There's a number in the SRS Acquiom 2024 M&A Claims Insights Report that every ophthalmologist signing a PE contract should see before they pick up the pen. Across non-life-sciences deals, earnouts pay roughly 21 cents on the dollar. Fifty-nine percent of earnouts pay something. Forty-one percent pay nothing at all. The median earnout period runs 24 months, and 28% of earnouts end up contested between the buyer and the seller.

That's the single most important piece of math in a PE ophthalmology buyout, and it rarely makes it into the conversation when a recruiter is walking a physician through the offer. The $800,000 retention equity line on the term sheet has a statistical expected value closer to $170,000 once the earnout mechanics are actually accounted for.

Physicians don't miss this math because they're bad at math. They miss it because the deal documents are 60 pages long, the earnout mechanics are buried in the purchase agreement, and the recruiter walking through the offer is selling the headline number, not the realization probability.

What an Ophthalmology Physician's Total Compensation Actually Looks Like Under PE

A typical PE ophthalmology employment agreement has four components. Base salary in the $200,000 to $350,000 range, RVU production bonus at $40 to $45 per wRVU for ophthalmology, retention equity structured over 4 to 5 years with performance-based vesting, and an earnout tied to EBITDA milestones or IRR targets. On paper, the math looks like a total compensation figure around $700,000 annually, with an additional equity tail at platform sale that could theoretically double that.

The problem is the equity and earnout components carry different realization rates than the base and RVU components. The base gets paid because it's contractual. The RVU bonus gets paid if the physician hits volume. The retention equity vests if the physician stays, and survives the bad leaver clauses that typically trigger if the physician leaves before year 5. The earnout gets paid at whatever rate the SRS Acquiom data says earnouts pay, which is 21 cents on the dollar.

When EyeCare Partners executed a distressed debt exchange in April 2024, the first-lien loans were trading at 54 cents on the dollar before the workout. Partners Group had acquired the platform for roughly $2.2 billion including debt in 2020. Four years later, adjusted EBITDA had fallen materially year over year and S&P had downgraded the credit to CCC-. The physicians who rolled equity into that platform at the 2020 recap rolled into an asset that was, on paper, worth materially less four years later.

Why the Ophthalmology Hospital Path Plateaus Faster Than Most Physicians Expect

The hospital employment path has a different failure mode, hidden behind the employment ceiling rather than earnout realization risk. MGMA 2024 data put the surgical specialist median total compensation at $554,108 with a 75th percentile at $722,647 and a 90th percentile at $970,009.

What the data doesn't show is that the curve flattens. A hospital-employed ophthalmologist who starts at $380,000 at year 1 typically caps somewhere in the $500,000 to $650,000 range by year 5, and stays there. The compensation model doesn't reward scale because the hospital captures the facility fee, the ASC revenue, and the pharmaceutical pass-through on intravitreal injections. The physician gets a base plus RVU, and the RVU formula caps the upside.

Health Affairs data covering 200 PE-acquired ophthalmology practices showed a 265% increase in physician turnover after acquisition, with physicians under 40 leaving at 2.28 times the replacement ratio. The hospital employment exit rate for early-career ophthalmologists doesn't show up in comparable peer-reviewed studies, but every ophthalmology recruiter in the country will tell the same story about hospital-employed surgeons leaving between years 3 and 7.

How the Ownership Path Runs a Different 10-Year Compensation Curve

The ownership math runs differently because the physician captures the whole business rather than a share of someone else's. BSM Consulting's benchmarks for ophthalmology put a healthy overhead ratio at 48% to 68%, with top-tier practices running at 52% and median practices running around 60%. Collections per FTE provider run $800,000 to $1.3 million for comprehensive ophthalmology and $1 million to $1.8 million for retina.

On a $2 million collections practice at 60% overhead, the owner's take-home lands in the $800,000 range before any ancillary income from optical, in-office surgery, or ASC syndication. On a $3 million practice, the math extends to $1.2 million. At year 10, assuming the practice grows modestly and the owner adds any form of ancillary revenue, the compensation curve starts separating materially from every employment path.

The Cencora acquisition of Retina Consultants of America closed in January 2025 at a $4.4 billion cash outlay for an 85% interest, plus up to $500 million in contingent consideration tied to later performance milestones. Scope Research put the implied EBITDA multiple between 15x and 23x on estimated EBITDA of $200 million to $300 million. RCA was formed in March 2020 with a $350 million Webster Equity Partners investment, meaning the physician founders who rolled equity at formation had a 4.5-year hold and captured the economics of the platform on exit. That's the ownership path at platform scale, and it's what the ownership path looks like when the economics work.

The Ophthalmology Compensation Number Physicians Should Actually Pay Attention To

There's a cleaner way to think about the decision than modeling every component of every path. Look at the cash-in-hand, post-tax, at year 10, factoring in realistic realization probabilities on any equity components.

The hospital employee is at roughly the same cash-in-hand at year 10 as they were at year 5, adjusted for inflation. The PE employee at year 10 has a base, RVU, and some combination of equity and earnout that may or may not have been realized at the platform's secondary sale. The owner at year 10 has built equity in a going concern that either sells, transitions, or continues generating cash flow.

The physicians who look closest at this math early tend to pick the ownership path. The physicians who pick PE or hospital employment tend to pick it because the year 1 offer is bigger and the year 10 question never gets asked.

This article is for general educational purposes and is not legal or financial advice.

Verdira is a healthcare acquisition platform focused on ophthalmology practices. Physician ownership. Transparent structure. No volume quotas. If you're a resident, fellow, or early-career ophthalmologist exploring ownership, we're open to thoughtful conversations.

Contact info@verdira.com | 307-381-3734 | verdira.com