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Bill to Ban Private Equity from Owning Medical Practices

509 points · 384 comments · paimapi

  1. throwaway13337 · · focus · HN ↗
    There's a pattern to the kinds of companies PE buys and I think it points to the real problem.

    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 but know there will be nowhere to run.

    There are two different ways to achieve this. Monopoly and regulation. Hospitals have both government granted locational monopoly and tons of regulations that make it impossible 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 natural selection played out in the environment we created.

    1. dadrian · · focus · HN ↗
      That’s absolutely not true. Private equity regularly buys small businesses, D2C businesses, retail businesses, failing businesses, software businesses…
      1. misterderpie · · focus · HN ↗
        Genuine Q: Are they buying failing businesses because they see potential and want to get those on the right track, or are they buying them because their forecast tells them they can still make money, before shutting them down for eternity?
        1. what-the-grump · · focus · HN ↗
          It doesn’t matter to PE as long as they can make a profit.

          Buy a failing business and leverage debt on it until you can’t, spend the money on yourself restructuring the business.

          Buy a working business and gut it for multiple.

          Buy failing businesses to offset tax burden.

          This a meta level game, they don’t care about the outcome as long as it produces profit.

          Product quality goes down the drain? That product is retirement homes, healthcare, food, utility, schools, it doesn’t matter. There is a million levels of separation and paperwork and a corp structure to prevent shit swimming up the stream.

          Net result, if you live in America look around you, go to an auto service center, or a clinic. It’s been gutted for profit one way or another.

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