3 ms·

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

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.
      - gruez 1y ago
        >It’s that I find the position sociopathically tone deaf. So is closing down the local sawmill and putting hundreds/thousands out of a job.
        ceejayoz 1y ago
        Except this is more like closing every job in an area, and not for lack of demand.
    - const_cast 1y ago
      Healthcare is not, and will never be, a free market. Applying free market dynamics to it just does not work. It's bad reasoning. People are quick to jump to free market reasoning because it's quick, easy, and requires little to no thought or nuance. But step number 1 is you have to prove said market is a free market. And, if it's not, you then have to prove forcing it to be a free market is not only possible, but beneficial for society as a whole. Nobody does that though, because it's hard. So they just hope if they skip the most fundamental part of free market reasoning that nobody would notice. No, we notice.
- mindslight 1y ago
  That might be fine if there were extremely strong regulations about the staffing/stocking/capabilities that must be provided as long as they continue to operate. For example the landlord should be getting notice that the hospital will not be paying the full amount of its rent before there is any reduction in hospital capabilities or effectiveness. And if the landlord wants to evict, that should probably require something like six months to a year's notice to allow notice to the public and orderly shutdown or moving. But it probably just makes more sense to prevent the development of such wildly opposed incentives that necessitate that kind of highly detailed mediation. For example hospitals are public-facing institutions, they shouldn't be primarily operating out of rented buildings like some vape shop.
- phkahler 1y ago
  >> Your wording strongly implies you think there's something shady going on, but what's the actual issue here? There is a distinction between shady and illegal. What they do is legal. Doing it behind closed doors while the company is privately owned and then having an IPO is shady.
SoftTalker 1y ago
I'm reminded of the poem. "You knew I was a snake when you picked me up."

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.
    - gruez 1y ago
      >It’s that I find the position sociopathically tone deaf. So is closing down the local sawmill and putting hundreds/thousands out of a job.
      - ceejayoz 1y ago
        Except this is more like closing every job in an area, and not for lack of demand.
  - const_cast 1y ago
    Healthcare is not, and will never be, a free market. Applying free market dynamics to it just does not work. It's bad reasoning. People are quick to jump to free market reasoning because it's quick, easy, and requires little to no thought or nuance. But step number 1 is you have to prove said market is a free market. And, if it's not, you then have to prove forcing it to be a free market is not only possible, but beneficial for society as a whole. Nobody does that though, because it's hard. So they just hope if they skip the most fundamental part of free market reasoning that nobody would notice. No, we notice.
mindslight 1y ago
That might be fine if there were extremely strong regulations about the staffing/stocking/capabilities that must be provided as long as they continue to operate. For example the landlord should be getting notice that the hospital will not be paying the full amount of its rent before there is any reduction in hospital capabilities or effectiveness. And if the landlord wants to evict, that should probably require something like six months to a year's notice to allow notice to the public and orderly shutdown or moving. But it probably just makes more sense to prevent the development of such wildly opposed incentives that necessitate that kind of highly detailed mediation. For example hospitals are public-facing institutions, they shouldn't be primarily operating out of rented buildings like some vape shop.
phkahler 1y ago
>> Your wording strongly implies you think there's something shady going on, but what's the actual issue here? There is a distinction between shady and illegal. What they do is legal. Doing it behind closed doors while the company is privately owned and then having an IPO is shady.

SoftTalker 1y ago

I'm reminded of the poem. "You knew I was a snake when you picked me up."