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I work in the healthcare space and hospitals, in my opinion, are motivated by profit. The rise in private equity purchases of hospitals indicates that the money

I work in the healthcare space and hospitals, in my opinion, are motivated by profit. The rise in private equity purchases of hospitals indicates that the money is going somewhere and it's certainly not any kind of "charity". Perhaps many small, poorly run hospitals have consolidated into a handful of large, poorly run hospitals. Still, that's no excuse to let Kaiser Permanente generate billions tax free.

alephnerd 2y ago
> The rise in private equity purchases of hospitals indicates that the money is going somewhere and it's certainly not any kind of "charity MSOs are organized as LLCs, not 501c3 organizations. The kinds of hospital networks that are run as 501c3s would be something like a CommonSpirit Health, Advent Health, UPMC, Mass Gen Brigham, etc. > Perhaps many small, poorly run hospitals have consolidated into a handful of large, poorly run hospitals Kinda. That's how CommonSpirit Health came to be, except backend management is basically centralized.
systemvoltage 2y ago
Wait… what’s wrong with motivated by profit? If the service sucks, they’ll lose customers. Focusing on profit is fundamentally sound unless you’re a monopoly, which tend to be when Gov sticks its beak into things it shouldn’t.
- cmiles74 2y ago
  I agree, there's nothing wrong with focusing on profit. The "non-profit" organizations are given tax-exempt status because they are centered around providing a public or social benefit, they explicitly should not be focused on providing a profit to their owners. In my opinion the majority of people can't afford to choose their hospital. Often it's the one that is within their means to travel and provides the service they require, regardless of the quality of their services. And, of course, after a serious accident you end up wherever the ambulance brings you.
- Keegs 2y ago
  > If the service sucks, they’ll lose customers. We’re talking about hospitals. Many areas are served by one local hospital. And where there are several, it’s typically the ambulance who decides where you go. It’s also pretty difficult to compare one hospital with another. IMO hospitals resemble utilities where market forces aren’t enough to guarantee good service.
  - happyopossum 2y ago
    > And where there are several, it’s typically the ambulance who decides where you go, not you. Don't necessarily disagree with most of your sentiment, however the vast majority of hospital patients do not arrive in an ambulance, or even through the ER. A lot of hospital services are elective or planned (surgeries, pregnancies, etc) and for those I've found it very helpful to 'shop' for the best options. Also, the one time I was in an ambulance, they asked which hospital I wanted my daughter transported to. All that said, it isn't always possible or feasible to choose - but it's not because of an ambulance.
    - vundercind 2y ago
      Yeah, it’s usually insurance network that decides where you can go (if you don’t want to go bankrupt)
  - systemvoltage 2y ago
    You're making an assumption that a hospital is a monopoly. I explicitly said "unless it's a monopoly". Ok, if "many areas have one hospital"... I don't think that's true at all. Most areas have multiple hospitals. Most people live in metropolitan or suburban areas.
    - jandrese 2y ago
      Depends on your definition. Do you only have 1 local hospital if there is another in a city that is a 2 hour drive away? Maybe only 1 hour? 30 minutes? Where do you draw the line?
  - 2y ago
- refurb 2y ago
  A comment on YC, a social media platform formed by a venture capital organization, and a comment saying “motivated by profit” gets downvoted.
  - uoaei 2y ago
    Almost as if communities are neither monoliths nor hiveminds!
    - refurb 2y ago
      That's not really relevant to my point?
      - uoaei 2y ago
        Your entire comment is based on that premise. If you gave folks the benefit of "not aligning with the majoritarian or stereotypical opinion" you wouldn't feel the way that you've expressed.
        refurb 2y ago
        My argument is not based on that premise at all. It's the idea that a comment that supports the basic foundation of the organization who run this board gets so severely downvoted. I'm justing calling out how ironic it is.
        uoaei 2y ago
        And that happens because different people are different and vote differently. No one is obligated to conform to your stereotypes.
  - systemvoltage 2y ago
    This whole place has been captured ideologically. HN has fallen so hard, even its leaders can't post here.
- uoaei 2y ago
  > fundamentally sound The language you've chosen is baldly ideological and leaaves no room for good faith discussion.
  - chimpanzee 2y ago
    I almost appreciate them slipping this phrase in. It signals that that door in their mind has closed and arguing against it is not worth the trouble.
- Peanuts99 2y ago
  As someone from the UK this is a strange thing to hear about a healthcare institution. In my view the end user is a patient and not a customer. If a sandwich shop produces bad sandwiches then eventually people stop buying them and shop around. This doesn't work with hospitals. In the worst case, dead people can't shop around.
- mjbale116 2y ago
  If their service sucks I lose my life. This isn't a discretionary purchase, let's stop pretending one can go shopping for care.
- mindslight 2y ago
  The healthcare industry has been thoroughly regulatory captured, so profits generally represent steeper zero-sum wealth extraction rather than having provided mutually consensual transactions. We likely agree that the main dysfunction of the healthcare industry is the complete lack of price signals, but without multiple key dynamics being fixed (off the top of my head: the nonsensical ability to create post-facto bills not based on any contract, anti-competitive arrangement between "insurance" and "providers" in the form of price fixing "networks", lack of statutory maximum rates for emergency care), superficial deregulation would only make the problem worse.
gruez 2y ago
>The rise in private equity purchases of hospitals indicates that the money is going somewhere and it's certainly not any kind of "charity". Ironically when they get bought out by PE they lose their tax exempt status, so that's kinda solving the problem.
- Projectiboga 2y ago
  If purchased with "carry forward" capital than it becomes tax differed until any of that is withdrawn.
  - twoodfin 2y ago
    That’s apples and oranges. PE-owned businesses pay corporate income tax just like any other for-profit entity.
    - deleted 2y ago
      [deleted]
  - solidsnack9000 2y ago
    What does that actually mean? Until "any of that" is "withdrawn"?
    - parkerhiggins 2y ago
      Unrealized gains.
Aurornis 2y ago
> Still, that's no excuse to let Kaiser Permanente generate billions tax free. As a nonprofit, they cannot distribute those profits to shareholders. That's the whole point. They're obligated to reinvest those profits back into the business, such as by developing new facilities, upgrading older facilities, and so on. Ironically, if you forcefully revoked the nonprofit status you'd actually open the door for those profits to go to shareholders instead.
- AdamJacobMuller 2y ago
  Profit, sure. But can I buy a non-profit hospital and force them to start buying syringes from my for-profit syringe company at a 1000% markup?
  - bandyaboot 2y ago
    You could, but as described that would be a crime (almost certainly multiple crimes). Fraud, breach of fiduciary duty, self-dealing, just to name a few avenues that a prosecution could pursue.
    - hnthr_w_y 2y ago
      how about a 20% markup that could very well be reasonably defended as a fair premium for a better product over the market, and while doing that we could be buying a lesser-than-average product for this, which we later sell, netting us a higher markup in practice.
    - thayne 2y ago
      It would be fairly easy to hide with the byzentine beurocracy and lack of pricing transparency involved in health care. And even if you did get caught, I'd be surprised if the punishment was anything worse than a fine that pales in comparison to the money you made.
    - magicalhippo 2y ago
      It's the MO to extract profits from private, non-profit kindergartens here in Norway. Non-profit kindergartens get subsidies from the state, so it's lucrative to have that status. The owners of the kindergarten hire the daily manager. They hire out the building itself to the kindergarten, as well as HR, accounting services etc. The prices are not 1000% market rate but certainly not competitive. By controlling the daily manager they make sure the kindergarten doesn't try to find better deals. Thus the kindergartens make no profit, yet the owners can extract a decent profit regardless. Pretty sure this idea was imported, and not something unique here.

alephnerd 2y ago

> The rise in private equity purchases of hospitals indicates that the money is going somewhere and it's certainly not any kind of "charity MSOs are organized as LLCs, not 501c3 organizations. The kinds of hospital networks that are run as 501c3s would be something like a CommonSpirit Health, Advent Health, UPMC, Mass Gen Brigham, etc. > Perhaps many small, poorly run hospitals have consolidated into a handful of large, poorly run hospitals Kinda. That's how CommonSpirit Health came to be, except backend management is basically centralized.

systemvoltage 2y ago

Wait… what’s wrong with motivated by profit? If the service sucks, they’ll lose customers. Focusing on profit is fundamentally sound unless you’re a monopoly, which tend to be when Gov sticks its beak into things it shouldn’t.

cmiles74 2y ago
I agree, there's nothing wrong with focusing on profit. The "non-profit" organizations are given tax-exempt status because they are centered around providing a public or social benefit, they explicitly should not be focused on providing a profit to their owners. In my opinion the majority of people can't afford to choose their hospital. Often it's the one that is within their means to travel and provides the service they require, regardless of the quality of their services. And, of course, after a serious accident you end up wherever the ambulance brings you.
Keegs 2y ago
> If the service sucks, they’ll lose customers. We’re talking about hospitals. Many areas are served by one local hospital. And where there are several, it’s typically the ambulance who decides where you go. It’s also pretty difficult to compare one hospital with another. IMO hospitals resemble utilities where market forces aren’t enough to guarantee good service.
- happyopossum 2y ago
  > And where there are several, it’s typically the ambulance who decides where you go, not you. Don't necessarily disagree with most of your sentiment, however the vast majority of hospital patients do not arrive in an ambulance, or even through the ER. A lot of hospital services are elective or planned (surgeries, pregnancies, etc) and for those I've found it very helpful to 'shop' for the best options. Also, the one time I was in an ambulance, they asked which hospital I wanted my daughter transported to. All that said, it isn't always possible or feasible to choose - but it's not because of an ambulance.
  - vundercind 2y ago
    Yeah, it’s usually insurance network that decides where you can go (if you don’t want to go bankrupt)
- systemvoltage 2y ago
  You're making an assumption that a hospital is a monopoly. I explicitly said "unless it's a monopoly". Ok, if "many areas have one hospital"... I don't think that's true at all. Most areas have multiple hospitals. Most people live in metropolitan or suburban areas.
  - jandrese 2y ago
    Depends on your definition. Do you only have 1 local hospital if there is another in a city that is a 2 hour drive away? Maybe only 1 hour? 30 minutes? Where do you draw the line?
- 2y ago
refurb 2y ago
A comment on YC, a social media platform formed by a venture capital organization, and a comment saying “motivated by profit” gets downvoted.
- uoaei 2y ago
  Almost as if communities are neither monoliths nor hiveminds!
  - refurb 2y ago
    That's not really relevant to my point?
    - uoaei 2y ago
      Your entire comment is based on that premise. If you gave folks the benefit of "not aligning with the majoritarian or stereotypical opinion" you wouldn't feel the way that you've expressed.
      - refurb 2y ago
        My argument is not based on that premise at all. It's the idea that a comment that supports the basic foundation of the organization who run this board gets so severely downvoted. I'm justing calling out how ironic it is.
        uoaei 2y ago
        And that happens because different people are different and vote differently. No one is obligated to conform to your stereotypes.
- systemvoltage 2y ago
  This whole place has been captured ideologically. HN has fallen so hard, even its leaders can't post here.
uoaei 2y ago
> fundamentally sound The language you've chosen is baldly ideological and leaaves no room for good faith discussion.
- chimpanzee 2y ago
  I almost appreciate them slipping this phrase in. It signals that that door in their mind has closed and arguing against it is not worth the trouble.
Peanuts99 2y ago
As someone from the UK this is a strange thing to hear about a healthcare institution. In my view the end user is a patient and not a customer. If a sandwich shop produces bad sandwiches then eventually people stop buying them and shop around. This doesn't work with hospitals. In the worst case, dead people can't shop around.
mjbale116 2y ago
If their service sucks I lose my life. This isn't a discretionary purchase, let's stop pretending one can go shopping for care.
mindslight 2y ago
The healthcare industry has been thoroughly regulatory captured, so profits generally represent steeper zero-sum wealth extraction rather than having provided mutually consensual transactions. We likely agree that the main dysfunction of the healthcare industry is the complete lack of price signals, but without multiple key dynamics being fixed (off the top of my head: the nonsensical ability to create post-facto bills not based on any contract, anti-competitive arrangement between "insurance" and "providers" in the form of price fixing "networks", lack of statutory maximum rates for emergency care), superficial deregulation would only make the problem worse.

gruez 2y ago

>The rise in private equity purchases of hospitals indicates that the money is going somewhere and it's certainly not any kind of "charity". Ironically when they get bought out by PE they lose their tax exempt status, so that's kinda solving the problem.

Projectiboga 2y ago
If purchased with "carry forward" capital than it becomes tax differed until any of that is withdrawn.
- twoodfin 2y ago
  That’s apples and oranges. PE-owned businesses pay corporate income tax just like any other for-profit entity.
  - deleted 2y ago
    [deleted]
- solidsnack9000 2y ago
  What does that actually mean? Until "any of that" is "withdrawn"?
  - parkerhiggins 2y ago
    Unrealized gains.

Aurornis 2y ago

> Still, that's no excuse to let Kaiser Permanente generate billions tax free. As a nonprofit, they cannot distribute those profits to shareholders. That's the whole point. They're obligated to reinvest those profits back into the business, such as by developing new facilities, upgrading older facilities, and so on. Ironically, if you forcefully revoked the nonprofit status you'd actually open the door for those profits to go to shareholders instead.

AdamJacobMuller 2y ago
Profit, sure. But can I buy a non-profit hospital and force them to start buying syringes from my for-profit syringe company at a 1000% markup?
- bandyaboot 2y ago
  You could, but as described that would be a crime (almost certainly multiple crimes). Fraud, breach of fiduciary duty, self-dealing, just to name a few avenues that a prosecution could pursue.
  - hnthr_w_y 2y ago
    how about a 20% markup that could very well be reasonably defended as a fair premium for a better product over the market, and while doing that we could be buying a lesser-than-average product for this, which we later sell, netting us a higher markup in practice.
  - thayne 2y ago
    It would be fairly easy to hide with the byzentine beurocracy and lack of pricing transparency involved in health care. And even if you did get caught, I'd be surprised if the punishment was anything worse than a fine that pales in comparison to the money you made.
  - magicalhippo 2y ago
    It's the MO to extract profits from private, non-profit kindergartens here in Norway. Non-profit kindergartens get subsidies from the state, so it's lucrative to have that status. The owners of the kindergarten hire the daily manager. They hire out the building itself to the kindergarten, as well as HR, accounting services etc. The prices are not 1000% market rate but certainly not competitive. By controlling the daily manager they make sure the kindergarten doesn't try to find better deals. Thus the kindergartens make no profit, yet the owners can extract a decent profit regardless. Pretty sure this idea was imported, and not something unique here.