To me it seems like PE has simply discovered a loophole in the system. We want a system where creating value for people is rewarded, but PE has found a way to legally get the rewards without improving society. Normally this is called a scam or a fraud, and there are laws for standard stuff like taking people's money without giving them what you promised.
For PE however, they've found a way around it, using the machinery available in the economy. For instance, once you are able to pay out a dividend that covers your cost of purchase, whatever comes next doesn't matter a whole lot from an investment point of view. You may have saddled the target with a huge debt, but that's a heads-I-win-tails-you-lose situation. If the firm does ok, PE actually win more. If it goes bankrupt, oh well. PE firm is still doing fine.
The risk is entirely on all the other interested parties: employees and customers.
But because we only have one side of the "created value" balance, all we can really see is some PE guys get paid. We don't see the other side, which is pretty hard to untangle. You can make an argument that everyone is better off with society organized this way, but you can't really ignore that many people seem to think they're worse off in this world.
I think it should be illuminating to balance narratives like this with simple questions along classical economic lines:
1. Why is private equity ending up with all these resources? Who is selling to them and why? Why didn't this happen before? It's not like PE is new.
2. When PE loads up a firm with supposedly unsustainable billions of debt, someone is on the other side of that transaction, lending the billions. Who does that and why? Are they perpetual suckers, unaware of the decades of experience we have doing this?
I don't necessarily think the conventional prestige media narrative around PE is wrong, but it never seems to get around to asking these basic economic questions. It can't be as simple as some metaphor where bandits are roaming the economic countryside pillaging innocent victims. Voluntary transactions are occurring and we need to understand why to address any underlying issues.
"Unpleasant things are happening, we need some sort of regulation" doesn't seem like a sufficient basis for socially beneficial action. Whatever underlying issues are making healthcare an attractive PE target will probably persist, and maybe get worse, if all we do is pass some kind of "PE bad, stop PE" law.
> To me it seems like PE has simply discovered a loophole in the system.
The fundamental loophole is that "the free market" is practically a religion in the United States (the so-called Invisible Hand taking the role of a god doling out rewards and punishments), and a significant portion of the population is vehemently opposed to any regulation of capital. You can even see this attitude in some of the comments here, where commenters are claiming that the problem is too much regulation rather than too little.
Moreover, political campaigns are financed by private "donations" (i.e., legal bribes), so the lawmakers themselves are practically indebted to wealthy interests who don't want to be regulated.
More like running many kinds of businesses has become more hassle than its worth.
Medical malpractice premiums are very high, insurance payouts are stingier, and medicine has become more capital intensive than ever as newer medicines and diagnostics increasingly dominate, along with an aging population that needs more intensive care.
Doctors report being more burnt out than ever. It's an attractive proposition to outsource the hard and messy stuff to a firm that knows the business angle well so that they can keep their sanity and focus on what got them interested in medicine in the first place while still getting a great salary.
I don't love the situation, but let's not pretend it happened in a vacuum.
Very well put. And this has been going on for a while. A decade ago the NYT had a great article on how private equity destroyed Simmons Mattress: https://archive.is/uGYrT
And you're right that the effects are obscured. I happened to be talking with an optometrist earlier this year. He and his partners sold their practice to a PE firm on the promise of making everything better. But he had started to moonlight at somebody else's non-PE practice because the PE overlords kept making things both worse and more expensive for the patients, and less and less satisfying for the doctors. And all of this was explained in a hush-hush tone, presumably because there were NDAs involved.
> You may have saddled the target with a huge debt
I’m not sure that’s the model PE is using in healthcare. My impression is that they’re buying hospitals and medical practices, then obscuring the cost of actually providing care, so they can charge insurance companies not something reasonable like cost+20% but rather the maximum amount they think they can get out of the insurance company. Their financial modelers figure out after each procedure the max they can charge based on the procedure, the insurance company and plan, patient’s finances, etc.
The net effect is to drive up medical insurance costs across the country, impoverishing and bankrupting many people while a small number of PE folks get rich. It’s an entirely extractive business model, not wealth-creating or innovation-producing.
Laws that simply require total transparency in medical care pricing and pre-publication of prices for all procedures and drugs would probably go a long way toward fixing this, and in a capitalism-compatible way. We require transparency among publicly traded companies, SEC has extensive rules about that, but less so for private ones like hospitals and medical practices. That’s the loophole PE is exploiting.
Many arguments for sketchy business moves like ticket scalping or PE / market making is that they "create liquidity"
Who is to say that a business should be liquid? Why? What is the value in making it easy to bail on your responsibilities, and why should we encourage people to quickly build a complicated and powerful system and make it easy for them to recuse themselves of that duty?
You really nailed the problem with the financialization of everything.
I’m busy figuring out how we got here, and how to get out of it but you’ve perfectly described how the incentives are flipped.
I’d further add that regulatory capture means that financialization is a ratchet process, so undoing it is multiples more difficult than putting it into place.
I live in Canada, where we have socialized medicine. Our survival rates for major cancers are on par the US and our infant mortality rate is lower, though we spend far less. We certainly have problems related to physician pay and cost of living crisis, but we are dealing with them. A lot of the problems we have here are the same as in the US: not enough nurses due to burnout, retiring physicians, etc.
I have never once in my life thought "I sure wish there was somebody in the middle extracting value from this whole situation." Contributes absolutely nothing. Doctors are plenty efficient (pathologically so) and no MBA is going to speed things up. Long term outcomes are ideologically opposed to short-term capitalism. You cannot relate a reduction in type 2 diabetes or stroke cases 20 years later to a quarterly report. It's insanity to have them involved at all.
I think its more of a systematized rentiership rather than fraud. There's no difference between local ownership and private equity except for the level of systematization.
With that said, I do agree that we've rewarded this form of rentiership and also enhanced the barriers to entry for other forms of private ownership (like a partner owned firm). This is in place of value created as a source of wealth, which the tax system has entirely devalued
The whole practice of a LBO does seem like a fraud almost. I dont understand how a buyer can "lend" to the purchased firm without bearing actual risk perhaps I don't understand the mechanics there fully
On top of this, most of it is leveraged capital at a fraction of the actual cost, so the risk is almost vacant for the firms. Corrupt banking leads to infinite leverage for the super-wealthy to buy up / control it all. They do not need to care because they risk little and still profit even if it crashes because the tangible assets have shifted to their side of the gap.
Think the economic reality is that the days of a doctor hiring a couple employees and hanging their shingle are over. The capital requirements are too high and the counter parties too big for individuals to thrive anymore. PE is one of the ways to consolidate and get some economies of scale. Plus I think most doctors prefer doctoring to running a business.
It seems that way if you only look at the PE part of the transaction. When a firm takes on debt, someone is backing that debt and loses out if the firm fails. If it's a the same PE firm or a bank making the loan, they would lose in the case of a bankruptcy.
In theory, there's nothing wrong with companies trying new things and sometimes failing. The only problem is when barriers are too high and it is difficult to replace failed companies.
> The risk is entirely on all the other interested parties: employees and customers.
How is PE increasing their risk in any way?
Maybe you are right that PE are getting more wealth than they create value but unless you want PE to be banned because of jealousy, you haven't pointed on any negative consequence due to them.
There is a lot of survivorship bias in reporting. Buying companies and trying to make money at it is an incredibly competitive game to be in. Yeah, the winners make billions, but so does Lebron.
> To me it seems like PE has simply discovered a loophole in the system
Serving private equity literally is the focus of the system in capitalism; it hasn’t found a loophole, it is the thing around which the system is engineered.
> For PE however, they've found a way around it, using the machinery available in the economy.
No, the effect you describe is literally what several centuries were spent engineering the machinery of the economy to create, its not an unintended pathway recently discovered that that machinery can be bent toward.
Its what “capitalism” was named, by its critics, for.
Reminds me of "Does Private Equity Investment in Healthcare Benefit Patients?" [1].
> Our estimates show that PE ownership increases the short-term mortality of Medicare patients by 10%, implying 20,150 lives lost due to PE ownership over our twelve-year sample period. This is accompanied by declines in other measures of patient well-being, such as lower mobility, while taxpayer spending per patient episode increases by 11%. We observe operational changes that help to explain these effects, including declines in nursing staff and compliance with standards.
When possible, I prefer people who work for me to have incentives that are aligned with mine. PE-owned medical practices and even many private practices throw that out the window, with financial incentives to do procedures or run tests.
I was talking to my wife’s obstetrician about this last week and he also feels strongly about it. He’s paid a flat salary and gets no financial benefit for a c-section vs. an induction vs. a conventional delivery. I’d like to keep it that way.
This is the kind of economic distortion that should be expected when onerous government-imposed regulation of practitioners, medication, and medical devices creates barriers to entry that reduce competition.
While such regulation may have been imposed to try to increase safety, quality, and consistency, for example, it also ends up interfering with the incentives of the participants.
The lack of real competition, combined with the introduction of significant unnecessary costs and other overhead, encourage and enable the participants to act in ways that may not be beneficial to the patients.
The truly unfortunate part is that such regulation often takes options and choices away from the patients, preventing them from accessing alternatives that may help mitigate or avoid the perverse incentives introduced by regulation.
I’m the furthest thing from having any knowledge here, but it feels like it should kind of be like how law firms can only have lawyers be owners with the idea that owners need to be aligned with codes of professional conduct/ethical obligations to clients etc
The business lobbies freaked out when that was proposed, in spite of it being fairly moderate. It was one of the reasons for the character assassination extravaganza (anti semitism, "terrorist friends", etc).
That model works well for professional services (eg. lawyers, accountants, consultants) because require very little capital. Everything from the office they work in, to the computers they type on can be leased. The same can't be said for hospitals, which cost hundreds of millions to build and equip. How are you going to raise all that capital from only the doctors? They're rich, but not that rich. Moreover, the payback on said investment is on the order of decades. A doctor late in their career has the most to invest, but they're also nearing retirement. What are you going to do with their shares? Sell them to newly graduated doctors who are hundreds of thousands in debt? Let them keep them, at which point they turn into quasi-investors?
america, unsatisfied with spending vastly more privately on healthcare than the rest of the world, while also spending more publicly on healthcare than the rest of the world, continues to find ways to make healthcare yet more expensive and ruinous for its citizens.
PE bought your hospital? More like, "some guys" bought your hospital.
Ask why "some guys" bought it instead of using their money in the market, or why your hospital sold in the first place. As anyone who's company has been purchased by private equity knows, it's probably because your hospital wasn't doing so hot to begin with and "some guys" were willing to gamble that they could turn it around and make some money before it blew up. This will mean turning the screws on the customers and employees and creating a sucky environment. But this is just accelerating what was likely already an inevitable decline.
As with any risky investment, there's a solid chance the PE firm will lose money on the gamble.
Hospitals, in many cases, are not good businesses. Especially in places where doctors, nurses, and other staff can demand a premium based on their local market's dearth of professionals. PE firms in my opinion are part of the slow death of these failing businesses - the last attempts of "some guys" desperate for returns trying to squeeze blood from a rock that everyone else was avoiding.
See, what I fundamentally disagree with is the notion that hospitals should be "good business." Why are "some guys" allowed to try to make a profit here at the expense of patient care? Healthcare (or government) should not be run like a business, and instead be provided as a service using the taxes we already pay for, much like how roads are built. The health of the public is our most vital infrastructure, and public infrastructure requires investment that you really can't make money on without defeating the whole purpose of public service.
> PE can be replaced with "Some guys". PE bought your hospital? More like, "some guys" bought your hospital.
The article is about how PE funds are large, and can thus buy enough businesses to reduce competition. Your "some guys" analogy doesn't hold here, right?
Nah the grift is that insurers are price-takers in a local area (if you want to provide insurance to businesses in Seattle, you need to cover e.g. cardiology in Seattle), so PE buys up all the cardiology practices in Seattle and charges more.
Having recently spent too much time at too many medical offices, I've been able to ask doctors about how thier businesses work. So far only one has said they own their practice, and he's of the opinion most doctors cannot pull off ownership becuase they exit med school bound by debt, and never end up with enough capital to hang their own shingle, much less to buy an existing practice when competing with PE. Of course this is 3rd hand anecdota.
My former dermatologist practice had several offices in this region staffed by good, trained physicians. It was a pleasant place to visit for the every so often check-up. During the first months of the pandemic I cancelled a regular appointment because our area was hot with COVID.
Late last year I finally decided to reschedule that appointment. The whole practice had sold out to PE. It had been renamed with a name that has religious connotations though all the doctors were still there.
I'm always suspicious of mixing religion with health care but in this area, north Texas, it isn't unusual to see that type of branding in business names any more. It seems that everyone from your yard person to your doctor wants you to know how patriotic or pious they are so they stick it in their business name or logo. Pretty disgusting to me and I dodge those outfits almost as a rule because they tend to be full of hypocritical assholes who smell the extra income that can flow their way if they just add a little Jesus or veteran reference somewhere.
The markets decided a long time ago to use the tools that actually worked and that's why we have trained physicians doing the health care instead of preachers.
Anyway, after that appointment I have decided that I will not return and if I ever need to visit another dermatologist I will look for one that is still independent. That old practice has allied with a sketchy compounding pharmacy and they encourage you to use that pharmacy instead of using Walgreens, CVS, etc. probably because there is some level of kick-back in action from referrals.
It all seems so broken and filled with greed. It reminds me of the software world where everyone wants you to subscribe and pay perpetually for apps that in most cases offer no long term value and which will inevitably be abandonware when the coder moves on to the next big grift. SaaS is a huge scam infecting the business world. Everyone should offer the option to pay based on actual usage or to buy a perpetual license to use a single version with the option to buy upgrades as they are available, based on the individual's own needs.
Must admit I find hn comments on PE anything quite strange. VC good, PE evil when in many cases it’s just different stage of life of the same company & what the means for funding sources
PE firms often control boardrooms without taking seats. Maybe they have the right to appoint a director but don't take it up, but come to board meetings anyway. The legal phrase for someone with control, but not registered as a director is 'shadow director'. Shadow directors are supposed to have the same responsibilities legally as real directors. In practice they get the real directors to risk sanction for insolvency and don't risk themselves. This needs tightening up massively.
I'd noticed some strange changes at our veterinary office, where they'd usually give my dog a full round of shots once a year, suddenly they decided to break it up into multiple different rounds, meaning I'd pay 3 times instead of the one. After a little research I'd found that they'd been bought by a private equity firm, and on further inspection had found a lot (NYC) of practices had changed hands the last few years.
There's been some antitrust cases, but the FTC clearly can't block many. The changes are clearly costing everyone more money for no reason, but can anyone really block this?
The thing about PE that confuses me, in fact it's about all finance.
Why is it that a business can be bought by a PE firm, that uses the existing cash flow of the business to fund the loan repayments, but the business itself cannot get a loan to invest in new capital / buy the CEO a yacht etc?
There feels like there is a missing market. There is the super safe regulated world of public corporations, where you loan MSFT your cash and they will spend it on marketing O365 or something. And there is the highly specialised one of a kind "selling it for parts" M&A.
But where is the middle market where a PE firm makes an offer and the next day the business itself puts up a prospectus and is able to find enough semi-liquid capital to take the self same bet?
> that uses the existing cash flow of the business to fund the loan repayments, but the business itself cannot get a loan to invest in new capital / buy the CEO a yacht etc
Loan repayment to banks and other financial institutions is the first and highest priority. During this process the company is constantly turned more efficient and profitable. If it adds value, jobs and capital in form of machines etc. is added, therefore PE firms do not only reduce employment. The goal is also to sell irrelevant jets / yachts and eliminate other expensive non-business related expenses from which often a few benefit. The goal is not to buy new yachts. In fact a PE firm is committed by contract and by incentives through own investments, to not use the company to fund lavish lifestyles. After on average 5 years the company is sold for a multiple.
> But where is the middle market where a PE firm makes an offer and the next day the business itself puts up a prospectus and is able to find enough semi-liquid capital to take the self same bet?
Why is it so hard to raise funds?
I think I don't really get your point here. There is no infrastructure which provides businesses this option, because it does not make sense. Private businesses are often sold through investment banks, and if the desire to sell comes from the owner, then there is often a form of auction involved. Companies with a solid business are getting a very good price this way. But raising funds for an existing business and selling a business are two completely different things. You don't accept a PE firms invitation to a call, and then turn the other way to get funding and keep ownership.
I think if we can get more health data access then we can slowly automate out general practice type doctors.
Only doctors around will be those who are highly specialized in orthopedics, neurology, etc.
For everyone else who needs a Z pack or headache pills, they can just get their care from a AI doctor in their pocket. Why do I need to wait days or weeks to see a general practice doctor? That doesn’t sound fair.
Cuts costs heavily. Most people live long with just eating healthy and moving around. I’m sure it will be fine for most people.
I personally don’t see a doctor each year. I exercise, eat whole non processed foods (cheaper than whatever packaged crap), and I get my lab work done regularly. The only times I’ve gone in are when I broke something or was heavily bleeding from an injury.
I’ll bet if most people put down the Diet Coke in favor of a water, we would save billions of dollars right off the bat.
[+] [-] lordnacho|2 years ago|reply
For PE however, they've found a way around it, using the machinery available in the economy. For instance, once you are able to pay out a dividend that covers your cost of purchase, whatever comes next doesn't matter a whole lot from an investment point of view. You may have saddled the target with a huge debt, but that's a heads-I-win-tails-you-lose situation. If the firm does ok, PE actually win more. If it goes bankrupt, oh well. PE firm is still doing fine.
The risk is entirely on all the other interested parties: employees and customers.
But because we only have one side of the "created value" balance, all we can really see is some PE guys get paid. We don't see the other side, which is pretty hard to untangle. You can make an argument that everyone is better off with society organized this way, but you can't really ignore that many people seem to think they're worse off in this world.
[+] [-] civilized|2 years ago|reply
1. Why is private equity ending up with all these resources? Who is selling to them and why? Why didn't this happen before? It's not like PE is new.
2. When PE loads up a firm with supposedly unsustainable billions of debt, someone is on the other side of that transaction, lending the billions. Who does that and why? Are they perpetual suckers, unaware of the decades of experience we have doing this?
I don't necessarily think the conventional prestige media narrative around PE is wrong, but it never seems to get around to asking these basic economic questions. It can't be as simple as some metaphor where bandits are roaming the economic countryside pillaging innocent victims. Voluntary transactions are occurring and we need to understand why to address any underlying issues.
"Unpleasant things are happening, we need some sort of regulation" doesn't seem like a sufficient basis for socially beneficial action. Whatever underlying issues are making healthcare an attractive PE target will probably persist, and maybe get worse, if all we do is pass some kind of "PE bad, stop PE" law.
[+] [-] lapcat|2 years ago|reply
The fundamental loophole is that "the free market" is practically a religion in the United States (the so-called Invisible Hand taking the role of a god doling out rewards and punishments), and a significant portion of the population is vehemently opposed to any regulation of capital. You can even see this attitude in some of the comments here, where commenters are claiming that the problem is too much regulation rather than too little.
Moreover, political campaigns are financed by private "donations" (i.e., legal bribes), so the lawmakers themselves are practically indebted to wealthy interests who don't want to be regulated.
[+] [-] lr4444lr|2 years ago|reply
Medical malpractice premiums are very high, insurance payouts are stingier, and medicine has become more capital intensive than ever as newer medicines and diagnostics increasingly dominate, along with an aging population that needs more intensive care.
Doctors report being more burnt out than ever. It's an attractive proposition to outsource the hard and messy stuff to a firm that knows the business angle well so that they can keep their sanity and focus on what got them interested in medicine in the first place while still getting a great salary.
I don't love the situation, but let's not pretend it happened in a vacuum.
[+] [-] wpietri|2 years ago|reply
And you're right that the effects are obscured. I happened to be talking with an optometrist earlier this year. He and his partners sold their practice to a PE firm on the promise of making everything better. But he had started to moonlight at somebody else's non-PE practice because the PE overlords kept making things both worse and more expensive for the patients, and less and less satisfying for the doctors. And all of this was explained in a hush-hush tone, presumably because there were NDAs involved.
[+] [-] SkyMarshal|2 years ago|reply
I’m not sure that’s the model PE is using in healthcare. My impression is that they’re buying hospitals and medical practices, then obscuring the cost of actually providing care, so they can charge insurance companies not something reasonable like cost+20% but rather the maximum amount they think they can get out of the insurance company. Their financial modelers figure out after each procedure the max they can charge based on the procedure, the insurance company and plan, patient’s finances, etc.
The net effect is to drive up medical insurance costs across the country, impoverishing and bankrupting many people while a small number of PE folks get rich. It’s an entirely extractive business model, not wealth-creating or innovation-producing.
Laws that simply require total transparency in medical care pricing and pre-publication of prices for all procedures and drugs would probably go a long way toward fixing this, and in a capitalism-compatible way. We require transparency among publicly traded companies, SEC has extensive rules about that, but less so for private ones like hospitals and medical practices. That’s the loophole PE is exploiting.
[+] [-] gmd63|2 years ago|reply
Who is to say that a business should be liquid? Why? What is the value in making it easy to bail on your responsibilities, and why should we encourage people to quickly build a complicated and powerful system and make it easy for them to recuse themselves of that duty?
[+] [-] AndrewKemendo|2 years ago|reply
I’m busy figuring out how we got here, and how to get out of it but you’ve perfectly described how the incentives are flipped.
I’d further add that regulatory capture means that financialization is a ratchet process, so undoing it is multiples more difficult than putting it into place.
[+] [-] stubybubs|2 years ago|reply
I have never once in my life thought "I sure wish there was somebody in the middle extracting value from this whole situation." Contributes absolutely nothing. Doctors are plenty efficient (pathologically so) and no MBA is going to speed things up. Long term outcomes are ideologically opposed to short-term capitalism. You cannot relate a reduction in type 2 diabetes or stroke cases 20 years later to a quarterly report. It's insanity to have them involved at all.
[+] [-] wnc3141|2 years ago|reply
With that said, I do agree that we've rewarded this form of rentiership and also enhanced the barriers to entry for other forms of private ownership (like a partner owned firm). This is in place of value created as a source of wealth, which the tax system has entirely devalued
The whole practice of a LBO does seem like a fraud almost. I dont understand how a buyer can "lend" to the purchased firm without bearing actual risk perhaps I don't understand the mechanics there fully
[+] [-] uLogMicheal|2 years ago|reply
[+] [-] treis|2 years ago|reply
[+] [-] cardamomo|2 years ago|reply
So why not call it a scam or a fraud? I know there's likely a solid legal argument for not classifying it as such, but laws can be changed.
[+] [-] s1artibartfast|2 years ago|reply
In theory, there's nothing wrong with companies trying new things and sometimes failing. The only problem is when barriers are too high and it is difficult to replace failed companies.
[+] [-] colordrops|2 years ago|reply
[+] [-] YetAnotherNick|2 years ago|reply
How is PE increasing their risk in any way?
Maybe you are right that PE are getting more wealth than they create value but unless you want PE to be banned because of jealousy, you haven't pointed on any negative consequence due to them.
[+] [-] danielmarkbruce|2 years ago|reply
[+] [-] dragonwriter|2 years ago|reply
Serving private equity literally is the focus of the system in capitalism; it hasn’t found a loophole, it is the thing around which the system is engineered.
> For PE however, they've found a way around it, using the machinery available in the economy.
No, the effect you describe is literally what several centuries were spent engineering the machinery of the economy to create, its not an unintended pathway recently discovered that that machinery can be bent toward.
Its what “capitalism” was named, by its critics, for.
[+] [-] verteu|2 years ago|reply
> Our estimates show that PE ownership increases the short-term mortality of Medicare patients by 10%, implying 20,150 lives lost due to PE ownership over our twelve-year sample period. This is accompanied by declines in other measures of patient well-being, such as lower mobility, while taxpayer spending per patient episode increases by 11%. We observe operational changes that help to explain these effects, including declines in nursing staff and compliance with standards.
[1] https://www.nber.org/system/files/working_papers/w28474/w284...
[+] [-] alach11|2 years ago|reply
I was talking to my wife’s obstetrician about this last week and he also feels strongly about it. He’s paid a flat salary and gets no financial benefit for a c-section vs. an induction vs. a conventional delivery. I’d like to keep it that way.
[+] [-] handwarmers|2 years ago|reply
https://news.ycombinator.com/item?id=32597326 ( When private equity takes over a nursing home)
The Portopiccolo Group got sued, but the lawsuit did not go anywhere. https://www.mcknights.com/news/shuttered-nursing-home-avoids...
they are shady to say the least - https://medicareadvocacy.org/private-equity-and-nursing-faci...
Also see - https://news.ycombinator.com/item?id=36108182 ( Private Equity Is Now Dominating the US Hospice System)
[+] [-] VancouverMan|2 years ago|reply
While such regulation may have been imposed to try to increase safety, quality, and consistency, for example, it also ends up interfering with the incentives of the participants.
The lack of real competition, combined with the introduction of significant unnecessary costs and other overhead, encourage and enable the participants to act in ways that may not be beneficial to the patients.
The truly unfortunate part is that such regulation often takes options and choices away from the patients, preventing them from accessing alternatives that may help mitigate or avoid the perverse incentives introduced by regulation.
[+] [-] balderdash|2 years ago|reply
[+] [-] pydry|2 years ago|reply
https://www.reuters.com/article/us-britain-politics-labour-b...
The business lobbies freaked out when that was proposed, in spite of it being fairly moderate. It was one of the reasons for the character assassination extravaganza (anti semitism, "terrorist friends", etc).
[+] [-] CamelCaseName|2 years ago|reply
The result is that a veterinarian owns the business on paper, but the PE fund can take over or replace them as needed.
[+] [-] gruez|2 years ago|reply
[+] [-] appplication|2 years ago|reply
[+] [-] sxg|2 years ago|reply
[+] [-] recursivedoubts|2 years ago|reply
[+] [-] jmoak3|2 years ago|reply
PE bought your hospital? More like, "some guys" bought your hospital.
Ask why "some guys" bought it instead of using their money in the market, or why your hospital sold in the first place. As anyone who's company has been purchased by private equity knows, it's probably because your hospital wasn't doing so hot to begin with and "some guys" were willing to gamble that they could turn it around and make some money before it blew up. This will mean turning the screws on the customers and employees and creating a sucky environment. But this is just accelerating what was likely already an inevitable decline.
As with any risky investment, there's a solid chance the PE firm will lose money on the gamble.
See this recent hacker news submission: https://news.ycombinator.com/item?id=36048464, 30% of rural hospitals are closing due to costs growing faster than revenues.
Hospitals, in many cases, are not good businesses. Especially in places where doctors, nurses, and other staff can demand a premium based on their local market's dearth of professionals. PE firms in my opinion are part of the slow death of these failing businesses - the last attempts of "some guys" desperate for returns trying to squeeze blood from a rock that everyone else was avoiding.
[+] [-] bp0017|2 years ago|reply
[+] [-] verteu|2 years ago|reply
The article is about how PE funds are large, and can thus buy enough businesses to reduce competition. Your "some guys" analogy doesn't hold here, right?
[+] [-] chrisaiv|2 years ago|reply
[+] [-] zug_zug|2 years ago|reply
Presumably the effect is -> PE forces doctors to spend less time/thought per patient -> patients receive worse care -> patients change providers
Whoever can provide value to patients to forces "market efficiency" and helps patients and the system as a whole.
[+] [-] peyton|2 years ago|reply
[+] [-] darth_avocado|2 years ago|reply
[+] [-] j-bos|2 years ago|reply
[+] [-] bagacrap|2 years ago|reply
[+] [-] rayiner|2 years ago|reply
[+] [-] bagacrap|2 years ago|reply
[+] [-] doodlebugging|2 years ago|reply
Late last year I finally decided to reschedule that appointment. The whole practice had sold out to PE. It had been renamed with a name that has religious connotations though all the doctors were still there.
I'm always suspicious of mixing religion with health care but in this area, north Texas, it isn't unusual to see that type of branding in business names any more. It seems that everyone from your yard person to your doctor wants you to know how patriotic or pious they are so they stick it in their business name or logo. Pretty disgusting to me and I dodge those outfits almost as a rule because they tend to be full of hypocritical assholes who smell the extra income that can flow their way if they just add a little Jesus or veteran reference somewhere.
The markets decided a long time ago to use the tools that actually worked and that's why we have trained physicians doing the health care instead of preachers.
Anyway, after that appointment I have decided that I will not return and if I ever need to visit another dermatologist I will look for one that is still independent. That old practice has allied with a sketchy compounding pharmacy and they encourage you to use that pharmacy instead of using Walgreens, CVS, etc. probably because there is some level of kick-back in action from referrals.
It all seems so broken and filled with greed. It reminds me of the software world where everyone wants you to subscribe and pay perpetually for apps that in most cases offer no long term value and which will inevitably be abandonware when the coder moves on to the next big grift. SaaS is a huge scam infecting the business world. Everyone should offer the option to pay based on actual usage or to buy a perpetual license to use a single version with the option to buy upgrades as they are available, based on the individual's own needs.
[+] [-] Havoc|2 years ago|reply
[+] [-] thisgoesnowhere|2 years ago|reply
PE often destroys as this article shows.
[+] [-] jimnotgym|2 years ago|reply
PE firms often control boardrooms without taking seats. Maybe they have the right to appoint a director but don't take it up, but come to board meetings anyway. The legal phrase for someone with control, but not registered as a director is 'shadow director'. Shadow directors are supposed to have the same responsibilities legally as real directors. In practice they get the real directors to risk sanction for insolvency and don't risk themselves. This needs tightening up massively.
[+] [-] tholman|2 years ago|reply
There's been some antitrust cases, but the FTC clearly can't block many. The changes are clearly costing everyone more money for no reason, but can anyone really block this?
- [1] https://www.ftc.gov/news-events/news/press-releases/2022/06/...
[+] [-] lifeisstillgood|2 years ago|reply
Why is it that a business can be bought by a PE firm, that uses the existing cash flow of the business to fund the loan repayments, but the business itself cannot get a loan to invest in new capital / buy the CEO a yacht etc?
There feels like there is a missing market. There is the super safe regulated world of public corporations, where you loan MSFT your cash and they will spend it on marketing O365 or something. And there is the highly specialised one of a kind "selling it for parts" M&A.
But where is the middle market where a PE firm makes an offer and the next day the business itself puts up a prospectus and is able to find enough semi-liquid capital to take the self same bet?
Why is it so hard to raise funds?
or ami missing something
[+] [-] multicast|2 years ago|reply
Loan repayment to banks and other financial institutions is the first and highest priority. During this process the company is constantly turned more efficient and profitable. If it adds value, jobs and capital in form of machines etc. is added, therefore PE firms do not only reduce employment. The goal is also to sell irrelevant jets / yachts and eliminate other expensive non-business related expenses from which often a few benefit. The goal is not to buy new yachts. In fact a PE firm is committed by contract and by incentives through own investments, to not use the company to fund lavish lifestyles. After on average 5 years the company is sold for a multiple.
> But where is the middle market where a PE firm makes an offer and the next day the business itself puts up a prospectus and is able to find enough semi-liquid capital to take the self same bet? Why is it so hard to raise funds?
I think I don't really get your point here. There is no infrastructure which provides businesses this option, because it does not make sense. Private businesses are often sold through investment banks, and if the desire to sell comes from the owner, then there is often a form of auction involved. Companies with a solid business are getting a very good price this way. But raising funds for an existing business and selling a business are two completely different things. You don't accept a PE firms invitation to a call, and then turn the other way to get funding and keep ownership.
[+] [-] throw9away6|2 years ago|reply
[+] [-] moomoo11|2 years ago|reply
Only doctors around will be those who are highly specialized in orthopedics, neurology, etc.
For everyone else who needs a Z pack or headache pills, they can just get their care from a AI doctor in their pocket. Why do I need to wait days or weeks to see a general practice doctor? That doesn’t sound fair.
Cuts costs heavily. Most people live long with just eating healthy and moving around. I’m sure it will be fine for most people.
I personally don’t see a doctor each year. I exercise, eat whole non processed foods (cheaper than whatever packaged crap), and I get my lab work done regularly. The only times I’ve gone in are when I broke something or was heavily bleeding from an injury.
I’ll bet if most people put down the Diet Coke in favor of a water, we would save billions of dollars right off the bat.
[+] [-] hkon|2 years ago|reply