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What does it mean in this context to be more intelligent and shrewd than the existing owners? Delivering better profit margins?

SoftTalker 13d ago
I mean, losing money is not sustainable. If a doctor or physician group isn't business savvy and can't earn a profit they will eventually go under. That's not good for the patient.
- cool_dude85 13d ago
  OK, but making money, though it may be less than a PE company would, is. Where do most doctor's offices fall?
  - csa 13d ago
    Most doctors make good money, but most who are good doctors could make much more. Simple example pitch that many general practitioners might consider using (based on local laws, of course): “Insurance covers C, Y, and Z. I can offer these additional services for A, B, and C that are not covered by insurance.” Where I live, you get a lot of this via “concierge doctors”, but that system can go far beyond basic concierge service, and people are willing to pay for top quality care.
csa 13d ago
> What does it mean in this context to be more intelligent and shrewd than the existing owners? Streamlining everything. Sometimes this is done in a bad faith way, but it’s often not difficult to do it in a good faith way. Some simple examples: - right-sizing staff (can be reducing, increasing, or changing roles) - improving marketing (e.g., simple things like customer reactivation, packaging the product/service better, or just plain, ol’ getting the word out better via stuff like before/after pics or success stories) - improving operations (e.g., better organization, better processes, better communication, better training, better logistics, etc.) > Delivering better profit margins? Improved profit margins are a byproduct of the things listed above.
- tavavex 13d ago
  You're putting the cart in front of the horse. Their incentive and their job isn't about 'streamlining' anything, let alone in a good-faith way, and that just so happens to deliver some extra cash on the side in a pleasant surprise. Their sole purpose is the profit, and they will try absolutely anything to get it. Sometimes it may accidentally produce good outcomes, but in general there's no rule or incentive to ensure that happens. They can do anything, and if there's anything to go off of, every entity I see desperately chase profit over all turns utterly evil. Being evil just deepens your toolbox for getting the only thing that matters in the world - money - so of course they tend to win out over anyone who still actually cares about the underlying business or customers.
- BrenBarn 13d ago
  In theory this is true, but in practice I am skeptical that it's generally possible to do this with generic "business" intelligence that is not accompanied by specific understanding of and genuine care for the actual substance of what the business does. That is, no matter how good you are at "business", you're not going to have a good hamburger stand unless you care about making good hamburgers. It's true that the importance of this varies from one business to another, but I don't see any particular tendency for PE to gravitate towards industries where it matters less. (Medicine is an example of an area where it would matter most.)
ChickeNES 13d ago
There's more than one form of intelligence, and being good at fixing people doesn't necessarily correlate with managing a business. As silly as it sounds, watching Shark Tank will really demonstrate that someone can have a legitimately great idea, but if they aren't business minded, it wont matter.

SoftTalker 13d ago

I mean, losing money is not sustainable. If a doctor or physician group isn't business savvy and can't earn a profit they will eventually go under. That's not good for the patient.

cool_dude85 13d ago
OK, but making money, though it may be less than a PE company would, is. Where do most doctor's offices fall?
- csa 13d ago
  Most doctors make good money, but most who are good doctors could make much more. Simple example pitch that many general practitioners might consider using (based on local laws, of course): “Insurance covers C, Y, and Z. I can offer these additional services for A, B, and C that are not covered by insurance.” Where I live, you get a lot of this via “concierge doctors”, but that system can go far beyond basic concierge service, and people are willing to pay for top quality care.

csa 13d ago

> What does it mean in this context to be more intelligent and shrewd than the existing owners? Streamlining everything. Sometimes this is done in a bad faith way, but it’s often not difficult to do it in a good faith way. Some simple examples: - right-sizing staff (can be reducing, increasing, or changing roles) - improving marketing (e.g., simple things like customer reactivation, packaging the product/service better, or just plain, ol’ getting the word out better via stuff like before/after pics or success stories) - improving operations (e.g., better organization, better processes, better communication, better training, better logistics, etc.) > Delivering better profit margins? Improved profit margins are a byproduct of the things listed above.

tavavex 13d ago
You're putting the cart in front of the horse. Their incentive and their job isn't about 'streamlining' anything, let alone in a good-faith way, and that just so happens to deliver some extra cash on the side in a pleasant surprise. Their sole purpose is the profit, and they will try absolutely anything to get it. Sometimes it may accidentally produce good outcomes, but in general there's no rule or incentive to ensure that happens. They can do anything, and if there's anything to go off of, every entity I see desperately chase profit over all turns utterly evil. Being evil just deepens your toolbox for getting the only thing that matters in the world - money - so of course they tend to win out over anyone who still actually cares about the underlying business or customers.
BrenBarn 13d ago
In theory this is true, but in practice I am skeptical that it's generally possible to do this with generic "business" intelligence that is not accompanied by specific understanding of and genuine care for the actual substance of what the business does. That is, no matter how good you are at "business", you're not going to have a good hamburger stand unless you care about making good hamburgers. It's true that the importance of this varies from one business to another, but I don't see any particular tendency for PE to gravitate towards industries where it matters less. (Medicine is an example of an area where it would matter most.)

ChickeNES 13d ago

There's more than one form of intelligence, and being good at fixing people doesn't necessarily correlate with managing a business. As silly as it sounds, watching Shark Tank will really demonstrate that someone can have a legitimately great idea, but if they aren't business minded, it wont matter.