Not really. Monopolies are an invitation to competition: Your margin is my opportunity, as it were. They are therefore hard to maintain absent some kind of external force to support it: Regulations (regulatory capture), licensing, explicit grant from the government, intellectual property laws, or some kind of collusion or market manipulation (more leading to oligopolies rather than monopolies).

This is how industrial barons of the early-mid 20th century operated, as an example, with collusion and price fixing type things. Or hospitals and medical facilities today with certificate-of-need laws enforced by the government.

Reagan and other racists succeeded in turning government benefits into a synonym for POC stealing from White Americans.

It’s fine for a military defense contractor to go a few billion over budget for a weapons platform that barely works, but if a single mother uses food stamps to buy cake ingredients and then sells a few pieces of cake that’s a travesty.

Millions of Americans, not just white, but plenty of Hispanics, Blacks and Asians too, voted to take away their own medical insurance.

Because they know that they’re just temporarily embarrassed millionaires. Not the type of people who need handouts.

I'm not sure anyone has solved the problem, though.

"For profit" isn't really the problem, fee for service is.

Value based arrangements and capitated payment structures are real improvements.

When you don't have any market forces constraining utilization, you get massive access problems.

If PE buys something that doesn't have a moat then they can't enshittify it because the customers would immediately switch to alternatives.

They often still buy those things, e.g. when there is a failing company in a competitive market that could do better with new management, but then no one complains about it because they're not making the product worse (and can't because there is actual competition).

> But why should an owner of a practice sell to their junior staff when PE is there offering 2, 3, 5x as much?

The better question is, why does a medical practice have a moat? What exactly is the PE firm buying? When the senior doctor retires, what stops the junior one(s) from renting their own offices and taking their patients with them?

The answer is presumably something like, non-compete agreements, or vendor lock-in from EMR systems, or some kind of insurance or regulatory bureaucracy. So then we need to identify what it actually is and do away with it so the next generation's juniors don't have to outbid Wall St to acquire it.

These PE-owned companies create market demand by being shitty. Somehow they are able to keep their margins and their market so that their business model makes sense. That's a puzzle, right?

There is no shortage of investment looking for great returns. A market with huge demand not being met adequately is a dream to investors. Even more when you know the competition must continue to fuck their customers because they paid above market rates for the purchase and the business is saddled with debt obligations it must meet (Leveraged buyouts do that).

What could stop new competition from beating them out?

It's not capital.

> To put humans through this kind of misaligned system is the stuff of nightmares.

And also the natural market equilibrium, apparently.

I love this idea but I think the PE angle also means suppliers and vendors will charge them far less for bulk order and those suppliers/vendors themselves may be a horrible little mix of MBA-brained owner practices that actively upcharges small businesses who have far less negotiating leverage

I think the only way to do it is to have your neighborhood actively being okay with seeking local services something that a lot of neighborhood groups I frequent seem to be a big fan of (farmer's markets are an indication of this - if there's strong and regular FMs being hosted, there's people willing to burn a little extra disposable income for better, more reliable products)

I'd be curious to hear of your progress on this idea. Its not dumb, and it sounds similar to what co-ops do.

>I hope someone else does this so I don't have to.

This is a type of challenge I've been thinking of a lot. A "you have to dedicate your whole life to becoming X" challenge - I had the thought of doing something similar here in Canada with groceries. An obviously profitable business where the challenge is "how do you resist a sweetheart buyout" when the cartel comes knocking with cash...

I’be been similarly interested and long ruminating about whether it would be possible to achieve something similar to this in the restaurant industry. For example to have a non profit operating a franchise of a fast food location and instead of having thw 20% corporate tax rate and profit going towards retained earnings and dividends to instead be reinvested in the mission which would be better, more nutritious ingredients to better healthily feed your local customers and two to provide the staff a livable wage. Like you, I keep turning it over in my head and contemplating it rather passively as it’s way outside of my lane of Data Engineering, but I’d like to think that the market would eventually identify this as viable if it at all would be. With the ever looming fear of layoffs and future of future employment in writing software I keep thinking about that scene of the firing in “Up In The Air” where the guy they let go had always dreamt of being a chef and was finally able to pursue it after getting laid off from his high paying job that he had come to hate. Typed on my phone with my cat on my lap ; so plz excuse any run on sentences or imperfections.

Good luck to you and I sincerely hope that you succeed. It's not a dumb idea.

But on the human side many health systems are non-profit, and they generally aren't any cheaper or better quality than their for-profit competition. The real problem is local market power and lack of anti-trust enforcement.

If you start your own veterinary practice, and eventually build up a steady stream of happy customers, then sooner or later the PE firms will come knocking on your door, too.

Imagine you're drowning in student debt and worrying about keeping your business afloat, when someone offers you $5M, and says you'll still get to work with animals, which you love, while they take care of the financial and business side, which you didn't enjoy. It's a no brainer for most people.

* Most small brick & motor businesses do not turn a profit in their first 2 years. So you’ll need a significant amount of runway, in a business where raising capital isn’t guaranteed.

* There’s probably more cost in medical supply, equipment, and certification than you’d expect. There’s standards for security of the medications.

* Most veterinary clinics have staff. That’s payroll expenses.

* Any new business will need marketing. You’ll probably want a large sign/billboard, a decent website, and social media.

* Just leasing office space and furnishing it is surprisingly expensive.

Dogs use the same x-ray machines that people do.

I don’t have a problem with privately owned clinics, but I do think it should have to be majority owned by the operators. What percentage of that 45% is just doctors that run their own office vs. investment firms.

I agree there is still a long way to go. I hope this case shows that there is political will and ability to push back against private equity rot. Many of the commenters here treat these forces as inevitable and unstoppable - but it is possible to take ground back against them. It's unfortunate it took the death of a child for this to happen.

You have to start somewhere.

Very strange comment. I would encourage you to read the specifics of the actual case. The hospital was severely under resourced resulting in a simple case being neglected and the child dying. The child could have received basic treatment and they would have survived.

Underresourcing the hospital was a deliberate decision by Brookfield to push for a government bail-out. Anyone who made money off this should be in jail.

Absolutely no idea what the rest of your comment is about. Our hospitals should have the resources to treat a sick child. Some might say that's the entire point of society.

A stronger steelman is that it results in resources getting allocated in smarter/healthier ways across society.

If there's some business that's getting by but the land it's on is more valuable (e.g. for housing) than the business, some investors buy the business, sell the land, make the business account for the land value, wind the business down if it can't, and there are apartments there a few years later.

Berkshire Hathaway is in some sense also PE (though done by a public company that you can invest in) and Warren Buffett's culture is to find great companies run by great managers and let them cook. That long-term view is the exception and not the rule though.

>If I build a business I get to decide what to do with it.

I don't think that follows necessarily, especially not categorically.

It is a broad term. VC is a subset of PE.

In medicine, it's a solution for someone who wants liquidity (buy kids new home, help local dog shelter, add a new mistress) and doesn't want to retire, yet.

The problem is that the terms are custom and YMMV as an existing patient of said practice.

> The steelman argument is that private equity is just property rights. If I build a business I get to decide what to do with it.

You're gonna need to steelman that again, because in and of itself that is also not something I see as desirable.

Lots of other efficiencies to look at. Tons of them are directly bad for the patient (capturing more of the surplus is an efficiency that businesses generally go hard at).

Ultimately, I think the issue is when people making decisions are able to treat the impact as an abstraction.

> Many people don't really run businesses efficiently.

In many cases that's a good thing, depending on what we mean by efficient. Lots of people run businesses in ways that make less money than they could, and often that's good.

> I don't know how these tradeoffs interact with patient care, but I wouldn't inherently expect PE to be worse at this than any other operating model.

Doesn't the evidence suggest it is indeed often worse?

A structure to run business efficiently using practiced methods is always a good thing. However from what little I have understood, the goal of Private Equity is to maximize the dollar value on their investment. Somehow they have settled with the playbook that running a business even profitably isn't the best idea. Instead its much more profitable to take over the struggling business at good price, squeeze everything possible from the assets (thats where PE seem to be investing their expertise unfortunately) over duration of time. Update the books in a manner that it saves money on taxes and carry forwards the loss, making money in the process.

>> Maybe they find a buyer in a doctor, maybe they don't, but PE provides them an exit that keeps the practice operating in the community.

If the practice is to continue, there must still be practitioners working there. Id prefer they buy out the one retiring, but the retiree can sell to whoever they want.

> and lowering prices in the long run.

My sweet summer child...

The business itself need not be a sellable thing.

Sell the assets maybe, potentially to somebody who wants to use them to run the same kind of business in the same kind of location with the same employees.

It's hostile to the consumer to call it the same business. A name change gives them the opportunity to decide for themselves whether the new owner is worth supporting. It's similarly hostile to the employees to assume that their loyalties can be bought and sold. Let the new owner of the assets re-hire them for the same position in the same location if he wants to, but lets not have them be for sale.

May be categorizing the different private equities can be helpful here. A PE interested and invested for growth is always the best outcome. A PE only looking to salvage and squeeze is that gives the bad branding to PE.

Except they always strip mine the business. Cut the quality and push unnecessary shit. But, hey, you can fill out your forms on an iPad instead of pen and paper. Very cool.

> So, what happens if person A is prohibited from selling their business?

I actually made that thought experiment. Disallow selling businesses. Disallow selling shares. Disallow stock market. Disallow mergers. The only way to acquire a business is to found it or to inherit it. The only way to quit a business is to shut it all down, with all assets liquidated, all liabilities settled, and all contracts terminated.

The main downside is that it's harder for to make money. Otherwise... I only see positives. And no, it wouldn't kill innovation. The investors would just have to invest the old fashioned way - by founding companies or expanding their existing businesses. As for job security, we already don't have it in the current system.

In human med, it's a pretty standard practice to offer a management company 10% ownership for them to handle the business shit.

I'm not arguing with you; I'm legitimately curious what happened to that model and why PE has swooped in as more attractive to doctors. Maybe it's the payout and/or the fact that they don't have to handle business owner decisions at _all_ anymore?

Improving efficiency and optimizing profit are two overlapping segments on the road to crap. It’s not easy to stop the car once you put the bean counters in the driver's seat. If a company is able to do so, it’s usually because there’s a strong leader or culture to resist the slide. But otherwise it’s a thousand small decisions that all seem reasonable on their own.

My controversial opinion: chains/large businesses are more convenient, cheaper, better (and more consistent) service, and the big one: you can complain up the chain when a local branch/franchise fucks up vs dealing with a sole proprietor. There's plenty of small businesses I do value (thrift stores, bodegas, etc), but for services? The choice is obvious.