Pioneer Eye Care Buys 5 Practices

Company Also Gains $16 Million To Make More Acquisitions

April 22, 1997|By M. William Salganik | M. William Salganik,SUN STAFF

Pioneer Eye Care, a 2-year-old enterprise that has assembled a network of eye doctors and negotiated managed care contracts, announced yesterday a move into a new phase, saying it had lined up $16 million in financing and had acquired five practices including 21 eye doctors.

Eventually, Pioneer looks to move beyond the mid-Atlantic region to become a national player, both through practice acquisition and contractual networks, that will be "incredibly attractive to managed care organizations," said Dr. Bert M. Glaser, the well-known retinal surgeon who is Pioneer's founder and chairman.

In acquiring practices, the doctors will remain self-employed, but Pioneer will own the assets of the practice and will employ the nonmedical staff. While the practices keep patient income, they pay a management fee to Pioneer. Doctors will receive a combination of cash and Pioneer stock for their practice assets. The price of the acquisitions was not disclosed.

Glaser said Pioneer hopes to make itself attractive to doctors, patients and insurers by developing research-based models on the prevention and care of eye disease. Already, for example, it has a program to monitor the eyes of diabetics, allowing earlier identification of conditions that could lead to blindness.

Economies of scale in large doctor groups can only save 5 to 7 percent of expenses, he said, with the real savings coming in better disease management and prevention and in "increased productivity from optimum utilization of ophthalmologists, optometrists and trained technicians."

Pioneer's contracting network now includes 212 ophthalmologists and 144 optometrists. It has contracts with two large HMOs in the Baltimore-Washington market, NYLCare and CIGNA. It also has contracts in New Jersey and Tennessee, Glaser said. The practices it has acquired -- four in the Baltimore area and one in New Jersey -- include 16 ophthalmologists and five optometrists.

Glaser said Pioneer's strategy for growth is to begin in a market as it began in Baltimore, assembling a network and winning HMO contracts.

"As we work with the providers," he said, "we get to know them and determine which are the best, the most effective, the most strategically positioned, and incorporate those into our equity network."

The new financing will be used primarily for practice acquisition, and also to help develop care guidelines and the information systems to monitor them, said Marty Brandwin, a Pioneer spokesman.

The lead investors will be Acacia Venture Partners of San Francisco. Also providing financing will be Kleiner, Perkins, Caulfield and Byers of Menlo Park, Calif., and New Enterprise Associates of Baltimore. New Enterprise has provided venture capital for a number of health-related businesses, including MedPartners, Inc., based in Birmingham, Ala., the nation's largest physician practice management company. MedPartners, affiliated with more than 10,000 physicians in 36 states, had 1996 revenue of $4.8 billion.

Charles Newhall, a general partner at New Enterprise, said the investment in Pioneer is one of three his firm has made recently in "disease management companies."

"We feel that although the days of starting general multispecialty and primary care companies are over, there is still an opportunity in `carve-out' areas or disease management," he said. "As the system moves to capitation [flat payments per patient], you can get better outcomes at lower cost if you develop good techniques and standardize them over a large number of practices."

Pub Date: 4/22/97

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