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.
    runako · 1789950674 · focus · HN ↗
    > 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.
    1 - <a href="https://en.wikipedia.org/wiki/Robinson–Patman_Act" rel="nofollow">https://en.wikipedia.org/wiki/Robinson–Patman_Act
    gruez · 1789954942 · focus · HN ↗
    >1 - <a href="https://en.wikipedia.org/wiki/Robinson–Patman_Act" rel="nofollow">https://en.wikipedia.org/wiki/Robinson–Patman_Act
    I'm not a lawyer, but a cursory search shows there's a bunch of carveouts. It's not a straightforward ban on all favorable pricing for big players. For instance, if there's an actual cost justification (eg. bigger buyer = more efficient shipping) that's allowed. Same with offering volume discounts that are available to all buyers. That's not to say everything's above board, but it's not as simple as "wow big box stores get better pricing than mom and pop shops, so there must be federal laws being violated".
    runako · 1789998321 · focus · HN ↗
    I hesitated before linking that specific statute because I suspected someone would parse it as you have. Not a bad thing, just distracts from the larger point that the US government currently has tools (of which Robinson-Patman is only one) to prevent & reverse the extreme consolidation that harms every American.
    In the context of this article -- we may not need a new ban specific to preventing private equity from owning medical practices. We could simply enforce existing laws around e.g. market consolidation, consumer harm, etc.
    Adding a new law to also be ignored seems silly.

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