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This isn't discussed much, but the healthcare provider industry has traditionally been a major sector of interest for private equity. Hospital companies like H
by aaavl2821 8y ago
This 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 agoI mean, this is close to being right, but it's wrong in every one of the details. Crassus didn't own the fire department. Crassus owned a bunch of slaves who he had trained to put out fires. Crassus didn't charge for extinguishing fires. If your house was on fire, Crassus took his team and negotiated to buy your house. If you sold it to him, he'd put out the fire. There was no flow of money from you to Crassus under any circumstances. (But he could get a low price, because the value of your house was constantly dropping while it burned.) In imperial times, private firefighting groups were illegal since they were viewed as a potential source of rebellion. (Using your own slaves to put out fires on your own property was of course fully legal.) It's in my mind that Crassus benefited from similar laws, but he was active during the Republic. Maybe someone else knows more about the precise timings.
- LaundroMat 8y agoServes me right for repeating what I have read multiple times elsewhere without researching it. Thanks!
- stephengillie 8y agoAh, the ol' fire sale. At other times in history, it was the seller whose house (or business) was literally on fire, trying to sell to an unwitting buyer.
- deleted 8y ago[deleted]
- evgen 8y agoCrassus would also negotiate deals with neighboring houses that were in danger if the fire spread. In densely-packed Rome a fire two or three houses down could suddenly make continuing to own your little piece of property a risky venture.
- ErikVandeWater 8y ago> Crassus didn't own the fire department. Crassus owned a bunch of slaves who he had trained to put out fires. That sounds like he literally owned the fire department? It was just made up of slaves. Otherwise I really found what you said very interesting!
- RichardCA 8y agohttps://www.npr.org/sections/health-shots/2018/09/25/647531500/taken-for-a-ride-doctor-injured-in-atv-crash-gets-56-603-bill-for-air-ambulance https://www.npr.org/sections/health-shots/2018/09/25/6475315...