12 ms·

Asset stripping is evil. I think we should have more regulations against asset stripping. How would those regulations be written, though? In my opinion, as a l

Asset stripping is evil. I think we should have more regulations against asset stripping. How would those regulations be written, though? In my opinion, as a lay person who reads the news, asset stripping seems to be a way of "hacking the system" - doing a series of things, individually permissible by the rules, to achieve personal gain at the cost of social harm. I think, we should forbid dumping negative externalities on people. But which step is the actual wrong?

cameldrv 1y ago
We shouldn’t have for profit hospitals.
- phkahler 1y ago
  I think by asset stripping the parent is including other plays. Private equity buys a company, sells the real-estate to their friends and leases it back to the company on a long term lease. Then after other shenanigans they IPO and dump the company back on the public. It's better than in the old days because they don't fire everyone and sell the assets. They may even make some positive changes, but the company now has to pay rent.
  - gruez 1y ago
    >I think by asset stripping the parent is including other plays. Private equity buys a company, sells the real-estate to their friends and leases it back to the company on a long term lease. Then after other shenanigans they IPO and dump the company back on the public. Your wording strongly implies you think there's something shady going on, but what's the actual issue here? It's a private company, after all. Minus the concern of minority shareholders getting screwed over by the transaction, there isn't anything obviously intrinsically wrong with restructuring the ownership structure of a company you own. If a given company is only limping along because it owns real estate and pays $0 in rent, arguably the right thing to do is let the company fold - creative destruction and all that.
    - tptacek 1y ago
      I didn't listen to the audio, just the teaser for it in this article, but my guess is they're not digging too much into the issue of hospital mismanagement and misallocation; in Chicago, we've got a lot of hospitals that are more or less slowly shutting down, not because anybody is doing anything shady, but simply because they aren't good and they're in areas with strong competition.
    - ceejayoz 1y ago
      “Creative destruction” isn’t as fun when it’s a large area’s main access to healthcare. We’re talking hospitals, not Red Lobster.
      - gruez 1y ago
        The same argument can be used to justify any keeping any sort of zombie business around. The local sawmill has been loss making for years, but shuttering it would mean losing the main source of jobs for the area. That's arguably worse than losing access to healthcare, because most people can survive without access to healthcare, but most can't survive a month without a paycheck. So why not keep it around? Maybe the local/state/federal government should chip in as well to keep it running? Of course, there's probably a reason why the business in question is faltering. Either it's being mismanaged, or the market conditions can't support the business any more. Letting it limp along might be the politically expedient thing, but it doesn't fix the underlying issue. Moreover, in the case of a market issue being the cause, not fixing it means there won't be competitors to take its place, which is basically a way to guarantee a "too big to fail" situation. To be clear, I'm not suggesting the area go without a hospital because the market conditions aren't right, it's that the government should fix the problem with rural hospitals (or whatever) rather than letting a bunch of zombie hospitals limp around.
        ceejayoz 1y ago
        It’s not that I don’t understand the free market laissez faire position. It’s that I find the position sociopathically tone deaf.
  - SoftTalker 1y ago
    I'm reminded of the poem. "You knew I was a snake when you picked me up."
- johnebgd 1y ago
  Socialized hospitals have waiting lists while for profit hospitals have health insurance companies denying coverage. The problem is the demand outstrips the supply and you end up with some form of rationing of care, this is not a problem with profit motive.
  - FirmwareBurner 1y ago
    >while for profit hospitals have health insurance companies denying coverage At least you immediately get the treatment you need, in the case of the latter.
    - fisherjeff 1y ago
      Hmmm, I’m not sure my (very much for-profit) primary care provider is aware of this rule
      - FirmwareBurner 1y ago
        Care to elaborate?
        fisherjeff 1y ago
        I’m lucky to schedule an appointment of any kind less than 8 weeks out, unless there’s a cancellation. Recently, it took me like six weeks to get an MRI to diagnose a broken pelvis. I live in a rural area and there’s a hospital system here that owns basically all the providers - everything is all remarkably expensive and booked out way into the future. There’s a smaller independent provider that I recently looked into but they’re scheduling new patients out by more than a year!
        FirmwareBurner 1y ago
        > Recently, it took me like six weeks to get an MRI to diagnose a broken pelvis. Bruh, where I am in European socialized medicine land, six weeks wait for an MRI is rookie numbers. How about 6-12 months. Sure, you might die until you get your turn, but at least it's "free"*. *) paid form everyone's taxes
- tptacek 1y ago
  Why stop there? Should we have for-profit grocery stores?
  - hvb2 1y ago
    Healthcare is a concept that few people wish to compromise on. It's also an area that most people lack the background to make educated decisions for. For a grocery store, you're talking about 'a commodity' with many suppliers all supplying an equivalent product. So changing grocery stores isn't a big deal. So if one grocery store charges a fortune, you just go to a different one. For healthcare, how often do you visit a hospital and when you do, how much do you care about price since you cannot tell the difference in quality beforehand
    - tptacek 1y ago
      Price shopping for hospitals is very much a thing. Read up on surgical centers! Meanwhile: food is a much more fundamental human need than medical care is.
      - hvb2 1y ago
        > Price shopping hospitals is a very much a thing In the US, sure. Where else? Because it's so expensive that literally one admission can bankrupt you Food is a more fundamental need. It's also available in many more places and easy to compare prices. Say you need a knee replaced. And one place is 1000$ less expensive, that's where you go? Or do you now read reviews on the doctor etc etc. When was the last time you read a review on a grocery store? The stakes are very different in cost and outcome
        tptacek 1y ago
        It's ironic that you managed to pick a surgery that the US is actually capable of delivering at lower cost than Europe (generally, our procedure costs are integer multiples higher than Europe, because of the doctor cartel). Most Americans getting a knee replacement will "pay" more than Europeans pay (nominally, through their employer-provided health insurance), but price-shopping Americans can significantly outdo Europe by getting that procedure done at a surgical center.
- gruez 1y ago
  Except, blaming for-profit hospitals only goes so far. Only 17% of hospitals are actually for profit. https://www.kff.org/health-costs/issue-brief/hospital-margins-rebounded-in-2023-but-rural-hospitals-and-those-with-high-medicaid-shares-were-struggling-more-than-others/ https://www.kff.org/health-costs/issue-brief/hospital-margin...
- kgwgk 1y ago
  Most hospitals are non-profit. It's not completely clear what the public gets in exchange of that $28 billion tax exemption.
- mindslight 1y ago
  Please explain what exactly that would change about this situation. The entire point is most of the surplus from the hospital is being extracted as real estate rent. The hospital itself doesn't need to post a profit in order for the overall scheme to be profitable for the perpetrators. Furthermore as far as getting into this situation, administrators of a non-profit are just as capable of asset stripping to post good numbers in short term, and self-dealing to enrich themselves long term.
- freefaler 1y ago
  May be we should have more supply, less regulation & more open information on pricing. (in the US you can't get a quote on your medical bill beforehand in many places) Currently the hospitals are working in an environment where the market forces can't work properly. That's why the prices of the medical services are so expensive. No competition, limited supply, over regulation, incentives between the hospitals and the insurers are bad. The argument of "it's too important to be for profit" is wrong, because food is "for profit" and it's not perfect, but the market forces the big retailers to work with 2-4% margin. Hospitals aren't like that. For profit hospitals work with 14% average operating profit margin (3-5 times higher) because of the regulated industry. This is a classical microeconomics problem of supply and demand. Markets are good at that to drive the price down. For people who can't afford it the government may redistribute the taxes from the healthy people to pay for treatment. The cheaper is the treatment, the better it will be for all.
  - nobody9999 1y ago
    >This is a classical microeconomics problem of supply and demand. Markets are good at that to drive the price down. For people who can't afford it the government may redistribute the taxes from the healthy people to pay for treatment. While it is something of a trope, I'm not sure I want to be (or would be able to do so) doing price comparisons between hospitals (or ambulances for that matter) as my internal organs ooze onto the pavement after being struck by a semi truck and dragged 40 meters. That's the primary issue with using price signals in a healthcare setting. Especially in a system where the recipient of services doesn't actually pay the total costs out-of-pocket for those services. Which creates perverse incentives for both the payer and the provider. And since that's not likely to change anytime soon, a single-payer system makes a lot of sense. Non-emergency treatment/care not related to any emergency care would definitely benefit from increased supply and more information. What, specific regulations would you like to see removed from hospital settings? I want to emphasize that this is not a rhetorical question.
    - freefaler 1y ago
      The supply of doctors and nurses (invite from abroad), certification of medical equipment & FDA drug approval (if it's certified in a normal country do a very lightweight approval process). If the patients want it, allow for more risk on his side. For drug prices, the current system is also very, very broken. Remove the PBMs from the drug supply and at least there allow for market forces to work. It's a classical problem of resource allocation that can't be avoided with just good intentions. Medical tourism in countries like Israel & Thailand shows that this can be allocated through market forces.
autobodie 1y ago
Who cares how they would be written? They would never get passed. It's called capitalism for a reason - capital calls the shots. Why does nobody understand this?
- SimianSci 1y ago
  This is the thing I think alot of people dont understand. Capitalism is not about people and their interests, its about capital, its perfectly willing to sacrifice social good, people's lives, etc. all in pursuit of Capital and its interests. Until people start to wisen up to this, we will continue to hear stories of organizations doing clearly evil things to serve their bottom line. The opioid crisis being caused by pharmaceudical companies in America being a clear example of this.
- kzrdude 1y ago
  So you mean that there is just one rule, capital calls the shots. Then why do we even have laws and regulation? I think that every market needs regulation to work well. Different rules for different markets, but they need regulation to keep participants on relatively equal footing, for example to avoid cartels.
toast0 1y ago
The thing is, asset stripping is how failing companies finance continuing operations. If you outlaw sale and lease back, businesses and hospitals will fail sooner, but with their real estate intact. At least until they figure out that they could move into a rental and sell their existing facility, but moving facilities is very expensive for hospitals, so they'll probably not be able to afford that. For hospitals, especially rural hospitals, I think trying to run them for economic gain just doesn't work. They're expensive, they have obligations to provide expensive care without promise of payment in many cases. Municipal hospitals seem to make a lot of sense to me, although the same communities that are having trouble with hospitals failing would likely have trouble paying for a municipal hospital as well.
- delusional 1y ago
  > For hospitals, especially rural hospitals, I think trying to run them for economic gain just doesn't work. In current day America it doesn't seem like anything useful is compatible with making money. From the outside, it looks like you've entirely divorced money from common good. It is possible to make hospitals profitable, but it requires you to take control over what sorts of things you wish to make a profit.
  - tptacek 1y ago
    You can just look to any well-run hospital chain to see organizations doing extremely valuable work lucratively. But many of the largest hospital chains are non-profit; in Chicago, Rush, Northwestern, UChicago, and Edwards-Elmhurst --- all of the largest chains --- are non-profit. Non-profit and rapidly expanding.
- RainyDayTmrw 1y ago
  I'm not sure if I believe that story, though. Look at Sears, for example. Yes, they mostly missed the wave on e-commerce, and were on a decline ever since then. But are you really claiming Eddie Lamport didn't do anything wrong that worsened the already bad trajectory?
  - 1y ago
deleted 1y ago
[deleted]
JumpCrisscross 1y ago
Asset stripping is fine. If a chain restaurant doesn’t work without its land use being subsidised by incumbency, the land probably has a better use. (Nobody is asset stripping beloved single-location family-owned restaurants). The problem is hospitals run for profit don’t make sense. The profit motive is the problem. Not how it is pursued.

cameldrv 1y ago

We shouldn’t have for profit hospitals.

phkahler 1y ago
I think by asset stripping the parent is including other plays. Private equity buys a company, sells the real-estate to their friends and leases it back to the company on a long term lease. Then after other shenanigans they IPO and dump the company back on the public. It's better than in the old days because they don't fire everyone and sell the assets. They may even make some positive changes, but the company now has to pay rent.
- gruez 1y ago
  >I think by asset stripping the parent is including other plays. Private equity buys a company, sells the real-estate to their friends and leases it back to the company on a long term lease. Then after other shenanigans they IPO and dump the company back on the public. Your wording strongly implies you think there's something shady going on, but what's the actual issue here? It's a private company, after all. Minus the concern of minority shareholders getting screwed over by the transaction, there isn't anything obviously intrinsically wrong with restructuring the ownership structure of a company you own. If a given company is only limping along because it owns real estate and pays $0 in rent, arguably the right thing to do is let the company fold - creative destruction and all that.
  - tptacek 1y ago
    I didn't listen to the audio, just the teaser for it in this article, but my guess is they're not digging too much into the issue of hospital mismanagement and misallocation; in Chicago, we've got a lot of hospitals that are more or less slowly shutting down, not because anybody is doing anything shady, but simply because they aren't good and they're in areas with strong competition.
  - ceejayoz 1y ago
    “Creative destruction” isn’t as fun when it’s a large area’s main access to healthcare. We’re talking hospitals, not Red Lobster.
    - gruez 1y ago
      The same argument can be used to justify any keeping any sort of zombie business around. The local sawmill has been loss making for years, but shuttering it would mean losing the main source of jobs for the area. That's arguably worse than losing access to healthcare, because most people can survive without access to healthcare, but most can't survive a month without a paycheck. So why not keep it around? Maybe the local/state/federal government should chip in as well to keep it running? Of course, there's probably a reason why the business in question is faltering. Either it's being mismanaged, or the market conditions can't support the business any more. Letting it limp along might be the politically expedient thing, but it doesn't fix the underlying issue. Moreover, in the case of a market issue being the cause, not fixing it means there won't be competitors to take its place, which is basically a way to guarantee a "too big to fail" situation. To be clear, I'm not suggesting the area go without a hospital because the market conditions aren't right, it's that the government should fix the problem with rural hospitals (or whatever) rather than letting a bunch of zombie hospitals limp around.
      - ceejayoz 1y ago
        It’s not that I don’t understand the free market laissez faire position. It’s that I find the position sociopathically tone deaf.
- SoftTalker 1y ago
  I'm reminded of the poem. "You knew I was a snake when you picked me up."
johnebgd 1y ago
Socialized hospitals have waiting lists while for profit hospitals have health insurance companies denying coverage. The problem is the demand outstrips the supply and you end up with some form of rationing of care, this is not a problem with profit motive.
- FirmwareBurner 1y ago
  >while for profit hospitals have health insurance companies denying coverage At least you immediately get the treatment you need, in the case of the latter.
  - fisherjeff 1y ago
    Hmmm, I’m not sure my (very much for-profit) primary care provider is aware of this rule
    - FirmwareBurner 1y ago
      Care to elaborate?
      - fisherjeff 1y ago
        I’m lucky to schedule an appointment of any kind less than 8 weeks out, unless there’s a cancellation. Recently, it took me like six weeks to get an MRI to diagnose a broken pelvis. I live in a rural area and there’s a hospital system here that owns basically all the providers - everything is all remarkably expensive and booked out way into the future. There’s a smaller independent provider that I recently looked into but they’re scheduling new patients out by more than a year!
        FirmwareBurner 1y ago
        > Recently, it took me like six weeks to get an MRI to diagnose a broken pelvis. Bruh, where I am in European socialized medicine land, six weeks wait for an MRI is rookie numbers. How about 6-12 months. Sure, you might die until you get your turn, but at least it's "free"*. *) paid form everyone's taxes
tptacek 1y ago
Why stop there? Should we have for-profit grocery stores?
- hvb2 1y ago
  Healthcare is a concept that few people wish to compromise on. It's also an area that most people lack the background to make educated decisions for. For a grocery store, you're talking about 'a commodity' with many suppliers all supplying an equivalent product. So changing grocery stores isn't a big deal. So if one grocery store charges a fortune, you just go to a different one. For healthcare, how often do you visit a hospital and when you do, how much do you care about price since you cannot tell the difference in quality beforehand
  - tptacek 1y ago
    Price shopping for hospitals is very much a thing. Read up on surgical centers! Meanwhile: food is a much more fundamental human need than medical care is.
    - hvb2 1y ago
      > Price shopping hospitals is a very much a thing In the US, sure. Where else? Because it's so expensive that literally one admission can bankrupt you Food is a more fundamental need. It's also available in many more places and easy to compare prices. Say you need a knee replaced. And one place is 1000$ less expensive, that's where you go? Or do you now read reviews on the doctor etc etc. When was the last time you read a review on a grocery store? The stakes are very different in cost and outcome
      - tptacek 1y ago
        It's ironic that you managed to pick a surgery that the US is actually capable of delivering at lower cost than Europe (generally, our procedure costs are integer multiples higher than Europe, because of the doctor cartel). Most Americans getting a knee replacement will "pay" more than Europeans pay (nominally, through their employer-provided health insurance), but price-shopping Americans can significantly outdo Europe by getting that procedure done at a surgical center.
gruez 1y ago
Except, blaming for-profit hospitals only goes so far. Only 17% of hospitals are actually for profit. https://www.kff.org/health-costs/issue-brief/hospital-margins-rebounded-in-2023-but-rural-hospitals-and-those-with-high-medicaid-shares-were-struggling-more-than-others/ https://www.kff.org/health-costs/issue-brief/hospital-margin...
kgwgk 1y ago
Most hospitals are non-profit. It's not completely clear what the public gets in exchange of that $28 billion tax exemption.
mindslight 1y ago
Please explain what exactly that would change about this situation. The entire point is most of the surplus from the hospital is being extracted as real estate rent. The hospital itself doesn't need to post a profit in order for the overall scheme to be profitable for the perpetrators. Furthermore as far as getting into this situation, administrators of a non-profit are just as capable of asset stripping to post good numbers in short term, and self-dealing to enrich themselves long term.
freefaler 1y ago
May be we should have more supply, less regulation & more open information on pricing. (in the US you can't get a quote on your medical bill beforehand in many places) Currently the hospitals are working in an environment where the market forces can't work properly. That's why the prices of the medical services are so expensive. No competition, limited supply, over regulation, incentives between the hospitals and the insurers are bad. The argument of "it's too important to be for profit" is wrong, because food is "for profit" and it's not perfect, but the market forces the big retailers to work with 2-4% margin. Hospitals aren't like that. For profit hospitals work with 14% average operating profit margin (3-5 times higher) because of the regulated industry. This is a classical microeconomics problem of supply and demand. Markets are good at that to drive the price down. For people who can't afford it the government may redistribute the taxes from the healthy people to pay for treatment. The cheaper is the treatment, the better it will be for all.
- nobody9999 1y ago
  >This is a classical microeconomics problem of supply and demand. Markets are good at that to drive the price down. For people who can't afford it the government may redistribute the taxes from the healthy people to pay for treatment. While it is something of a trope, I'm not sure I want to be (or would be able to do so) doing price comparisons between hospitals (or ambulances for that matter) as my internal organs ooze onto the pavement after being struck by a semi truck and dragged 40 meters. That's the primary issue with using price signals in a healthcare setting. Especially in a system where the recipient of services doesn't actually pay the total costs out-of-pocket for those services. Which creates perverse incentives for both the payer and the provider. And since that's not likely to change anytime soon, a single-payer system makes a lot of sense. Non-emergency treatment/care not related to any emergency care would definitely benefit from increased supply and more information. What, specific regulations would you like to see removed from hospital settings? I want to emphasize that this is not a rhetorical question.
  - freefaler 1y ago
    The supply of doctors and nurses (invite from abroad), certification of medical equipment & FDA drug approval (if it's certified in a normal country do a very lightweight approval process). If the patients want it, allow for more risk on his side. For drug prices, the current system is also very, very broken. Remove the PBMs from the drug supply and at least there allow for market forces to work. It's a classical problem of resource allocation that can't be avoided with just good intentions. Medical tourism in countries like Israel & Thailand shows that this can be allocated through market forces.

autobodie 1y ago

Who cares how they would be written? They would never get passed. It's called capitalism for a reason - capital calls the shots. Why does nobody understand this?

SimianSci 1y ago
This is the thing I think alot of people dont understand. Capitalism is not about people and their interests, its about capital, its perfectly willing to sacrifice social good, people's lives, etc. all in pursuit of Capital and its interests. Until people start to wisen up to this, we will continue to hear stories of organizations doing clearly evil things to serve their bottom line. The opioid crisis being caused by pharmaceudical companies in America being a clear example of this.
kzrdude 1y ago
So you mean that there is just one rule, capital calls the shots. Then why do we even have laws and regulation? I think that every market needs regulation to work well. Different rules for different markets, but they need regulation to keep participants on relatively equal footing, for example to avoid cartels.

toast0 1y ago

The thing is, asset stripping is how failing companies finance continuing operations. If you outlaw sale and lease back, businesses and hospitals will fail sooner, but with their real estate intact. At least until they figure out that they could move into a rental and sell their existing facility, but moving facilities is very expensive for hospitals, so they'll probably not be able to afford that. For hospitals, especially rural hospitals, I think trying to run them for economic gain just doesn't work. They're expensive, they have obligations to provide expensive care without promise of payment in many cases. Municipal hospitals seem to make a lot of sense to me, although the same communities that are having trouble with hospitals failing would likely have trouble paying for a municipal hospital as well.

delusional 1y ago
> For hospitals, especially rural hospitals, I think trying to run them for economic gain just doesn't work. In current day America it doesn't seem like anything useful is compatible with making money. From the outside, it looks like you've entirely divorced money from common good. It is possible to make hospitals profitable, but it requires you to take control over what sorts of things you wish to make a profit.
- tptacek 1y ago
  You can just look to any well-run hospital chain to see organizations doing extremely valuable work lucratively. But many of the largest hospital chains are non-profit; in Chicago, Rush, Northwestern, UChicago, and Edwards-Elmhurst --- all of the largest chains --- are non-profit. Non-profit and rapidly expanding.
RainyDayTmrw 1y ago
I'm not sure if I believe that story, though. Look at Sears, for example. Yes, they mostly missed the wave on e-commerce, and were on a decline ever since then. But are you really claiming Eddie Lamport didn't do anything wrong that worsened the already bad trajectory?
- 1y ago

deleted 1y ago

[deleted]

JumpCrisscross 1y ago

Asset stripping is fine. If a chain restaurant doesn’t work without its land use being subsidised by incumbency, the land probably has a better use. (Nobody is asset stripping beloved single-location family-owned restaurants). The problem is hospitals run for profit don’t make sense. The profit motive is the problem. Not how it is pursued.