Koch Eye sale offers vision for future
Peter Koch has met a lot of famous and important people.
His office walls are adorned with their pictures. There’s Koch mugging for the camera with a typically stern Mikhail Gorbachev and Koch standing alongside President George H.W. Bush.
Of all the shots, that with Vanna White was most serendipitous. Koch was on a flight to California and White ended up being his traveling companion.
Koch is good at making connections and running a business. His siblings, Paul and Patricia are good doctors. The combination has built Koch Eye Associates that started in Warwick and now employs 140 people at seven locations statewide.
It also opened the door for the sale of the family-owned company earlier this year, which happened without any layoffs and went so smoothly that from the public’s perspective it was unnoticed.
As Koch describes it, none of the new generation of Koches has an interest in running the business that he and his brother started from scratch in 1981. Koch Eye still operates from the same location that his late father, Dr. Peter Koch, a general practitioner, operated his business on Toll Gate Road, albeit much larger.
Koch talked with an investment banker friend. The friend believed there might be interest in the private equity market to acquire the business.
That was how Boston-based Candescent Partners LLC came into the picture. It seemed like a perfect fit from the start – an hour-long phone call in the summer of 2010. A four-hour meeting followed. Koch had considered other options for the company’s future, but “this one felt good.”
The family was looking for an exit strategy that preserved the team and the legacy they have built.
Paul and Patricia met with principals in the firm founded by Steve Jencks and Sandy McGrath. According to their website, the firm has originated, structured and managed in excess of $600 million of private equity investments in 44 private companies in the health care and technology sectors. Koch is the first acquisition in the field of eye care.
“They are looking for a major New England presence, five to 10 times the size [of Koch Eye Associates],” says Koch.
Details were worked out. A letter of intent was signed in March of 2011. Peter has a three-year contract. His brother and sister have five-year agreements with options for renewal. The transition was subject to Department of Health approval that came this year followed by a closing.
“This fits quite well into what we’re planning, purchasing small health care providers,” McGrath said in an interview. He said what attracted Candescent were Koch’s “great management” and the local brand the company has built.
“They are excellent providers that have a loyal customer base,” he said. Koch Eye is now one of 11 health care companies under the umbrella of Candescent Holdings, including Aspen Dental Alliancecare and Odyssey Healthcare.
McGrath said the model of private equity firms acquiring dental practices is fairly common, but what Candescent aims to do in eye care is different. Koch is in the forefront of that growth.
He said he is looking for eye groups with their own surgical centers and has already initiated talks with one New England company. He looks for aspects that have made Koch successful in other firms, including a strong community presence and reputation.
For his brother, Paul, who is the medical director of the practice, the sale has provided him time to do some things he had difficulty getting around to before. He is pursuing the study and implementation of best practices and best policies to get the best results.
Koch Eye has been a leader in the field of eye care and new treatments. Dr. Koch started performing Lasik laser surgery in 1979 and says there are only two doctors in the country who have been practicing the surgery longer. He has been named one of the Top 100 Ophthalmologists and one of the Top 15 Cataract Surgeons in North America by Ophthalmology Times. Also, he has been cited in each issue of The Best Doctors in America.
Dr. Koch teaches cataract surgery and estimates between himself and a close group of friends, they have trained 6,000 of the 10,000 who perform the surgery across the country. Dr. Koch is the author of seven textbooks on cataract surgery and holds patents on several devices he developed for eye surgeries. He also initiated a fellowship program that continues today where a doctor spends a year learning techniques in surgery.
“I look back and say we did something good for our field,” says Dr. Koch, “and we’re leaving the practice and the patients in good hands.”
His sister, Dr. Patricia Koch, feels the same way.
She called the sale “a very exciting proposition” that enabled the practice to preserve its staff and its patients.
Looking ahead, Paul sees the days of the solo practitioner numbered, if not over, because of increasing government mandates that drain away time and energy. The same is true from practices the size of Koch where three staff members devote their time to coding forms to ensure reimbursements from insurers and Medicare.
“Government mandates increase time and decrease efficiency,” he said.
Paul sees the progression of the industry as going to larger and larger entities so as to improve efficiency.
As for what it means to Peter, the sale to Candescent that gives the family a small position in the holding company enables them to continue while knowing what’s going to happen.
“We could work together for the rest of our lives … it was a dream,” he said.
And how might the transition affect customers or the community?
“There’s nothing that has happened at Koch Eye Associates that is any different than it was a year and a half ago,” said Peter.