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September 20, 2018

Mohs Knows

MHT Partners  | Healthcare Investment Bank

Unknown to most individuals outside the profession, a highly specialized medical doctor exists within the realm of dermatology. Mohs surgeons play the part of both skin cancer surgeon and pathologist. Amazingly, in a country of approximately 320 million people, only 1,500 Mohs surgeons (American College of Mohs Surgery Fellowship trained) exist – making their unique skills and services rare and valuable. In layman’s terms, if Mohs surgeons were professional baseball players, they would be left-handed knuckleballers.

Mohs surgery derives its name from Frederic Mohs, MD, who developed the procedure in 1938 while a medical student at the University of Wisconsin. For a couple decades thereafter, the procedure was not widely practiced, but it gained increasing traction starting in 1960s and 1970s, and today is widely accepted as a highly effective, minimally invasive procedure. In a typical Mohs procedure, extremely thin layers of cancerous tissue are sequentially removed and examined under microscope. As the tumor’s roots (their blood supply) oftentimes extend deeper than what is apparent, layers of tissue are removed and examined from the bottom up to detect where roots still extend into otherwise healthy tissue. By sequentially removing thin layers of tissue, and by removing tissue only in highly targeted areas, Mohs surgeons are able to remove only the cancerous tissue, causing less damage to healthy cells, minimizing scarring.

Mohs is frequently used to treat basal cell carcinomas and squamous cell carcinomas, the most prevalent forms of skin cancer, and to a lesser extent, melanomas, in areas where cosmetic considerations are highest (e.g., sensitive, highly visible areas such as the face). Cure rates are in the mid-to-high 90th percentile range depending on, among other things, whether the effected areas had been treated previously. With over five million cases of skin cancer diagnosed each year in the U.S. and growing, due to aging demographics and climate change (ozone depletion), the need for Mohs surgery will only increase.

Given the efficacy of the procedure, and the scarcity of practitioners, Mohs surgeons are in high demand, and their compensation reflects this dynamic. In an age of production-based compensation, Mohs surgeons can command 50% plus of their collections, and can make well in excess of seven figures.

From a healthcare investment bank “transactional” perspective, in a rapidly evolving and consolidating dermatology industry, the presence of Mohs capabilities is a differentiator among practices and one that accretes significantly to financial performance, partner interest and ultimately, valuation.

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