More and more doctor chains: Does monopolization harm ophthalmology?

International financial investors have bought hundreds of ophthalmological practices in Germany in recent years. In several cities and counties are following NDRresearch, monopoly-like structures have already emerged.

Stefan Koinzer is an ophthalmologist. He works independently in his own practice in Kiel – and thus has almost a unique selling point. Because most of the outpatient ophthalmologists in the city are now employed by a large company, the Sanoptis chain, which belongs to a London investment company. Since 2019, she has bought three regional practice groups in Schleswig-Holstein and also taken over many ophthalmological practices in other parts of Germany. “A good ten years ago, ophthalmologist cash register seats were sometimes considered almost unsaleable,” says Koinzer. But in the meantime the prices would explode.

Business for international financial investors

International private equity companies have discovered German medical practices as an investment opportunity. They buy small companies, merge them into a larger group and then try to sell them on as profitably as possible a few years later. The strategy is called “buy-and-build” – “buy-and-grow” – and apparently it also works with practices.

NDRresearch for Panorama 3 now show that various ophthalmologist chains have even achieved a monopoly position in several cities and districts, for example in Kiel, but also in other regions such as in and around Augsburg in Bavaria. Around 15 practices and clinics there belong to Sanoptis.

The company was only founded in 2018 and apparently already has more than 200 locations in Germany and Switzerland. However, exact dates are not known. On questions from Panorama 3 Regarding various figures – such as practices purchased, operations performed and sales – Sanoptis said it “generally does not answer such inquiries”.

“Danger of monopolization”

Largely unnoticed by the public, a situation has apparently arisen within a few years, against which the Federal Council had explicitly warned at the end of 2018: “Group-like structures are developing in more and more areas of outpatient medical care, often in the hands of profit-oriented companies,” it said in an opinion.

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. the NDR asked the Federal Ministry of Health why this did not happen, but received no answer.

More examples in Bavaria

Another example of an apparently monopoly-like position can be found in northern Bavaria. There – around Nuremberg and Fürth – the majority of the ophthalmologists work at the Ober Scharrer Group (OSG). According to the group, it has a total of 125 locations throughout Germany and employs around 300 ophthalmologists.

At the request of NDR according to possible regional monopolies, the company refers to the total number of all ophthalmologists working in practices and hospitals in Germany. Of these, only just under 3.8 percent are employed in their group. The OSG did not respond to the question about specific districts and cities.

Health care “very attractive” for investors

A total of more than 500 ophthalmological practices in Germany now belong to international private equity companies. That’s 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.

“Healthcare is very attractive for investors,” says Vivek Kotecha, a financial analyst in London. 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.

Doctor chains: not looking for quick money

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 eye doctor company, and also serves 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.

In 2011, Artemis sold its then small group of seven clinics and practices to a French company. In 2015 a new investor based in London took over. According to the chain, it now has 140 locations in Germany. Their head office is in northern Hesse. It is there, in the Lahn-Dill district with more than 250,000 inhabitants, that most ophthalmologists now work for the group of companies. In Hesse, she performs about half of all eye operations, says Schayan-Araghi.

Schayan-Araghi says the company has grown primarily because she has taken over many of the practices of older ophthalmologists who otherwise would have had trouble finding successors. In this way, Artemis contributes to securing the supply.

It was similar at 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 continued to sell the chain in 2018, and it had now grown to 80 locations. Now it’s 125.

Difficult to see through

It is difficult for patients to see which financial company owns the practice. And politicians obviously don’t have an overview either. The Federal Ministry of Health informed that NDR when asked that he did not know “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.

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 threat of problems – such as rising prices or poorer patient care – the office could initiate a so-called sector inquiry to initially collect data on the market . In recent years, the Cartel Office has carried out such an investigation, for example in the hospital sector.