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Bill to Ban Private Equity from Owning Medical Practices

509 points · 384 comments · paimapi

  1. NegativeK · · 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. tbrownaw · · focus · HN ↗
      > Can someone steelman private equity, please?

      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".

      1. sandeepkd · · focus · HN ↗
        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.
        1. 0xDEAFBEAD · · focus · HN ↗
          It basically comes down to interest rates right? If interest rates are low, the discounted-cash-flows analysis will favor maximizing long-run profitability. If interest rates are high, you can do better by squeezing the business in the short term and placing the money you obtained into some sort of high-yield, low-risk investment vehicle.
          1. Xirdus · · focus · HN ↗
            When interest rates are low, it's most profitable to invest in extremely high risk, extremely high reward unicorn startups. That makes way more money on average than any long-run profitability. In fact, long-run profitability is basically never the most efficient use of money regardless of market conditions.
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