Hospital ratings dive and medical errors rise when private equity firms are in charge.
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Hospitals slash staff, services, quality of care when private equity takes over
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It's like I've said about COBRA: it's worse than nothing at all. If there was nothing, we might do something; since there is something, people act as if there's nothing to be done.
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I can actually answer one aspect of that, from specific job experience relating to hospital lab work.
A lot of money passes through hospital lab work (or at least it did in the 90s). Some tests were profitable, others took a loss. But, hospitals didn't need to penny-count every test as long as the lab overall balanced out. Insurance companies were fine with it too, as long as the overall totals were reasonable.
Along come HMOs and vulture capitalists.
Here's what they did.
HMO gets a large number of "customers". They can dictate where these people (or their blood/urine specimens) must go for most lab tests.
HMO gets their hands on hospital lab price-book. (maybe legally, maybe ... not so legally.)
HMO picks a test that the hospital loses a bunch of money on. HMO sends a locust-swarm of patients and/or specimens to that hospital for that test and only that test.
Hospital starts bleeding cash. If they're slow to react, they get in dire straits very quickly. Failing that, the HMO simply starves them of patients. Too many empty beds makes a hospital bleed.
Either way, once things get bad, the vultures swoop in to "save" them.
Note this doesn't require direct collusion between the HMOs and the vultures. Just the systemic changes that led to the rise of HMOs. Everything else falls out as inexorable consequences of greed and capital. I was close enough to multiple hospital labs to see various stages of this play out.
In the 90s it was pretty common to see one hospital underpopulated and others nearby heavily overloaded. The "HMO locust swarm" was a big cause of that. Specimen-splitting (which has it's own numerous issues) also became very common.
The vultures have been scheming and profiting from patient misery for decades.
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The Sheep Look Up
Ars Praetorian
We've gone cart-before-horse. Used to be already wealthy people had the time and resources to become physicians. Now people become physicians to become wealthy.
To drill down further: can anyone name anything that's been purchased by private equity which was then made stronger, more robust, more responsive, or an overall better product, service, or experience?
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But isn't that the problem? We do seem to realize this, yet folks still vote for politicians that keep pushing us further and further down this fatal path. When I walk into any healthcare provider today, I walk in with the attitude that I am in a hostile buying environment, and sometimes I seriously contemplate going full on barbarian. It seems my attitude works because they usually back down with me with a simple stare. Oh, I've worked with and for publicly owned hospitals, and that is a whole different experience. They may not have all the latest tech, but you know they are there to help you, not suck your back account dry.
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If capitalism is always driving towards this exact outcome, which it is despite all attempts to regulate it into submission -- something other 'semi capitalist' countries are slowly realizing, America is just ahead of the curve -- then it's not really a perversion of capitalism but the personification of capitalism's true nature.
In other words, stop blaming the tailpipe for the car's pollution. It's the car. More specifically, the engine. And America's 'engine' is capitalism.
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I'm surprised.
Not that hospitals owned by private equity are absolutely shitty at providing care. No, I'm surprised that private equity - the most rapacious of all investment groups - is allowed to buy hospitals in the first place.
I probably shouldn't be, because Murica, but I am.
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But...but...but it worked so well for Boeing after the C-suite from M-D took over. There hasn't been a safety issue in the news in....(checks news) 18 hours....
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Well, your recommendation looks promising, and I'm all for it.
However, I'm not seeing a path towards changing mentality in US in such that healthcare and education sectors are not sources of profit.
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This number is absolutely astounding. 75000 employees across 220 hospitals? My org has 70,000 employees for only 27 hospitals. They are SEVERELY understaffed.
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That's only if you're looking at America's political spectrum from the inside. Because the rest of the world considers both of America's 'parties' batshit crazy. It's just that one party is MORE batshit crazy than the other. What Americans considers 'progressive' is politically 'centrist' in most other countries. But don't worry. They're all headed in America's direction for the exact same reason: capitalism. Because capitalism doesn't like democracy. It doesn't like sharing anything, including power over the government.
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Leveraged buyouts are a symptom, not the cause. Banning it, without other financial/corporate regulation, would have little effect.
The classic leveraged buy out is PE takes over the Firm and pays off the shareholders using money borrowed against the Firm.
If we banned it, the next option would be for PE to borrow funds to pay current shareholders, and then once they own the Firm, pay off the PE debt by having the Firm, which they now wholly control, borrow money to pay off the PE debt. The result is the same.
If you banned direct transfers, there is also no limit to PE spinning up a holding company which is the one getting loans off the fact it owns said Firm and extracting significant revenues from Firm for holding company debt servicing.
You would need additional regulation on much capital a private corporation can borrow/give/lend to a parent or subsidiary, which would impact all kinds of business where this is common practice (i.e. SMB, conglomerates, and even typical parent/subsidiary). the entire problem is controlling leverage and since leverage is core to capital markets, eliminating it would be problematic.
Rather than banning leveraged buyouts, more regulation (or rather a return on regulation) of corporate financial practices should be done to actual address capital flows. Limits on perhaps how much leverage is allowed, what classes of assets loans are allowed against, and how much can be extracted out of subsidiaries. Banking in particular is the easy target as they are critical source of public capital and banking regulation can be put in place easily to control their lending practices. More difficult would be PE and private equity loans as there are fewer options to regulate. But it is possible, and you can also tackle it to focus on publicly listed firms for instance and perhaps buyouts of certain industries can be limited.
This may have the side benefit of tackling taxation of multinationals as it would reduce the benefits of tax havens using IP manipulation for instance. Ideally, you have the rules kick in for any publicly traded corporation and corporations above a certain size/revenue, or even just for specific industries.
While the free flow of capital is a component of building an efficient economy, effiency is not the be all and end all if there are extensive unpriced externalities to society as a result.
In the end however, for core essential industries, the only real options is heavy regulation of many if not all aspects such as PE is no longer attracted/limiting damage, or state control to avoid the issue entirely.
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Crying Croc
Ars Praetorian
Health care that screws treats you the same way your airline or cable company treats you - because companies follow the same for-profit model. What can go wrong??
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ubercurmudgeon
Ars Praefectus
Why are we, as a society, so bad at identifying what is a zero-sum game and what isn't? Most things aren't, yet are treated as if they are. This is an example of one that is, and yet to say so is heresy among the people who have any power to stop it.
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File this one under “News that should surprise none”.
Healthcare shouldn’t be run for-profit, it’s as simple as that.
Healthcare shouldn’t be run for-profit, it’s as simple as that.
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Could this days open up Apollo and the line to class action lawsuits? Surely they had some internal data about worsening patient outcomes and problems as a result of profit seeking?
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I've said it before, and I'll say it again. Capitalism has its place, but hospitals isn't one of them.
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Do you know the story about the company that called in a specialist because one of their machines was broken? The specialist walked around the machine for a minute or two, then took out a piece of chalk and drew a cross on a specific spot. He said "Take a hammer, hit the machine exactly at the center of the X and it will work again. That will be 20000$" The owner of the company was incensed. "20 000$ for making a chalk cross? I won't pay that." The specialist replied "The cross I did for free, 20 000$ are for knowing where to make it."
Your experience has nothing to do with that. It is actually because the venture capitalist who bought the clinic didn't actually have the money so the clinic now has to pay interest for the loan he took out to pay for the clinic.
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Didn't Trump have some initiative that planned to force hospitals to publish valid and transparent pricelists so this "its 200.000 USD invoice for you, but for insurance its 10.000 USD" bull*** stops?
I seem to remember this being discussed and when hospitals were forced to produce pricelist it was convoluted bunch of junk that nobody could figure out what the cost would be to pay out of pocket?
I seem to remember this being discussed and when hospitals were forced to produce pricelist it was convoluted bunch of junk that nobody could figure out what the cost would be to pay out of pocket?
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From an outsider, US politics appears to be centre-right and further-right.
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The well being of patients is not the focus of entities focused on maximizing profit. Surprise!
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Wait, what dude tried to recreate kill bill vol 1? Didn't see anything like that in the article
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For six months from 2021 to early 2022 I was hospitalized for the relapse of my cancer and had a sort of front-row seat of that hospital and tangled with them on a safety issue, which they cleverly ducked; and on other issues. In the process of that happening, I had a fair bit of information put to me by the general manager about his battle with expenses and related matters on money to run that very large hospital. It was quite an education, especially as he was really pissed off at me for dragging some government folks into my worries. Actually, he was/is a bit scared of me because of connections I have and I suppose I also have the ability to write in such a way that some folks pay attention. Still, he did take some time to educate me on certain matters.
So I read that article, but the two reports I did not read, yet; and the other five links I also did not look at, yet. So if I want to engage in a proper thought process here I need to do that homework.
BUT I saw that number of 220 hospitals and my first question is if anyone can cite the total number of hospitals in the United States? My second question is if those two financials entities also own hospitals in Canada, Mexico, or any other nation? I only make note of Canada and Mexico because of their proximity to the United States.
I also have a sort of nagging thought as to what educational institutes may be providing staff to the hospitals in those reports. No, that's not exactly a question, yet.
So I read that article, but the two reports I did not read, yet; and the other five links I also did not look at, yet. So if I want to engage in a proper thought process here I need to do that homework.
BUT I saw that number of 220 hospitals and my first question is if anyone can cite the total number of hospitals in the United States? My second question is if those two financials entities also own hospitals in Canada, Mexico, or any other nation? I only make note of Canada and Mexico because of their proximity to the United States.
I also have a sort of nagging thought as to what educational institutes may be providing staff to the hospitals in those reports. No, that's not exactly a question, yet.
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By the way, my use of "very large" in the post above is sort of meaning I have thoughts about just how large these hospitals are that the studies are focused on. If anyone wants to offer information that addresses that, please help me. I'll offer a 'thank you' in advance.
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If you google "total number of hospitals in the United States" it will quote the number the American Hospital Association provides right under the search box.
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I sort of wondered if anyone would slip on that one. Kind of like a frozen lake, isn't it?
But I wasn't expecting a second question to arise, and I thank you for that.
How many hospitals are there in the United States that are not listed by that association?
Really, I thank you; I had not anticipated that one.
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Take a look at elder care facilities. The problem is rampant there. I’d never put a relative in a for profit one after what I’ve read about them.
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It should be prohibited to buy a company and then dump the debt incurred buying the company onto the company and not the parent. At the very least for critical infrastructure like hospitals. But maybe all companies since any company can be very well critical for the economic viability of a community.
In practice it's very hard to prevent since the companies can just merge and then split again at a different line. So any attempt to prevent that needs to include additional limits on when companies can be merged or split.
Maybe a rule that on a split any debt would have to be guaranteed by both parts of the company? The goal is to prevent the unilateral shift of risk from the whole to the smaller part.
In practice it's very hard to prevent since the companies can just merge and then split again at a different line. So any attempt to prevent that needs to include additional limits on when companies can be merged or split.
Maybe a rule that on a split any debt would have to be guaranteed by both parts of the company? The goal is to prevent the unilateral shift of risk from the whole to the smaller part.
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Next time you visit an ER, notice there are hardly any trained doctors supervising areas, it is all run by an AI app. No supervisors, only metrics and the treating physician can only recommend treatment to an AI app that decides what you get.
For all you hard boiled capitalists out there, health care and profit can't exist in the same place. The least profitable patients are those who need the most healthcare. Does the US have to burn down and descend into red hat anarchy and full pay to win government before it comes to it's senses and socializes medicine as it should be.
For all you hard boiled capitalists out there, health care and profit can't exist in the same place. The least profitable patients are those who need the most healthcare. Does the US have to burn down and descend into red hat anarchy and full pay to win government before it comes to it's senses and socializes medicine as it should be.
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Just to nitpick, even in the "northern" paradise people pay "out of pocket" for health insurance. It's just that everyone has to pay for it and the insurer (state or not) can't turn down anyone.
This ends up cheaper for everyone since the cost is spread across the whole population, but there's no "i'm young and healthy and i don't pay anything". Not when you have an income.
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