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Some private equity firms are furious over a paper in a dermatology journal
- ItsMe000001 8y agoDiscussion on reddit in /r/medicine, by actual medical professionals AFAICS: https://old.reddit.com/r/medicine/comments/9rpajq/dermatology_article_discusses_vc_buying_up/ https://old.reddit.com/r/medicine/comments/9rpajq/dermatolog... Copy of the starter comment by OP there: > Starter comment: NYTimes discusses an article that details Venture Capital buying dermatology practices that do an unusually high proportion of high dollar procedures. The article made it through peer review and was posted as an article in press. It was suddenly pulled. The AAD’s incoming president works for an VC Owners clinic and sits on their board. Lawyers for one firm called lead authors institution to demand changes. This is a huge assault on academic freedom. More so than any nonsense from Washington. Coming on the heels of AAD telling multiple people incorrectly that they failed the board exam over the past few years, this is another major scandal that could result huge changes. Or retaliation. From another comment there that is a tl;dr of some the problem: > VC involvement in derm practices is a huge, huge issue. One of the bigger practices in town recently was bought by a VC firm, and, lo and behold, all their borderline melanomas now, after being read by their "new" pathologist, need re-resections to get more ti$$ue. I no longer refer to them. Don't even get me started on electronic brachytherapy.
- hn_throwaway_99 8y agoAfter just finishing "Bad Blood", the book by John Carreyrou on the Theranos fraud, this particular passage in the article had me incensed: > This week a lawyer for Advanced Dermatology and Cosmetic Surgery, which is backed by private equity and is the largest dermatology practice in the United States, called the general counsel at the University of Florida, where two of the authors are employed, demanding specific changes to the paper. I'm disgusted by these high-powered law firms using thuggish tactics to try to silence critics. I have no problem with these lawyers responding to the article, in public, after it is published, but using the threat of expensive litigation to shut people up is just gross and morally bankrupt.
- gaius 8y agoI'm disgusted by these high-powered law firms using thuggish tactics to try to silence critics. The actions of Boies law firm, as documented in the book, are particularly egregious. Worse still is that Boies himself has a track record of being super tech savvy; he’s litigated against Microsoft and Google. As he was a board member at Theranos, it stretches credulity that he wasn’t more aware of the deception. Paid in equity too, how is that not a conflict of interest? How is it even legal?
- fjsolwmv 8y agoHow is a conflict of interest to be paid by your client to represent their interests?
- gaius 8y agoIt hinges on how plausible the scenario is that you can be a board member with a history of effortlessly mastering complex technical concepts, and all around you are whistleblowers asserting that the technology is a fraud, in which case your equity is worthless, and you decide that the best course of action is to abuse the legal system to intimidate them into silence. It's documented in the book that the family of one whistleblower ran up massive debts defending themselves, and a key scientist was hounded into committing suicide. It's not mentioned in the book that any of the lawyers ever wondered if maybe there might be something in all these reports. Anyway, read the book and draw your own conclusions about the characters involved.
- matthewdgreen 8y agoIt creates an environment where the attorney is incentivized to protect his/her own investment in the company, above and beyond representing the company's interest and the interest of the law.
- maxxxxx 8y agoI don't think it's a conflict of interest. They got paid by Theranos for their services. But there should be some ethics about helping clients with a lot of money bullying people with no money. Reading about the way Theranos abused whistleblowers with the help of lawyers was infuriating. The little guy simply has no chance against this unless you are willing to risk everything.
- refurb 8y agoThe issue seems to come down as to wether or not the paper had factual inaccuracies. Many academic papers are withdrawn, just check out retractionwatch.com.
- ohazi 8y agoCan someone link to the paper? The best thing we can do to combat this sort of thuggery is to shine light on it and try to go full-on Streisand effect. Edit - here it is: https://www.docdroid.net/fhDjc7P/konda-article-pe-copy.pdf https://www.docdroid.net/fhDjc7P/konda-article-pe-copy.pdf
- stevehawk 8y agoI don't care why because this is hacker news and I expect better article headlines than buzzfeed clickbait crap.
- nyolfen 8y agoeverybody does these headlines now besides maybe the wire services, it's inescapable
- djsumdog 8y agoPeople often wonder what the point of tenure is. Well this is it. Those authors need to not back down, and call attention to this. If they're tenured researchers or professors, they should be able to make publications like this without fear or retaliation from the school or industry.
- distant_hat 8y agoAll tenure does is largely protect you from getting fired. They can still do a fair amount of damage though you still have employment. Lab space can be reduced, it can get harder to get approvals for research, decreased funding etc.
- Fomite 8y agoIt's not a deflector shield, but "Protects you from getting fired" is, itself, a powerful tool. Especially at public universities with potentially hostile legislatures/boards of regents.
- jcutrell 8y agoI have no proof they are involved, but my wife and I both had a visit to a dermatologist last year. Both of us were then recommended for excisions. She was 29, I was 28. Everything came back pretty much normal. We were sent to this fern after a friend went there. He also had an excision. Also under 30. Now, we feel pretty much like we were played. Maybe this is relevant to this issue.
- yborg 8y agoThis summer I made the mistake of going to a large dermatology practice with several locations because a dermatologist I had seen a few times before was unavailable. I had what turned out to be essentially contact dermatitis. The large corporate practice ended up billing almost $900 for this including an unnecessary biopsy. I assumed that this was simply a rogue practice, but this news story makes me see this in a new light. Apparently the field of dermatology has been identified as a lucrative profit center by P/E firms and these sort of dermatology practices are being built up to strip mine the out of control medical-insurance complex here in the US. The logical next step is for these equity-backed firms to use their capital to acquire the majority of dermatology practices in a region and be able to dictate pricing. I'm sure that this area of medicine has been selected by equity firms because of the prevalence of cosmetic-related procedures that are inherently high-margin in this field. But there is so much money being sucked into this sector of the economy that this will encompass other types of medicine. The other area that seems to be active now is hospice care - the large insurer Anthem just bought a large palliative care provider this year. How this is not playing both sides of the trade kind of escapes me. The whole health care sector is starting to resemble the payday loan market on a vast scale and with even less regulation. And with 2 profit-seeking players interested in shaking down the consumer in every transaction, not just one. Or, one player pretending to be two players for maximum profit.
- lotsofpulp 8y agoVertical integration is happening everywhere, especially due to advances in technology allowing for much greater economies of scale. Insurers have to combine with each other to get bigger to negotiate with providers and pharmacies, providers have to combine with each other to get bigger to negotiate with insurers, pharmacies have to combine with each other to negotiate with drug manufacturers and PBMs, drug manufacturers combine with each other to negotiate with insurance, and finally, insurance combines with pharmacy and PBM (Aetna/cvs) to negotiate with drug manufacturer and providers. Telecoms, computers, retailing, everything is trending towards a handful of big players with enough vertical integration to be able to survive. Initially, this is could be good for consumers as the cost savings of economies of scale might be passed on to them, but we will pay for it at the end when there is only 2 vendors to choose from and they dictate the price.
- copper_think 8y agoWhat is the value that private equity and/or VC are adding to dermatology? I guess what I'm asking is, why would the physicians be interested in sharing some portion of their income with these non-physicians? Medicine, like other guild professions like law, dentistry, and accounting, is an enterprise which seems to naturally fit the partnership model instead.
- Eridrus 8y agoMedicine is a market for lemons, so reputation/brand is important. Many good doctors are full up on patients, but if they can convince you that an unknown doctor in their practice is just as good/under their supervision, they can pocket some of those gains. This doesn't really require private equity, but PE is providing a way to get a lump sum for this to doctors, and milking that cash cow. There is also a growing remote/virtual dermatology sector which can see gains from technology, but I doubt PE is involved.
- darawk 8y agoThe same thing they add to any other business: Better management, efficiency, etc.. I don't think any profession 'naturally fits the partnership model'. Some professions have simply managed to enshrine protectionism for themselves into law. There's precious little evidence that this is in any way beneficial for consumers and serves to do anything other than enrich the members of the professional guild at the expense of the public.
- quizbiz 8y agoSimple economics of scale. centralizing a highly effective management and financial instruments create a lot of value, often called a roll-up strategy. a company worth 1 merged with a company worth 1 is typically worth more than 2.
- sueders101 8y agoThe value add is an enthusiastic pursuit of profit. Ownership by a collection of doctors drives lower margins/profits than ownership by a private equity firm. Economies of scale can also help, but that’s not the driving reason behind PE acquisitions. There’s a degree of good faith/naïveté when medical providers and pharmacies bill insurance providers. PE firms can leverage this expectation and push for increased costs with little, if any, additional overhead.
- aaavl2821 8y agoThis isn't discussed much, but the healthcare provider industry has traditionally been a major sector of interest for private equity. Hospital companies like HCA, dental clinics, ambulatory surgery centers, etc. Healthcare providers are attractive to private equity 1) because of stable, non-cyclical cash flow, 2) benefits to scale (ie better negotiating leverage with payers), 3) ability to easily increase revenue at small clinics by "optimizing" billing (ie use more lucrative codes for the same procedure) and practice management (optimizing procedure mix and scheduling) and 4) regulatory protection -- local monopolies enjoy durable economic advantages and often are politically entrenched as healthcare providers are major employers These factors aren't limited to private equity backed healthcare, though. Even non-profits take advantage of these things (sutter health in the bay area is an example). If you're looking for why US healthcare is so expensive, this isn't a bad place to start
- atomical 8y agoAny idea if private equity is involved in ketamine clinics? That would be a juicy story.
- duxup 8y agoThere was an NPR (I think it was NPR) story about how medical helicopter rides have skyrocketed in cost. The issue was a lot of private equity folks realized that you could just get in the market and if you didn't get enough rides... you just cranked up the price and went after individuals who where hardly in a position to shop around when they needed the ride. Now there is an excess of medical helicopters, solution? Crank up the price...
- LaundroMat 8y agoIn ancient Rome, Crassus owned the fire department. When there was a home on fire, Crassus would negotiate the price for extinguishing the fire with the owners or tenants. Plus ça change...
- thaumasiotes 8y ago
- Gatsky 8y agoPaper isn’t even that bad really, just stating the obvious. Academia isn’t built to cope with well funded adversaries. Journalists handle the heat much better, at least the NYT got hold of it.
- mcny 8y agoI doubt it is perfect. I agree they're probably built for it but in practice, theory and practice are not the same. https://www.nytimes.com/2014/01/05/business/media/banished-for-questioning-the-gospel-of-guns.html https://www.nytimes.com/2014/01/05/business/media/banished-f... Archived at https://archive.fo/v5b1x https://archive.fo/v5b1x I'm sure even the NY Times has its limits and so do the likes of al Jazeera and the BBC. Another question: Could Intel or nVidia or Microsoft or Facebook do something similar for tech journalists?
- daro 8y agoBloomberg has still not retracted its story about the Chinese spyware despite heavy pressure from Apple and Amazon. So I guess that shows that at least some journalist can cope with it.
- rio517 8y agoBarbara Streisand effect in play. I never would have thought to be careful about this without this Push to silence criticism.
- justaaron 8y agopaywall source material alert...
- tomhoward 8y agohttp://archive.is/VWgV3 http://archive.is/VWgV3
- lordnacho 8y agoIt sounds to me that what is being monetized is the authority of doctors. There's a lot of medical conditions where you rely on the doctor to tell you what to do. After all, you don't have a degree in that. Now I can buy a clinic and pressure all the doctors through an incentive scheme that they are not used to, and get them all to nudge the borderline cases into must-act cases. And chances are each individual case is somewhat defensible, and the doctor is still an authority. It's perfect, the doctors are not even going to admit their bias. But as a whole, a lot of people will be on treatments that they wouldn't have been on.
- killjoywashere 8y agoAre socialized medicine systems less evil?
- stirlo 8y agoWho do you expect to sell more? A salesperson on commission or a salesperson on salary?
- justtopost 8y agoA salaried person still has room for perverse incentives. The wine-ing and dining by drug companies is famous, and not counted on any salary form. It makes no difference.
- your-nanny 8y agoif it makes no difference tgen you must think that commissioned persons are less susceptible to wining and dining incentives
- mindslight 8y agoYes, the situation described by the OP is ultimately due to those incentives not being kept in check by the customer, as there is little incentive for them to research the care. A socialized healthcare system is actually truer to a functioning free market than what we currently have. By negotiating prices and treatment ahead of time (albeit collectively), both sides of the transaction have the ability to make informed decisions. Whereas in our current system prices are (at best!) negotiated by a sick person while they're over a barrel, and in most cases not even negotiated just let ride on the roulette wheel of health "insurance". An open market (transparent, competitive, and payer-indifferent prices) could be even better, especially for more elective less time sensitive procedures like dermatology. But that's a long ways away from how things currently are, and in the opposite direction of how they're moving.
- calgoo 8y agoSo I wonder if there is an opportunity to create a service that let's you look up the center you are visiting, and seeing who the investors/ owners are. Then you can filter away any that has gotten bad stars/reviews based on bad practices. Fight vc money with vc money basically.
- Arubis 8y agoI would use this initially, until it got enough traction that paid/incentivized reviews destroyed it. I can think of at least one clinic I’d have avoided.
- darkerside 8y agoYou'll have a huge problem with uninformed reviewers. It usually doesn't become apparent you've been receiving substandard care (or over care) for quite a while, if ever. Maybe you could contact this by taking reviews only from patient advocates?
- DrNuke 8y agoConflict of interests on one side, sociopaths isolating a few words out of their context to have a rant on the other side; both are more dangerous than bad science, to be fair, but this is the spirit of the times.
- seanseanme 8y agoYoung dermatologist here - its an interesting time for my and my derm friends. We frequently discuss if the introduction of a PE profit motive will shunt care away from the complex, comprehensive patient exam to a more 'problem-focused' model. The proposed changes to Medicare reimbursement - which essentially pays the same for an office visit regardless of complexity - seems to be also pushing that way. Speaking only from personal perspective, helping complex patients is incredibly rewarding and I would absolutely hate for the system to steer the specialty away from that.
- divbzero 8y agoThe core underlying issue is fee-for-service [1] which inherently incentivize overutilization of services. We have been and should continue pushing for better alternatives. ACOs [2] and integrated managed care [3] are promising possibilities and there are assuredly others. [1]: https://en.wikipedia.org/wiki/Fee-for-service https://en.wikipedia.org/wiki/Fee-for-service [2]: https://en.wikipedia.org/wiki/Accountable_care_organization https://en.wikipedia.org/wiki/Accountable_care_organization [3]: https://en.wikipedia.org/wiki/Kaiser_Permanente https://en.wikipedia.org/wiki/Kaiser_Permanente