In 1945, Morris Osher opened a solo ophthalmology practice in Cincinnati, Ohio. The country had just come out of World War II. Cataract surgery was still performed as open-eye intracapsular extraction without the benefit of phacoemulsification (which wouldn't be invented for another 22 years) or intraocular lens implants (which wouldn't become standard for another three decades). Most ophthalmology in 1945 was refraction, basic surgical procedures, and early diagnostics; the specialty as Americans know it today, with its high-volume cataract surgery, anti-VEGF retinal therapy, refractive surgery, and premium intraocular lens technology, didn't exist yet. What Osher opened in 1945 was the kind of practice that a single physician could build, own, and transfer over a career.

He spent the next 33 years building that practice. By 1978, Osher was leading a group of seven ophthalmologists, and by the time his son Robert joined the practice in 1980, the foundation Morris built had become the anchor of what would become the Cincinnati Eye Institute, one of the largest and most respected ophthalmology practices in the Midwest. In 2014, Morris's grandson James Osher joined the practice as a retina specialist. Three generations of Osher ophthalmologists, continuously building across 74 years, inside the same American practice.

The practice grew. By the mid-2010s, Cincinnati Eye Institute operated across 16 locations in Ohio, Indiana, and Kentucky, with a 120,000 square foot surgical facility and a 7-operating-room ambulatory surgery center, and approximately 100 ophthalmologists practiced inside the group. The institution partnered with the University of Cincinnati in 2015 to provide academic infrastructure for ophthalmology training and research. For most of its history, Cincinnati Eye Institute was exactly what American ophthalmology did best: a physician-built, physician-owned, multi-generational practice that compounded in value across decades.

Then PE arrived.

Cincinnati Eye Institute is now affiliated with CEI Vision Partners, a private equity-backed platform. The 74-year physician-built practice that Morris Osher started, his son Robert helped lead, and his grandson James continued, now operates under a capital structure designed around a fund exit cycle rather than indefinite physician ownership. The story of Cincinnati Eye Institute isn't that the practice failed; the story is that the practice succeeded for 74 years doing exactly what ophthalmology does best, and then a different capital structure arrived that valued what physicians built differently than physicians did. Understanding what three generations of Oshers actually built, and what changes when that asset transitions to a fund-cycle capital structure, is the starting point for understanding why patient capital matches American ophthalmology's underlying economics better than fund capital does.

What Compounds in a Physician-Led Practice

A well-run ophthalmology practice generates several distinct compounding streams over time. The most fundamental is patient volume and relationships: an ophthalmologist who sees 3,000-5,000 patients per year builds, across a 30-year career, relationships with tens of thousands of patients and their families, most of whom return for annual eye exams, ongoing care, and eventually cataract surgery when demographic timing arrives. Patients introduce their spouses, children, and parents to the practice, and the compounding pattern across 30 years produces a loyal patient base that's worth many multiples of what a similar-sized new practice could build in any single year.

The referral network compounds in parallel. Primary care physicians, optometrists, endocrinologists, rheumatologists, and other physicians who send patients for ophthalmology care build referral patterns through personal relationships, clinical reputation, and consistent follow-through on referred cases, and a practice that has cultivated referring physician relationships over 20-30 years has a structural competitive advantage that's difficult for any new entrant to replicate. Infrastructure and capability compound on top of both: ambulatory surgery centers, diagnostic equipment (OCT, fundus imaging, perimetry, specular microscopy), optical dispensaries, and specialty-specific capabilities (femtosecond laser, premium IOL portfolios, phacoemulsification platforms, vitrectomy equipment) build across the practice's history. Owned real estate (medical office buildings, surgery centers) generates independent cash flow beyond the practice's professional fee revenue, and staff expertise, physician relationships, and operational systems accumulate as institutional knowledge that compounds across decades.

Cincinnati Eye Institute built all of these streams over 74 years across three generations of Osher ophthalmologists and the dozens of other physicians who joined the practice. By the time CEI reached 100 ophthalmologists across 16 locations, the compounding had produced one of the most valuable ophthalmology platforms in American medicine.

The Economics at Scale

American Academy of Ophthalmology AAOE benchmarking data gives structural context for what compounds inside well-run practices. A solo ophthalmology practice typically generates $1.0-1.5 million in annual revenue, overhead rates run 52% at the top quartile, 58% at median, and 67% at the bottom quartile, and after physician compensation, cash flow margins in well-run groups typically run 15-25%. As practices scale, overhead leverage improves: a 5-physician group with shared infrastructure runs lower overhead ratios than five separate solo practices, and a 20-physician multi-location group with central administration, shared imaging, shared surgical facilities, and consolidated billing achieves meaningful operating leverage beyond individual practice economics.

Subspecialty mix improves margins further. Retina practices (with drug pass-through economics) can generate $3M+ per FTE ophthalmologist, and surgical subspecialties like cornea, glaucoma, and oculoplastics generate higher revenue per physician than general ophthalmology due to procedure complexity and reimbursement structure. Ambulatory surgery center ownership adds a separate revenue stream: the 2025 Medicare cataract ASC facility fee of roughly $1,371 is approximately 2.4 times the physician professional fee for the procedure, and a practice that owns its ASC captures both the professional fee and the facility fee for every surgery performed. Across a high-volume cataract practice performing 1,000+ cases per year, that facility-fee capture produces substantial additional cash flow beyond physician professional services. Owned commercial real estate adds a third income layer: practices that own their medical office buildings and surgery center facilities generate rent income (or avoid rent expense) at 5-8% cap rate economics, and over 30 years of practice operation, real estate equity compounding typically produces multi-million-dollar additional value beyond practice operations.

A practice that scales from solo to 20+ physicians, captures ASC facility fees through ownership, and builds owned medical real estate across 30-40 years can generate total owner economic value (compensation plus equity accumulation plus real estate plus ASC cash flow) of $20-40 million or more across a career. Across multiple generations of physician ownership, the compounding across all the streams produces institutional value that makes practices like Cincinnati Eye Institute what they became by the 2010s.

What the Fund Cycle Changes

Private equity acquisition restructures the asset characteristics of a physician-led practice in specific, measurable ways. The physician compensation structure typically shifts: post-acquisition PE ophthalmology physicians report compensation cuts of 20-40% relative to pre-acquisition income, reflecting the PE platform's need to capture EBITDA for fund returns. Physician rollover equity (the portion of sale consideration paid in platform equity rather than cash) replaces some of the compensation cut with equity that vests over time and realizes value only on platform exit, which may or may not happen on the expected timeline.

Operational priorities shift toward EBITDA optimization within the fund hold period. Procedure mix adjusts toward higher-margin services, as the Braun et al. Health Affairs 2024 research documented: anti-VEGF injection volume rises relative to lower-margin surgical categories, drug selection patterns shift toward higher-margin biologic choices, and operational efficiency programs focus on throughput and revenue per case rather than the long-horizon practice-building metrics that physician owners prioritize. The staffing model changes too. Physician turnover at PE-acquired ophthalmology practices increased 265% relative to non-PE practices per Singh et al. Health Affairs 2025, and 78% of ophthalmology trainees in recent surveys said they would not consider employment at a PE-backed practice. The workforce signals indicate that the practice character inside PE ownership structures differs materially from the character inside physician-owned practices.

Patient relationships, referral relationships, and reputation (the compounding streams that drove 74 years of Cincinnati Eye Institute's value) are long-horizon assets that don't show up in 3-year EBITDA growth metrics. They compound over decades but can be degraded relatively quickly through procedure-mix shifts, physician turnover, and operational priorities that optimize for quarterly metrics rather than multi-year relationships. Patient-capital structures match ophthalmology's underlying economics better than fund-cycle structures because the capital that holds a practice indefinitely has incentives aligned with the compounding streams that actually produce long-term value, while the capital that holds a practice for 5-7 years has incentives aligned with the metrics that produce exit multiples. Those are structurally different capital classes producing structurally different operating decisions, which produce structurally different assets over time.

What Could Have Been

The counter-factual for Cincinnati Eye Institute is specific. A capital structure that matched the underlying physician-led compounding characteristics of the practice would have allowed a fourth Osher generation, or (if the family didn't continue medically) a continuation of physician-led ownership through other mechanisms, to extend the 74-year build into a century and beyond. That capital structure exists. It's what Berkshire Hathaway has been for operating businesses, what Constellation Software has been for vertical market software companies, and what multi-generational family office holding companies have been for industrial and service businesses: direct investment into operating businesses, permanent hold intent, no forced exit cycle, alignment between ownership time horizons and underlying asset characteristics.

For American ophthalmology specifically, that capital structure is what absorbs the thousands of independent ophthalmology practices approaching succession over the next 36-60 months. PE fund capital can't match that structure because fund lifecycles force exit cycles that don't align with the 30-40 year horizon of compounding physician-led value, strategic corporate acquirers don't operate at sub-$10 million transaction sizes, and hospital systems have exited physician employment expansion. Patient-capital operators building permanent-hold platforms have the structural match that fund-cycle capital doesn't. The practices that Morris Osher's contemporaries built across American ophthalmology (thousands of physician-led practices similar in character to early Cincinnati Eye Institute) can be absorbed by capital that continues the compounding character of what physicians built, rather than converting that character into fund-return optimization.

That's not a theoretical proposition. It's what capital structures aligned with underlying asset characteristics have always done for businesses that compound across multi-generational time horizons. For capital that values that kind of asset, American ophthalmology in 2026 is one of the last specialty categories in American medicine where the underlying asset is still structurally positioned to compound that way. If the first three Oshers had found capital that matched what they built, the fourth generation might still be extending the story. The lesson for the next generation of American ophthalmology ownership is that the structure of capital determines what survives and what gets converted, and the capital structure that preserves the compounding characteristics of physician-led practices is the structure that fits the specialty's next decade.

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 practice owner thinking about succession or a physician exploring ownership, we're open to thoughtful conversations.

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