Private Equity - Healthcare Edition

02/28/24
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"The game was, come to Massachusettts, make some investments and then begin to suck out as much as you can in terms of profits," she said.

Cerberus, the private equity firm, shed its stake in Steward by January 2021, after making an $800 million profit in a decade, according to a report from Bloomberg. Financial records show Steward has also sold off more than $1 billion of its hospitals' land and buildings since 2016 to Medical Properties Trust, which has made a business of buying up hospital real estate from private equity investors.

https://youtu.be/sKLCK8pR0TM

https://www.cbsnews.com/news/a-new-m...greed-to-blame


05/06/24
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BOSTON – Steward Health Care, the struggling health care provider that relied on backing from private equity investors to quickly acquire dozens of community hospitals, including facilities in Massachusetts, Texas and Florida, announced Monday that it is filing for bankruptcy.

https://www.cbsnews.com/texas/news/s...are-bankruptcy

https://www.youtube.com/watch?v=GxPvAXDJzec

Boston Globe has been doing some good reporting on this. CEO should be in the “Piece of Shit Humans” thread. Cardiologist who took over Steward, sold the buildings for cash and saddled Stewart with massive rent payments. At least he got himself two yachts out of the deal.

https://www.bostonglobe.com/2024/02/...-torre-yachts/

I was going post ALL PE should be in the POS Humans thread. It needs to die in a fire

Maybe not all. https://www.cbsnews.com/video/privat...eo-2024-05-05/

Our DIL is about to enter her last year of ER residency and is starting to look at jobs in Las Vegas. All the ER groups seem to be owned by PE, including the university ER where she's training. Most of the care is provided by PA's and the docs are expected to sign off sometimes without seeing the patients.

This is the hospital group where medical devices where repossessed leading to the deaths of some patients who needed said lifesaving devices

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Originally Posted by old goat

Maybe not all. https://www.cbsnews.com/video/privat...eo-2024-05-05/

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I saw the original piece on 60 Minutes, and caught the follow up this past Sunday. They didn't burn the place to the ground, but the PE firm did get in and out within a few years with a significant profit. It would be interesting to know how the wealth actually got shared. Maybe someone somewhere is doing a case study, or a deeper reporting dive?

And although the new owners are reportedly carrying on in a similar fashion, will that last?

Perhaps "maybe" is the operative word.

https://www.youtube.com/watch?v=S0yAK2kiW1M

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Originally Posted by old goat

Our DIL is about to enter her last year of ER residency and is starting to look at jobs in Las Vegas. All the ER groups seem to be owned by PE, including the university ER where she's training. Most of the care is provided by PA's and the docs are expected to sign off sometimes without seeing the patients.

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That does not sound ... good.

P.S. I believe a lot of people get an unpleasant surprise when they go to an ER at a hospital that's in network, but then get a big bill their insurer won't cover because the ER is run separately. Thx, PE.

The whole PE schtick about giving employees a stake is largely smoke and mirrors--not a lie, but a deflection of sorts. I have experience with this first hand and it works for them because c-suite folks are accustomed to it, so they're already going to go through the motions to set up an ESOP or the like.

So let's say c-suite folks account for ~3-5% of the company shares. So maybe 5 people own 5%... The reality is the entirety of the rest of the company will only account for maybe another 3-5%, and of that only a portion will actually understand the mechanisms and end up exercising their shares and converting. So maybe 1000 other folks account for that additional 5% and of that, only a portion will take action.

In short, they do what they have to get top level talent as dictated by the market, and the rest is fluff so that they can say "you're an owner, too," to any given employee, knowing the business could go bonkers and that person MIGHT make enough to by themselves an average car over the course of that ownership. The reality is that young folks hear "equity" and think Microsoft stories of Opera money, but surprisingly don't actually do the math.

Stravos is full of shit.



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I'm sure it was all quite legal.

Attachment 493251

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Originally Posted by Cisco Kid

I'm sure it was all quite legal.

Attachment 493251

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I mean, the interesting thing is that yes, it is and it should be legal. Lots of average people have made really good money through similar programs, myself and wife included. But it's a law of averages and very much a deferment of risk. The employees only get paid via ESOP if the company transacts at a highly profitable rate. I guess truly shady PE firms might withhold that fact, I don't know.

And, it's learned behavior in the PE community. And while it's unfortunate, it's also reliant on the fact that most people don't do the math and tend to believe that the word "equity" is synonymous with "guaranteed pay out."

In the unlikely event that there is anyone on the TGRs under the age of 40, DO the MATH. If you don't know how, find someone who can. As an example, you might find out that negotiating a relatively simple and benign bonus program in leau of equity actually nets more money via your vanilla investment portfolio. Maybe not.

It should be noted that one of the companies I worked with who used the aforementioned equity model also paid really well, had excellent benefits and we're generally respectful of their employees. I don't think they're necessarily bad people but there's one thing PE has in common, good or bad. They do the math. Lots of it and it's what determines their course of action, much like a casino. And it's in employees' interst to do it, too. If you work for PE and understand that in many ways, you're working for a casino run by robots, you tend to make better decisions and benefit more.

But employment benefits are a bit off the main topic. So I apologize.

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Originally Posted by The Reverend Floater

But employment benefits are a bit off the main topic. So I apologize.

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Please don't. We're all here to vent.

And learn.

No hugging, though.

I'm less interested in the profit sharing aspect of Stavros' model--although the long time employee they interviewed got a 6 figure payout--than in the fact that they didn't strip the business and saddle it with debt. But relying on the altruism of PE is not scalable. What we need are enforcement--the FTC and SEC et al have been asleep for decades--and better laws to enforce. Starting with laws restricting or banning stock buy backs.

“We had previously found that private equity acquisitions led to higher charges, prices, and societal spending,” said Zirui Song, associate professor of health care policy and medicine in the Blavatnik Institute and director of research in the Center for Primary Care at HMS. “Now, we’re learning that there are also downstream concerns for the clinical quality of care delivered to hospital patients.”

The researchers said the findings are alarming because they may reflect bottom-line incentives overshadowing patient care and safety.

What Happens When Private Equity Takes Over a Hospital

We need state laws that allow medical boards to hold nonphysician owners of hospitals, clinics and medical practices to be held accountable for the quality of medical care. Give medical boards the authority to suspend the right of owners to operate these facilities (analagous to the authority of boards to suspend or revoke physian licenses), require medical oversight by outside parties (analogous to the proctoring requirements boards can impose on physicians), etc. Currently, if there are lapses in care medical boards can only discipline doctors. State depts of health can suspend the license of hospitals but this generally requires that the state show specific breaches of regulations, and it is easy to comply with the letter of regulations while stripping the operation in fact. The only recourse recourse against non physician owners is private lawsuits for individual bad outcomes and even if victims and victims' attorneys could afford to sue, they would have to show that it was a specific act by the owners that caused a specific death or injury.

Hey OG, this was linked in the HMS article in my previous post...

Private equity acquisitions of clinician practices and hospitals continue to increase. Over the last decade, hundreds of hospitals, thousands of physicians, and many additional health care entities in the US—including nursing homes, ambulatory surgical centers, and fertility clinics—have been acquired by private equity firms. As evidence emerges on the clinical and economic consequences of these buyouts, federal and state policy makers have begun exploring ways to improve oversight and regulation in this space. To date, however, a framework for potential policy responses to this growth in private equity ownership remains lacking.

https://jamanetwork.com/journals/jam...stract/2804025

Full article requires an account - perhaps you could have a look and comment?

There's also a Fortune article, but paywalled - but as the article notes, more PE backed healthcare companies are going bankrupt.

https://www.healthcare-brew.com/stor...t-report-finds

Maybe it has legs for the next session, but the Oregon legislature considered a bill to curtail PE owned healthcare.

https://www.opb.org/article/2024/02/...cal-practices/

Steward was already obliged to provide financial reporting data for state regulatory review. They didn't, took the fines, and tied things up in court.

Steward and Cerberus put on a masterclass in financial fuckery. It wasn't even clear what assets Steward still owned to sell at onset.

At least it's on the Gov radar now...

https://www.axios.com/2024/04/10/pri...ctors-congress

https://calmatters.org/health/2024/0...private-equity

California AB 3129: Health care system consolidation

With people all around the country experiencing ill effects of the ongoing plunder of healthcare systems could be a popular issue in an election year.

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Originally Posted by HappyCamper

There's also a Fortune article, but paywalled - but as the article notes, more PE backed healthcare companies are going bankrupt.

https://www.healthcare-brew.com/stor...t-report-finds

Maybe it has legs for the next session, but the Oregon legislature considered a bill to curtail PE owned healthcare.

https://www.opb.org/article/2024/02/...cal-practices/

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Speaking of plunder...

Attachment 493293

Are Private Equity Firms Plundering the U.S. Economy? - FREAKONOMICS

The fact that the overwhelming majority of people I met up in the Yellowstone Club were Private Equity bros perhaps should tell us everything we need to know. The owner of the Club included. These guys make an obscene living raping and pillaging companies until there's nothing left to extract. Lather, rinse, repeat. It's essentially 21st century legal piracy if you ask me. While we get absolutely hosed with the health care system writ large, those assholes be bragging about their sailboat racing conquests and lavish trips (some of the many convos I've overhead in the lodge). I'd say it's nigh time for the long dick of the law to deal with them and their involvement fucking us all over on healthcare, housing, shit wages, and so much more, BUT that ain't happening with their simultaneous involvement in PACs and what not. :cussing:

Im pretty much against any elements of health care being run to generate a profit.

That’s kind of my knee-jerk take and there’s like probably some reasons my broad-brush take is wrong, but hey, I’m idealistic.

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Originally Posted by Meadow Skipper

Im pretty much against any elements of health care being run to generate a profit.

That’s kind of my knee-jerk take and there’s like probably some reasons my broad-brush take is wrong, but hey, I’m idealistic.

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Fortunately, we don't have to worry about getting any of it fixed, because people are sufficiently distracted by which bathroom people use to vote in their own interests. :rolleyes2

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Originally Posted by fomofo

I saw the original piece on 60 Minutes, and caught the follow up this past Sunday. They didn't burn the place to the ground, but the PE firm did get in and out within a few years with a significant profit. It would be interesting to know how the wealth actually got shared. Maybe someone somewhere is doing a case study, or a deeper reporting dive?

And although the new owners are reportedly carrying on in a similar fashion, will that last?

Perhaps "maybe" is the operative word.

https://www.youtube.com/watch?v=S0yAK2kiW1M

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Quote:

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Originally Posted by The Reverend Floater

The whole PE schtick about giving employees a stake is largely smoke and mirrors--not a lie, but a deflection of sorts. I have experience with this first hand and it works for them because c-suite folks are accustomed to it, so they're already going to go through the motions to set up an ESOP or the like.

So let's say c-suite folks account for ~3-5% of the company shares. So maybe 5 people own 5%... The reality is the entirety of the rest of the company will only account for maybe another 3-5%, and of that only a portion will actually understand the mechanisms and end up exercising their shares and converting. So maybe 1000 other folks account for that additional 5% and of that, only a portion will take action.

In short, they do what they have to get top level talent as dictated by the market, and the rest is fluff so that they can say "you're an owner, too," to any given employee, knowing the business could go bonkers and that person MIGHT make enough to by themselves an average car over the course of that ownership. The reality is that young folks hear "equity" and think Microsoft stories of Opera money, but surprisingly don't actually do the math.

Stravos is full of shit.

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Couple weeks ago Freakonomics devoted an episode to this topic of PE and employee ownership. Several people who operate in the space (including Stavros) discuss different aspects of the situation.

The employee ownership movement is growing, and one of its biggest champions is also a private equity heavyweight. Is this meaningful change, or just window dressing?

Should Companies Be Owned by Their Workers?

Link goes to web page with audio playback, transcript, and link to YouTube vid at bottom

Want to know why healthcare in America sucks hairy donkey ballz so badly? A LOT can be explained right here. Should maybe even cross-post to the Anti-work thread since it is also explains why constant layoffs, shit wages, and benefit reductions have become SO prevalent. I don't even know WTF can possibly be done about this since these asshole's tentacles reach so far and wide:

https://www.youtube.com/watch?v=K1cJqB0X_BA

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Originally Posted by MontuckyFried

Want to know why healthcare in America sucks hairy donkey ballz so badly?

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Because it's profit-run as opposed to single-payer, like it should be. And it *can* be changed, but people will need to vote for it, instead of being distracted by who is using which bathroom. :rolleyes:

Quote:

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Originally Posted by The Reverend Floater

The whole PE schtick about giving employees a stake is largely smoke and mirrors--not a lie, but a deflection of sorts. I have experience with this first hand and it works for them because c-suite folks are accustomed to it, so they're already going to go through the motions to set up an ESOP or the like.

So let's say c-suite folks account for ~3-5% of the company shares. So maybe 5 people own 5%... The reality is the entirety of the rest of the company will only account for maybe another 3-5%, and of that only a portion will actually understand the mechanisms and end up exercising their shares and converting. So maybe 1000 other folks account for that additional 5% and of that, only a portion will take action.

In short, they do what they have to get top level talent as dictated by the market, and the rest is fluff so that they can say "you're an owner, too," to any given employee, knowing the business could go bonkers and that person MIGHT make enough to by themselves an average car over the course of that ownership. The reality is that young folks hear "equity" and think Microsoft stories of Opera money, but surprisingly don't actually do the math.

Stravos is full of shit.



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i'm not disagreeing with you

it really is sleazy

it sucks, I work in healthcare IT, and do a lot of contracting. i hear about charges being padded and it bumms me out, but PE in healthcare is so fucking awful when you believe healthcare is a human right