Yes, a lot of bills are introduced in one chamber and die in that same chamber. This case is referring to it being introduced by "Senators Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), and Jeff Merkley (D-Ore.), along with Representatives Val Hoyle (D-Ore.), Alexandria Ocasio-Cortez (D-N.Y.), and Suhas Subramanyam (D-Va.)", presumably there's a companion bill for the house, since the links seem to only have the Senate version.
Can someone steelman private equity, please? I'm honestly looking for the upsides (for non-investors) of when PE moves into an industry like medicine and begins buying up businesses that traditionally aren't already large chains.
I already hear the downsides frequently from someone whose work is directly affected.
It should be more about making certain levels of consolidation and deep erosion of local ownership illegal.
We have run this country on an assumption that we must give businesses a high amount of freedom. An argument can be made that businesses have been given too much freedom in our system. We’ve allowed Amazon and Ticketmaster and Walmart to exist and they shouldn’t exist in their present form.
Healthcare practices that provide necessary care shouldn’t even really be allowed to be for-profit entities if you ask me. The incentives become too perverse as a result.
Can you define profit? Would a doctor be allowed to earn more than $200 per hour? $300 per hour? $400 per hour? Is a doctor allowed to be paid per procedure or time?
How much would you want to sacrifice your 20s and early 30s? How much would you need to work in the middle of nowhere where your kids won’t have the best opportunities?
Healthcare practices that provide necessary care shouldn’t even really be allowed to be for-profit entities if you ask me. The incentives become too perverse as a result.
Why stop at healthcare? Why not other essentials of life, like food or toilet paper?
You’re absolutely right. For example, we’ve seen the negative impacts from excessive agricultural consolidation.
Many of them already lack profitability without subsidy.
Many agricultural products all pass through the same mega-sized processors and entities. Driscoll’s, Tyson, etc.
We’ve already made things like water and sanitation non-profit/government owned so the idea of doing more of that for food and essentials isn’t that crazy.
You’re absolutely right. For example, we’ve seen the negative impacts from excessive agricultural consolidation.
Like what?
Many of them already lack profitability without subsidy.
That doesn't mean anything without context. How are the non-PE farms doing?
We’ve already made things like water and sanitation non-profit/government owned so the idea of doing more of that for food and essentials isn’t that crazy.
it can't have a national foodborne illness outbreak.
Which is bad for PR and great for clicks, but it's entirely unclear whether we're better off on average. What about all the years where we didn't have a mass outbreak? Would it be better if every state/county had separate food supply chains, and they had the same rate of illness, but it's more randomly dispersed so it doesn't make it to national TV? Think the difference between airplane crash (maybe one incident per year, hundreds of deaths per incident) vs car crashes (40k/year)
"We’ve allowed Amazon and Ticketmaster and Walmart to exist and they shouldn’t exist in their present form."
Do you realize that when Walmart moves into a community, prices charged for everyday things overall drop significantly, both at Walmart and their competition, which means that poor families are able to buy more with every dollar.
They then get to skim the other side of those subsidies, too, since they sell so many items that qualify for SNAP and WIC, as well as being one of the largest if not the largest prescription supplier in the country.
And what happens if walmart closed up shop? Do those employees magically evaporate and not need benefits? Why are we putting the blame on the employee's best employment option?
What competition? When Walmart comes to town, the competition closes.
Why? Because they're sending goon squads to trash all the existing businesses? If walmart replacing "the competition" because they're offering lower prices and consumers are switching, why is this bad?
Walmart is able to offer lower prices because it does not pay its employees enough. The people being hurt is the society at large that has to allocate taxes towards SNAP and other social benefits so that Walmart can continue to underpay people. Those resources could go to other programs. That is why Walmart is bad.
Everything explodes and people die in the streets.... No, other businesses move in to fill the economic needs because there is a profit to be made and provide jobs in doing so.
Because they're sending goon squads to trash
You have a horrifically simplistic world view and can't imagine where goon squads actually are.
There was an article around 2 decades ago on how Walmart manipulates prices at an unimaginable scale via their suppliers. If you supply Walmart they automatically become your biggest customer. Walmart knows this, and has you by the proverbial balls. If you don't meet their demands they drop you in a heartbeat which is a death sentence for any business who's capitalization is not in the 10s of billions. There was a saying in this article I can no longer find but to summarize.
"To compete against Walmart is to invite death. To work with Walmart is to embrace it".
Simply put they are so large they have near monopoly power over a good chunk of manufacturing.
It’s wild to blame Walmart for government subsidies when it’s the government not Walmart who decides who gets benefits.
Is Walmart to blame they hired a single mother of 3 for $20/hr? Would this women be better off if Walmart never existed and she was unemployed?
And then turn around and blame Walmart for selling essential food items for low prices because SNAP can be used to pay for them. Would you rather SNAP beneficiaries pay more for groceries so they have less to eat?
Healthcare practices that provide necessary care shouldn’t even really be allowed to be for-profit entities if you ask me. The incentives become too perverse as a result.
You don't need to disallow them for necessary care to be provided. You can just have public healthcare programs. That can look like publicly-owned hospitals or regulation that private hospitals must provide certain services under certain conditions if they want to keep operating. Private healthcare then works to provide more than that basic service that fulfills necessary care, to the benefit of the public that can afford more.
We’ve allowed Amazon and Ticketmaster and Walmart to exist and they shouldn’t exist in their present form.
Unpopular knowledge is that these businesses are generally illegal in their current forms under existing US law. The relevant laws are still in effect, they are just rarely enforced. The scale of the lawbreaking runs to the trillions of dollars annually, and it directly harms every US consumer.
The illegal conduct is so pervasive that even explaining the existing federal law makes one sound ridiculous, because companies have been explicitly advertising illegal behavior for decades. Because there is no sanction.
One of my faves is the notion that $BIG_RETAILER can buy in bulk and get better pricing, which they pass on to the consumer. You may have seen a company advertise something like this. It sounds like smart business! There is an active federal law[1] that explicitly prohibits this arrangement.
Lack of enforcement of that law is a factor in the disappearance of the American "high street" and the demise of many small retailers.
My #1 call for reform in the US is to simply start enforcing laws, even if doing so makes rich people/companies uncomfortable.
That’s a good expansion of the premise, I’d support your idea wholeheartedly. Let PE raid chain restaurants and toy stores, not essential services where they add no value and only extract wealth.
Easy. PE 99% of the time buy businesses that were already failing and provide a lifeline. A failing business can't afford to pay for expensive medical treatments without a loan that a bank will not provide since it is failing.
People who are vehemently against PE generally do not have any idea of how the system works
They don't have to have an in-depth understanding of leveraged finance to get pissed off when their doctors start doubling prices or their own employment conditions get worse or their parents get treated badly in care homes because the staff are now overworked etc. they're mad at the outcomes they're overwhelmingly not actually trying to debate the merits of it from an exit liquidity perspective.
That's one model of private equity, but PE has also been buying up very successful local businesses in areas like veterinary care. The PE firm keeps the name and branding of the local vet because people have traditionally wanted to take their pet to a trusted local vet, not a big chain.
Many medical practices (and other businesses) are poorly operated and administered. I think of my dentist: terrible website (even by 1995 standards), awful at follow up, weird insurance coverage (since she doesn't have time to follow up with new plans it seems) and almost no appointment reminders. There are obvious things to do that could drive business for her.
It makes sense to me that someone could come in and say "hey, let me run the business + finance side of the house while you practice medicine" and at least on paper I can see a real world where that works out for everybody.
Of course, soon you end up with dentists pushing unnecessary procedures and more, so it doesn't always works out that way.
Improving efficiency and optimizing profit are two overlapping segments on the road to crap. It’s not easy to stop the car once you put the bean counters in the driver's seat. If a company is able to do so, it’s usually because there’s a strong leader or culture to resist the slide. But otherwise it’s a thousand small decisions that all seem reasonable on their own.
In human med, it's a pretty standard practice to offer a management company 10% ownership for them to handle the business shit.
I'm not arguing with you; I'm legitimately curious what happened to that model and why PE has swooped in as more attractive to doctors. Maybe it's the payout and/or the fact that they don't have to handle business owner decisions at _all_ anymore?
Many new medical treatments/approaches involve heavy capex (robots, light and ion sources, imaging systems, etc) and removing private money that doesn't belong to individual physicians personally will suck a vast amount of capital out of healthcare, creating significant forces against innovation and deployment.
PE exists because a lot of companies are poorly managed. It's better for your local hospital to be taken over by a PE firm than to go out of business. You can say that it would be even better if the government ran the hospital, and you would be right, but that would require a radical overhaul of the American healthcare system. Until that happens, PE plays a major role in keeping things working.
PE staff are more intelligent and more shrewd than the people running the businesses they buy. Being a good doctor doesn't make you a good businessman.
I'm not a huge fan of PE but the point of economics to deliver cheap and quality goods to consumers not keep people in a job.
In healthcare in US in particular I think the main thing that capital should be (if regulators allow) boutique / specialists that e.g. are the best in the biz at doing MRI scans, in some states my understanding is that it's literally illegal to start a business aiming to make one small part of the process better.
I mean, losing money is not sustainable. If a doctor or physician group isn't business savvy and can't earn a profit they will eventually go under. That's not good for the patient.
Contrary to popular belief, being intelligent in one thing does correlate with being intelligent at other things[1]. For doctors, the comparison with private equity (MBAs?) might be close, but it's not hard to imagine the targets of other PE rollups have owners that are more average in intelligence, think plumbing or roofing.
Which section of that very long article are you claiming supports your assertion?
Here's a bit from the start of the "Concept" section:
> In a famous research paper published in 1904,[8] English psychologist Charles Spearman observed that children's performance measures across seemingly unrelated school subjects were positively correlated. The consistent finding of universally positive correlation matrices of mental test results (or the "positive manifold"), despite large differences in tests' contents, has been described as "arguably the most replicated result in all psychology".[9]
being intelligent in one thing does correlate with being intelligent at other things
vs
The consistent finding of universally positive correlation matrices of mental test results (or the "positive manifold"), despite large differences in tests' contents, has been described as "arguably the most replicated result in all psychology".[9]
How are they contradictory? Did the first part of my comment make you think there was a negation?
Hard disagree about "more intelligent". They are playing a financial game using a combination of leverage and reptilian ruthlessness to EBITDA hack.
They buy one (or more) companies, often with only the slimmest understanding of what those companies do, slash opex by gutting the company with layoffs (yay EBITDA), maybe staple a few such companies together with leveraged buy-outs, then resell the whole bundle for more than they paid.
From experience, they don't give a single crap whether the resulting mess still functions. They care about selling the company for more than they bought it for. That prospect is only tenuously and at best accidentally related to whether the company still functions.
The private equity companies I've had to deal with were full of braindead MBA spreadsheet monkeys and used car salesmen. Their chief differentiator was that they worked 80 hours a week and were enthusiastic about laying people off without much deliberation.
Thinking private equity is "more intelligent" than business owners is like thinking house flippers are "more intelligent" than home owners. No. They know how to rip out carpet and replace it with laminate on the cheap. They know how to cut corners and hide it. They know buyers will over value a fresh veneer of paint. They don't give a shit about the long-term health or value of the house. They are not better stewards of houses. They specialize in short-term profit maximization and that is literally it.
Remove “more intelligent” here and I’ll give you some benefit.
The problem with healthcare “economics” is that providing high quality care is likely not as profitable as middling care, or sub-standard care.
You say that economics is meant to deliver cheap quality goods, but in reality here economics for PE is value extraction and has nothing to do with consumer good at all - unless of course there’s more profit there. Most of the time, there isn’t.
Apple has, for most of its existence, been a distant second choice, because IBM and Microsoft captured the enterprise, which trickled down into consumer buying habits.
It survived, then thrived, by making its products so appealing that customers would buy them anyway.
We know how to make MRI cheaper. Put it in a can. MRI suites are built with copper shielding in the walls, and the machines are really heavy, which creates huge capital costs. (Capex is a big problem for medicine.) There's an easy solution: you can just put an MRI machine in a standard tractor-trailer container and bring the patients in. Nothing has to be constructed or installed.
None of the private equity chains with the sans-serif fonts, simplified logos and trisyllabic names are doing this, though. It's bad marketing. Patients don't want to walk outside to an MRI machine in the parking lot. It feels sketchy. Never mind that they score just as well on the ACR image quality tests as the in-room machines. Who the hell knows what that is?
In reality, it's the county hospitals and big universities that use them! Places that have in-house physicists who can argue for what really makes sense in practice. A major problem with healthcare as a business is that the customer does not usually understand the product, but they still need to buy it, and there are time constraints.
Easy to imagine practices where the primary owner is going to retire and looking for an out.
Maybe they find a buyer in a doctor, maybe they don't, but PE provides them an exit that keeps the practice operating in the community.
Many people don't really run businesses efficiently. There was an interesting video I saw recently where a sole doctor practice made a few changes to their workflow that allowed them to hire more doctors and handle 2x as many people - I would expect a PE firm would pursue similar changes that help increase the number of people they can service, increasing competitiveness and lowering prices in the long run.
I don't know how these tradeoffs interact with patient care, but I wouldn't inherently expect PE to be worse at this than any other operating model.
Lots of other efficiencies to look at. Tons of them are directly bad for the patient (capturing more of the surplus is an efficiency that businesses generally go hard at).
Ultimately, I think the issue is when people making decisions are able to treat the impact as an abstraction.
A structure to run business efficiently using practiced methods is always a good thing. However from what little I have understood, the goal of Private Equity is to maximize the dollar value on their investment. Somehow they have settled with the playbook that running a business even profitably isn't the best idea. Instead its much more profitable to take over the struggling business at good price, squeeze everything possible from the assets (thats where PE seem to be investing their expertise unfortunately) over duration of time. Update the books in a manner that it saves money on taxes and carry forwards the loss, making money in the process.
Why do you need to sell a private practice? There’s no brand to sell, it’s just you and that will be gone.
PE is scourge in this space. They’ve probably taken over every dental office already and now they push unnecessary procedures and whatever your insurance will bear just because.
These businesses would simply stop existing if no purchaser came forward. Many first-world economies face a demographic cliff where boomers are retiring and there is nobody in the next generation who can afford to take over the local dentist office, the HVAC company, etc.
I don’t think that’s true though in all cases. Sometimes PE just offers more money passing the debt into the company they acquire. But smaller players would still take control.
Person B has a pile of money and thinks that that business is (or can be) a good investment.
That's it.
So, what happens if person A is prohibited from selling their business? Are they forced to keep working because they don't have enough other savings to retire on? Do they shut the business down in order to retire? Something else?
.
Calls to ban private equity are attempts to play "shoot the messenger".
May be categorizing the different private equities can be helpful here. A PE interested and invested for growth is always the best outcome. A PE only looking to salvage and squeeze is that gives the bad branding to PE.
Except they always strip mine the business. Cut the quality and push unnecessary shit. But, hey, you can fill out your forms on an iPad instead of pen and paper. Very cool.
Small(er) businesses can be poorly run. In theory private equity takes knowledge already in practise in other locations and shares it with this new location, improving results. Downside of course is that they care a lot less about that specific location than the previous owners would have.
One specific practise I’d like to see banned is private equity buying companies with debt the company then assumes. It staggers me that it’s legal.
PE attacks organizational sclerosis, can save companies that otherwise slowly deteriorate, reallocates resources faster, creates an unusually powerful form of corporate governance, Debt can impose useful discipline, can provide capabilities that smaller companies couldn't build themselves.
A society doesn't necessarily benefit from preserving every existing job. It benefits from creating increasingly productive jobs.
If I own a hospital that makes infinite money and every patient that comes to it dies the economy measures this is infinite productivity. This is contrived, but really matches some of what we see in real life.
This is why making a measurement a target can be horrifically destructive and contrary to the actual goal society wants.
The west doesn't seem to believe in the idea of social stability over increased profits which can lead to things like corporations being the social structure that is optimized for rather than the wellbeing of the individuals it contains. Left to run out of control the society can collapse.
If I own a hospital that makes infinite money and every patient that comes to it dies the economy measures this is infinite productivity. This is contrived, but really matches some of what we see in real life.
You wouldn't have any business if all, or many, of your patients die.
The history of government regulations mostly only being made in response to people dieing seems to refute that. If what you claimed is true, those businesses killing people would have gone under, rather than continuing until there is enough public outcry to regulate it.
It seems to me that oligarchies as a whole function a lot like PE's taking over a socially unstable polity.
The west has been an oligarchy for several decades at least, so it's not that people in the west don't believe in social stability, it's that they are living in the hollowed out shell of the former "company" where that doesn't exist. We need to optimize for the people's prosperity and well being.
Private Equity allows an owner to sell their income generating but slowly dieing company for its value today. The company will keep operating for 3-5 years and then rapidly shutdown.
This is valuable for business owners, because it gives them a way to get the value out of a failing business without having to ride it all the way into the ground.
It's valuable for consumers because it provides locations to shop for halloween supplies.
Pe is good when it is taking big risks on something new. That is hard so that is not what most pe does. Most pe is just figuring out ways to insert artificial inefficiencies into the system to syphon money off. Ie tax arbitrage, patent/copyright abuse, geographic or other market power abuse, etc. Basically find a way to move money around the system with no net benefit to society while having a bunch of it fall in your pocket is 90% of what pe does and its poison. The other 10% is vitally important to continued growth and prosperity and its often hard to tell which is happening until its over.
employers expect health care plan costs to rise by an average of 11 percent per worker in 2027, unless benefits are cut
I am sure most workers would prefer to get that extra 11% as a cash raise, but because healthcare costs are out of control the same care costs 11% more.
Certainly some companies will throw up their arms and hire someone overseas instead.
The cap is generous. If an insurance company is hitting it, competition is failing to keep them in check and lifting the cap would just let them gouge deeper. Of course, that doesn't keep them from constantly yapping this talking point, as if it wasn't that way before, as if we don't have evidence that it wouldn't work. "Just lift our profit cap" is self-serving baloney.
That's not the issue, it's because an insurer's absolute profit only grows if the premium base grows. This removes any reason to compete on reduced costs and an incentive to have the costs go up.
Australia is on its way down this path after Brookfield / Healthscope was holding a private hospital hostage against the government and had performance so degraded a child died. Hopefully we (aus) continue down this path of burning off the rot.
I don’t have a problem with privately owned clinics, but I do think it should have to be majority owned by the operators. What percentage of that 45% is just doctors that run their own office vs. investment firms.
A) can probably only be fixed with regulation. Why would hospitals and insurance otherwise make prices transparent? The current state serves them really well.
Because in a fair market they would be competed away - prices of food, computers, bonds, etc are not transparent because of regulation - it's largely because of the tax incentive as far as I've read from healthcare economists.
The 'fake' price is due to the negotiation of reimbursement between major healthcare chains and insurers. The most regulated piece - Medicare - is the only piece where there's fairly transparent pricing.
It's very wild to me that you're like "This organization is lying to me, so what we need less of is people telling them what to do." Because you _could_ instead say "What if the government protected its citizens by punishing them for lying?"
Ask an American hospital how much something costs - you will get a completely fake price back
You think the government tells hospitals to lie to you? The hospitals lie because the government doesn't force them not to. Laissez-faire capitalism causes that. Regulation is needed to fix it.
I need you to help me connect the dots, because a bare URL is not the same thing as communication. What does the airline deregulation act have to do with hospitals giving you fake prices because nobody forces them not to?
What do you think would force hospitals to give you real prices if not the law?
Most importantly to fight it as Private Equity is creeping like a cancer into good health systems globally, even in Europe, to slowly but surely siphon away all that is good.
It's important to fight it now before it is too late and other places also fall apart into a degraded, predatory, dystopian US system !
Make it a leverage limit. Otherwise you’ll have other players come in and replicate the playbook.
The short-term fix is banning PE. The long-term one is restricting the leverage these groups can take. Then put limits on upstream leverage. We have these across our economy. We just don’t apply them to this sector.
Most state bar associations require a lawyer (or group of them) to own law firms. That _doesnt_ prevent law firms from doing crazy deals to gain liquidity for their partners, including from private equity.
Dictating who has to “own” something just incentivizes people to separate ownership from financial benefit. In most cases that’s just plain worse than letting real ownership happen.
If there is a business practice you don’t like, regulate the practice, not the corporate structure.
Medicine is extremely capex intensive and only become more so. Sucking private capital out of healthcare is going to make it vastly worse for everyone; higher prices and less innovation. I think we can criticize the often ruthlessness of PE while realizing that limiting medicine's ability to invest would be a huge self-own and only force further centralization into the biggest non-profit centers.
Medicine is already held back enough by the lack of ability to use debt to finance its sales, unlike almost every other industry; you can repossess a car but you can't repo an implant or administered drug, forcing everything to be paid for in cash upfront. Medicine needs as much access to capital as it can get.
I'm sorry, compared to what? We're not talking about a routine doctor's office for healthy people. Advanced care is extremely technologically intensive and your local surgeon is not personally buying the $20M in infrastructure required for many modern advanced treatments. Venture capital has been essential for progress in medicine, and many advanced therapies are going to be increasingly delivered vertically integrated for the widest accessibility and best outcomes.
I have no words for how completely toxic the surge of PE in healthcare has been. It's driven the degradation of care everywhere I've been. Healthcare chains have no issues with investment (see any annual reporting document to see how much money is sitting in various investments, mostly RE); smaller clinics being eaten up by PE chains is not an answer to centralization, it's just another mechanism of it.
"Private equity" also includes venture capital here. It means all private direct investment. The thing you are imagining is one small corner of what private equity actually is.
It feels to me as if the US is a useful example for the outcomes of a focus on capitalist ideals does for medical services in a country.
Apologies if an AI summary is offensive to some, but here we go:
The US is a world leader in advanced and specialist medicine, but its overall system for providing affordable, accessible, equitable medical care to its citizens ranks poorly—last among the 10 comparable high-income countries in the strongest recent comparison.
I wonder if ai can help doctors reclaim their practices, as the bureaucracy of dealing with insurance may become easier. Administrative overhead must be cheaper with ai. It was the main reason for consolidation and giving up management to hospitals and private equity.
There's a pattern to the kinds of companies PE buys and I think it points to the real porblem.
They like companies with some kind of moat that makes it hard to unseat them. Basically, companies where there is no alternative for the consumer. That way, they can inflict abuse without but know there will be nowhere to run.
There are two different ways to achieve this. Monopoly and regulation. Hopsitals have both government granted locational monopoly and tons of regulations that makes it hard to compete.
Private equity is the symptom, not the disease.
Until we get at the disease, new monsters will be born with different name filling the same ecological niche. It's economic evolution.
Bi…cameral legislation?
...meaning both houses of Congress.
As opposed to the many famous cases of unicameral American legislation?
Yes, a lot of bills are introduced in one chamber and die in that same chamber. This case is referring to it being introduced by "Senators Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), and Jeff Merkley (D-Ore.), along with Representatives Val Hoyle (D-Ore.), Alexandria Ocasio-Cortez (D-N.Y.), and Suhas Subramanyam (D-Va.)", presumably there's a companion bill for the house, since the links seem to only have the Senate version.
Can someone steelman private equity, please? I'm honestly looking for the upsides (for non-investors) of when PE moves into an industry like medicine and begins buying up businesses that traditionally aren't already large chains.
I already hear the downsides frequently from someone whose work is directly affected.
The upside is to the folks who sold the businesses they owned.
Should they be outlawed from selling to certain classes of investor? Which?
It should be more about making certain levels of consolidation and deep erosion of local ownership illegal.
We have run this country on an assumption that we must give businesses a high amount of freedom. An argument can be made that businesses have been given too much freedom in our system. We’ve allowed Amazon and Ticketmaster and Walmart to exist and they shouldn’t exist in their present form.
Healthcare practices that provide necessary care shouldn’t even really be allowed to be for-profit entities if you ask me. The incentives become too perverse as a result.
Can you define profit? Would a doctor be allowed to earn more than $200 per hour? $300 per hour? $400 per hour? Is a doctor allowed to be paid per procedure or time?
How much would you want to sacrifice your 20s and early 30s? How much would you need to work in the middle of nowhere where your kids won’t have the best opportunities?
I updated my comment, I mean a for-profit entity versus non-profit, which the IRS already defines.
Not-for-profit entities can still pay market rate wages to employees and owners.
Should Doctors have a legally enforced max pay? Same with the web devs, max $150K, anything else is just profit driven bullshit right?
No, not-for-profit entities pay market rate salaries. This is already a well-established system.
Why stop at healthcare? Why not other essentials of life, like food or toilet paper?
Hippocratic oath?
You’re absolutely right. For example, we’ve seen the negative impacts from excessive agricultural consolidation.
Many of them already lack profitability without subsidy.
Many agricultural products all pass through the same mega-sized processors and entities. Driscoll’s, Tyson, etc.
We’ve already made things like water and sanitation non-profit/government owned so the idea of doing more of that for food and essentials isn’t that crazy.
Like what?
That doesn't mean anything without context. How are the non-PE farms doing?
sanitation: please see https://en.wikipedia.org/wiki/Waste_Management,_Inc.
water, but not power, or natural gas?
Google “taylor farms cyclospora” or “tyson beef prices shortage” for an example of the problems of highly consolidated processing.
I wasn’t talking about private equity farms versus not, I’m generally talking about industry consolidation.
Sanitation includes sewers which are typically municipal.
Power and natural gas are legal monopolies with strict rules on pricing.
There are also public electric utilities such as Cleveland Public Power.
https://en.wikipedia.org/wiki/List_of_foodborne_illness_outb...
If a product isn't nationally consolidated, it can't have a national foodborne illness outbreak.
Which is bad for PR and great for clicks, but it's entirely unclear whether we're better off on average. What about all the years where we didn't have a mass outbreak? Would it be better if every state/county had separate food supply chains, and they had the same rate of illness, but it's more randomly dispersed so it doesn't make it to national TV? Think the difference between airplane crash (maybe one incident per year, hundreds of deaths per incident) vs car crashes (40k/year)
https://www.npr.org/2026/07/09/nx-s1-5885008/department-of-j...
When consolidation happens collusion always follows, along with higher prices, and fines that are a tiny part of the total gain.
"We’ve allowed Amazon and Ticketmaster and Walmart to exist and they shouldn’t exist in their present form."
Do you realize that when Walmart moves into a community, prices charged for everyday things overall drop significantly, both at Walmart and their competition, which means that poor families are able to buy more with every dollar.
What do you have against poor people?
https://en.wikipedia.org/wiki/Boots_theory
And the employer with the largest amount of employees using SNAP benefits is…
Walmart is subsidized by the government to the tune of $2,000 per employee due to their low wages: https://rmfu.org/taxpayer-dollars-subsidize-wal-mart/ [1]
They then get to skim the other side of those subsidies, too, since they sell so many items that qualify for SNAP and WIC, as well as being one of the largest if not the largest prescription supplier in the country.
(25% of Walmart employees qualify for Medicaid https://mafainsurance.com/how-many-walmart-employees-are-on-...)
So their employees on SNAP and Medicaid turn right around and spend that money inside Walmart.
What competition? When Walmart comes to town, the competition closes.
[1] Probably a lot higher since this article is about 20 years old
And what happens if walmart closed up shop? Do those employees magically evaporate and not need benefits? Why are we putting the blame on the employee's best employment option?
Why? Because they're sending goon squads to trash all the existing businesses? If walmart replacing "the competition" because they're offering lower prices and consumers are switching, why is this bad?
Walmart is able to offer lower prices because it does not pay its employees enough. The people being hurt is the society at large that has to allocate taxes towards SNAP and other social benefits so that Walmart can continue to underpay people. Those resources could go to other programs. That is why Walmart is bad.
As another poster stated, Walmart and other large companies are already violating federal law.
https://en.wikipedia.org/wiki/Robinson%E2%80%93Patman_Act
Everything explodes and people die in the streets.... No, other businesses move in to fill the economic needs because there is a profit to be made and provide jobs in doing so.
You have a horrifically simplistic world view and can't imagine where goon squads actually are.
There was an article around 2 decades ago on how Walmart manipulates prices at an unimaginable scale via their suppliers. If you supply Walmart they automatically become your biggest customer. Walmart knows this, and has you by the proverbial balls. If you don't meet their demands they drop you in a heartbeat which is a death sentence for any business who's capitalization is not in the 10s of billions. There was a saying in this article I can no longer find but to summarize.
"To compete against Walmart is to invite death. To work with Walmart is to embrace it".
Simply put they are so large they have near monopoly power over a good chunk of manufacturing.
It’s wild to blame Walmart for government subsidies when it’s the government not Walmart who decides who gets benefits.
Is Walmart to blame they hired a single mother of 3 for $20/hr? Would this women be better off if Walmart never existed and she was unemployed?
And then turn around and blame Walmart for selling essential food items for low prices because SNAP can be used to pay for them. Would you rather SNAP beneficiaries pay more for groceries so they have less to eat?
If you think about this a bit, I'll bet you can spot the flaw in your own argument.
They're probably thinking the same thing as those darn busybodies who outlawed child labor.
You don't need to disallow them for necessary care to be provided. You can just have public healthcare programs. That can look like publicly-owned hospitals or regulation that private hospitals must provide certain services under certain conditions if they want to keep operating. Private healthcare then works to provide more than that basic service that fulfills necessary care, to the benefit of the public that can afford more.
Unpopular knowledge is that these businesses are generally illegal in their current forms under existing US law. The relevant laws are still in effect, they are just rarely enforced. The scale of the lawbreaking runs to the trillions of dollars annually, and it directly harms every US consumer.
The illegal conduct is so pervasive that even explaining the existing federal law makes one sound ridiculous, because companies have been explicitly advertising illegal behavior for decades. Because there is no sanction.
One of my faves is the notion that $BIG_RETAILER can buy in bulk and get better pricing, which they pass on to the consumer. You may have seen a company advertise something like this. It sounds like smart business! There is an active federal law[1] that explicitly prohibits this arrangement.
Lack of enforcement of that law is a factor in the disappearance of the American "high street" and the demise of many small retailers.
My #1 call for reform in the US is to simply start enforcing laws, even if doing so makes rich people/companies uncomfortable.
1 - https://en.wikipedia.org/wiki/Robinson–Patman_Act
If the business is a hospital?
Yes.
I'd expand that to any type of business that has effectively inelastic demand through the ability to hold people emotionally hostage.
So, for example, in addition to hospitals also include veterinarians, funeral services, family planning, etc.
Soulless PE vultures should be barred from all of this.
That’s a good expansion of the premise, I’d support your idea wholeheartedly. Let PE raid chain restaurants and toy stores, not essential services where they add no value and only extract wealth.
Funeral services in the US got aggressively consolidated already, decades ago. Look up SCI - owns over 1,500 funeral homes and 400 cemeteries.
Yes. This is already the case for law firms as they have to be owned and managed by lawyers, in most jurisdictions.
Easy. PE 99% of the time buy businesses that were already failing and provide a lifeline. A failing business can't afford to pay for expensive medical treatments without a loan that a bank will not provide since it is failing.
People who are vehemently against PE generally do not have any idea of how the system works
That's just not true. Distressed and turnaround investing represent less than 20% of PE acquisitions [0].
[0] https://www.ey.com/en_us/insights/private-equity/pulse
They don't have to have an in-depth understanding of leveraged finance to get pissed off when their doctors start doubling prices or their own employment conditions get worse or their parents get treated badly in care homes because the staff are now overworked etc. they're mad at the outcomes they're overwhelmingly not actually trying to debate the merits of it from an exit liquidity perspective.
That's one model of private equity, but PE has also been buying up very successful local businesses in areas like veterinary care. The PE firm keeps the name and branding of the local vet because people have traditionally wanted to take their pet to a trusted local vet, not a big chain.
So this vet practice are now a big chain except for in name only?
written by someone who worked in private equity for 20 years:
https://www.bloomberg.com/news/articles/2025-06-06/private-e...
https://archive.is/27tJr
Many medical practices (and other businesses) are poorly operated and administered. I think of my dentist: terrible website (even by 1995 standards), awful at follow up, weird insurance coverage (since she doesn't have time to follow up with new plans it seems) and almost no appointment reminders. There are obvious things to do that could drive business for her.
It makes sense to me that someone could come in and say "hey, let me run the business + finance side of the house while you practice medicine" and at least on paper I can see a real world where that works out for everybody.
Of course, soon you end up with dentists pushing unnecessary procedures and more, so it doesn't always works out that way.
Improving efficiency and optimizing profit are two overlapping segments on the road to crap. It’s not easy to stop the car once you put the bean counters in the driver's seat. If a company is able to do so, it’s usually because there’s a strong leader or culture to resist the slide. But otherwise it’s a thousand small decisions that all seem reasonable on their own.
In human med, it's a pretty standard practice to offer a management company 10% ownership for them to handle the business shit.
I'm not arguing with you; I'm legitimately curious what happened to that model and why PE has swooped in as more attractive to doctors. Maybe it's the payout and/or the fact that they don't have to handle business owner decisions at _all_ anymore?
Many new medical treatments/approaches involve heavy capex (robots, light and ion sources, imaging systems, etc) and removing private money that doesn't belong to individual physicians personally will suck a vast amount of capital out of healthcare, creating significant forces against innovation and deployment.
PE exists because a lot of companies are poorly managed. It's better for your local hospital to be taken over by a PE firm than to go out of business. You can say that it would be even better if the government ran the hospital, and you would be right, but that would require a radical overhaul of the American healthcare system. Until that happens, PE plays a major role in keeping things working.
It's a false choice. The healthcare system has long dealt with and deal with that situation without private equity.
PE staff are more intelligent and more shrewd than the people running the businesses they buy. Being a good doctor doesn't make you a good businessman.
I'm not a huge fan of PE but the point of economics to deliver cheap and quality goods to consumers not keep people in a job.
In healthcare in US in particular I think the main thing that capital should be (if regulators allow) boutique / specialists that e.g. are the best in the biz at doing MRI scans, in some states my understanding is that it's literally illegal to start a business aiming to make one small part of the process better.
What does it mean in this context to be more intelligent and shrewd than the existing owners? Delivering better profit margins?
I mean, losing money is not sustainable. If a doctor or physician group isn't business savvy and can't earn a profit they will eventually go under. That's not good for the patient.
OK, but making money, though it may be less than a PE company would, is. Where do most doctor's offices fall?
What shows that they are more intelligent? They might be better at extracting value from enterprise, but is that generally “more intelligent?”
Well they're considerably better paid and in a business that allows economies of scale.
It's a steelman argument to be clear I'm not entirely convinced by it.
Contrary to popular belief, being intelligent in one thing does correlate with being intelligent at other things[1]. For doctors, the comparison with private equity (MBAs?) might be close, but it's not hard to imagine the targets of other PE rollups have owners that are more average in intelligence, think plumbing or roofing.
[1] https://en.wikipedia.org/wiki/G_factor_(psychometrics)
DISREGARD THIS, I CAN'T READ TODAY
Which section of that very long article are you claiming supports your assertion?
Here's a bit from the start of the "Concept" section:
That explicitly contradicts your assertion.
vs
How are they contradictory? Did the first part of my comment make you think there was a negation?
d'oh, yep
Hard disagree about "more intelligent". They are playing a financial game using a combination of leverage and reptilian ruthlessness to EBITDA hack.
They buy one (or more) companies, often with only the slimmest understanding of what those companies do, slash opex by gutting the company with layoffs (yay EBITDA), maybe staple a few such companies together with leveraged buy-outs, then resell the whole bundle for more than they paid.
From experience, they don't give a single crap whether the resulting mess still functions. They care about selling the company for more than they bought it for. That prospect is only tenuously and at best accidentally related to whether the company still functions.
The private equity companies I've had to deal with were full of braindead MBA spreadsheet monkeys and used car salesmen. Their chief differentiator was that they worked 80 hours a week and were enthusiastic about laying people off without much deliberation.
Thinking private equity is "more intelligent" than business owners is like thinking house flippers are "more intelligent" than home owners. No. They know how to rip out carpet and replace it with laminate on the cheap. They know how to cut corners and hide it. They know buyers will over value a fresh veneer of paint. They don't give a shit about the long-term health or value of the house. They are not better stewards of houses. They specialize in short-term profit maximization and that is literally it.
Remove “more intelligent” here and I’ll give you some benefit.
The problem with healthcare “economics” is that providing high quality care is likely not as profitable as middling care, or sub-standard care.
You say that economics is meant to deliver cheap quality goods, but in reality here economics for PE is value extraction and has nothing to do with consumer good at all - unless of course there’s more profit there. Most of the time, there isn’t.
Is Apple Inc run for consumer good or value extraction?
Apple has, for most of its existence, been a distant second choice, because IBM and Microsoft captured the enterprise, which trickled down into consumer buying habits.
It survived, then thrived, by making its products so appealing that customers would buy them anyway.
So, effectively, both.
We know how to make MRI cheaper. Put it in a can. MRI suites are built with copper shielding in the walls, and the machines are really heavy, which creates huge capital costs. (Capex is a big problem for medicine.) There's an easy solution: you can just put an MRI machine in a standard tractor-trailer container and bring the patients in. Nothing has to be constructed or installed.
None of the private equity chains with the sans-serif fonts, simplified logos and trisyllabic names are doing this, though. It's bad marketing. Patients don't want to walk outside to an MRI machine in the parking lot. It feels sketchy. Never mind that they score just as well on the ACR image quality tests as the in-room machines. Who the hell knows what that is?
In reality, it's the county hospitals and big universities that use them! Places that have in-house physicists who can argue for what really makes sense in practice. A major problem with healthcare as a business is that the customer does not usually understand the product, but they still need to buy it, and there are time constraints.
Easy to imagine practices where the primary owner is going to retire and looking for an out.
Maybe they find a buyer in a doctor, maybe they don't, but PE provides them an exit that keeps the practice operating in the community.
Many people don't really run businesses efficiently. There was an interesting video I saw recently where a sole doctor practice made a few changes to their workflow that allowed them to hire more doctors and handle 2x as many people - I would expect a PE firm would pursue similar changes that help increase the number of people they can service, increasing competitiveness and lowering prices in the long run.
I don't know how these tradeoffs interact with patient care, but I wouldn't inherently expect PE to be worse at this than any other operating model.
Lots of other efficiencies to look at. Tons of them are directly bad for the patient (capturing more of the surplus is an efficiency that businesses generally go hard at).
Ultimately, I think the issue is when people making decisions are able to treat the impact as an abstraction.
My sweet summer child...
A structure to run business efficiently using practiced methods is always a good thing. However from what little I have understood, the goal of Private Equity is to maximize the dollar value on their investment. Somehow they have settled with the playbook that running a business even profitably isn't the best idea. Instead its much more profitable to take over the struggling business at good price, squeeze everything possible from the assets (thats where PE seem to be investing their expertise unfortunately) over duration of time. Update the books in a manner that it saves money on taxes and carry forwards the loss, making money in the process.
Why do you need to sell a private practice? There’s no brand to sell, it’s just you and that will be gone.
PE is scourge in this space. They’ve probably taken over every dental office already and now they push unnecessary procedures and whatever your insurance will bear just because.
These businesses would simply stop existing if no purchaser came forward. Many first-world economies face a demographic cliff where boomers are retiring and there is nobody in the next generation who can afford to take over the local dentist office, the HVAC company, etc.
I don’t think that’s true though in all cases. Sometimes PE just offers more money passing the debt into the company they acquire. But smaller players would still take control.
Step back and look at what it fundamentally is.
Person A has a business they want to sell.
Person B has a pile of money and thinks that that business is (or can be) a good investment.
That's it.
So, what happens if person A is prohibited from selling their business? Are they forced to keep working because they don't have enough other savings to retire on? Do they shut the business down in order to retire? Something else?
.
Calls to ban private equity are attempts to play "shoot the messenger".
May be categorizing the different private equities can be helpful here. A PE interested and invested for growth is always the best outcome. A PE only looking to salvage and squeeze is that gives the bad branding to PE.
Except they always strip mine the business. Cut the quality and push unnecessary shit. But, hey, you can fill out your forms on an iPad instead of pen and paper. Very cool.
Small(er) businesses can be poorly run. In theory private equity takes knowledge already in practise in other locations and shares it with this new location, improving results. Downside of course is that they care a lot less about that specific location than the previous owners would have.
One specific practise I’d like to see banned is private equity buying companies with debt the company then assumes. It staggers me that it’s legal.
I’ve literally never seen that happen. what does always happen is cutting ‘non essentials’ that are essential until the company implodes.
That is one of the core strategies in the private equity playbook.
What alternative are you imagining?
That the buying company keeps the debt on their books instead of offloading it onto the company that they bought.
PE attacks organizational sclerosis, can save companies that otherwise slowly deteriorate, reallocates resources faster, creates an unusually powerful form of corporate governance, Debt can impose useful discipline, can provide capabilities that smaller companies couldn't build themselves.
A society doesn't necessarily benefit from preserving every existing job. It benefits from creating increasingly productive jobs.
This needs to be defined a little bit better.
If I own a hospital that makes infinite money and every patient that comes to it dies the economy measures this is infinite productivity. This is contrived, but really matches some of what we see in real life.
This is why making a measurement a target can be horrifically destructive and contrary to the actual goal society wants.
The west doesn't seem to believe in the idea of social stability over increased profits which can lead to things like corporations being the social structure that is optimized for rather than the wellbeing of the individuals it contains. Left to run out of control the society can collapse.
You wouldn't have any business if all, or many, of your patients die.
The history of government regulations mostly only being made in response to people dieing seems to refute that. If what you claimed is true, those businesses killing people would have gone under, rather than continuing until there is enough public outcry to regulate it.
To be fair, in an emergency one does not usually get to choose the hospital they are taken to by the ambulance company.
It seems to me that oligarchies as a whole function a lot like PE's taking over a socially unstable polity.
The west has been an oligarchy for several decades at least, so it's not that people in the west don't believe in social stability, it's that they are living in the hollowed out shell of the former "company" where that doesn't exist. We need to optimize for the people's prosperity and well being.
Private Equity allows an owner to sell their income generating but slowly dieing company for its value today. The company will keep operating for 3-5 years and then rapidly shutdown.
This is valuable for business owners, because it gives them a way to get the value out of a failing business without having to ride it all the way into the ground.
It's valuable for consumers because it provides locations to shop for halloween supplies.
Pe is good when it is taking big risks on something new. That is hard so that is not what most pe does. Most pe is just figuring out ways to insert artificial inefficiencies into the system to syphon money off. Ie tax arbitrage, patent/copyright abuse, geographic or other market power abuse, etc. Basically find a way to move money around the system with no net benefit to society while having a bunch of it fall in your pocket is 90% of what pe does and its poison. The other 10% is vitally important to continued growth and prosperity and its often hard to tell which is happening until its over.
Nothing a few bills slipped to republican and "moderate" democratic senators won't fix!
They'll still manage to figure out some loophole to do it anyway. PE really is cancer to most industries.
I am sure most workers would prefer to get that extra 11% as a cash raise, but because healthcare costs are out of control the same care costs 11% more.
Certainly some companies will throw up their arms and hire someone overseas instead.
Look up "Medical Loss Ratio" from the ACA if you want to find out where the perverse incentives for health care pricing comes from..
The cap is generous. If an insurance company is hitting it, competition is failing to keep them in check and lifting the cap would just let them gouge deeper. Of course, that doesn't keep them from constantly yapping this talking point, as if it wasn't that way before, as if we don't have evidence that it wouldn't work. "Just lift our profit cap" is self-serving baloney.
That's not the issue, it's because an insurer's absolute profit only grows if the premium base grows. This removes any reason to compete on reduced costs and an incentive to have the costs go up.
How about just “cannot sell for 20 years”?
The usual complaint is going full extractive mode, desperately squeezing profit and selling inside 3-7 years.
So, yeah, we can keep private investment. But they're fucking stuck with it, trying to maintain a healthy business for 20 years.
Australia is on its way down this path after Brookfield / Healthscope was holding a private hospital hostage against the government and had performance so degraded a child died. Hopefully we (aus) continue down this path of burning off the rot.
https://www.abc.net.au/news/2025-03-27/nsw-government-joes-l...
That's for hospitals though, in one state.
Approximately 45% of GPs in Australia work in practices owned by private companies
https://www.monash.edu/business/che/impact-and-engagement/re...
You have to start somewhere.
I don’t have a problem with privately owned clinics, but I do think it should have to be majority owned by the operators. What percentage of that 45% is just doctors that run their own office vs. investment firms.
You know what american healthcare really needs is more regulation!
Are you saying it needs less? Why do you think that?
yes. It's completely insane that health insurance A) does all price discovery B) is tied to your employer.
Ask an American hospital how much something costs - you will get a completely fake price back, this is a sign of a totally broken market.
A and B are due to regulations?
I am good with getting rid of B).
A) can probably only be fixed with regulation. Why would hospitals and insurance otherwise make prices transparent? The current state serves them really well.
Because in a fair market they would be competed away - prices of food, computers, bonds, etc are not transparent because of regulation - it's largely because of the tax incentive as far as I've read from healthcare economists.
The 'fake' price is due to the negotiation of reimbursement between major healthcare chains and insurers. The most regulated piece - Medicare - is the only piece where there's fairly transparent pricing.
And why is this so prevalent? It's subject to huge subsidy and regulatory capture
Because the law doesn't force them not to?
It's very wild to me that you're like "This organization is lying to me, so what we need less of is people telling them what to do." Because you _could_ instead say "What if the government protected its citizens by punishing them for lying?"
You think the government tells hospitals to lie to you? The hospitals lie because the government doesn't force them not to. Laissez-faire capitalism causes that. Regulation is needed to fix it.
https://en.wikipedia.org/wiki/Airline_Deregulation_Act
I need you to help me connect the dots, because a bare URL is not the same thing as communication. What does the airline deregulation act have to do with hospitals giving you fake prices because nobody forces them not to?
What do you think would force hospitals to give you real prices if not the law?
How is less regulation suppose to fix any of that?
Most importantly to fight it as Private Equity is creeping like a cancer into good health systems globally, even in Europe, to slowly but surely siphon away all that is good.
It's important to fight it now before it is too late and other places also fall apart into a degraded, predatory, dystopian US system !
Make it a leverage limit. Otherwise you’ll have other players come in and replicate the playbook.
The short-term fix is banning PE. The long-term one is restricting the leverage these groups can take. Then put limits on upstream leverage. We have these across our economy. We just don’t apply them to this sector.
This is the right response.
Most state bar associations require a lawyer (or group of them) to own law firms. That _doesnt_ prevent law firms from doing crazy deals to gain liquidity for their partners, including from private equity.
Dictating who has to “own” something just incentivizes people to separate ownership from financial benefit. In most cases that’s just plain worse than letting real ownership happen.
If there is a business practice you don’t like, regulate the practice, not the corporate structure.
Medicine is extremely capex intensive and only become more so. Sucking private capital out of healthcare is going to make it vastly worse for everyone; higher prices and less innovation. I think we can criticize the often ruthlessness of PE while realizing that limiting medicine's ability to invest would be a huge self-own and only force further centralization into the biggest non-profit centers.
Medicine is already held back enough by the lack of ability to use debt to finance its sales, unlike almost every other industry; you can repossess a car but you can't repo an implant or administered drug, forcing everything to be paid for in cash upfront. Medicine needs as much access to capital as it can get.
Injecting PE into healthcare is what made it vastly worse for everyone in the first place. You can't have it both ways.
I'm sorry, compared to what? We're not talking about a routine doctor's office for healthy people. Advanced care is extremely technologically intensive and your local surgeon is not personally buying the $20M in infrastructure required for many modern advanced treatments. Venture capital has been essential for progress in medicine, and many advanced therapies are going to be increasingly delivered vertically integrated for the widest accessibility and best outcomes.
VC's can still fund companies that are making expensive new products.
Banks (and PE...) can still underwrite loans for these things.
We have many solutions for capex-intensive businesses and have had these for over four hundred years. LBO-type PE is not even fifty years old yet
I have no words for how completely toxic the surge of PE in healthcare has been. It's driven the degradation of care everywhere I've been. Healthcare chains have no issues with investment (see any annual reporting document to see how much money is sitting in various investments, mostly RE); smaller clinics being eaten up by PE chains is not an answer to centralization, it's just another mechanism of it.
"Private equity" also includes venture capital here. It means all private direct investment. The thing you are imagining is one small corner of what private equity actually is.
" less innovation"
"Innovation" as in marketing expenses and stock buybacks?
It feels to me as if the US is a useful example for the outcomes of a focus on capitalist ideals does for medical services in a country.
Apologies if an AI summary is offensive to some, but here we go:
Both sources are the same site:
https://www.commonwealthfund.org/sites/default/files/2024-09...
https://www.commonwealthfund.org/publications/fund-reports/2...
I wonder if ai can help doctors reclaim their practices, as the bureaucracy of dealing with insurance may become easier. Administrative overhead must be cheaper with ai. It was the main reason for consolidation and giving up management to hospitals and private equity.
There's a pattern to the kinds of companies PE buys and I think it points to the real porblem.
They like companies with some kind of moat that makes it hard to unseat them. Basically, companies where there is no alternative for the consumer. That way, they can inflict abuse without but know there will be nowhere to run.
There are two different ways to achieve this. Monopoly and regulation. Hopsitals have both government granted locational monopoly and tons of regulations that makes it hard to compete.
Private equity is the symptom, not the disease.
Until we get at the disease, new monsters will be born with different name filling the same ecological niche. It's economic evolution.