-location company to a London private equity firm. The investor resold the chain in 2018. In the meantime it had grown to 80 locations. The new investor continued to expand, taking over, among other things, a regional association with several practices in and around Osnabrück, but also ophthalmologist chains in three other European countries and merging them all into a joint company. This is now apparently to be resold to the next investors.
More than 100 ophthalmologist practices in the north belong to financial investors
In total, more than 100 ophthalmological practices in northern Germany belong to international private equity companies. In all of Germany there are now more than 500, about three times as many as three years ago. It is estimated that around one fifth of all outpatient ophthalmologists now work in chains of financial investors. And this trend is not only evident in ophthalmology. Investors also take over other practices – such as dentists, radiologists or nephrologists.
“Health care is very attractive for investors,” says Vivek Kotecha, a financial analyst in London. “The population is aging, so much more money is being spent on health care.” And investors wanted a piece of that. An expected return of 20 percent is quite common for private equity companies, says Kotecha. From his point of view, this harbors the risk that doctors in such practices are under particular economic pressure. And that’s not in the patient’s best interests.
Chain founder defends himself against allegations
The big chains defend themselves against these accusations. Kaweh Schayan-Araghi, for example, says that nobody is out to “make quick money”. He is one of the founders of the Artemis Clinics, another large ophthalmology company, and is also on the board of directors of an association of investor-run doctor chains. A company only becomes more valuable “if the reputation is good, if the quality is good,” says Schayan-Araghi. As a patient, you have a free choice of doctor.
But the research by Panorama 3 shows that freedom of choice is now restricted in several cities and districts because the majority of all outpatient ophthalmologists work for one and the same company – such as in Kiel or Osnabrück or in Hesse, where Artemis claims to be based, for example performs half of all eye operations.
Legislative change against “corporate-like structures” fails
This has created a situation that the Federal Council had explicitly warned against at the end of 2018: “Group-like structures are being formed in more and more areas of outpatient medical care, often in the hands of profit-oriented companies,” said a statement at the time. The Federal Council saw “the danger of monopolization and thus the deterioration of patient care”. For example, there could be “a narrowing down of the care offered to certain, particularly lucrative services”. The Federal Council proposed a change in the law to counteract this. However, the then federal government of CDU and SPD did not implement them. NDR asked the Federal Ministry of Health why this did not happen, but received no answer.
And the current government does not seem to want to change anything for the time being. The Federal Ministry of Health stated that it was not aware “whether and to what extent there was a dominant market concentration of ophthalmological care structures” in individual areas and “what any concentration tendencies can be attributed to”. Overall, it is also legally difficult to restrict the market more. According to the Ministry, the mere finding of an increase in investor-operated practices should not be enough.
Cartel Office: Takeovers below relevant sales thresholds
On request, the Bundeskartellamt stated that it had not checked the acquisitions of the large ophthalmologist chains in recent years, since each individual acquisition was apparently below the relevant sales thresholds. However, if there are indications that individual companies are gaining a dominant position in some regions and that there is also a risk of problems such as rising prices or poorer patient treatment, the office could possibly initiate a so-called sector inquiry.