> suggesting that less regulation would make healthcare better?
No, but more competition would. If we want to have private healthcare, we have to actually let free markets work. Our current system is the worst of both worlds.
I think they're pointing out that heavily regulated industries are very easy to fall prey to regulatory capture, which benefits incumbents at the expense of users and those trying to enter the industry from outside. Healthcare in the US is nowhere close to a free market, so it seems perfectly reasonable to question the GP if it's asked in good faith (it's not).
> You can’t even build a hospital ... without government permission.
You are talking about Certificates of Need which are investigations to show that an area needs a new facility...
The concept of a CoN was lobbied for by hospitals and healthcare providers who wanted "guarantees" of profits before they'd commit to building new facilities. The CoN process helps existing facilities get a say in whether a new hospital should be allowed in the area. The government itself generally doesn't care.
The most profitable companies can afford the most security. It would probably work to some extent. I imagine it would mostly be for defensive purposes and to protect employees but you never know.
Why would companies that claim their own monopolies on violence and have no laws to answer to other than their own allow customers to do so? What's to stop companies from blacklisting such customers or collaborating to fix prices?
What's being described here is what anarcho-capitalism and pure free markets always devolve into - the mafia. You don't get to just shop around for a better mafia if you don't like the one running your town.
> most profitable companies can afford the most security. It would probably work to some extent.
Monopoly on violence requires enforcing that monopoly. Such a firm would also stomp out its competition. You’re describing government-run healthcare by an unelected government.
> You’re describing government-run healthcare by an unelected government.
Government run healthcare, the healthcare where you just go to the hospital and then you just get treated.. (?) Government run healthcare does not have a great reputation for doing cutting-edge health care, but on the other hand it does have a good reputation for taking care of people for basic needs. How is that describing a monopoly on violence? Repairing broken bones is the same as breaking bones? (If the implied argument is that health care is so heavily rationed, that people are left untreated, tantamount to violence, I would beg you to look at the statistics of which countries have more complications due to untreated illnesses (hint, the US is high on that list [1]; or we could look at health outcomes per dollar spent, US is very far down on that list, US spends multiples of other countries for the same outcome))
I would think a more apt description and example of a monopoly on violence would be narco-states. Otherwise the example is a well functioning government, and that is demonstrated in the police force and judicial system (not healthcare).
When considering the absence of the government monopoly on violence, drug markets are the closest thing there is to a true free-market. And yes, there contract enforcement is contingent upon a bunch of people standing behind you with guns.
Thanks for considering the response. I did not quite miss that bit, it's a bit of a tangled web of nuances. Ultimately, I don't think it matters whether a government provides healthcare was elected or not relative to that _not_ being an example of government exerting a monopoly on violence.
For the good track record, I'm referring to governments like the UK, Norway, France & Canada that all have better health outcomes compared to the privatized healthcare system of the US. The US system tends to stand out for the very specialized cutting edge (and super expensive) procedures; though you still have to overcome a lot of accessibility problems to get that. At present day, if you break a bone, have a child [1], need to be in hospital for a few days - generally you're better off not in the US
[1] "Despite spending less on coverage, France has comparable or even better health care outcomes than the United States. The United States has a higher rate of infant mortality. In France nearly four children die out of every 1000 live births. In the U.S. that number is closer to six." https://healthchoiceofmichigan.com/lectorium/MHzUCToycks
[2] https://www.brookings.edu/wp-content/uploads/2016/06/dutton.... This resource sites that France was ranked #1 back in 2001. While the US might have improved in that time, it goes to show it has been decades where the US is not the leader in healthcare. This implies that on average and for at least a couple decades running now, there are better outcomes in other countries (than the US). The dependent variable does seem to be how healthcare is financed, payed for, and how the profit incentive compares between those different places.
The most pure form of free-market is a black market. Without any government, the free market does not have a mechanism to prevent monopolies (AKA absolute winners). Further, many markets do not even exist without the government. EG: there is no Tesla without the department of Energy [1]. The housing market would be totally different without Freddie & Fannie Mae, the banking system would also be totally different without FDIC insurance.
Capitalism creates bubbles & winners (aka monopolies). Government has to be involved to keep an even playing field and to smooth out the bubbles. No industry in the US has had no government involvement. All industries are involved with government in some form - if only to enforce contract law, or for more physical matters like using public roads, buying electricity from government run electrical companies, benefitting regulation that requires phone providers to provide service, etc..
> "When health systems buy hospitals, they generally do not use borrowed money," said Song, who is also an internal medicine physician at Mass General. "In contrast, the classic private equity buyout uses a small amount of cash, but a large amount of debt."
This is a red herring. Health systems have different metrics for success than "the market". The former, ideally balances QoC with costs. The latter by definition only cares about ROI in terms of profits (either from revenue or from playing hot potato with other buyers). There's no reasonable argument why we should expect private equity to result in anything but a degradation of QoC if it doesn't have a considerable negative impact on profitability or resale value (and that's even ignoring situations in which a loss may be desirable or acceptable).
Seems obvious. Private equity is all about sacrificing everything on the altar of cost cutting, quality be damned. Why should we be surprised they do the same to the hospitals they buy?
It’s pretty clear to me that the overriding economic issue of our time is how do we systematically realign delivering quality and efficiency with profits. It’s pretty obvious that there are major breakdowns in both the current practices of laissez-faire and of regulation. Its seems to be an exception when a company delivers on all three of quality, efficiency, and profits.
> how do we systematically realign delivering quality and efficiency with profits.
Free entry into the market, along with competition, are the free market forces that naturally balance those attributes over time.
Keep in mind that within a given market, there can be multiple different balances at once, depending on the varying needs and priorities of the buyers and sellers involved.
> It’s pretty obvious that there are major breakdowns in both the current practices of laissez-faire and of regulation.
Even if it may be somewhat freer than in places like Canada or the UK, for example, the US health care sector shouldn't be considered a real free market or laissez-faire in any meaningful way.
The US health care sector is highly regulated. This significantly reduces competition, and also makes it extremely costly and difficult for new entrants to participate in the markets.
Regulation-imposed distortions that decrease competition and impede market entry should be expected to result in the inefficiencies and other problems we see.
Fixing the problem is rather simple: remove the regulations, allow free market entry and competition again, and put the onus back on market participants to choose for themselves what's best for them and their own particular situations.
Except that, in basically every other developed nation, healthcare is _more_ regulated, if not nationalized, and has better performance for substantially lower cost.
The invisible hand(job) can't save you from areas where there is no significant profit to be made. In many cases, it's most cost effective to simply let people die. That's the problem with focusing exclusively on profit motives in healthcare.
> Except that, in basically every other developed nation, healthcare is _more_ regulated, if not nationalized, and has better performance for substantially lower cost.
The various provincial public health care systems in Canada are generally seen as having atrocious performance, despite consuming massive amounts of taxpayer resources each year.
Keep in mind that many Canadians also have costly private insurance to help pay for the numerous common exams, procedures, treatments, prescriptions, etc., that aren't covered by the public systems.
For Canadians with the means to do so, it's quite common for them to seek medical treatment in the US, even if doing so is financially costly.
Going to the US is often the only practical way for Canadians to receive health care services in a timely and effective manner.
> Fixing the problem is rather simple: remove the regulations, allow free market entry and competition again, and put the onus back on market participants to choose for themselves what's best for them and their own particular situations.
This is a statement that cannot be farther from the truth.
There is a great asymmetry of information and a high pressure situation that leads to difficulty in researching and deciding on the best choice. It is a system that, without regulation, leads to exploitation.
The regulations exist because of the abuses, because of the immoral behavior it caused without them.
The only motivation to remove them is a profit motive. Avarice at the sake of lives. It is not 'regulations' that are a problem, but the immoral avarice living at the heart of healthcare in the US.
how do we systematically realign delivering quality and efficiency with profits
We don't. We should just acknowledge that certain sectors of the economy (including healthcare and education) are fundamentally incompatible with private profit. These sectors should be ring-fenced with their own managed budgets and money flowing out of the system should be subject to 100% tax rate.
In a world of so many distractions, what's not a surprise?
Also, I think unless people are trained to question everything, they tend to flow with the dominant narrative. Private equity makes health care more efficient!
I'd love to know how to get people to focus on potential problems and ask questions.
"After a hospital was acquired by private equity, admitted Medicare patients had a 25% increase in hospital-acquired complications, compared with patients admitted before acquisition. Patients also had 27% more falls and 38% more bloodstream infections caused by central lines, which are temporary surgically inserted ports that allow easy intravenous access for patients receiving repeated drug infusions or other treatments.
The increase was seen despite private equity hospitals' placing 16% fewer central lines than before the buyout."
I am not sure who the private equity firms are, but I thought it was alarming when insurers started purchasing hospitals, urgent care facilities and even your standard family med doc, as they would be negotiating with themselves on how much profit they could make off each appointment. But I didn't consider lower standards when it comes to patient care, this adds a whole different dimension.
Water is a monopoly right? Seems obvious that privatizing a monopoly doesn't help, because there's no competition incentive to keep prices down and service up.
I sometimes think the "anti-government run anything" mantra is just people who are easily swayed by propaganda reciting a line. It's easy to take singular examples of government failure and write articles claiming that everything must be owned by private equity because government is dysfunctional.
But do you know what? I used to pay 1/4 the price for electricity when i lived in an area with a local county run power company compared to my new nearby location that has PG&E as the only option. As in government run utilities were literally 1/4 the price per kwh and yet i'm supposed to buy into this "GOVERNMENT IS INEFFICIENT LOL COMMUNISM" propaganda that just doesn't appear true in the slightest. I mean this is consistent across the board.
I know the baby boomer generation were vulnerable to this anti-socialism propaganda but can we please start looking at things objectively and push back against this privatization that is almost always a way for politicians to enrich themselves. Sigh.
The government is less efficient at serving its stake holders than for-profit corporations.
The government creates the conditions for PGE to be so bad. I’m defecting from the grid this year, PGE’s high prices mean my s system will pay for itself in less than a year and will likely be more reliable.
battery and solar companies saved me from PGE and they can save you. The government perhaps can but likely won’t. Extrapolate for yourself what this means about the world and what organizations should command the most resources.
Seems a bit passive no? The government has a job, but your way of handling it is the opposite of holding it accountable. Government is made of people and they will be as inefficient as allowed to be.
The government told PG&E not to fix its broken ass infrastructure and cause a catastrophic fire? I think if you examine the historical record, you will find that the opposite occurred. The government told PG&E not to have 100-year-old infrastructure in fire prone areas, and PG&E decided to send dividends to its hedge fund owners instead of doing so.
My township recently sold my local sewer line to a private company, after privatizing my water line to the same company. Interestingly, there was a major scandal a few years ago where the private company had allowed grey water to mix with the fresh water running to everybody's tap, and a few people got sick. There seemed to be a major public outcry but the company did not pay a price for the error, and were rewarded with the sewer business. As someone who maintains a SaaS business, this seemed unforgivable to me, the equivalent of my company failing in their one job, to keep the servers online. At the same time, my water bill has just about doubled, and my sewer bill has now gone to be around three times. I now pay 4.5 times what I did at my old residence with public utilities, for the exact same service. Is everybody on the take?
I think the anti-government everything must be privatized thing is pushed because it's an opportunity to divert large flows of money into wealthy peoples pockets. The head of a publicly run company might make as much as a sr tech bro. The head of a privatized one can divert tens of millions a year.
Same as attempts to privatize social security. You got a cash flow of $1.4T/year and it drives the lords of capital bonkers they can't get their hands on it.
Hospitals are a monopoly too, when you have an emergency and need care now, you can't compare prices or get quotes for the care, as you don't know even what you will need
This is not well-known but the vast majority of hospital visits are non-emergency.
People used to have choice but now due to 1950s tax code, your employer chooses a health conglomerate which chooses an insurance company which influences the billing allowances which influences the hospital profitability which is now so complicated that often only PE firms are willing to take the investment risk.
The incentives and market feedback is now so distorted that there is little to no signal. Healthcare in the US is often used as an example of failed free markets, but it is very far from a free market.
It's still one of the most deregulated, most bloated and inefficient systems in the whole world, delivering the worst health outcomes across the G7-States.
Everywhere else in the world tight-controlled and regulated Healthcaresystems deliver far better quality. It's one of the cases where you need a regulated market, not a free one
American lifestyles especially in certain states are generally not conducive to good outcomes but the US healthcare system itself is still generally world-renowned for cutting edge procedures.
Analyzing from a cost POV it's quite bad, but in many ways healthcare is the ultimate marginal good so people are willing to spend what they have.
On a population level it does.
Higher children mortality than most developing countries and worst life expectancy in G7 can't only be contributed to bad lifestyle.
It's also a huge part of not being able to access care, and that's not the cutting edge care, it's cheap basic care
No one wants to learn the lesson that while government administration of some things might be "inefficient", any efficiencies brought about by privatization will be turned into margins by the private entity rather than savings to the end customers. Private entities need to maintain margins and will cut service to maintain them.
> Private entities need to maintain margins and will cut service to maintain them
This is a false dichotomy. Public v private is so often framed as a political agency versus free-market bonanza. In reality, we have independent agencies and public-private partnerships. But on the private side, we also co-operatives, a model which seems well-suited for community hospitals.
“If the public health goal is to improve hospital care, then focusing on things like for-profit or nonprofit status is a distraction” [1].
> Taking "profit" from keeping people "not dead" seems as close to extortion
Modern medicine is expensive. For profit or not, expenses must be covered.
We’re better off incentivising people to become doctors and nurses and pharmaceutical researchers. The problem is all the nonsense being eaten up in administration, administration largely paid for by price obfuscation.
Still you manage to waste 10% on Administrative Expenses and have the worst health outcomes in G7 but the highest expenses.
Maybe learn a thing or two from northern Europe which has 100% public healthcare delivery
> Modern medicine is expensive. For profit or not, expenses must be covered.
There's a ton of bullshit that goes into "medical expenses" in the US. Not the least of which is the inability for people to pay for care and end up in the ER for urgent non-emergency services because ER services are required to be provided. Hospitals need to foot the costs of those people that literally can't pay. Those costs get amortized over every other service (plus plain old margin and gauging) increasing the overall costs.
Besides eliminating unpaid emergency service public health coverage would let people get regular medical care without plunging into debt so they'd go sooner before conditions become acute. Private insurance could even still exist, but as a premium add-on to statutory coverage.
More doctors and nurses is just supply side economics applied to healthcare. Those jobs will appear naturally with the entire population completely covered. Rural hospitals could even open back up since they'd be serving people with actual coverage.
PPPs are often a mirage. As long as there's a private actor involved, some of the input (money) will be siphoned off as profits. That's the height of inefficiency. Where the alternative is a competent, responsive and accountable government, the government will allocate the resources more effectively, and all "inefficiency" goes into working people's pockets. This is not always practical, for example in situations where only private businesses have highly specialized knowledge, but for basic infrastructure the private sector offers nothing the government couldn't do just as well.
Yea the argument that efficiency gains are passed to consumers is a tired old and often false argument. The only time efficiencies are passed to consumers are when there is real healthy competition and consumers are supporting that diversity. That's when in order to remain competitive, efficiency needs to be passed to the consumer.
Even in those situations it's not guaranteed. Markets seem to arise at or duplicate similar solutions and even if it's inefficient it's not worth he risk to find better alternatives for consumers because the competitive edge vs risk vs reward just isn't a winning mix worth pursing.
I'm increasingly convinced that most forms of free market systems work best once we have commoditization of a solution and it's just a matter of reproducing that solution, and doing so isn't too capital intensive. As you start to move away from these parameters, markets get more and more consumer hostile and self focused making the argument for them increasingly weak.
> most forms of free market systems work best once we have commoditization
It’s almost the opposite. Free markets didn’t work in the pre-industrial era because everything was commoditised. That made returns on capital paltry, which in turn made it more “profitable” to conquer capital than build it.
After industrialisation, we repeatedly saw innovation—though not necessarily creativity—in market economies outperform that in centralised ones.
Not to mention that the private companies will work to avoid said competition. Little wonder why ISPs refer to creating networks where one already exists as “overbuilding”
When I look around, there are multiple businesses usually near each other that compete. Home Depot and Lowes, Walmart and Target, Burger King and McDonald’s. ATT/Verizon/Tmobile.
But it is possible that if you pay to build out an entirely new network to a place where Comcast has a monopoly, and the customers would rather pay Comcast $5 less than whatever the lowest price you can charge is, then you would see negative returns by paying to build that network (since the cost of building out a network like that is so astronomical, and Comcast obviously does not have to pay it so their COGS is much lower).
There needs to be a focus on competitive markets instead of free markets. Competition is mostly good for customers but competition needs to be created by regulating the market to some degree. Otherwise markets will almost always be taken over slowly by the biggest players that don’t like competition.
It’ll never happen in the US. Neither political party with power will break away from the corporate interests that determine what laws and regulations will pass.
The last candidate who ran on small donors and wore a proud badge of being anti-corporate interests lost twice. Politicians are figuring out how much money can be made by both acquiring legislative influence and power and accepting donations to steer their platforms, as well as passing legislation and policy that helps siphon public funds into private companies that said politicians have a financial stake in.
Changing private equity power requires benevolence, and there’s very little of that left amongst those with political power in the US.
One of the big problems is that infection control and antibiotic stewardship don't have billable procedures most of the time, and are thus viewed as cost centers by hospital leadership.
And therein lies the most significant problem with unbounded capitalism. Capitalism is a very, very powerful tool, because it redefines everything in terms of money. This enables the magic of specialization and trade, but it also causes situations like this where greedy and/or thoughtless people chip away at the margins of things like safety and let other people suffer the consequences.
> Capitalism is a very, very powerful tool, because it redefines everything in terms of money
Well, in terms of capital. For the segments of the economy we put into the market. Also, this is more a feature of industrialisation than capitalism—socialist economies still consider resource allocation in generalisable terms.
> Capitalism is a very, very powerful tool, because it redefines everything in terms of money.
But only when it is convenient. For example school teachers or police officers can work their brains out but cannot profit from it like entrepreneurs do. For many people unbounded capitalism is a very shitty proposition.
Teachers and police officers don't benefit by definition because they do not have capital. Capitalism benefits the people who start private schools and private jails. Capitalists take advantage of labor in order to increase their own profits.
*A* hospital. Single. I'm certainly not going to defend private equity. But if we're going to do a takedown, let's do it correctly. Cherry picking what is likely an outlier is not doing it correctly.
Some things never change. So typical of HN. A comment lacking in critical thinking is added. The punters jump on to further the false narrative. And...the correction to that misguided affair is down voted. Y'all are funny. Ignorant, but funny.
And discover why your comment was downvoted. I apologize I did not leave a comment to explain why I was down voting, I just did not want to say 'look, this person can't read', it's tacky (sorry for still doing it btw)
Not sure where you got the idea that the study was only of a singular hospital, seeing as the study outline details claims for 600k hospitalizations in 51 private-equity hospitals are compared to 4m comparable hospitalizations in 259 non-private-equity hospitals.
Why are you trying to suggest that the 25% increase in hospital acquired complications are limited to a single outlier? The conclusion of the study states that the outcomes across those 51 private-equity acquired hospitals result in a 25.4% increase in hospital acquired complications.
So if the generalized hospital is an outlier, then why are the stats quoted matching the overall average results from the study?
Based on the context of the linked study, it's quite clear that the above quoted paragraph has the following meaning:
"After a [randomly selected] hospital [of the 51 sampled private equity acquired hospitals] was acquired by private equity, admitted Medicare patients had [on average, based on evalutation of those 51 PE acquired hospitals against 259 non PE aquired hospitals,] a 25% increase in hospital-acquired complications, compared with patients admitted before acquisition..."
The purpose of the article is to summarize the study findings. If they were talking about an outlier, they would mention that and use phrasing like "After THE hospital..." where "the" reiterates that it's a specific singular, and not a generalized sample.
Here's the direct text from the linked study as well that medicalxpress paraphrased/reworded:
"After private equity acquisition, Medicare beneficiaries admitted to private equity hospitals experienced a 25.4% increase in hospital-acquired conditions compared with those treated at control hospitals (4.6 [95% CI, 2.0-7.2] additional hospital-acquired conditions per 10 000 hospitalizations, P = .004)."
It seems like you're hung up on medicalxpress's choice of wording for their paraphrasing, which is fine, but 25.4% increase in hospital acquired conditions is NOT an outlier amongst the 51 sampled PE acquired hospitals.
I'm not trying to say anything. I'm simply reading the article and stating the obvious: a cherry picking tactic that sensationalizes an important issue is bull shit.
- It has not place in journalism.
- It has no place on HN.
It's a distraction. We're wasting time debating the merits of a turd, and it is a turd. If we're going to do better than we need to expect better. The study might be sound. The article as present is shite.
The writing of the article was not as precise as it needed to be (I assume for the sake of saving space and words). It was a summary given in lay terms to an audience that could dig deeper into the source research results if they needed further clarification.
"After private equity acquisition, Medicare beneficiaries admitted to private equity hospitals experienced a 25.4% increase in hospital-acquired conditions compared with those treated at control hospitals. ... This increase in hospital-acquired conditions was driven by a 27.3% increase in falls and a 37.7% increase in central line–associated bloodstream infections at private equity hospitals, despite placing 16.2% fewer central lines."
> I thought it was alarming when insurers started purchasing hospitals, urgent care facilities and even your standard family med doc
I am skeptical of that conclusion. Kaiser Permanente gets good results, and they are an HMO: the very definition of an insurer owning the hospital/urgent care/family doc.
I’m struggling to understand how the standard PE model works, particularly the debt component. PE firms seem to target mediocre businesses, load them with debt, and then harvest returns and eventually the assets. Why would a bank loan money for such an arrangement, given how often these businesses end up in bankruptcy (Toys R Us as an example)? Is the debt collateralized and bundled with better performing debt or sold off to an unwitting buyer?
> PE firms seem to target mediocre businesses, load them with debt, and then harvest returns and eventually the assets
Private equity no longer necessarily involves large amounts of debt, i.e. LBOs. Most managers have an economic effect they deploy to bring efficiency to an industry. The first popular one was deconglomeratisation. Then capital structure management. Digitisation and supply chain management followed. In each phase, they delivered then overcorrected.
Hospitals initially started on the scale side. The thesis was that the biggest cost centre is administration, so if you linked together the administration of many hospitals you could reduce costs compared to private practices. This initially panned out. But hospitals are natural monopolies; those initial theses were rapidly corrupted.
> given how often these businesses end up in bankruptcy
Private-equity backed companies tend to be more resilient, not less [1].
It is a mix of tax loopholes. They can load up on debt, pull cash out. The big scam is share buybacks, they use the loans to by up their own stock. That was illegal from the 30a-80s, the Regan administration legalized it and it's been a race to the bottom. The other part is banks create money at multiples of their deposits. Fractional reserve lending. This creating money and then charging interest that isn't created is the root of this mess. They system worked well when there was fresh land and slaves to grab. It has continued w industrial growth. But now we are running out of oil to pump and other resources are starting to become scarce. This whole private equity is becoming a shackle on our economic system, almost 24% of the economy is controlled by private equity, and a chunk of that is carry forward profits which aren't taxed until withdrawn. They get to sell not pay capital gains and go into the next one. Good luck trying that yourself.
"it depends" - but there are several components at play:
PE benefited greatly from a long-term decline in interest rates. The amount of debt a company can service at a given profitability is directly related to the current prevailing interest. So as long as interest rates drifted down, PE firms could buy, load with debt to be paid out as dividend, and sell again, sometimes to the next PE buyer.
Secondly, banks will not hold this debt directly on their books, but either sell bonds directly (the low interest environment led to some life insurers and other long term investors to buy pretty risky corporate debt) or repackage them with (hopefully) uncorrelated debt to obtain better ratings (price).
There's an argument that the success of PE funds had everything to do with them being a macro bet on falling interest rates.
Doesn't that have more to do with Michael Milken pioneering junk bonds, which then vastly expanded the available credit?
As in: The fact that the 80s had comparatively high interest rates doesn't matter to the argument, as the necessary infrastructure to issue and trade high yield corporate debt quickly didn't exist - so in some sense effective interest rates dropped from infty to something, enabling the entire LBO model.
And since then, with the exception of the recent hiccup, the long term trend in interest rates has been downward?
> Doesn't that have more to do with Michael Milken pioneering junk bonds
Capital was uniquely available in the 1980s. But Milken was a symptom, not the cause. The booming American economy provided the fuel, but digitisation turbocharged the engine: issuing, pricing and trading securities, in particular bonds, became easier very quickly. (This is why your stereotypical trader from the 80s has an accent and is uncouth. They replaced blue-blooded bankers who had run bonds, calculating prices and yields by hand using tables.)
Put another way, America is “unusually good at creating tradeable claims on the profits and revenues that its economy generates” [2]. Computers amplified that strength and prompted massive opportunities in reshaping the economy.
> with the exception of the recent hiccup, the long term trend in interest rates has been downward
Yes, this is a function of increasing stability and time horizons [1]. That said, the relevant frame is a fund lifespan, usually 5 to 10 years. (Unless you’re Warren Buffett.) In those intervals, the long-term signal is dwarfed by short-term noise.
I haven't checked in depth, but ... while the Fed funds rate has oscillated a bit ("noise") the curve for 10- or 30-year t-bills or mortgages is much smoother, and newly issued junk bonds will track those more than the Fed funds rate.
And I'd be surprised if in the period between 1980 and 2021 you could find a 10 year interval that didn't exhibit significantly lower rates at the end than at the beginning, and only a select few 5-year periods.
You seem to have the viewpoint that this had nothing to do with the historical performance of PE funds?
> this had nothing to do with the historical performance of PE funds
It had a strong effect. But it’s far from dominating. Compounding PE’s performance woes are that fundraising is easier when the economy is strong. That is why there has been a tendency of the largest LBOs happening just before a downturn; the last cycle’s was Twitter.
Buy the company, saddle it with the debt used to acquire it, take all its real estate and transfer it to a separate company, make the company rent from the company that owns the real estate at inflated prices. If its something like a software company you convert its software to a rental model and keep jacking up the price so that now an annual subscription costs the same as the perpetual license price from three years ago with 25 years of maintenance. Sure, you just lost 98% of your customers, but really, you just need one or two customers that can't leave you to keep it running in perpetuity. In the case of a retail store, though, you just run the store into the ground over the next year or two and now your real estate division is the #1 creditor of the retail chain and gets first pick of the liquidation and it now owns the real estate, which it then sells for 10x its real value to a developer who will bribe the local approval board to turn the area that is zoned commercial only due to flood risk is now overpriced homes or condos. When everything floods the victims that bought houses or condos will have to move elsewhere.
Or, your PE firm is actually owned by a foreign country and they don't care about profit as their long term goal is wrecking your country's economy.
There are different playbooks, but one is to take a declining business and cut unprofitable parts until it becomes (at least temporarily) profitable. The debt has a higher interest rate that reflects the risk of the strategy not being successful (hence being called junk bonds).
Even in the case of bankruptcy though, the bondholders may still come out OK. Toys R Us actually made about 5 billion in debt payments in the years it was privately owned, and it took about 5 billion in debt as part of the buyout. The bondholders may not have gotten the return they were expecting, but they mostly got their principal back.
All of that said, the real problem as I see it with PE is that it's just so exploitative. The only thing that matters is the investor's money. For example, one very common strategy after a buyout is to cut quality in various forms. People may have a positive quality impression of a store or a brand, and then keep buying it even after the PE company cuts quality. It takes them a while to realize that the product they're buying is not what it once was, and so the PE firm is making money by tricking people into buying bad products.
The hospital case is just an extreme example of this where the cuts in quality lead to people getting sick and dying.
> "Hospital success is measured not only in dollars or the number of patients who pass through the doors, but also in lives saved"
As if profits are the primary goal of hospitals and saving lives/treating patients is just an afterthought.
The capture of all life sustaining efforts by for-profit entities is probably the number one problem in the western world which is driving all others. Climate change, famine, homelessness, death from preventable disease.
None are caused by unsolvable problems but instead by the inability of the for-profit/market based system to provide for human needs.
Profit is necessary to invest in the future. If revenue matches cost leading to a gross profit of zero, you can only ever keep whatever it is you have today with no room to advance or adapt or even maintain.
> skimming some of the revenue for profit goes directly against that
Non-profit hospitals don’t fare better or worse on health outcomes than for-profit hospitals [1]. They are run less efficiently [2]. If you’ve been on a non-profit Board, particularly a service-model non-profit, this makes sense.
Except, if it's tax funded the hospital does not need to generate revenue to enable that goal. It can focus on saving lives, and maybe even do preventative care which lowers overall health costs for society by dealing with problems early on. As a society, that saves money, leaving everyone better off
I think a lot about how hard it is for us to imagine a better world. My foot kind of hurts. It’s been this way for years and I’ve changed shoes to something that’s better but I’d love to have it looked at by a podiatrist. But also every time I visit the doctor, despite having insurance, I end up having to pay a lot of money. So maybe I don’t see a doctor about my foot. It’s fine.
But in a better world I wouldn’t have any reason not to get my foot checked up on. Maybe there is something that could be done for it and maybe it makes my life better. Or it’s fine and I get peace of mind and stop worrying.
Now multiply this across the entire population. What if everyone had lower barriers to health care. The amount of population wide well being would increase a lot. And that’s the part I think we usually have a hard time conceptualizing when we think about a better world. But it’s a very real possibility!
Im endlessly fascinated by the cultural angle on technology of well being. We have enough resources to solve poverty, education, and access to medicine yet social determinism is the driving force in all these areas.
There have been recent calls for the human population to hit a trillion people (by billionaires). The reasoning is we’d “have more einsteins” but personally Im way more worried about the genius physicist working in an amazon shipping center.
> We have enough resources to solve poverty, education, and access to medicine yet social determinism is the driving force in all these areas.
Do we?
We have enough food, but not the logistics to distribute it. I doubt we produce enough of some medicines because they have constant shortages. Whether we have enough education depends on how you define it: I believe we have enough to give everyone access to online resources, but we have an education crisis in the US which is driven by unmotivated students, and the factors which are causing the lack of motivation cost much more (old-style teaching, large classes with disruptive students, poor school infrastructure, poverty at home).
It's a social problem because I'm sure even if we had enough resources, there are people who would get in the way of distributing them, because they don't want people to be educated or feel they don't deserve assistance. Already we have countries which block parts of the internet, and countries at war which block aid. But I don't think it's only a social problem.
> We have enough resources to solve poverty, education, and access to medicine
Access isn't binary, nor is it ever "solved". Every person in wealthy 1st world countries has access to enough food that they won't starve, access to secondary education to 16/18, and emergency medical care. I'm sure you would consider those things insufficient.
A right asserted without any degree is pretty useless.
I don't understand why governments allow to privatize hospitals or other public ressources, often with the reasoning that otherwise they wouldn't be profitable. We don't expect other public services like fire departments or road construction to make money. Why should hospitals be treated differently?
Because there is no practical way for rich people to use luxury fire departments that deprive the filthy proles of protection, or luxury roads for that matter.
My sense (as someone with generations of family in healthcare) is, at least in the US, there's a massive gap between what the healthcare system was like decades ago and how it functions now. At one point in the distant past there was probably a better balance of population size and number of providers, service demand and provider type, a greater number of more independent and locally run hospitals and clinics, less regulation about certain important issues, more permanent employee positions with more standard employer benefits, and so forth and so on.
At least in some areas of the US there used to be public hospitals, run at the local (state or county level) but they were essentially privatized or defunded to the point where they had to close or become privatized.
I could give lots of examples of this, but things now are less local, more controlled by centralized, private but national entities, more regulation, more consolidation of clinics and hospitals, and so forth and so on.
I'm for putting more central resources in public control (government insurance, more public clinics and hospitals) but also believe there needs to be more deregulation of important elements and more competition to drive down costs on the supply end.
In my opinion, there's a lot of hidden factors driving up healthcare costs, in the form of insulating providers and hospital and clinic chains from competition, taking choice aware from consumers, decreasing transparency about costs, as well as "hiding" public funding of healthcare that's already happening. It feels a bit like, in the US at least, we have this system that likes to pretend it's 1960, at least insofar as doing so benefits certain people and groups.
If we do enter an era of slowing actual growth, we will really have a problem with the financial industry trying to cannibalize the entire economy to find "alpha" somewhere.
Everything in our economy could work just fine without a lot of growth except finance, which absolutely cannot work and collapses completely unless number always goes up forever.
>Everything in our economy could work just fine without a lot of growth except finance
Which includes all taxpayers, since all those government employees are paid with the "growth" in the form of underfunded defined benefit pension and retiree healthcare. Or the people counting on their 401k numbers to go up.
Not even monopolies, literally no market forces. If you have a heart attack or a stroke, it doesn't matter what the prices listed for care are or customer reviews. You get to a hospital as fast as you fucking can. There are literally no market forces in play a lot of the time. Also, if you don't live in a big city, there may only be a single hospital by you that provides the treatment you need. Again, no market forces.
It’s useful to separate medicine from ER in healthcare discussions. In ER, there is no market. In healthcare, we have a deeply-flawed market. But in most zip codes, there is some competition.
In part due to access-to-care issues. More competition in medicine should increase access thereby reducing ED use. One that comes to mind are in-house visits, something expensive for no good reason in America.
It's being reduced though. A lot of private practices are being bought out by big (in many cases for-profit) hospital or doctor's groups, and the doctors are put on salaries instead of owning their practices. In many areas there is now only one big group. Naturally this can be highly profitable.
> Nobody while having a heart-attack stops and thinks about shopping around for a lower price. "hmmm, about to die, let me see if I have any coupons".
Well in theory that's the point of insurance. You comparison shop insurance before having a heart attack, then if an attack happens you're covered.
Of course many people just wouldn't buy insurance unless forced ... many breadwinners die leaving their families nothing because they don't think of buying life insurance.
Absolutely, I'm personally super excited about my ability to choose between my single work-provided health insurance that tries to maximize the amount of money they get for a doctor's visit where the doctor doesn't even try to help me.
And I agree, we should punish those who don't understand the system. Let them die for their ignorance.
If you get insurance through work, there is zero choice.
You are locked into you're companies decisions.
You may say, 'well you can opt out', but the deck is really stacked against you trying to go it alone.
This is one of the ways that employees are 'locked in' to jobs and become immobilized from seeking better jobs. The insurance is a type of 'capture'.
Food is a terror-nightmare that can only be fixed by completely rethinking our values. We are literally seeing lifespan decline as food manufacturers addict their customers, capture regulators, destroy the environment, and pretty much single handedly reduce life expectancy. In many ways, we have regressed to the point of having a food system that works worse than it did under the better periods of communism.
Electronics I think has been mostly successful as a regulated free market.
What we have is not a free market. We have a system that has been consolidated and pushed towards high inefficiencies by pharma companies, insurance companies and hospital conglomerates.
A free market would be one where government hospitals exist alongside private for profit hospitals. A free market would have insurance as an optional convenience, not a mandatory one. A free market would have one price for medicine regardless of how you pay for it, where paying with insurance wouldn’t cost $34 when paying out of pocket and using GoodRx costs $2. A free market would be one where opening a private practice for a doctor would not be prohibitively expensive for family medicine because they need to hire 5 administrators to deal with the entangled mess of insurance payments.
Not to mention all the territorial regulatory capture on the provider side.
I'm supportive of greater "publicizing"(?) of healthcare but I also agree that there are many, many, many ways in which competition could be increased to actual improve free market dynamics.
I’d love to see evidence supporting the claim that a free market would make these things come to pass. Otherwise, this comes across as a list of things you’d like to see, with “the free market” standing in as the just-so story that will magically right all that is wrong
I’d like to see evidence supporting it doesn’t work. If something hasn’t been done before, it’s really hard to provide evidence without actually doing it. I unfortunately cannot change it by my own, so I cannot provide evidence on what would hypothetically happen if we ban lobbying, get politicians motivated to allow a competitive free market, have the government participate in healthcare and do bunch of other things.
I can provide examples of different models of public/private healthcare existing in the same market, if health insurance and healthcare being more accessible and being cheaper across the world. All of these systems have more than one aspect of my “wishlist” if not all. https://www.news-medical.net/health/Healthcare-Systems-Aroun...
I wanted to say that the charitable interpretation is that these things are basically prerequisites for the market to be "free" enough for any invisible hand efficiencies to arise - low barrier to entry, consumers are cost-conscious and have free choice, no anti-competitive bundling between provider, pharmacy, and insurance services.
But then I hit F5 and see that they explicitly feel these things will just come about given a "free market". Oh well.
Yes that is correct. In theory, in the freest market, there would only be one company that does everything and generates infinite profits.
I’m responding to the “free market” that most “free market” advocates refer to: a market where companies are free to do whatever they want as long as it makes them money and also have regulations only when it benefits them.
I'm trying to take this comment as an honest question in good faith and not as political bait or "rich ppl bad."
Some random PE investor or analyst isn't the one putting needles in people's arms or writing prescriptions, so does it make sense to send the analyst to jail when someone dies from negligent causes in a hospital? I don't think it does. It probably doesn't make sense to send anyone to jail unless there's actual malice involved but if you're looking to punish someone for something it probably makes sense to look first at the person actually pushing the drug or doing the procedure.
When PE takes over and cuts resources or otherwise "optimizes" leading to bad outcomes, the medical staff are on the hook for those bad outcomes but the PE firm that caused the cuts that caused the bad things are not. Make sense?
PE company comes in to a med facility. We have proof that when they move in, they make new policies. These policies have a demonstrable proof that they reduce standard of care, cause X% more incidents, and Y% more deaths.
From the article is:
> After a hospital was acquired by private equity, admitted Medicare patients had a 25% increase in hospital-acquired complications, compared with patients admitted before acquisition. Patients also had 27% more falls and 38% more bloodstream infections caused by central lines, which are temporary surgically inserted ports that allow easy intravenous access for patients receiving repeated drug infusions or other treatments.
We have demonstrable proof that policies put in place have directly caused this harm. I'm not trying to alleviate blame when a med professional does something wrong and causes an injury. However when we see increases like "25% increase in hospital acquired complications", tells me that there is underlying policy that caused a significant increase in injuries/deaths.
We can point towards a policy that causes mass injury, yet the policy people are beyond reproach. Instead, the 25% more injuries are looked at as an individual bad action. Now we should be looking at the individuals and how their decisions caused a bad thing to happen.... however when we see trends from multiple people towards the same reasoning, and the reasoning is "policy", then absolutely those policymakers should be in scope.
I would also look at policy decisions of 2nd derivative effects too. However those can take quite a bit of time to appear. Again, if policymakers want the responsibility of policy, ethics, legality, and direct result of policies should also be what they look at and are responsible for.
tbh, my experience is the other way around. When a hospital locally ran out of money and was taken over by the county, the quality of care dropped drastically.
My wife had a good experience giving birth in our local hospital 12 years ago, but this year, after having been taken over, they completely screwed her brain up in what should have been a routine procedure. 10 months later and she’s still suffering. i’m not sure she’ll ever recover :(
First let me say I'm sorry for your wife and I hope she recovers. Respectfully that hospital may not be an apt comparison because it was taken over because it was already failing under private ownership whereas PE is more apt to buy something because it is functional and therefore profitable.
It seems likely that both causes are an example of failure of private ownership wherein the county is being blamed only because it was left holding the bag.
When the metric is "return on investment" let me assure you that all the PE investors, execs, managers, individuals involved are only looking to eek out more profit - quarter after quarter.
If it ever comes down to helping a patient (or employee) vs a quarter with lower than expected growth, they will predictably not help the patient (or employee) in favor of meeting that quarter's target.
LBOs should probably be illegal. They seem to ruin everything they touch. Also, we should probably nationalize a lot of the entities PE has taken control of. Might be a nice way to back into nationalizing a lot of industries that have no business being private.
I remember my parents and Aunts/Uncles talking about the new at the time trend of for-profit health care in the 70s. Back then all the hospitals were non-profit, many supported by religious groups.
They pretty much predicted the current situation for care, but missing out a bi on the tech side of healthcare.
I suspect there are a lot of other factors to take into consideration here:
- population growth over that time
- percent of people able to afford cars and fuel over that time
- % of those numbers that are in London ( and other big cities) - so the number of people able to afford to live in London compared to jobs there... Many people were priced out, and so have to commute, and pollution taxes and parking prices are now there to discourage cars
- how much train line maintenance has been dropped, and will be coming up as needing replacement "soon" but not done
- how much subsidy the private companies are actually getting still.
...
Trains in the UK are really not great at all... Compared to the rest of Europe anyway.
So people are literally dying to help investors make a return on capital.
I feel like you could be at the end of the world, looking at certain destruction approaching us, and there’d be some venture capitalist being, “listen, we have full control of this situation. Everything is fine… we’ve got a long history of managing risk in this area.”
Curiously, the study found a small drop in hospital deaths at private equity hospitals. This, the researchers said, may be due to social and demographic factors — private equity patients were younger and less disadvantaged than those at peer hospitals not owned by private equity.
Is there any well known instance where a private equity firm taking over a business/service resulted in a net positive for customers and not just the firm being a leech?
I would add another caveat: "and for the employees" as one of the key plays by PE seems to be to just lay as many people off as they possibly can get away with.
What?? Why are we allowing private equity to take over hospitals? That’s a life and death public service! You don’t just throw it to the wolves like that.
Is anyone actually surprised by this? Since PE is all about shaving pennies and maximising profit for the PE partners, of course they're going to sacrifice actual patient care.
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[ 3.0 ms ] story [ 266 ms ] threadNo, but more competition would. If we want to have private healthcare, we have to actually let free markets work. Our current system is the worst of both worlds.
You are talking about Certificates of Need which are investigations to show that an area needs a new facility...
The concept of a CoN was lobbied for by hospitals and healthcare providers who wanted "guarantees" of profits before they'd commit to building new facilities. The CoN process helps existing facilities get a say in whether a new hospital should be allowed in the area. The government itself generally doesn't care.
They just shouldn't exist.
It would be interesting to compare small private clinics performance vs hospitals.
What's being described here is what anarcho-capitalism and pure free markets always devolve into - the mafia. You don't get to just shop around for a better mafia if you don't like the one running your town.
Monopoly on violence requires enforcing that monopoly. Such a firm would also stomp out its competition. You’re describing government-run healthcare by an unelected government.
Government run healthcare, the healthcare where you just go to the hospital and then you just get treated.. (?) Government run healthcare does not have a great reputation for doing cutting-edge health care, but on the other hand it does have a good reputation for taking care of people for basic needs. How is that describing a monopoly on violence? Repairing broken bones is the same as breaking bones? (If the implied argument is that health care is so heavily rationed, that people are left untreated, tantamount to violence, I would beg you to look at the statistics of which countries have more complications due to untreated illnesses (hint, the US is high on that list [1]; or we could look at health outcomes per dollar spent, US is very far down on that list, US spends multiples of other countries for the same outcome))
I would think a more apt description and example of a monopoly on violence would be narco-states. Otherwise the example is a well functioning government, and that is demonstrated in the police force and judicial system (not healthcare).
When considering the absence of the government monopoly on violence, drug markets are the closest thing there is to a true free-market. And yes, there contract enforcement is contingent upon a bunch of people standing behind you with guns.
[1] https://www.cbsnews.com/news/medical-care-costs-americans-sk...
Or do you mean an unelected government has a good track record of meeting basic needs as well?
For the good track record, I'm referring to governments like the UK, Norway, France & Canada that all have better health outcomes compared to the privatized healthcare system of the US. The US system tends to stand out for the very specialized cutting edge (and super expensive) procedures; though you still have to overcome a lot of accessibility problems to get that. At present day, if you break a bone, have a child [1], need to be in hospital for a few days - generally you're better off not in the US
[1] "Despite spending less on coverage, France has comparable or even better health care outcomes than the United States. The United States has a higher rate of infant mortality. In France nearly four children die out of every 1000 live births. In the U.S. that number is closer to six." https://healthchoiceofmichigan.com/lectorium/MHzUCToycks
[2] https://www.brookings.edu/wp-content/uploads/2016/06/dutton.... This resource sites that France was ranked #1 back in 2001. While the US might have improved in that time, it goes to show it has been decades where the US is not the leader in healthcare. This implies that on average and for at least a couple decades running now, there are better outcomes in other countries (than the US). The dependent variable does seem to be how healthcare is financed, payed for, and how the profit incentive compares between those different places.
Capitalism creates bubbles & winners (aka monopolies). Government has to be involved to keep an even playing field and to smooth out the bubbles. No industry in the US has had no government involvement. All industries are involved with government in some form - if only to enforce contract law, or for more physical matters like using public roads, buying electricity from government run electrical companies, benefitting regulation that requires phone providers to provide service, etc..
[1] https://www.energy.gov/lpo/tesla
This is a red herring. Health systems have different metrics for success than "the market". The former, ideally balances QoC with costs. The latter by definition only cares about ROI in terms of profits (either from revenue or from playing hot potato with other buyers). There's no reasonable argument why we should expect private equity to result in anything but a degradation of QoC if it doesn't have a considerable negative impact on profitability or resale value (and that's even ignoring situations in which a loss may be desirable or acceptable).
Free entry into the market, along with competition, are the free market forces that naturally balance those attributes over time.
Keep in mind that within a given market, there can be multiple different balances at once, depending on the varying needs and priorities of the buyers and sellers involved.
> It’s pretty obvious that there are major breakdowns in both the current practices of laissez-faire and of regulation.
Even if it may be somewhat freer than in places like Canada or the UK, for example, the US health care sector shouldn't be considered a real free market or laissez-faire in any meaningful way.
The US health care sector is highly regulated. This significantly reduces competition, and also makes it extremely costly and difficult for new entrants to participate in the markets.
Regulation-imposed distortions that decrease competition and impede market entry should be expected to result in the inefficiencies and other problems we see.
Fixing the problem is rather simple: remove the regulations, allow free market entry and competition again, and put the onus back on market participants to choose for themselves what's best for them and their own particular situations.
The invisible hand(job) can't save you from areas where there is no significant profit to be made. In many cases, it's most cost effective to simply let people die. That's the problem with focusing exclusively on profit motives in healthcare.
The various provincial public health care systems in Canada are generally seen as having atrocious performance, despite consuming massive amounts of taxpayer resources each year.
Keep in mind that many Canadians also have costly private insurance to help pay for the numerous common exams, procedures, treatments, prescriptions, etc., that aren't covered by the public systems.
For Canadians with the means to do so, it's quite common for them to seek medical treatment in the US, even if doing so is financially costly.
Going to the US is often the only practical way for Canadians to receive health care services in a timely and effective manner.
This is a statement that cannot be farther from the truth.
There is a great asymmetry of information and a high pressure situation that leads to difficulty in researching and deciding on the best choice. It is a system that, without regulation, leads to exploitation.
The regulations exist because of the abuses, because of the immoral behavior it caused without them.
The only motivation to remove them is a profit motive. Avarice at the sake of lives. It is not 'regulations' that are a problem, but the immoral avarice living at the heart of healthcare in the US.
We don't. We should just acknowledge that certain sectors of the economy (including healthcare and education) are fundamentally incompatible with private profit. These sectors should be ring-fenced with their own managed budgets and money flowing out of the system should be subject to 100% tax rate.
Also, I think unless people are trained to question everything, they tend to flow with the dominant narrative. Private equity makes health care more efficient!
I'd love to know how to get people to focus on potential problems and ask questions.
The increase was seen despite private equity hospitals' placing 16% fewer central lines than before the buyout."
I am not sure who the private equity firms are, but I thought it was alarming when insurers started purchasing hospitals, urgent care facilities and even your standard family med doc, as they would be negotiating with themselves on how much profit they could make off each appointment. But I didn't consider lower standards when it comes to patient care, this adds a whole different dimension.
But do you know what? I used to pay 1/4 the price for electricity when i lived in an area with a local county run power company compared to my new nearby location that has PG&E as the only option. As in government run utilities were literally 1/4 the price per kwh and yet i'm supposed to buy into this "GOVERNMENT IS INEFFICIENT LOL COMMUNISM" propaganda that just doesn't appear true in the slightest. I mean this is consistent across the board.
I know the baby boomer generation were vulnerable to this anti-socialism propaganda but can we please start looking at things objectively and push back against this privatization that is almost always a way for politicians to enrich themselves. Sigh.
The government creates the conditions for PGE to be so bad. I’m defecting from the grid this year, PGE’s high prices mean my s system will pay for itself in less than a year and will likely be more reliable.
battery and solar companies saved me from PGE and they can save you. The government perhaps can but likely won’t. Extrapolate for yourself what this means about the world and what organizations should command the most resources.
Same as attempts to privatize social security. You got a cash flow of $1.4T/year and it drives the lords of capital bonkers they can't get their hands on it.
People used to have choice but now due to 1950s tax code, your employer chooses a health conglomerate which chooses an insurance company which influences the billing allowances which influences the hospital profitability which is now so complicated that often only PE firms are willing to take the investment risk.
The incentives and market feedback is now so distorted that there is little to no signal. Healthcare in the US is often used as an example of failed free markets, but it is very far from a free market.
American lifestyles especially in certain states are generally not conducive to good outcomes but the US healthcare system itself is still generally world-renowned for cutting edge procedures.
Analyzing from a cost POV it's quite bad, but in many ways healthcare is the ultimate marginal good so people are willing to spend what they have.
This is a false dichotomy. Public v private is so often framed as a political agency versus free-market bonanza. In reality, we have independent agencies and public-private partnerships. But on the private side, we also co-operatives, a model which seems well-suited for community hospitals.
Taking "profit" from keeping people "not dead" seems as close to extortion as you can get without actually being so.
“If the public health goal is to improve hospital care, then focusing on things like for-profit or nonprofit status is a distraction” [1].
> Taking "profit" from keeping people "not dead" seems as close to extortion
Modern medicine is expensive. For profit or not, expenses must be covered.
We’re better off incentivising people to become doctors and nurses and pharmaceutical researchers. The problem is all the nonsense being eaten up in administration, administration largely paid for by price obfuscation.
[1] https://www.hsph.harvard.edu/news/press-releases/hospitals-c...
Fair enough. So let's just ban for-profit healthcare so we can stop being distracted by that whole thing.
There's a ton of bullshit that goes into "medical expenses" in the US. Not the least of which is the inability for people to pay for care and end up in the ER for urgent non-emergency services because ER services are required to be provided. Hospitals need to foot the costs of those people that literally can't pay. Those costs get amortized over every other service (plus plain old margin and gauging) increasing the overall costs.
Besides eliminating unpaid emergency service public health coverage would let people get regular medical care without plunging into debt so they'd go sooner before conditions become acute. Private insurance could even still exist, but as a premium add-on to statutory coverage.
More doctors and nurses is just supply side economics applied to healthcare. Those jobs will appear naturally with the entire population completely covered. Rural hospitals could even open back up since they'd be serving people with actual coverage.
Even in those situations it's not guaranteed. Markets seem to arise at or duplicate similar solutions and even if it's inefficient it's not worth he risk to find better alternatives for consumers because the competitive edge vs risk vs reward just isn't a winning mix worth pursing.
I'm increasingly convinced that most forms of free market systems work best once we have commoditization of a solution and it's just a matter of reproducing that solution, and doing so isn't too capital intensive. As you start to move away from these parameters, markets get more and more consumer hostile and self focused making the argument for them increasingly weak.
It’s almost the opposite. Free markets didn’t work in the pre-industrial era because everything was commoditised. That made returns on capital paltry, which in turn made it more “profitable” to conquer capital than build it.
After industrialisation, we repeatedly saw innovation—though not necessarily creativity—in market economies outperform that in centralised ones.
But it is possible that if you pay to build out an entirely new network to a place where Comcast has a monopoly, and the customers would rather pay Comcast $5 less than whatever the lowest price you can charge is, then you would see negative returns by paying to build that network (since the cost of building out a network like that is so astronomical, and Comcast obviously does not have to pay it so their COGS is much lower).
The last candidate who ran on small donors and wore a proud badge of being anti-corporate interests lost twice. Politicians are figuring out how much money can be made by both acquiring legislative influence and power and accepting donations to steer their platforms, as well as passing legislation and policy that helps siphon public funds into private companies that said politicians have a financial stake in.
Changing private equity power requires benevolence, and there’s very little of that left amongst those with political power in the US.
Well, in terms of capital. For the segments of the economy we put into the market. Also, this is more a feature of industrialisation than capitalism—socialist economies still consider resource allocation in generalisable terms.
But only when it is convenient. For example school teachers or police officers can work their brains out but cannot profit from it like entrepreneurs do. For many people unbounded capitalism is a very shitty proposition.
*A* hospital. Single. I'm certainly not going to defend private equity. But if we're going to do a takedown, let's do it correctly. Cherry picking what is likely an outlier is not doing it correctly.
https://jamanetwork.com/journals/jama/fullarticle/2813379?gu...
And discover why your comment was downvoted. I apologize I did not leave a comment to explain why I was down voting, I just did not want to say 'look, this person can't read', it's tacky (sorry for still doing it btw)
If I wanted to speak to the whole study I would have. However, the paragraph pulled specifically says "*a* hospital*.
Now who did the skimming?? FFS
Y'all read those stats to be for all. Instead it was one extreme outlier and y'all's biases fell for it.
This is why we can't have nice things. Too much assuming, not enough intentional "listening".
So if the generalized hospital is an outlier, then why are the stats quoted matching the overall average results from the study?
Based on the context of the linked study, it's quite clear that the above quoted paragraph has the following meaning:
"After a [randomly selected] hospital [of the 51 sampled private equity acquired hospitals] was acquired by private equity, admitted Medicare patients had [on average, based on evalutation of those 51 PE acquired hospitals against 259 non PE aquired hospitals,] a 25% increase in hospital-acquired complications, compared with patients admitted before acquisition..."
The purpose of the article is to summarize the study findings. If they were talking about an outlier, they would mention that and use phrasing like "After THE hospital..." where "the" reiterates that it's a specific singular, and not a generalized sample.
Here's the direct text from the linked study as well that medicalxpress paraphrased/reworded: "After private equity acquisition, Medicare beneficiaries admitted to private equity hospitals experienced a 25.4% increase in hospital-acquired conditions compared with those treated at control hospitals (4.6 [95% CI, 2.0-7.2] additional hospital-acquired conditions per 10 000 hospitalizations, P = .004)."
It seems like you're hung up on medicalxpress's choice of wording for their paraphrasing, which is fine, but 25.4% increase in hospital acquired conditions is NOT an outlier amongst the 51 sampled PE acquired hospitals.
- It has not place in journalism.
- It has no place on HN.
It's a distraction. We're wasting time debating the merits of a turd, and it is a turd. If we're going to do better than we need to expect better. The study might be sound. The article as present is shite.
"After private equity acquisition, Medicare beneficiaries admitted to private equity hospitals experienced a 25.4% increase in hospital-acquired conditions compared with those treated at control hospitals. ... This increase in hospital-acquired conditions was driven by a 27.3% increase in falls and a 37.7% increase in central line–associated bloodstream infections at private equity hospitals, despite placing 16.2% fewer central lines."
https://jamanetwork.com/journals/jama/fullarticle/2813379
I am skeptical of that conclusion. Kaiser Permanente gets good results, and they are an HMO: the very definition of an insurer owning the hospital/urgent care/family doc.
Private equity no longer necessarily involves large amounts of debt, i.e. LBOs. Most managers have an economic effect they deploy to bring efficiency to an industry. The first popular one was deconglomeratisation. Then capital structure management. Digitisation and supply chain management followed. In each phase, they delivered then overcorrected.
Hospitals initially started on the scale side. The thesis was that the biggest cost centre is administration, so if you linked together the administration of many hospitals you could reduce costs compared to private practices. This initially panned out. But hospitals are natural monopolies; those initial theses were rapidly corrupted.
> given how often these businesses end up in bankruptcy
Private-equity backed companies tend to be more resilient, not less [1].
[1] https://siepr.stanford.edu/news/private-equity-firms-show-re...
PE benefited greatly from a long-term decline in interest rates. The amount of debt a company can service at a given profitability is directly related to the current prevailing interest. So as long as interest rates drifted down, PE firms could buy, load with debt to be paid out as dividend, and sell again, sometimes to the next PE buyer.
Secondly, banks will not hold this debt directly on their books, but either sell bonds directly (the low interest environment led to some life insurers and other long term investors to buy pretty risky corporate debt) or repackage them with (hopefully) uncorrelated debt to obtain better ratings (price).
There's an argument that the success of PE funds had everything to do with them being a macro bet on falling interest rates.
It’s incorrect. The leveraged buyout, for example, found its footing in the high-rate environment of the early 1980s.
As in: The fact that the 80s had comparatively high interest rates doesn't matter to the argument, as the necessary infrastructure to issue and trade high yield corporate debt quickly didn't exist - so in some sense effective interest rates dropped from infty to something, enabling the entire LBO model.
And since then, with the exception of the recent hiccup, the long term trend in interest rates has been downward?
What's your read?
Capital was uniquely available in the 1980s. But Milken was a symptom, not the cause. The booming American economy provided the fuel, but digitisation turbocharged the engine: issuing, pricing and trading securities, in particular bonds, became easier very quickly. (This is why your stereotypical trader from the 80s has an accent and is uncouth. They replaced blue-blooded bankers who had run bonds, calculating prices and yields by hand using tables.)
Put another way, America is “unusually good at creating tradeable claims on the profits and revenues that its economy generates” [2]. Computers amplified that strength and prompted massive opportunities in reshaping the economy.
> with the exception of the recent hiccup, the long term trend in interest rates has been downward
Yes, this is a function of increasing stability and time horizons [1]. That said, the relevant frame is a fund lifespan, usually 5 to 10 years. (Unless you’re Warren Buffett.) In those intervals, the long-term signal is dwarfed by short-term noise.
[1] http://www.economist.com/news/finance-and-economics/21598651...
[2] https://www.bankofengland.co.uk/-/media/boe/files/working-pa...
And I'd be surprised if in the period between 1980 and 2021 you could find a 10 year interval that didn't exhibit significantly lower rates at the end than at the beginning, and only a select few 5-year periods.
You seem to have the viewpoint that this had nothing to do with the historical performance of PE funds?
It had a strong effect. But it’s far from dominating. Compounding PE’s performance woes are that fundraising is easier when the economy is strong. That is why there has been a tendency of the largest LBOs happening just before a downturn; the last cycle’s was Twitter.
Or, your PE firm is actually owned by a foreign country and they don't care about profit as their long term goal is wrecking your country's economy.
Even in the case of bankruptcy though, the bondholders may still come out OK. Toys R Us actually made about 5 billion in debt payments in the years it was privately owned, and it took about 5 billion in debt as part of the buyout. The bondholders may not have gotten the return they were expecting, but they mostly got their principal back.
All of that said, the real problem as I see it with PE is that it's just so exploitative. The only thing that matters is the investor's money. For example, one very common strategy after a buyout is to cut quality in various forms. People may have a positive quality impression of a store or a brand, and then keep buying it even after the PE company cuts quality. It takes them a while to realize that the product they're buying is not what it once was, and so the PE firm is making money by tricking people into buying bad products.
The hospital case is just an extreme example of this where the cuts in quality lead to people getting sick and dying.
> "Hospital success is measured not only in dollars or the number of patients who pass through the doors, but also in lives saved"
As if profits are the primary goal of hospitals and saving lives/treating patients is just an afterthought.
The capture of all life sustaining efforts by for-profit entities is probably the number one problem in the western world which is driving all others. Climate change, famine, homelessness, death from preventable disease.
None are caused by unsolvable problems but instead by the inability of the for-profit/market based system to provide for human needs.
If the primary goal of a hospital is to save lives, which it is, then the hospital needs to generate sufficient revenue to enable that goal.
Non-profit hospitals don’t fare better or worse on health outcomes than for-profit hospitals [1]. They are run less efficiently [2]. If you’ve been on a non-profit Board, particularly a service-model non-profit, this makes sense.
[1] https://www.hsph.harvard.edu/news/press-releases/hospitals-c...
[2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7439627/
But in a better world I wouldn’t have any reason not to get my foot checked up on. Maybe there is something that could be done for it and maybe it makes my life better. Or it’s fine and I get peace of mind and stop worrying.
Now multiply this across the entire population. What if everyone had lower barriers to health care. The amount of population wide well being would increase a lot. And that’s the part I think we usually have a hard time conceptualizing when we think about a better world. But it’s a very real possibility!
There have been recent calls for the human population to hit a trillion people (by billionaires). The reasoning is we’d “have more einsteins” but personally Im way more worried about the genius physicist working in an amazon shipping center.
I think you are right, the billionaires want minimum wage workers who are making less than a living wage.
Do we?
We have enough food, but not the logistics to distribute it. I doubt we produce enough of some medicines because they have constant shortages. Whether we have enough education depends on how you define it: I believe we have enough to give everyone access to online resources, but we have an education crisis in the US which is driven by unmotivated students, and the factors which are causing the lack of motivation cost much more (old-style teaching, large classes with disruptive students, poor school infrastructure, poverty at home).
It's a social problem because I'm sure even if we had enough resources, there are people who would get in the way of distributing them, because they don't want people to be educated or feel they don't deserve assistance. Already we have countries which block parts of the internet, and countries at war which block aid. But I don't think it's only a social problem.
Access isn't binary, nor is it ever "solved". Every person in wealthy 1st world countries has access to enough food that they won't starve, access to secondary education to 16/18, and emergency medical care. I'm sure you would consider those things insufficient.
A right asserted without any degree is pretty useless.
At least in some areas of the US there used to be public hospitals, run at the local (state or county level) but they were essentially privatized or defunded to the point where they had to close or become privatized.
I could give lots of examples of this, but things now are less local, more controlled by centralized, private but national entities, more regulation, more consolidation of clinics and hospitals, and so forth and so on.
I'm for putting more central resources in public control (government insurance, more public clinics and hospitals) but also believe there needs to be more deregulation of important elements and more competition to drive down costs on the supply end.
In my opinion, there's a lot of hidden factors driving up healthcare costs, in the form of insulating providers and hospital and clinic chains from competition, taking choice aware from consumers, decreasing transparency about costs, as well as "hiding" public funding of healthcare that's already happening. It feels a bit like, in the US at least, we have this system that likes to pretend it's 1960, at least insofar as doing so benefits certain people and groups.
Everything in our economy could work just fine without a lot of growth except finance, which absolutely cannot work and collapses completely unless number always goes up forever.
Which includes all taxpayers, since all those government employees are paid with the "growth" in the form of underfunded defined benefit pension and retiree healthcare. Or the people counting on their 401k numbers to go up.
It fails with monopolies though.
Nobody while having a heart-attack stops and thinks about shopping around for a lower price. "hmmm, about to die, let me see if I have any coupons".
Take insulin for example, companies can charge whatever they want, what are customers going to do? Just die?
Well in theory that's the point of insurance. You comparison shop insurance before having a heart attack, then if an attack happens you're covered.
Of course many people just wouldn't buy insurance unless forced ... many breadwinners die leaving their families nothing because they don't think of buying life insurance.
And I agree, we should punish those who don't understand the system. Let them die for their ignorance.
You are locked into you're companies decisions.
You may say, 'well you can opt out', but the deck is really stacked against you trying to go it alone. This is one of the ways that employees are 'locked in' to jobs and become immobilized from seeking better jobs. The insurance is a type of 'capture'.
Electronics I think has been mostly successful as a regulated free market.
A free market would be one where government hospitals exist alongside private for profit hospitals. A free market would have insurance as an optional convenience, not a mandatory one. A free market would have one price for medicine regardless of how you pay for it, where paying with insurance wouldn’t cost $34 when paying out of pocket and using GoodRx costs $2. A free market would be one where opening a private practice for a doctor would not be prohibitively expensive for family medicine because they need to hire 5 administrators to deal with the entangled mess of insurance payments.
I'm supportive of greater "publicizing"(?) of healthcare but I also agree that there are many, many, many ways in which competition could be increased to actual improve free market dynamics.
I can provide examples of different models of public/private healthcare existing in the same market, if health insurance and healthcare being more accessible and being cheaper across the world. All of these systems have more than one aspect of my “wishlist” if not all. https://www.news-medical.net/health/Healthcare-Systems-Aroun...
But then I hit F5 and see that they explicitly feel these things will just come about given a "free market". Oh well.
I’m responding to the “free market” that most “free market” advocates refer to: a market where companies are free to do whatever they want as long as it makes them money and also have regulations only when it benefits them.
Um, the whole point of the free market is to destroy profit!
To paraphrase Jeff Bezos, your profit is my opportunity.
In the US, we love faulting individuals doing $badthing, but refuse to look at policymakers when they knowingly do so.
And in the end, the policymakers play musical chairs or Pokemon (gotta buy them all), and do the same company after company.
Some random PE investor or analyst isn't the one putting needles in people's arms or writing prescriptions, so does it make sense to send the analyst to jail when someone dies from negligent causes in a hospital? I don't think it does. It probably doesn't make sense to send anyone to jail unless there's actual malice involved but if you're looking to punish someone for something it probably makes sense to look first at the person actually pushing the drug or doing the procedure.
PE company comes in to a med facility. We have proof that when they move in, they make new policies. These policies have a demonstrable proof that they reduce standard of care, cause X% more incidents, and Y% more deaths.
From the article is:
> After a hospital was acquired by private equity, admitted Medicare patients had a 25% increase in hospital-acquired complications, compared with patients admitted before acquisition. Patients also had 27% more falls and 38% more bloodstream infections caused by central lines, which are temporary surgically inserted ports that allow easy intravenous access for patients receiving repeated drug infusions or other treatments.
We have demonstrable proof that policies put in place have directly caused this harm. I'm not trying to alleviate blame when a med professional does something wrong and causes an injury. However when we see increases like "25% increase in hospital acquired complications", tells me that there is underlying policy that caused a significant increase in injuries/deaths.
We can point towards a policy that causes mass injury, yet the policy people are beyond reproach. Instead, the 25% more injuries are looked at as an individual bad action. Now we should be looking at the individuals and how their decisions caused a bad thing to happen.... however when we see trends from multiple people towards the same reasoning, and the reasoning is "policy", then absolutely those policymakers should be in scope.
I would also look at policy decisions of 2nd derivative effects too. However those can take quite a bit of time to appear. Again, if policymakers want the responsibility of policy, ethics, legality, and direct result of policies should also be what they look at and are responsible for.
My wife had a good experience giving birth in our local hospital 12 years ago, but this year, after having been taken over, they completely screwed her brain up in what should have been a routine procedure. 10 months later and she’s still suffering. i’m not sure she’ll ever recover :(
It seems likely that both causes are an example of failure of private ownership wherein the county is being blamed only because it was left holding the bag.
If it ever comes down to helping a patient (or employee) vs a quarter with lower than expected growth, they will predictably not help the patient (or employee) in favor of meeting that quarter's target.
They pretty much predicted the current situation for care, but missing out a bi on the tech side of healthcare.
- population growth over that time - percent of people able to afford cars and fuel over that time - % of those numbers that are in London ( and other big cities) - so the number of people able to afford to live in London compared to jobs there... Many people were priced out, and so have to commute, and pollution taxes and parking prices are now there to discourage cars - how much train line maintenance has been dropped, and will be coming up as needing replacement "soon" but not done - how much subsidy the private companies are actually getting still.
...
Trains in the UK are really not great at all... Compared to the rest of Europe anyway.
I feel like you could be at the end of the world, looking at certain destruction approaching us, and there’d be some venture capitalist being, “listen, we have full control of this situation. Everything is fine… we’ve got a long history of managing risk in this area.”
right in the subheadline it says "though patients were no more likely to die"
Curiously, the study found a small drop in hospital deaths at private equity hospitals. This, the researchers said, may be due to social and demographic factors — private equity patients were younger and less disadvantaged than those at peer hospitals not owned by private equity.
https://hms.harvard.edu/news/what-happens-when-private-equit...
Also:
https://www.medpagetoday.com/publichealthpolicy/practicemana...
https://www.usnews.com/news/health-news/articles/2023-12-26/...
https://www.chicagobooth.edu/review/when-private-equity-take...
Maybe because the former patients died at home.
https://www.newyorker.com/cartoon/a16995
https://news.ycombinator.com/item?id=38773426