11 ms·

To me it seems like PE has simply discovered a loophole in the system. We want a system where creating value for people is rewarded, but PE has found a way to l

To me it seems like PE has simply discovered a loophole in the system. We want a system where creating value for people is rewarded, but PE has found a way to legally get the rewards without improving society. Normally this is called a scam or a fraud, and there are laws for standard stuff like taking people's money without giving them what you promised. For PE however, they've found a way around it, using the machinery available in the economy. For instance, once you are able to pay out a dividend that covers your cost of purchase, whatever comes next doesn't matter a whole lot from an investment point of view. You may have saddled the target with a huge debt, but that's a heads-I-win-tails-you-lose situation. If the firm does ok, PE actually win more. If it goes bankrupt, oh well. PE firm is still doing fine. The risk is entirely on all the other interested parties: employees and customers. But because we only have one side of the "created value" balance, all we can really see is some PE guys get paid. We don't see the other side, which is pretty hard to untangle. You can make an argument that everyone is better off with society organized this way, but you can't really ignore that many people seem to think they're worse off in this world.

gmd63 3y ago
Many arguments for sketchy business moves like ticket scalping or PE / market making is that they "create liquidity" Who is to say that a business should be liquid? Why? What is the value in making it easy to bail on your responsibilities, and why should we encourage people to quickly build a complicated and powerful system and make it easy for them to recuse themselves of that duty?
- Aunche 3y ago
  I see your point, but otherwise you'd be punishing people for pursuing essential lines of work. A software engineer at a FAANG gets to enjoy liquidity without scrutiny even if they're just facilitating the sale of ads. Why shouldn't a doctor who saves lives get to do the same?
  - gmd63 3y ago
    The value of your actions is not just the immediate work you do. It's the long term effect of the sum of your choices. If you save lives only to put your system that you've built in the hands of a price extracting PE firm, it's arguable you are violating the Hippocratic oath. One of the other commenters mentioned a study that measured a 10% increase in mortality after PE acquisition on average.
lr4444lr 3y ago
More like running many kinds of businesses has become more hassle than its worth. Medical malpractice premiums are very high, insurance payouts are stingier, and medicine has become more capital intensive than ever as newer medicines and diagnostics increasingly dominate, along with an aging population that needs more intensive care. Doctors report being more burnt out than ever. It's an attractive proposition to outsource the hard and messy stuff to a firm that knows the business angle well so that they can keep their sanity and focus on what got them interested in medicine in the first place while still getting a great salary. I don't love the situation, but let's not pretend it happened in a vacuum.
- wpietri 3y ago
  This would be a good argument if it were only medical practices where PE was active and having a malign effect. But that's most definitely not the case.
  - MattGaiser 3y ago
    That just means for numerous professions, running a business is more hassle than it is worth. Accounting, dentistry, massage, etc. all come to mind. Those people want to all practice their field, not deal with licenses, paperwork, insurance, and tax. Everything from burnout to higher required investment to increased regulatory hassle applies to other fields as well.
    - vkou 3y ago
      > Those people want to all practice their field, not deal with licenses, paperwork, insurance, and tax. This problem has been solved for a century, in the form of the practice which employs support staff, sometimes a multi-practitioner practice which shares those staff. PE rolling into it has been a very recent phenomena.
    - wpietri 3y ago
      That doesn't mean that. That is what one might infer if one believed the conclusion were true. But that's only persuasive to those predisposed to believe it. Which I am not. Regardless, running a business has always been more hassle than it's worth for people who would just rather have a job. But it has been worth it for those who prefer independence. If you wanted to claim that things were radically worse, you could take a swing at it. But given the rise in communications, computers, SaaS, and service outsourcing, there's a strong case to be made that it's much easier to run a professional service business. And I think the just-want-to-do-the-work thing is a bit of a red herring. I was recently talking with an optometrist whose joint practice was sold to a PE firm. His precise complaint was that PE was interfering with just doing the work, which he saw as helping patients.
s1artibartfast 3y ago
It seems that way if you only look at the PE part of the transaction. When a firm takes on debt, someone is backing that debt and loses out if the firm fails. If it's a the same PE firm or a bank making the loan, they would lose in the case of a bankruptcy. In theory, there's nothing wrong with companies trying new things and sometimes failing. The only problem is when barriers are too high and it is difficult to replace failed companies.
wpietri 3y ago
Very well put. And this has been going on for a while. A decade ago the NYT had a great article on how private equity destroyed Simmons Mattress: https://archive.is/uGYrT https://archive.is/uGYrT And you're right that the effects are obscured. I happened to be talking with an optometrist earlier this year. He and his partners sold their practice to a PE firm on the promise of making everything better. But he had started to moonlight at somebody else's non-PE practice because the PE overlords kept making things both worse and more expensive for the patients, and less and less satisfying for the doctors. And all of this was explained in a hush-hush tone, presumably because there were NDAs involved.
uLogMicheal 3y ago
On top of this, most of it is leveraged capital at a fraction of the actual cost, so the risk is almost vacant for the firms. Corrupt banking leads to infinite leverage for the super-wealthy to buy up / control it all. They do not need to care because they risk little and still profit even if it crashes because the tangible assets have shifted to their side of the gap.
- lotsofpulp 3y ago
  Is it leveraged? Or is it often times money from underfunded government employee pension funds and whatnot, seeking higher returns to make up for the underfunding from previous decades?
  - uLogMicheal 3y ago
    Wouldn't inflation cause these to perpetually be underfunded giving reason to borrow/spend more? It is a lot of debt/leverage at this point -- https://www.wsj.com/articles/private-equitys-food-binge-goes-sour-8f830dd4 https://www.wsj.com/articles/private-equitys-food-binge-goes... The funds snapped up a record 786 makers of food and beverages worth $32 billion in 2021, using bundles of debt to pay for their purchases, according to data from S&P Global Market Intelligence.
    - lotsofpulp 3y ago
      No, they are underfunded because it is easier to win elections by shortchanging the pension plans and keeping taxes low now, counting on future taxpayers to make up the deficit. Nothing stopping them from playing it conservatively and investing in high grade bonds and whatnot, but they want to hit those 8% annual returns (not including the underfunding in the first place), and so it drives them to riskier and riskier assets. And of course corruption of someone on the board of the pension plan investing in their friend’s nephew’s investments and so on.
cardamomo 3y ago
> Normally this is called a scam or a fraud So why not call it a scam or a fraud? I know there's likely a solid legal argument for not classifying it as such, but laws can be changed.
- lordnacho 3y ago
  Because those are terms for standard pretend-products like when someone buys a timeshare or gets a watch they thought was a Rolex. This is its own thing that operates on another level. The only thing they have in common is that people aren't getting the value they thought.
treis 3y ago
Think the economic reality is that the days of a doctor hiring a couple employees and hanging their shingle are over. The capital requirements are too high and the counter parties too big for individuals to thrive anymore. PE is one of the ways to consolidate and get some economies of scale. Plus I think most doctors prefer doctoring to running a business.
- lordnacho 3y ago
  But there's nothing to stop all the doctors in an area from forming a cooperative. That would also be private equity, but not in the sense described in the article. The PE in the article is firms with other values than what traditional medical professionals have, and those values are conflicting.
  - treis 3y ago
    There's some anti-trust complications with loose cooperatives negotiating as a collective. Fine line between collective bargaining power and price fixing. Organizations more like employee owned businesses exist but those come with their own sets of problems.
  - matheweis 3y ago
    ACA restricted doctors from owning hospitals under the guise of preventing fraud in the form of self referrals. https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfRe...
- maxerickson 3y ago
  We should flood the market with doctors so that private equity doesn't see it as an attractive investment to hire them.
civilized 3y ago
I think it should be illuminating to balance narratives like this with simple questions along classical economic lines: 1. Why is private equity ending up with all these resources? Who is selling to them and why? Why didn't this happen before? It's not like PE is new. 2. When PE loads up a firm with supposedly unsustainable billions of debt, someone is on the other side of that transaction, lending the billions. Who does that and why? Are they perpetual suckers, unaware of the decades of experience we have doing this? I don't necessarily think the conventional prestige media narrative around PE is wrong, but it never seems to get around to asking these basic economic questions. It can't be as simple as some metaphor where bandits are roaming the economic countryside pillaging innocent victims. Voluntary transactions are occurring and we need to understand why to address any underlying issues. "Unpleasant things are happening, we need some sort of regulation" doesn't seem like a sufficient basis for socially beneficial action. Whatever underlying issues are making healthcare an attractive PE target will probably persist, and maybe get worse, if all we do is pass some kind of "PE bad, stop PE" law.
- ericjmorey 3y ago
  The victims never consent to the sale. They have no say in the transactions that victimize them. You're looking at two parties making a transaction and assume that those are the only two parties that are part of the transaction.
  - civilized 3y ago
    This can be true of any corporate sale though. How do we distinguish sales that must be stopped because there are victims who must be protected from other sales?
  - prepend 3y ago
    > The victims never consent to the sale. It’s extremely rare for a forced sale. Usually it’s a public company and shares are purchased on public exchanges, or for privately held companies the board and shareholders approve the sale. It’s not that these are the only people impacted by the sale, but it’s the best method possible to govern sales.
AndrewKemendo 3y ago
You really nailed the problem with the financialization of everything. I’m busy figuring out how we got here, and how to get out of it but you’ve perfectly described how the incentives are flipped. I’d further add that regulatory capture means that financialization is a ratchet process, so undoing it is multiples more difficult than putting it into place.
stubybubs 3y ago
I live in Canada, where we have socialized medicine. Our survival rates for major cancers are on par the US and our infant mortality rate is lower, though we spend far less. We certainly have problems related to physician pay and cost of living crisis, but we are dealing with them. A lot of the problems we have here are the same as in the US: not enough nurses due to burnout, retiring physicians, etc. I have never once in my life thought "I sure wish there was somebody in the middle extracting value from this whole situation." Contributes absolutely nothing. Doctors are plenty efficient (pathologically so) and no MBA is going to speed things up. Long term outcomes are ideologically opposed to short-term capitalism. You cannot relate a reduction in type 2 diabetes or stroke cases 20 years later to a quarterly report. It's insanity to have them involved at all.
- chimeracoder 3y ago
  > I live in Canada, where we have socialized medicine. Our survival rates for major cancers are on par the US That's not really true. Cancer is one area that has been extensively studied over multiple rounds of years-long comparative studies, and while Canada is not as far behind the US in survival rates for cancers as other developed countries are, it's still decisively behind the US. You're correct that the middlemen here serve no purpose and are effectively leeches upon the system (with patients paying the price in the end, with both their wallets and their health). However, cancer is not the example that proves this point - it's one are where the US system does quite well, by the numbers.
  - stubybubs 3y ago
    For breast cancer, we're talking 88.6% vs 85.8%. It's very much on par. We generally do better with lower socioeconomic status people as well. Another thing to consider is that we treat everyone. You don't have to consider of it's going to bankrupt your family before you engage in treatment. So we often treat people who are sicker and poorer because we don't have affluence as a selection mechanism for our patient population.
    - chimeracoder 3y ago
lapcat 3y ago
> To me it seems like PE has simply discovered a loophole in the system. The fundamental loophole is that "the free market" is practically a religion in the United States (the so-called Invisible Hand taking the role of a god doling out rewards and punishments), and a significant portion of the population is vehemently opposed to any regulation of capital. You can even see this attitude in some of the comments here, where commenters are claiming that the problem is too much regulation rather than too little. Moreover, political campaigns are financed by private "donations" (i.e., legal bribes), so the lawmakers themselves are practically indebted to wealthy interests who don't want to be regulated.
- monero-xmr 3y ago
  Unlike in Europe and the UK, where such political influence from corporations and the wealthy never happens /s At least in the US we (try) and make donations public. The places where it’s “banned” are black holes.
  - shadowfox 3y ago
    > At least in the US we (try) and make donations public. The places where it’s “banned” are black holes. That is definitely an interesting take. So, is your ideal society one where anybody is allowed to give and take bribes as long as it is public?
    - dingusdew 3y ago
      [dead]
    - monero-xmr 3y ago
      I think the world is so complex that a politician - especially the sort democracies typically elect - cannot be expected to be an expert in all subjects and things they are supposed to vote on and make rules for. Lacking perfect knowledge, they must rely on outside advice, directly from those affected or indirectly from their assistants and technocrats who advise them. At all points it’s possible to manipulate the outcome. Given that influence and manipulation is impossible to stamp out, and then realizing that some of those that want to influence are some of the richest and most powerful entities on earth, I would personally rather allow lobbying and donations to be legal, but require all of it to be public. That way you can tell who is taking money from who. Otherwise, it’s just the mafia and insiders games all the way up the chain.
dragonwriter 3y ago
> To me it seems like PE has simply discovered a loophole in the system Serving private equity literally is the focus of the system in capitalism; it hasn’t found a loophole, it is the thing around which the system is engineered. > For PE however, they've found a way around it, using the machinery available in the economy. No, the effect you describe is literally what several centuries were spent engineering the machinery of the economy to create, its not an unintended pathway recently discovered that that machinery can be bent toward. Its what “capitalism” was named, by its critics, for.
SkyMarshal 3y ago
> You may have saddled the target with a huge debt I’m not sure that’s the model PE is using in healthcare. My impression is that they’re buying hospitals and medical practices, then obscuring the cost of actually providing care, so they can charge insurance companies not something reasonable like cost+20% but rather the maximum amount they think they can get out of the insurance company. Their financial modelers figure out after each procedure the max they can charge based on the procedure, the insurance company and plan, patient’s finances, etc. The net effect is to drive up medical insurance costs across the country, impoverishing and bankrupting many people while a small number of PE folks get rich. It’s an entirely extractive business model, not wealth-creating or innovation-producing. Laws that simply require total transparency in medical care pricing and pre-publication of prices for all procedures and drugs would probably go a long way toward fixing this, and in a capitalism-compatible way. We require transparency among publicly traded companies, SEC has extensive rules about that, but less so for private ones like hospitals and medical practices. That’s the loophole PE is exploiting.
- lordnacho 3y ago
  You are actually right, I focused too much on the financial angle and not the operational. I myself was "affected" if buying a shitty burger qualifies as a form of victimization. Ed's Easy Diner here in the UK totally changed their burger after getting acquired, to something inedible. This PE-driven enshittification is actually the more important thing about it: every damn thing in society is made a little bit worse for the consumer (and the employees) due to people buying up the businesses and quite directly making everything about the service worse.
colordrops 3y ago
I get a sense that the recent acceleration across industries of cost cutting and profit squeezing is due to PE activities.
wnc3141 3y ago
I think its more of a systematized rentiership rather than fraud. There's no difference between local ownership and private equity except for the level of systematization. With that said, I do agree that we've rewarded this form of rentiership and also enhanced the barriers to entry for other forms of private ownership (like a partner owned firm). This is in place of value created as a source of wealth, which the tax system has entirely devalued The whole practice of a LBO does seem like a fraud almost. I dont understand how a buyer can "lend" to the purchased firm without bearing actual risk perhaps I don't understand the mechanics there fully
YetAnotherNick 3y ago
> The risk is entirely on all the other interested parties: employees and customers. How is PE increasing their risk in any way? Maybe you are right that PE are getting more wealth than they create value but unless you want PE to be banned because of jealousy, you haven't pointed on any negative consequence due to them.
danielmarkbruce 3y ago
There is a lot of survivorship bias in reporting. Buying companies and trying to make money at it is an incredibly competitive game to be in. Yeah, the winners make billions, but so does Lebron.

gmd63 3y ago

Many arguments for sketchy business moves like ticket scalping or PE / market making is that they "create liquidity" Who is to say that a business should be liquid? Why? What is the value in making it easy to bail on your responsibilities, and why should we encourage people to quickly build a complicated and powerful system and make it easy for them to recuse themselves of that duty?

Aunche 3y ago
I see your point, but otherwise you'd be punishing people for pursuing essential lines of work. A software engineer at a FAANG gets to enjoy liquidity without scrutiny even if they're just facilitating the sale of ads. Why shouldn't a doctor who saves lives get to do the same?
- gmd63 3y ago
  The value of your actions is not just the immediate work you do. It's the long term effect of the sum of your choices. If you save lives only to put your system that you've built in the hands of a price extracting PE firm, it's arguable you are violating the Hippocratic oath. One of the other commenters mentioned a study that measured a 10% increase in mortality after PE acquisition on average.

lr4444lr 3y ago

More like running many kinds of businesses has become more hassle than its worth. Medical malpractice premiums are very high, insurance payouts are stingier, and medicine has become more capital intensive than ever as newer medicines and diagnostics increasingly dominate, along with an aging population that needs more intensive care. Doctors report being more burnt out than ever. It's an attractive proposition to outsource the hard and messy stuff to a firm that knows the business angle well so that they can keep their sanity and focus on what got them interested in medicine in the first place while still getting a great salary. I don't love the situation, but let's not pretend it happened in a vacuum.

wpietri 3y ago
This would be a good argument if it were only medical practices where PE was active and having a malign effect. But that's most definitely not the case.
- MattGaiser 3y ago
  That just means for numerous professions, running a business is more hassle than it is worth. Accounting, dentistry, massage, etc. all come to mind. Those people want to all practice their field, not deal with licenses, paperwork, insurance, and tax. Everything from burnout to higher required investment to increased regulatory hassle applies to other fields as well.
  - vkou 3y ago
    > Those people want to all practice their field, not deal with licenses, paperwork, insurance, and tax. This problem has been solved for a century, in the form of the practice which employs support staff, sometimes a multi-practitioner practice which shares those staff. PE rolling into it has been a very recent phenomena.
  - wpietri 3y ago
    That doesn't mean that. That is what one might infer if one believed the conclusion were true. But that's only persuasive to those predisposed to believe it. Which I am not. Regardless, running a business has always been more hassle than it's worth for people who would just rather have a job. But it has been worth it for those who prefer independence. If you wanted to claim that things were radically worse, you could take a swing at it. But given the rise in communications, computers, SaaS, and service outsourcing, there's a strong case to be made that it's much easier to run a professional service business. And I think the just-want-to-do-the-work thing is a bit of a red herring. I was recently talking with an optometrist whose joint practice was sold to a PE firm. His precise complaint was that PE was interfering with just doing the work, which he saw as helping patients.

s1artibartfast 3y ago

It seems that way if you only look at the PE part of the transaction. When a firm takes on debt, someone is backing that debt and loses out if the firm fails. If it's a the same PE firm or a bank making the loan, they would lose in the case of a bankruptcy. In theory, there's nothing wrong with companies trying new things and sometimes failing. The only problem is when barriers are too high and it is difficult to replace failed companies.

wpietri 3y ago

Very well put. And this has been going on for a while. A decade ago the NYT had a great article on how private equity destroyed Simmons Mattress: https://archive.is/uGYrT https://archive.is/uGYrT And you're right that the effects are obscured. I happened to be talking with an optometrist earlier this year. He and his partners sold their practice to a PE firm on the promise of making everything better. But he had started to moonlight at somebody else's non-PE practice because the PE overlords kept making things both worse and more expensive for the patients, and less and less satisfying for the doctors. And all of this was explained in a hush-hush tone, presumably because there were NDAs involved.

uLogMicheal 3y ago

On top of this, most of it is leveraged capital at a fraction of the actual cost, so the risk is almost vacant for the firms. Corrupt banking leads to infinite leverage for the super-wealthy to buy up / control it all. They do not need to care because they risk little and still profit even if it crashes because the tangible assets have shifted to their side of the gap.

lotsofpulp 3y ago
Is it leveraged? Or is it often times money from underfunded government employee pension funds and whatnot, seeking higher returns to make up for the underfunding from previous decades?
- uLogMicheal 3y ago
  Wouldn't inflation cause these to perpetually be underfunded giving reason to borrow/spend more? It is a lot of debt/leverage at this point -- https://www.wsj.com/articles/private-equitys-food-binge-goes-sour-8f830dd4 https://www.wsj.com/articles/private-equitys-food-binge-goes... The funds snapped up a record 786 makers of food and beverages worth $32 billion in 2021, using bundles of debt to pay for their purchases, according to data from S&P Global Market Intelligence.
  - lotsofpulp 3y ago
    No, they are underfunded because it is easier to win elections by shortchanging the pension plans and keeping taxes low now, counting on future taxpayers to make up the deficit. Nothing stopping them from playing it conservatively and investing in high grade bonds and whatnot, but they want to hit those 8% annual returns (not including the underfunding in the first place), and so it drives them to riskier and riskier assets. And of course corruption of someone on the board of the pension plan investing in their friend’s nephew’s investments and so on.

cardamomo 3y ago

> Normally this is called a scam or a fraud So why not call it a scam or a fraud? I know there's likely a solid legal argument for not classifying it as such, but laws can be changed.

lordnacho 3y ago
Because those are terms for standard pretend-products like when someone buys a timeshare or gets a watch they thought was a Rolex. This is its own thing that operates on another level. The only thing they have in common is that people aren't getting the value they thought.

treis 3y ago

Think the economic reality is that the days of a doctor hiring a couple employees and hanging their shingle are over. The capital requirements are too high and the counter parties too big for individuals to thrive anymore. PE is one of the ways to consolidate and get some economies of scale. Plus I think most doctors prefer doctoring to running a business.

lordnacho 3y ago
But there's nothing to stop all the doctors in an area from forming a cooperative. That would also be private equity, but not in the sense described in the article. The PE in the article is firms with other values than what traditional medical professionals have, and those values are conflicting.
- treis 3y ago
  There's some anti-trust complications with loose cooperatives negotiating as a collective. Fine line between collective bargaining power and price fixing. Organizations more like employee owned businesses exist but those come with their own sets of problems.
- matheweis 3y ago
  ACA restricted doctors from owning hospitals under the guise of preventing fraud in the form of self referrals. https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfRe...
maxerickson 3y ago
We should flood the market with doctors so that private equity doesn't see it as an attractive investment to hire them.

civilized 3y ago

I think it should be illuminating to balance narratives like this with simple questions along classical economic lines: 1. Why is private equity ending up with all these resources? Who is selling to them and why? Why didn't this happen before? It's not like PE is new. 2. When PE loads up a firm with supposedly unsustainable billions of debt, someone is on the other side of that transaction, lending the billions. Who does that and why? Are they perpetual suckers, unaware of the decades of experience we have doing this? I don't necessarily think the conventional prestige media narrative around PE is wrong, but it never seems to get around to asking these basic economic questions. It can't be as simple as some metaphor where bandits are roaming the economic countryside pillaging innocent victims. Voluntary transactions are occurring and we need to understand why to address any underlying issues. "Unpleasant things are happening, we need some sort of regulation" doesn't seem like a sufficient basis for socially beneficial action. Whatever underlying issues are making healthcare an attractive PE target will probably persist, and maybe get worse, if all we do is pass some kind of "PE bad, stop PE" law.

ericjmorey 3y ago
The victims never consent to the sale. They have no say in the transactions that victimize them. You're looking at two parties making a transaction and assume that those are the only two parties that are part of the transaction.
- civilized 3y ago
  This can be true of any corporate sale though. How do we distinguish sales that must be stopped because there are victims who must be protected from other sales?
- prepend 3y ago
  > The victims never consent to the sale. It’s extremely rare for a forced sale. Usually it’s a public company and shares are purchased on public exchanges, or for privately held companies the board and shareholders approve the sale. It’s not that these are the only people impacted by the sale, but it’s the best method possible to govern sales.

AndrewKemendo 3y ago

You really nailed the problem with the financialization of everything. I’m busy figuring out how we got here, and how to get out of it but you’ve perfectly described how the incentives are flipped. I’d further add that regulatory capture means that financialization is a ratchet process, so undoing it is multiples more difficult than putting it into place.

stubybubs 3y ago

I live in Canada, where we have socialized medicine. Our survival rates for major cancers are on par the US and our infant mortality rate is lower, though we spend far less. We certainly have problems related to physician pay and cost of living crisis, but we are dealing with them. A lot of the problems we have here are the same as in the US: not enough nurses due to burnout, retiring physicians, etc. I have never once in my life thought "I sure wish there was somebody in the middle extracting value from this whole situation." Contributes absolutely nothing. Doctors are plenty efficient (pathologically so) and no MBA is going to speed things up. Long term outcomes are ideologically opposed to short-term capitalism. You cannot relate a reduction in type 2 diabetes or stroke cases 20 years later to a quarterly report. It's insanity to have them involved at all.

chimeracoder 3y ago
> I live in Canada, where we have socialized medicine. Our survival rates for major cancers are on par the US That's not really true. Cancer is one area that has been extensively studied over multiple rounds of years-long comparative studies, and while Canada is not as far behind the US in survival rates for cancers as other developed countries are, it's still decisively behind the US. You're correct that the middlemen here serve no purpose and are effectively leeches upon the system (with patients paying the price in the end, with both their wallets and their health). However, cancer is not the example that proves this point - it's one are where the US system does quite well, by the numbers.
- stubybubs 3y ago
  For breast cancer, we're talking 88.6% vs 85.8%. It's very much on par. We generally do better with lower socioeconomic status people as well. Another thing to consider is that we treat everyone. You don't have to consider of it's going to bankrupt your family before you engage in treatment. So we often treat people who are sicker and poorer because we don't have affluence as a selection mechanism for our patient population.
  - chimeracoder 3y ago

lapcat 3y ago

> To me it seems like PE has simply discovered a loophole in the system. The fundamental loophole is that "the free market" is practically a religion in the United States (the so-called Invisible Hand taking the role of a god doling out rewards and punishments), and a significant portion of the population is vehemently opposed to any regulation of capital. You can even see this attitude in some of the comments here, where commenters are claiming that the problem is too much regulation rather than too little. Moreover, political campaigns are financed by private "donations" (i.e., legal bribes), so the lawmakers themselves are practically indebted to wealthy interests who don't want to be regulated.

monero-xmr 3y ago
Unlike in Europe and the UK, where such political influence from corporations and the wealthy never happens /s At least in the US we (try) and make donations public. The places where it’s “banned” are black holes.
- shadowfox 3y ago
  > At least in the US we (try) and make donations public. The places where it’s “banned” are black holes. That is definitely an interesting take. So, is your ideal society one where anybody is allowed to give and take bribes as long as it is public?
  - dingusdew 3y ago
    [dead]
  - monero-xmr 3y ago
    I think the world is so complex that a politician - especially the sort democracies typically elect - cannot be expected to be an expert in all subjects and things they are supposed to vote on and make rules for. Lacking perfect knowledge, they must rely on outside advice, directly from those affected or indirectly from their assistants and technocrats who advise them. At all points it’s possible to manipulate the outcome. Given that influence and manipulation is impossible to stamp out, and then realizing that some of those that want to influence are some of the richest and most powerful entities on earth, I would personally rather allow lobbying and donations to be legal, but require all of it to be public. That way you can tell who is taking money from who. Otherwise, it’s just the mafia and insiders games all the way up the chain.

dragonwriter 3y ago

> To me it seems like PE has simply discovered a loophole in the system Serving private equity literally is the focus of the system in capitalism; it hasn’t found a loophole, it is the thing around which the system is engineered. > For PE however, they've found a way around it, using the machinery available in the economy. No, the effect you describe is literally what several centuries were spent engineering the machinery of the economy to create, its not an unintended pathway recently discovered that that machinery can be bent toward. Its what “capitalism” was named, by its critics, for.

SkyMarshal 3y ago

> You may have saddled the target with a huge debt I’m not sure that’s the model PE is using in healthcare. My impression is that they’re buying hospitals and medical practices, then obscuring the cost of actually providing care, so they can charge insurance companies not something reasonable like cost+20% but rather the maximum amount they think they can get out of the insurance company. Their financial modelers figure out after each procedure the max they can charge based on the procedure, the insurance company and plan, patient’s finances, etc. The net effect is to drive up medical insurance costs across the country, impoverishing and bankrupting many people while a small number of PE folks get rich. It’s an entirely extractive business model, not wealth-creating or innovation-producing. Laws that simply require total transparency in medical care pricing and pre-publication of prices for all procedures and drugs would probably go a long way toward fixing this, and in a capitalism-compatible way. We require transparency among publicly traded companies, SEC has extensive rules about that, but less so for private ones like hospitals and medical practices. That’s the loophole PE is exploiting.

lordnacho 3y ago
You are actually right, I focused too much on the financial angle and not the operational. I myself was "affected" if buying a shitty burger qualifies as a form of victimization. Ed's Easy Diner here in the UK totally changed their burger after getting acquired, to something inedible. This PE-driven enshittification is actually the more important thing about it: every damn thing in society is made a little bit worse for the consumer (and the employees) due to people buying up the businesses and quite directly making everything about the service worse.

colordrops 3y ago

I get a sense that the recent acceleration across industries of cost cutting and profit squeezing is due to PE activities.

wnc3141 3y ago

I think its more of a systematized rentiership rather than fraud. There's no difference between local ownership and private equity except for the level of systematization. With that said, I do agree that we've rewarded this form of rentiership and also enhanced the barriers to entry for other forms of private ownership (like a partner owned firm). This is in place of value created as a source of wealth, which the tax system has entirely devalued The whole practice of a LBO does seem like a fraud almost. I dont understand how a buyer can "lend" to the purchased firm without bearing actual risk perhaps I don't understand the mechanics there fully

YetAnotherNick 3y ago

> The risk is entirely on all the other interested parties: employees and customers. How is PE increasing their risk in any way? Maybe you are right that PE are getting more wealth than they create value but unless you want PE to be banned because of jealousy, you haven't pointed on any negative consequence due to them.

danielmarkbruce 3y ago

There is a lot of survivorship bias in reporting. Buying companies and trying to make money at it is an incredibly competitive game to be in. Yeah, the winners make billions, but so does Lebron.