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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

#131

Post by nine_k »

thfuran wrote: post #64
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 are people going to make fuck you money if there's no profit?

The same way how some non-profits and endowment funds operate. They are designed to produce a constant, predictable supply of money for their cause, and not try to maximize their profit and take over the world. Think about the way the Nobel Prize is funded, for instance.

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

#132

Post by throw47474777j »

lapcat wrote: post #114
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…

> 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,…

> The fundamental loophole is that "the free market" is practically a religion in the United States

Blaming something for being practically a religion is about as empty a piece of reasoning as it's possible to make.

Why not actually suggest a solution rather than just throwing your hand up at the whole thing?

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

#133

Post by dragonwriter »

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…

> 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.

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

#134

Post by brightball »

lapcat wrote: post #114
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…

> 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,…

In the US, the problem is too much regulation but that regulation comes from different levels like insurance companies, medicare, medicaid, etc.

I know somebody who owns a therapy business. Medicaid rates have not increased in 15 years and increasingly make it harder and harder to do your job. The level of stress and pressure it creates is intense.

What do you think is going to happen when private equity comes around and offers an exit?

I can't speak for the pressures on doctors as confidently, but I can assume there are similar issues.

So what you end up with is regulatory pressure that is forcing the market to a certain position, which makes private equity seem like the only realistic escape. In a true free market, this wouldn't happen or it would be significantly more expensive for the PE firms to make acquisitions. The businesses would either fail quickly or become successful enough to increase their rates and thus the compensation for their employees and owners, which removes incentives to sell.

I was at a sporting event earlier this year where I overheard an exec from an insurance company (I was a guest of somebody with pricey tickets). He was complaining about how a hospital was forcing them to increase rates after being willing to drop them as an insurance provider, because the insurance company would lose all business in the area of the hospital wasn't on board. It's a microcosm of the stuff happening behind the scenes.

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

#135

Post by starcraft2wol »

verteu wrote: post #117
starcraft2wol wrote: post #110

Earlier quoted context omitted.

> study must fork the universe to compare the same business with different timeline Unfortunately, that might be what's necessary to know. I am not knocking the research quality, but there are limits on what we can conclude, and obviously other important factors have not been sufficiently isolated.

By this standard, should we not believe that smoking causes lung cancer? After all, a controlled experiment on humans has never been done.

Those studies aren't similar in methodology or subject at all. Can you acknowledge there are unmeasured social factors at play in this simple survey analysis, or not?

If so, I'm happy to speculate about the epistemology of tobacco studies.

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

#136

Post by lordnacho »

civilized wrote: post #109
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…

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…

My current working theory. Happy to hear from any of the actual PE people who are reading this.

1. As you can imagine, not everyone has the wherewithal to launch a PE firm. Only people who are well connected in the financial world will get access to the funds. People who have friends in the investment sector for instance. There's plenty of stories about how VC (which isn't the same thing) investment is hard to get a meeting for if you don't know someone in the firm. PE works in a similar way, certain people know the players and get the deals together. Of course a lot of it is a promise of future business.

2. When a firm is acquired, the M&A advisors that did the deal get paid. When a firm is restructured (from bankruptcy), the same happens. Lawyers as well. These people all get paid to make the deals happen. Part of what happens is the M&A people will talk someone in the lending department into doing the deal. And remember it isn't just one bank or one lawyer or one lender on each deal. The lenders will all take a piece of the debt, which can be sold on (eg packaged in various tranched products) to investors (pension funds etc). If you smooth out the poop enough it doesn't smell so bad.

That's what I can glean from my far corner of the financial world, while I do work in finance I'm pretty removed from PE.

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

#137

Post by magnawave »

ajhurliman wrote: post #37
gruez wrote: post #21

Earlier quoted context omitted.

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 payba…

That’s not true. There was a doctor owned clinic in Seattle (The Polyclinic) with multiple locations across the city. A few years ago it was purchased by Optum (United Healthcare), and the standard of care has fallen through the floor.

…and sadly the doctors have been fleeing too, all my doctors have left. Their replacements aren’t bad, but not to the same top notch level of care. The Polyclinic was honestly off the charts excellent, and now it’s just “fine”. In a few more years who knows. The alternatives are unfortunately not better.

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

#138

Post by rcme »

classichasclass wrote: post #77
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.

No. My late father started his own solo vet practice in 1983, in that less capital intensive environment, and he still required a substantial amount of seed capital to procure and retrofit the building to meet regulations and have enough in the tank to keep it going through the initial lean business years. (There were other complications related to the specific property and title liens not relevant here.) In these da…

Not sure what your point is. I'm not saying you can open a vet for free. All businesses require capital. But, as evidenced by your father, opening a new vet practice is not some totally new thing no one has ever done before. People have done it and people will continue to do it.

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

#139

Post by donw »

lapcat wrote: post #114
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…

> 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,…

The US has not had a “free market” for quite some time now.

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

#140

Post by lapcat »

throw47474777j wrote: post #132
lapcat wrote: post #114

Earlier quoted context omitted.

> 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,…

> The fundamental loophole is that "the free market" is practically a religion in the United States Blaming something for being practically a religion is about as empty a piece of reasoning as it's possible to make. Why not actually suggest a solution rather than just throwing your hand up at the whole thing?

> Why not actually suggest a solution rather than just throwing your hand up at the whole thing?

A solution to which problem?

The solution to the problem of private equity running the medical system is government-run health care, like in most other nations, who spend less on health care per person than the US but whose populations are nonetheless healthier.

Or are you talking about the problem of the severe ideological divide? Or some other problem?

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