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Who employs your doctor? Increasingly, a private equity firm

nytimes.com

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Re: Who employs your doctor? Increasingly, a private equity firm

#61

Post by [deleted] »

gmd63 wrote: post #58
peyton wrote: post #12

Earlier quoted context omitted.

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.

It's so frustrating that such a basic, non-intelligent move is the go-to by the biggest players that can afford such a strategy. It's completely counter to the presumption that wealthier players are more suited to allocate resources for efficient outcomes.

[deleted]

Re: Who employs your doctor? Increasingly, a private equity firm

#62

Post by sxg »

balderdash wrote: post #7

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 ACA enacted a completely opposite law—doctors are not allowed to own hospitals.

Re: Who employs your doctor? Increasingly, a private equity firm

#63

Post by nobodyandproud »

tryptophan wrote: post #35
alach11 wrote: post #4

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 inductio…

Flat salary is an incentive to do the easiest option or least work. You can’t win with the incentive game. One nasty way that can manifest is to under test because if you don’t find anything you don’t have to do anything.

A flat incentive with a clinical outcome stick doesn’t have the warped incentive of PE.

Re: Who employs your doctor? Increasingly, a private equity firm

#64

Post by thfuran »

dcow wrote: post #52
synetic wrote: post #30

Earlier quoted context omitted.

But it is not difficult to isolate from common sense. No one should profit from denying someone healthcare. All systems have ration care but it is immoral for someone to profit by denying care. Profit motive does not make for a good healthcare system.

Nobody should profit from healthcare at all. I don't care if doctors and nurses and board members and janitors all make fuck you money, or if hospitals reinvest tons of money to perpetually have state of the art facilities. But the profit dynamic is too much.

How are people going to make fuck you money if there's no profit?

Re: Who employs your doctor? Increasingly, a private equity firm

#65

Post by thfuran »

kjghkjghkjgh wrote: post #60
dcow wrote: post #52

Earlier quoted context omitted.

Nobody should profit from healthcare at all. I don't care if doctors and nurses and board members and janitors all make fuck you money, or if hospitals reinvest tons of money to perpetually have state of the art facilities. But the profit dynamic is too much.

How would vaccines and new drugs be invented without any profit incentive?

Isn't a lot of that coming out of universities already?

Re: Who employs your doctor? Increasingly, a private equity firm

#66

Post by raphman »

leoh wrote: post #44
tryptophan wrote: post #35

Earlier quoted context omitted.

Flat salary is an incentive to do the easiest option or least work. You can’t win with the incentive game. One nasty way that can manifest is to under test because if you don’t find anything you don’t have to do anything.

> You can’t win with the incentive game. I agree that incentives are frequently and perhaps typically exploited, especially when crafted carelessly or not iterated upon, as most incentives seem to be. I would be eager to contemplate a clinical outcome based incentive scheme.

Wouldn't this incentivise doctors to only accept cases with a high chance of quick success?

Young child with cancer? Nope, not worth the risk.

Patient with mental health problems? Takes too long, outcome not easily measurable.

Obese patient with back pain? Let's do surgery instead of investigating and treating the root causes.

Re: Who employs your doctor? Increasingly, a private equity firm

#67

Post by s1artibartfast »

lordnacho wrote: post #46

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 machin…

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.

Re: Who employs your doctor? Increasingly, a private equity firm

#68

Post by weberer »

olddustytrail wrote: post #33
dazc wrote: post #13

Earlier quoted context omitted.

Maybe true but, for the rest of the world, you're still the 'go-to' place where medical miracles can happen. Money had something to do with this.

Not really. The number of people that's true for is miniscule compared to the number of Americans who engage in medical tourism.

What are the numbers for each one?

Re: Who employs your doctor? Increasingly, a private equity firm

#69

Post by rcme »

darth_avocado wrote: post #55
rcme wrote: post #27

Earlier quoted context omitted.

But the barriers to starting a new vet are pretty low. If existing vets are inadequate, new ones can start.

Capital is the barrier and the requirement is not low in the areas PE takes over.

It seems like a vet would be about as expensive as opening a restaurant, maybe 1-3x as much. That doesn't seem like the most capital intensive thing ever.

Re: Who employs your doctor? Increasingly, a private equity firm

#70

Post by wpietri »

lordnacho wrote: post #46

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 machin…

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.

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