Thread

Bill to Ban Private Equity from Owning Medical Practices

509 points · 384 comments · paimapi

NegativeK · 1789944184 · focus · HN ↗
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.
1. mhh__ · 1789946857 · focus · HN ↗
  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.
  1. throwaway20222 · 1789947524 · focus · HN ↗
    What shows that they are more intelligent? They might be better at extracting value from enterprise, but is that generally “more intelligent?”
    mhh__ · 1789947622 · focus · HN ↗
    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.
    gruez · 1789948067 · focus · HN ↗
    >but is that generally “more intelligent?”
    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] <a href="https://en.wikipedia.org/wiki/G_factor_(psychometrics)" rel="nofollow">https://en.wikipedia.org/wiki/G_factor_(psychometrics)
    tbrownaw · 1789949382 · focus · HN ↗
    DISREGARD THIS, I CAN'T READ TODAY
    > Contrary to popular belief, being intelligent in one thing does correlate with being intelligent at other things[1].
    > [1] <a href="https://en.wikipedia.org/wiki/G_factor_(psychometrics)" rel="nofollow">https://en.wikipedia.org/wiki/G_factor_(psychometrics)
    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]
    That explicitly contradicts your assertion.
    gruez · 1789949928 · focus · HN ↗
    >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?
    tbrownaw · 1789950435 · focus · HN ↗
    d'oh, yep

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