4 ms·

Doctors Warn Accountants of Private-Equity Drain on Quality: You Could Be Next

50 points by impish9208 1y ago

readthenotes1 1y ago
Their 1993 warning was before the Neon scandal, the WorldCom scandal, the Madoff and other Ponzi schemes. It's a little late to assume accounting firms are 100% reliable
impish9208 1y ago
Gift link: https://www.wsj.com/articles/doctors-warn-accountants-of-private-equity-drain-on-quality-you-could-be-next-1be0f0fd?st=YDU38G https://www.wsj.com/articles/doctors-warn-accountants-of-pri...
quantified 1y ago
They will be next, and tough. The owners of the firms who get money on the sale are all that matters. In American capitalism, doctors are just cogs to make money, and accountants will be too.
- JCattheATM 1y ago
  At some point hopefully the US will catch up to other developed countries and introduced some much needed legislation so that is no longer the case.
  - quantified 1y ago
    The issue is more cultural than legal, I think. This behavior is acceptable in more and more quarters.
    - lesuorac 1y ago
      I dunno, you don't see PE-run law-firms since you need legally need to be lawyer to run one. It doesn't seem that much of a stretch to me to require somebody to have expertise in the field that the company operates in. What to do about holding companies I'm not too sure, but not opposed to calling it anti-competitive and banning them.
  - hnthrow90348765 1y ago
    Republicans will basically be undoing Democratic work from now on because that gets votes now, while skirting the law as much as possible with executive orders. Democrats may or may not do the same, but no one knows who the next generation of electable Democratic presidential candidates are. At 4 year intervals, this makes any serious empire building ventures (encouraged by legislation) very risky. We're basically coasting on inertia and USD dominance, and that is quite a lot of inertia, but Trump is doing his best to slam on the brakes.
    - monkeyelite 1y ago
      [flagged]
    - JCattheATM 1y ago
      It's a cycle that can't sustain, and will lead to the destruction of the US, if not as a country via civil war, then with it losing it's place on the world stage rapidly and extensively. The only solution is somehow to force or trick red state populations into learning what they need to so they can vote with information rather than beliefs, or getting rid of the electoral college so they can be disregarded entirely.
  - monkeyelite 1y ago
    [flagged]
- mistrial9 1y ago
  fortunately, people make decisions outside of the Capitalism framework all the time.. those people include Doctors themselves. Think of Capitalism as a force of gravity in the system, but not the only one. Oversimplifying "america" mostly does not penetrate the topic as a real world system IMHO
djohnston 1y ago
I have a question someone can hopefully help me answer. I've heard this narrative for many years now - private equity buys a company and drives it to shit. Recently it was PE firms buying all the vets in an area. If that's indeed the case, wouldn't it make sense to hold out because eventually you'll get all the customers? Like, if there are 10 vet offices in the county, and PE firms buy 8 of them, over time won't everyone end up flocking to the 2 that held out?
- nunez 1y ago
  PE-owned vet clinics are cheaper due to economies of scale, and that's all that matters for most people.
- devmor 1y ago
  This doesn’t happen as often for the same reason that startups would rather flare out than build a sustainable business: greed. Most people would rather get rich quickly by selling out, instead of putting in effort to get rewarded far in the future.
  - actionfromafar 1y ago
    Yes... that's one way of putting it, but I liked the sibling comments more. Another perspective on the same thing. The upshot of holding out isn't very great and may in fact get worse if MegaPetCo buys all your suppliers. It can be not so much greed as running for higher ground when the MegaPetCo tsunami comes to town.
- newsclues 1y ago
  Vertical orientation, so the hold outs still need to source per meds and foods and supplies from somewhere? Mega pet co owns the whole stack.
  - loloquwowndueo 1y ago
    Is it perhaps integration instead of orientation?
- 1y ago
ivape 1y ago
Is the idea that an independent accounting firm would flag egregious money-making schemes by Hospitals? If both the Hospital and Accounting firm are owned by Private Equity, then there is no independent body with the right incentives to do this. Even so, I can't help but wonder why any accounting firm, even if independent, would antagonistically audit their customer (the Hospital). Feels like only a regulatory body should be involved in auditing to begin with. Which brings me to a Bloomberg headline from today: "How BlackRock's CEO Gets Paid Is Anyone's Guess" (To the tune of 37 million) https://www.bloomberg.com/opinion/articles/2025-05-07/how-blackrock-s-larry-fink-gets-paid-is-anyone-s-guess https://www.bloomberg.com/opinion/articles/2025-05-07/how-bl... Well, this might be one of those psychotic ways these animals get paid. So in this fucked up multiverse, PE executives run some scheme through a Hospital to generate more revenue, have their own Accounting audit it and give it the green-light, pocket the cash, and say "well, everything is dandy because it's been audited". At this point the comedy just writes itself.
triceratops 1y ago
Is the recent trend of private equity buying literally every business going - down to your local plumber - a sign of wealth inequality? Or would it have happened regardless?
- DangitBobby 1y ago
  I wish I could remember where I heard this, it's from some NPR podcast like Freakonimics or This American Life. Dentists would normally sell their private practice to an up-and-coming dentist that they know, but recent graduates are so mired in debt that they can't really afford the loan to buy a practice, so PE firms end up buying instead. Edit: > DUBNER: We did a series on private-equity consolidation in the pet-care industry, and we found a lot of problems there for employees and consumers. But we also learned something that seems to apply to a lot of the human healthcare industry. If you look at nursing homes, doctor’s offices, dentists offices, what we heard is that the founders of these offices and companies, when it’s time to retire, they might prefer to sell to one of their junior partners. That’s what often happened before private equity was around. But now those junior partners have so much debt from medical school or veterinary school or whatever that they can’t afford to buy the practice. So the only likely buyer is an outside investor like a private-equity firm. The P.E. firm is satisfying a real need there, but the resulting roll-ups or consolidations are often worse for existing employees and worse for consumers. Do you have any thoughts for how that might work differently? https://freakonomics.com/podcast/the-biden-policy-that-trump-hasnt-touched/ https://freakonomics.com/podcast/the-biden-policy-that-trump...
- danaris 1y ago
  Yes, it's definitely a sign of increasing inequality, on at least three fronts. On the high side, there's loads of money sloshing around with—especially since the end of ZIRP—no "safe" place to put it. They "need" ways to guarantee high returns over relatively short periods in order to justify their continued access to a never-ending supply of yachts that have other yachts docked inside them; vulture capitalism is a reliable way to do that for people with absolutely no scruples or understanding of (or care about) long-term effects. On the low side, much like DangitBobby noted, there's much less money available to either buy the business of someone interested in retiring and passing it along, or to start your own. The third side is that moneyed interests have captured government to an unprecedented degree—even before the current administration came in, with its "burn down everything that helps people and hand the ashes to the wealthy to sift through for loose change" policies. All the protections that should be stopping private equity from doing these things are reliant on government to step in and actually impose meaningful penalties for harming people and small businesses, and it has been systemically incapable of doing so for far too long.

50 points by impish9208 1y ago

Their 1993 warning was before the Neon scandal, the WorldCom scandal, the Madoff and other Ponzi schemes. It's a little late to assume accounting firms are 100% reliable

impish9208 1y ago

Gift link: https://www.wsj.com/articles/doctors-warn-accountants-of-private-equity-drain-on-quality-you-could-be-next-1be0f0fd?st=YDU38G https://www.wsj.com/articles/doctors-warn-accountants-of-pri...

quantified 1y ago

They will be next, and tough. The owners of the firms who get money on the sale are all that matters. In American capitalism, doctors are just cogs to make money, and accountants will be too.

JCattheATM 1y ago
At some point hopefully the US will catch up to other developed countries and introduced some much needed legislation so that is no longer the case.
- quantified 1y ago
  The issue is more cultural than legal, I think. This behavior is acceptable in more and more quarters.
  - lesuorac 1y ago
    I dunno, you don't see PE-run law-firms since you need legally need to be lawyer to run one. It doesn't seem that much of a stretch to me to require somebody to have expertise in the field that the company operates in. What to do about holding companies I'm not too sure, but not opposed to calling it anti-competitive and banning them.
- hnthrow90348765 1y ago
  Republicans will basically be undoing Democratic work from now on because that gets votes now, while skirting the law as much as possible with executive orders. Democrats may or may not do the same, but no one knows who the next generation of electable Democratic presidential candidates are. At 4 year intervals, this makes any serious empire building ventures (encouraged by legislation) very risky. We're basically coasting on inertia and USD dominance, and that is quite a lot of inertia, but Trump is doing his best to slam on the brakes.
  - monkeyelite 1y ago
    [flagged]
  - JCattheATM 1y ago
    It's a cycle that can't sustain, and will lead to the destruction of the US, if not as a country via civil war, then with it losing it's place on the world stage rapidly and extensively. The only solution is somehow to force or trick red state populations into learning what they need to so they can vote with information rather than beliefs, or getting rid of the electoral college so they can be disregarded entirely.
- monkeyelite 1y ago
  [flagged]
mistrial9 1y ago
fortunately, people make decisions outside of the Capitalism framework all the time.. those people include Doctors themselves. Think of Capitalism as a force of gravity in the system, but not the only one. Oversimplifying "america" mostly does not penetrate the topic as a real world system IMHO

djohnston 1y ago

I have a question someone can hopefully help me answer. I've heard this narrative for many years now - private equity buys a company and drives it to shit. Recently it was PE firms buying all the vets in an area. If that's indeed the case, wouldn't it make sense to hold out because eventually you'll get all the customers? Like, if there are 10 vet offices in the county, and PE firms buy 8 of them, over time won't everyone end up flocking to the 2 that held out?

nunez 1y ago
PE-owned vet clinics are cheaper due to economies of scale, and that's all that matters for most people.
devmor 1y ago
This doesn’t happen as often for the same reason that startups would rather flare out than build a sustainable business: greed. Most people would rather get rich quickly by selling out, instead of putting in effort to get rewarded far in the future.
- actionfromafar 1y ago
  Yes... that's one way of putting it, but I liked the sibling comments more. Another perspective on the same thing. The upshot of holding out isn't very great and may in fact get worse if MegaPetCo buys all your suppliers. It can be not so much greed as running for higher ground when the MegaPetCo tsunami comes to town.
newsclues 1y ago
Vertical orientation, so the hold outs still need to source per meds and foods and supplies from somewhere? Mega pet co owns the whole stack.
- loloquwowndueo 1y ago
  Is it perhaps integration instead of orientation?
1y ago

ivape 1y ago

Is the idea that an independent accounting firm would flag egregious money-making schemes by Hospitals? If both the Hospital and Accounting firm are owned by Private Equity, then there is no independent body with the right incentives to do this. Even so, I can't help but wonder why any accounting firm, even if independent, would antagonistically audit their customer (the Hospital). Feels like only a regulatory body should be involved in auditing to begin with. Which brings me to a Bloomberg headline from today: "How BlackRock's CEO Gets Paid Is Anyone's Guess" (To the tune of 37 million) https://www.bloomberg.com/opinion/articles/2025-05-07/how-blackrock-s-larry-fink-gets-paid-is-anyone-s-guess https://www.bloomberg.com/opinion/articles/2025-05-07/how-bl... Well, this might be one of those psychotic ways these animals get paid. So in this fucked up multiverse, PE executives run some scheme through a Hospital to generate more revenue, have their own Accounting audit it and give it the green-light, pocket the cash, and say "well, everything is dandy because it's been audited". At this point the comedy just writes itself.

triceratops 1y ago

Is the recent trend of private equity buying literally every business going - down to your local plumber - a sign of wealth inequality? Or would it have happened regardless?

DangitBobby 1y ago
I wish I could remember where I heard this, it's from some NPR podcast like Freakonimics or This American Life. Dentists would normally sell their private practice to an up-and-coming dentist that they know, but recent graduates are so mired in debt that they can't really afford the loan to buy a practice, so PE firms end up buying instead. Edit: > DUBNER: We did a series on private-equity consolidation in the pet-care industry, and we found a lot of problems there for employees and consumers. But we also learned something that seems to apply to a lot of the human healthcare industry. If you look at nursing homes, doctor’s offices, dentists offices, what we heard is that the founders of these offices and companies, when it’s time to retire, they might prefer to sell to one of their junior partners. That’s what often happened before private equity was around. But now those junior partners have so much debt from medical school or veterinary school or whatever that they can’t afford to buy the practice. So the only likely buyer is an outside investor like a private-equity firm. The P.E. firm is satisfying a real need there, but the resulting roll-ups or consolidations are often worse for existing employees and worse for consumers. Do you have any thoughts for how that might work differently? https://freakonomics.com/podcast/the-biden-policy-that-trump-hasnt-touched/ https://freakonomics.com/podcast/the-biden-policy-that-trump...
danaris 1y ago
Yes, it's definitely a sign of increasing inequality, on at least three fronts. On the high side, there's loads of money sloshing around with—especially since the end of ZIRP—no "safe" place to put it. They "need" ways to guarantee high returns over relatively short periods in order to justify their continued access to a never-ending supply of yachts that have other yachts docked inside them; vulture capitalism is a reliable way to do that for people with absolutely no scruples or understanding of (or care about) long-term effects. On the low side, much like DangitBobby noted, there's much less money available to either buy the business of someone interested in retiring and passing it along, or to start your own. The third side is that moneyed interests have captured government to an unprecedented degree—even before the current administration came in, with its "burn down everything that helps people and hand the ashes to the wealthy to sift through for loose change" policies. All the protections that should be stopping private equity from doing these things are reliant on government to step in and actually impose meaningful penalties for harming people and small businesses, and it has been systemically incapable of doing so for far too long.