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. twoodfin · 1789944333 · focus · HN ↗
  The upside is to the folks who sold the businesses they owned.
  Should they be outlawed from selling to certain classes of investor? Which?
  1. Grombobulous · 1789944624 · focus · HN ↗
    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.
    furytrader · 1789945966 · focus · HN ↗
    "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?
    Grombobulous · 1789946506 · focus · HN ↗
    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: <a href="https://rmfu.org/taxpayer-dollars-subsidize-wal-mart/" rel="nofollow">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 <a href="https://mafainsurance.com/how-many-walmart-employees-are-on-medicaid.html" rel="nofollow">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.
    > both at Walmart and their competition
    What competition? When Walmart comes to town, the competition closes.
    [1] Probably a lot higher since this article is about 20 years old
    gruez · 1789947679 · focus · HN ↗
    >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: <a href="https://rmfu.org/taxpayer-dollars-subsidize-wal-mart/" rel="nofollow">https://rmfu.org/taxpayer-dollars-subsidize-wal-mart/ [1]
    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?
    pixl97 · 1789952202 · focus · HN ↗
    As another poster stated, Walmart and other large companies are already violating federal law.
    <a href="https://en.wikipedia.org/wiki/Robinson%E2%80%93Patman_Act" rel="nofollow">https://en.wikipedia.org/wiki/Robinson%E2%80%93Patman_Act
    >And what happens if walmart closed up shop
    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.
    gruez · 1789956190 · focus · HN ↗
    >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.
    So what's the complaint here, that walmart negotiates aggressively, passing those better prices to buyers, and that's... bad? Given we're in a thread complaining about healthcare, should walmart do the opposite, instead using the insurance company strategy of encouraging their suppliers to pad their margins, so they can offer "modest" (in % terms, high in absolute terms) markups?
    pixl97 · 1789957663 · focus · HN ↗
    Way to miss the point.
    VC is bad because of the concentration of power, same reason Walmart is.

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