MADISON, Wis.—In an effort to add a new ownership model to the evolving eyecare marketplace, Rev360 is launching an “alternative model” and practice partnership service for ECPs to consider as they weigh the benefits of remaining as an independent versus combining their practice with a larger group under new ownership. The initiative was announced to the RevolutionEHR’s customer base earlier this week. Rev360 is approaching 6,000 optometrists in the Rev360/RevolutionEHR user base, according to company executives.
RevAdvance LLC, which will operate as a separate company under the Rev360 corporate umbrella, is designed to be “an innovative partnership that will sustain the practice beyond [the ODs’ career] while also honoring and preserving your legacy in the community,” according to a Rev360 briefing report.
Rev360 is an eyecare software and business services company that delivers the RevolutionEHR software platform and additional services to RevolutionEHR users.
The core model of RevAdvance is designed around “an extended partnership,” the briefing report noted. RevAdvance seeks to invest in practices by initially purchasing between 60 percent and 80 percent of the practice, while the doctor (or practice owners) retains the remainder of the ownership.
“The doctor stays fully engaged for a defined term, assisting RevAdvance in optimizing and growing the business, and providing continued leadership in patient care,” the briefing paper said. “The end goal is to bring in associate doctors (or outside doctors, if needed) to transition the remaining owner equity to the next generation of leaders. Thus sustaining a vibrant, healthy practice in the community for years to come.”
“When we started seeing practice consolidation [and] 100 percent practice buyouts happening by private equity firms, we realized that with thousands of practices on our software some of them might not know how to run their practice in an optimized way and might be targets for being purchased completely by a consolidator,” Rev360 chief executive officer Scott Jens, OD, told VMAIL
in an exclusive interview.
“As an option to this type of consolidation, RevAdvance was created so the Rev360 community of practices would have a means of remaining somewhat independent,” Jens said. “When I say somewhat independent I mean [they don’t have] to take what some might consider an easier path if an acquirer with a checkbook showed up on the front door and said, ‘Can I take your practice in exchange for a fee.’”
Gunnar Bjorklund, chairman of Rev360, said the “RevAdvance practice partnership service is highly differentiated from the transactional alternatives that many optometrists are choosing today. The doctor(s) in the practice that partner with RevAdvance will be seeing their patients, with their same practice name, so as to sustain the practice and their legacy in their community. It's truly a unique approach.”
RevAdvance participants are not required to change the practice name or post new signs, according to Rev360. Rev360 said the new initiative also provides a transition strategy for doctors who seek an immediate exit and payout by recruiting a new doctor [or doctors] for the practice. The new doctor also gains a minority position in the practice, which allows the doctor to become an owner.
Dr. Evan Pritchett, OD, of Pritchett Eye Care Associates, a seven-location practice based in Sparks, Nev., has been named to oversee the RevAdvance initiative. In a test of the new ownership model, several RevolutionEHR practices have been recruited to participate in a RevAdvance “incubator” trial, according to Rev360. It is expected that between 15 to 25 practices come under the RevAdvance umbrella in the “early years,” Rev360 said.
The “launch” announcement to the RevolutionEHR user base earlier this week “went very well and we had several practices inquire within hours of sending our message,” marketing director Tim Barg told VMAIL
Jens told VMAIL
that “this wasn’t something that we needed to do, but RevAdvance is an opportunity to create an alternative model that doctors could consider if they thought it made sense.” He said RevAdvance “is just one more thing that Rev360 has contemplated carefully” before deciding whether it needed to add this to its menu of services for ECPs. “There are enough doctors that we already serve as their software vendor that are going to go through some consideration of a transformation of their practice," he explained. So how about we find a way to help the doctor who would like an alternative model to sustain his or her practice and his or her legacy in the community?”
Asked about the long-term goal of this new ownership model, Jens said, “The ideal end game for us … is one in which Rev360 really becomes known in the industry … as a provider of excellent service to doctors who choose to use our software.” He also noted that Rev360 is independent and a company “that does not carry debt or any contingency to an owner.” He said RevAdvance will give Rev360 an “opportunity to create a market of our own of practices that are just thriving because they are in Rev360.”
He added, “In other words, there is no private-equity like end game. And that isn’t to disparage the private equity end game. I am perfectly comfortable with those doctors who need that full buyout and cash today and have an ‘I don’t mind the change’ [perspective.]. I hope the tone comes across that we don’t mind that and we want to make sure that we don’t look like we are trying to create any enemies because we are not.”
The RevAdvance partnership model “separates strategic and operational practice planning and management from ownership.” RevAdvance partners will retain 20 percent to 40 percent ownership “after realizing an upfront, one-time fair-market calculated payment of 60 percent to 80 percent of the practice value, resulting in 60 percent to 80 percent of the practice ownership being assumed by RevAdvance LLC, a company of Rev360,” according to the briefing report.
The ideal candidates for utilizing this new ownership model are technology-oriented, understand the value of efficiency and measuring the key performance metrics and has an “owner and entrepreneurial mindset,” according to Rev360. In addition, the candidate would be coachable, a team player, driven to succeed financially and understanding of the role to improve patient care and drive new revenues. Rev360 said it is prepared to engage in “a small number of partnerships with interested practice owners who have at least two full-time doctors on staff.”