Private equity firms acquired more than 500 autism centers in past decade: study

https://www.brown.edu/news/2026-01-07/private-equity-autism-centers

by hhs • 6 months ago

309 235 6 months ago

Krasnol4• 6 months ago

Private equity in healthcare shows particularly clearly how far capitalism is willing to go. Profiting from the suffering of humans and animals, while probably still feeling good and even heroic about it, disgusts me.

mapontosevenths12• 6 months ago

I can see your perspective, but healthcare isn't always a zero sum game. It can be empathetic and useful while also being profitable. It often isn't, but it can be.

hermanzegerman9• 6 months ago

There is plenty of evidence that Hospitals, Nursing Homes operated by private equity have way more worse outcomes than those of other operators, even for-profit ones

Krasnol4• 6 months ago

Why does it HAVE to be profitable?

Why can't we just leave some things out of the whole madness?

It's not like we don't have enough stuff that can be made profitable already.

Just let your customers be healthy, have a roof over their head, water, electricity, internet. They'll have more time and money to spend on all the other profitable stuff.

It doesn't have to be EVERYTHING!

sergiotapia• 6 months ago

Private equity just makes everything worse for consumer. Squeezes every penny out.

threethirtytwo6• 6 months ago

Makes sense. Half the people I know now have autism including Elon musk so it’s quite lucrative.

mapontosevenths12• 6 months ago

They always did, its just that you now know about it.

tjwebbnorfolk4• 6 months ago

I know this is the conventional view. But is it possible that the prevalence of autism has been somewhat exaggerated and overdiagnosed? There's a CLEAR profit motive here...

threethirtytwo6• 6 months ago

What do you mean I didn't know about it?

I always knew much of my family, including me, had autism.

Der_Einzige• 6 months ago

No they weren't. Autism is as a result of endocrine disruptions through environmental contamination along with a significant amount of heredity transmission. Same reason why T rates, sperm rates, fertility, are cratering.

https://en.wikipedia.org/wiki/Empathising%E2%80%93systemisin...

Unironically trying to villify the "Atrazine is turning the frogs gay" guy is going to look really stupid to liberals very soon.

bunnybomb23• 6 months ago

Its cool to have autism now. People think it makes you nerdy into rockets like Elon.

Maybe these private equity firms are trying to create incubators out of these autism centers for new startup ideas..

JumpCrisscross11• 6 months ago

If we’re going to stick with private ownership of our healthcare infrastructure, patient-facing providers should at least be required to be B Corps, with one Board seat set to represent the doctors’ and nurses’ interests and a second patients’ interests. (Not sure how you’d elect the latter.)

There should also be strict leverage, related-party transaction and dividend limits. In exchange, we might provide a public lender of last resort for healthcare providers who need a lifeline.

Banning private equity from healthcare is a good headline. And if I were a candidate, I’d probably run on it. But it’s a band-aid to a broader incentive problem.

chneu• 6 months ago

The issue is, at least in the US, if we ban PE/VC from healthcare, who is going to do it?

Americans are deeply divided on the big bad guvmit

fc417fc8025• 6 months ago

What's wrong with private practices again? Personally I prefer them but (purely my own impression) it seems like they are dwindling.

callc• 6 months ago

I have hope that the newer generations don’t align with “big bad guvmit”, and there’s been enough negative experiences (direct and indirect) with healthcare that people will vote for alternatives.

Also, I am saddened by the shared anxiety of healthcare in US (availability while jobless, f*** by big bills, lack of care, etc). The raw amount of shared mental stress must contribute to lower lifespans :(

keernan• 6 months ago

Americans are deeply divided on the big bad guvmit

But insurance companies are a-ok

stogot• 6 months ago

The same way they ran before PE and VC

red-iron-pine2• 6 months ago

are they? it's mostly boomers plus the ones that corpo-owned social media are able to hit

look at the F500 list and note how many healthcare companies are in the top 50 (even top 10), then ask yourself how much they could spend on marketing

cyanydeez4• 6 months ago

Thats essential Democratic Socialism and would lead to minorities benefitting.

As such, liberals and conservatives agree its a bad idea.

andy993• 6 months ago

These should be useful signals to regulators. Regulation is imperfect but somehow we blame companies that take advantage, either of immature or nonexistent regulation (which might be the case here) or of poorly written regulation (e.g. circa 2000 California energy regulation that let Enron and company run wild).

These companies, in finding essentially arbitrage opportunities, are, perversely, helping strengthen regulation, but only if regulators pay attention to what is going on and do something about it, instead of just watching it happen.

20after4• 6 months ago

This fails to recognize the existence of lobbyists and regulatory capture.

KPGv22• 6 months ago

No it doesn't. Nothing about what you're responding to indicates they're ignoring these things exist. Unless your argument is "lobbyists exist, so we should ban all regulations and go back to the wild west," then the sentence where the person referred to regulation as "imperfect" encompasses lobbying.

cogman106• 6 months ago

I really dislike this, especially because it ultimately results in worse care for the kids.

I think the place I take my kid to for therapy is likely private equity owned, but it's also about the only place available in my area.

I know they are charging around $80 per season, and I also know that the salaries for their therapists are around $25 to $30 per hour.

That leaves a very healthy margin for everything from employee benefits to building rental to admin (which I think is probably where the majority of margin goes).

accrual2• 6 months ago

It's worth asking if you're curious or have a good relationship with the provider. Some may be willing to tell all about their ownership or management situation if prompted politely.

I know of a childcare center that was acquired recently. Not sure if by PE or just another business, but the employees are less than thrilled with the changes.

didntknowyou2• 6 months ago

having work in an industry affected by PE buyouts, a lot of these are transactions acted on at management level by businessmen and MBAs/consultants in their offices with no clinician input, yet the hate seems directed at front-line staff.

Plasmoid• 6 months ago

I think you're over-estimating how much slack there is in the organization.

A rule of thumb is that benefits cost an employer 25-30% of salary. So you're already pushing to 50% of revenue going to direct salary costs. Then there are employees in non-revenue roles (HR, legal, accounting, IT, etc...) and employees doing non-revenue work.

Finally, you have rent, licensing, insurance, and all the other fixed costs.

WalterBright2• 6 months ago

An awful lot of businesses go under from underestimating what their expenses inevitably will be. Everyone they deal with has their hand out to get paid.

whydoineedthis2• 6 months ago

Anthem Blue cross pays $125-$150/hr. $80/hr is cheap.

didntknowyou2• 6 months ago

applying this same kind of logic that PE uses, equating healthcare workers to machines is the bane of the industry.

and then people complain why ther doctors burn out. what do you expect when you ingrained on them that every hour not booked is $80 lost, so we need to book them 24/7, cut their lunch break and squeeze every inch of life from them.

Buttons840• 6 months ago

Is it even moral to help people if investors aren't making a profit in the process? (/s)

InMice• 6 months ago

The primary concern is that private equity firms may prioritize financial gains over families, said Daniel Arnold, a senior research scientist at the School of Public Health.

...may? How are they not already by gobbling them up in a calculated way. Targeting states with lax insurance claim scrutiny

hermanzegerman9• 6 months ago

We already know that Private Equity kills people in the hospitals [1] and nursing homes [2] for profit. So why do we continue to allow them to operate Healthcare facilities?

[1] https://jamanetwork.com/journals/jama/fullarticle/2813379

[2] https://www.nber.org/papers/w28474

cogman106• 6 months ago

Because we have governments anemic to running anything or regulating any business.

They are much more likely to continue shoveling cash into private businesses through subsidies then to want to setup and/or run the same business for a fraction of the cost.

tjwebbnorfolk4• 6 months ago

The same one who just said PE isn't allowed to buy any more residential real estate?

I hope they go after hospitals next.

andy993• 6 months ago

Government is probably the worst actor to run healthcare facilities. It’s not that different from PE, except with more administrative bloat. I’d be curious to compare US PE run facilities with government run facilities in Canada.

There is not an easy answer here, it basically a cost centre that whoever runs it, the welfare state is incentivized to spend as little as possible on it. PE is almost certainly a bad solution. If they can destroy a restaurant or other low impact business, I hate to think what they’d do to businesses that care for people. You’d get the healthcare equivalent of Burger King. But with government you get the equivalent of the DMV.

immibis5• 6 months ago

Think the word that fits there is "allergic".

throwaway20372• 6 months ago

    > Because we have governments anemic to running anything or regulating any business.

This comment is weird to me. The US has one of the most effective environmental regulators in the world (EPA). The FAA and FDA are also excellent. The securities markets in the US are the global gold standard of regulation (SEC, etc.).

p-e-w• 6 months ago

Because between the 1970s and 1990s, Western nations decided that private operations should be the default for everything except where the law specifically requires state institutions, instead of the other way round.

In many countries, essential services like hospitals, drinking water supply, airport security, schools, even prisons are now partially or fully privatized. It seems insane when you think about it, but that’s what your grandparents voted for.

messe3• 6 months ago

A mix of public and private can work with proper regulation (especially when combined with state owned private companies).

This article only refers to the US. This is the second time I've brought it up over the last week, but it'd be nice if the US and "the west" weren't constantly conflated.

Not all of us have fucked over their citizens and spiraled into borderline dictatorships that are well on their way to becoming international pariahs as much as the US have.

c22• 6 months ago

How would this work the other way around? The state provides cheeseburgers and fidget spinners until someone writes a law requiring private industry to provide these things? Isn't there a sort of lack of freedom inherent in forcing people to get all their cheeseburgers from a single place?

markdown• 6 months ago

It seems insane when you think about it, but that’s what your grandparents voted for.

Our grandparents wanted a nice hospital and that's what they voted for. The people they elected needed funds to build the hospital, so they sought funding. The IMF and World Bank said "sure, we'll help you fund it. But in order to do so, you need to privatize your healthcare industry."

Our grandparents got a nice hospital for a while, the politicians got another 4 years in power, and a few years later we noticed that our free healthcare was gone.

This, multiplied across the entire developing world.

Panzer043• 6 months ago

Private is the default solution for all problems. The state only provides a service when the government takes action to do so, and usually this is on top of whatever existing private infrastructure there is.

This seems like a pretty weird perspective to have?

JumpCrisscross11• 6 months ago

why do we continue to allow them to operate Healthcare facilities?

We don’t want to pay for them. When private equity is forced to sell, someone has to buy or the providers get shuttered.

On the other hand, we’re clearly willing to blow the money and deficit on stupid stuff. But only if it goes boom, apparently.

lukev2• 6 months ago

Who do you mean by "we", here?

The only possible entities who could buy a company are either a bigger company, or private equity.

That the leavings of a PE business are unattractive to either of them is not a surprise.

That has nothing to do with what society at large (a better definition of "we") actually wants or needs.

SkyeCA2• 6 months ago

We don’t want to pay for them.

Perhaps we should have kept taxing the rich the we did during WW2 and the few decades following it? No, clearly that would never work!

phkahler• 6 months ago

> > why do we continue to allow them to operate Healthcare facilities?

We don’t want to pay for them. When private equity is forced to sell, someone has to buy or the providers get shuttered.

Sell? The point is that PE should never have purchased these things in the first place.

cyanydeez4• 6 months ago

Had a creepy interaction with Fraser. They absolutely did a marketing spiel and sounded nothing like a medical intervention.

When you review the findings on the standard behavioral intervention, autism, on average requires 2.5 years of 40hr/week.

Thats basically one persons job.

john-h-k5• 6 months ago

Your citation's statistics [1] actually says the exact opposite of your claim!

It shows a -0.2pp DECREASE in in-hospital mortality, with no significant change on 7 or 30 day mortality. The authors suggest this could be due to:

* selecting for healthier patients - the paper shows an average change of 0.1 years younger for patients. this is not significant!

* transferring out sicker patients - 30 day mortality would show this (it doesn't), and the transfer rate does not change meaningfully

So based on the evidence you have provided, private equity purchasing hospitals saves lives. Maybe that is wrong, but it is the conclusion of that evidence.

They also don't claim PE is killing people in the conclusion; did you read the paper?

hermanzegerman9• 6 months ago

The age difference was significant

They've had more bloodstream infections, surgical infections, and falls. Everything which traces back to staff cuts and lack of hygiene.

Also they dumped the complicated, and probably expensive cases to real hospitals In contrast, transfers to other acute care hospitals increased 12.2% at private equity hospitals compared with control hospitals

xnx• 6 months ago

In all these critiques, "private equity" is a stand-in for "capitalism" in general.

analog8374• 6 months ago

Because autists make the best engineers? So autism center becomes a recruiting tool.

class3shock2• 6 months ago

Reading the headline all I can think about is that many people with autism are not capable of communicating, or if they are, only in a limited way. Literally people who do not have a voice to speak for themselves.

bunnybomb23• 6 months ago

Like severe autism? Yeah.

Moderate and below that I think you can live a pretty free life. Its not like down-syndrome. Autism is surprisingly normalized.

class3shock2• 6 months ago

Yes, depending on whose stats you use it's 20-30% of those diagnosed. Not a small amount and people I worry about being dependent on private equity.

https://pmc.ncbi.nlm.nih.gov/articles/PMC3869868/

renewiltord2• 6 months ago

Private equity goes where the money is. Nothing is magically non-exploitative just because it's done by a bunch of small businessmen instead of a private equity company. There's a reason why Private Equity bought so many dialysis clinics. There's a reason why they're doing this.

It's easy to scam the government out of money for this because a bunch of well-meaning "useful idiots" will say "pay whatever it takes; give them as much money as they need; it's for human lives!" and none of that is true. It's all about using different battalions to rent-seek on normal tax-paying Americans.

Tim Walz lost his hope for re-election over this but he's not the only one. In time we will discover a large array of healthcare scams and home-care and autism/child mental health are going to be near the top.

hermanzegerman9• 6 months ago

If your dialysis clinics have the worst outcomes in the industrialised world, it should make you go hmmm.

And usually it's not a problem, of "Throwing more money at it", but lack of regulations and enforcing them.

That said, Physician Owned Clinics have better outcomes, there is no reason why that shouldn't be the standard model of operating them. Usually they have more moral scruples about worsening care for profit.

Also there is naturally more competition, if there are multiple small operators instead of only Fresenius Nephrocare or DaVita

https://www.cbsnews.com/texas/news/death-rates-at-u-s-dialys...

renewiltord2• 6 months ago

The dialysis clinics are bad and make all the money because it’s Medicare fraud dude. Well meaning morons say “whatever people need we should pay for them” not thinking for a second that some unscrupulous fuck is the one getting the money.

john-h-k5• 6 months ago

CBS say this then don't publish the data!

The data [https://www.transonic.com/renal-disease-in-us] says that kidney transplants for dialysis patients happen LESS frequently in the USA than in Europe, yet the survival rate is very close - 39% USA vs 41% Europe. This implies that dialysis in the USA is very close or _better_ quality than in Europe - as there is a large difference in transplant rates but only a small difference in survival rates.

Maybe the above data is wrong, but CBS don't seem to provide any better data

desmoulins• 6 months ago

Yes, as soon as I hit the "...children who are largely insured by Medicaid programs..." part of the article, I figured that this is happening because some PE firms ran the numbers and discovered they could use autistic kids to squeeze as much money from medicaid as possible.

Panzer043• 6 months ago

We have something like this going on in Australia right now.

The NDIS is our disability welfare scheme, and it's costs have exploded as oversight has failed to keep pace with exploitative actors. Few questions asked welfare for our vulnerable would be nice, but sadly it doesn't look sustainable in most places.

blibble• 6 months ago

ah yes, another market where the private equity scum have realised that "the market is inefficient" and that the existing businesses aren't "extracting maximum consumer surplus"

fortunately the UK doesn't have this problem for people as the state run healthcare system has set the price floor at zero

it hasn't stopped the private equity scum completely though, instead they have bought up most of the country's formerly independent vets

From only 10% in 2013, almost 60% of veterinary practices are now owned by large companies

they then immediately "optimise the demand curve", doubling/tripling their prices, meaning there are now people that can no longer afford to treat their pets

46493168• 6 months ago

“Private investors making a little bit of money while expanding access is not a bad thing, per se,” Singh said. “But we need to understand how much of a bad thing this is and how much of a good thing this is. This is a first step in that direction.”

Who gets to say what "a little bit of money" is here?

dizlexic• 6 months ago

Are you surprised? there's money to be made.

xvedejas• 6 months ago

You are implying people should shut up about it because it's not novel information. I think "are you surprised?" is a very lame and unoriginal response I see everywhere and doesn't even care to engage with the problem. I think HN's rules suggest you should put in more effort than this.

SkyeCA2• 6 months ago

If corporations are people than PE firms should be executed like the leaches on society they are. Nothing makes me see red like the fact that basic services are increasingly being captured by these disgusting rats so they can squeeze every last cent out of society possible.

ineedaj0b• 6 months ago

You should share anger for all the taxpayer dollars being stolen and never spent on the 'victims' its supposedly meant to help.

Social programs have been funded, show poor results, then seem like dead ends because of fraud.

Stealing money put aside to help the less fortunate is far more heinous imo.

AngryData• 6 months ago

Even with the losses a lot more is provided per dollar because its done at-cost, and the majority still going to the most desperate.

If we wanted to worry about the bigges source of theft though it is wage theft by a large margin over all other forms of threat combined. And the healthcare industry is ripe with labor abuses.

_DeadFred_4• 6 months ago

You mean like Bret Favre the millionaire conservative ex-NFL quarterback's welfare scandal stealing from the poor? https://en.wikipedia.org/wiki/Mississippi_welfare_funds_scan...

Or do you mean like Republican Senator from Florida Rick Scott who was elected AFTER he was involve in $1.7 billion dollars in Medicaid fraud (largest in history) and whom the Republican party embraces and endorses and has in a position of power today? https://www.justice.gov/archive/opa/pr/2003/June/03_civ_386....

foogazi2• 6 months ago

Social programs have been funded, show poor results, then seem like dead ends because of fraud.

They already got audited by DOGE, now we move on to PE

locusofself• 6 months ago

My daughter is “on the spectrum” and dealing with these therapy places was just a huge waste of time and money. I don’t know if the places we went to were owned by private equity or what but the quality was really bad and this is in a major metropolitan area that is also affluent. The therapist seemed like good hearted people, but they were paid so miserably that there was constant turnover. The billing practices were always shady and complicated and frustrating. Not to mention most of these places have 6 to 12 months waiting list to see anybody in the first place.

SoftTalker2• 6 months ago

Exactly the same experience with long term care for elderly relatives. It's all about getting their money. Care is perfunctory.

taurath2• 6 months ago

If everyone wasn’t held basically at economic gunpoint to a level where they are one or two missed paychecks to living in their car, we could advocate for patients and providers to strike outside of the managers offices or in front of a news station. It’s insane how having no financial security creates a world where they can extract with abandon.

taurath2• 6 months ago

It’s part and parcel to the mental healthcare system for the last decade or so. There is no place that does better because every single provider is dependent on private health insurance which rarely pays without major and intense hassle.

ekjhgkejhgk• 6 months ago

Absolute cancer.

MarkusAllen7• 6 months ago

Releasing an almost-3,000-page expose on private equity this week.

It's hard to argue against those who say private equity ruins everything. It's astonishing. And massively depressing.

You can download for free when you search the 'net for Founderstowne.

Imustaskforhelp• 6 months ago

Wait so are you doing the journalistic action? I can't wait for this to drop. Please give me more details if possible.

Massive respects to your journalism, I have a lot of questions regarding this tho, namely how long did it take you to build this expose and where are you gonna drop it because I searched net for Founderstowne but I didn't find anything special, are they the VC fund you are gonna expose?

MarkusAllen7• 6 months ago

Can I post a direct link here... don't want to be accused of spam?

I expose just about everyone as a "roman a clef" (a work of "fiction":>).

I'm 58 years old. Entrepreneurial builder. Disgusted by VC/PE. Been writing this book since 1987.

packeted2• 6 months ago

I'm looking forward to reading your book! Part of my expose of PE in the veterinary business can be found at https://www.privateequityvet.org

MarkusAllen7• 6 months ago

Wish I had your knowledge before writing...

Pages in my book related to how private-equity screwed over the vet industry: 250. 442. 1001.

I think people will be blown away that the company that makes M&Ms owns a ton of vets.

like_any_other• 6 months ago

Please name names when you do.

MarkusAllen7• 6 months ago

I name names. (Mostly.)

When I get sued (and I will), I'll employ "roman a clef" and slightly fictionalize the names.

By the way, VCs are not exactly any better than PE firms.

I've tried to reach out Marc Andreesen to see if he can 100% pivot to building instead of extracting. I'm encouraged by his latest fund.

Hnrobert422• 6 months ago

Private equity is into this. Into that. The problem is some folks just got too much damn money. They gotta put it somewhere.

burnt-resistor2• 6 months ago

That's it. And everything they touch turns to shit to feed their insatiable, sociopathic greed.

TrackerFF• 6 months ago

Come to think of it, I don't think I've ever experienced a product or service that took a turn for the better, after the company was acquired by PE.

There might have been a time where PE bought up mismanaged companies, and turned them around - but the PE acquisition spree we've seen for the past 10 years or so...it seems exclusively to cause enshitification. And it is happening everywhere. There will always exist some niche PE firms for every sector out there, nothing is safe.

SoftTalker2• 6 months ago

Yes it happens. It doesn't make headlines. And I'm not sure it happens often.

datsci_est_20152• 6 months ago

Services that PE has ruined in my city by rent-seeking:

  - Veterinary services
  - Dental services
  - Optometry services
  - Urgent care services

I go out of my (sometimes significantly) to go to non-PE owned companies and services, and the experience is so much better it's like experiencing an entirely different quality of life. My 2¢ is that a decent chunk of the "dissolution of the social contract" in the US is due to the way that people are treated when they interact with these soulless entities.

ekropotin• 6 months ago

I wish there were some kind of public database that allowed easy lookup of whether a given company is owned by a private equity firm.

encrypted_bird• 6 months ago

I agree! I think this kind of resource would be very useful to a lot of people!

tartoran• 6 months ago

I’d happily pay for a tool that lets me opt out of being slowly nickel-and-dimed by entities optimized for short-term yield. This feels like infrastructure: a small amount of collective effort that gives individuals leverage again. Visibility is the lever. And it could be done, it's just more organizing and involvement in local politics. The information already exists, it’s just effectively invisible, and a small translation layer could collapse it into a one-second answer, letting people avoid operators with a predictable extractive playbook, with the only real challenge being the constant, boring maintenance in an environment designed for churn and opacity. Eventually this should revolve around organizing and politics to make a difference.

neilv• 6 months ago

It should be integrated with the ways that people find those businesses, including maps, Web search, and "AI chat".

shrubble• 6 months ago

Storage unit rental went from $90 in 2014 to $110 about 2017, but then was acquired by CubeSmart which is publicly traded: now $241 per month. I know the local taxes and they have stayed about the same all those years.

WalterBright2• 6 months ago

Storage units are the way station to the thrift store / city dump.

I had a storage unit for a while until I realized that the monthly bill was more than the value of the contents.

arwhatever• 6 months ago

I’m beyond peeved by the inability to get any sort of price guarantee from these places more than 3 months in advance.

I’ve even offered to pay for several years in advance at their “current” rate, and they won’t accept it.

meetingthrower• 6 months ago

My behavioral economics pricing idea for storage unit is to charge $1 for the first month but then double every month (or something like that). You shouldn't put stuff in storage long term and you're getting ripped off.

jojobas• 6 months ago

Coutry wide only 16% of dental practices are DSO, and it's not that functionally different from junior dentists getting loans to set up their practices with practices themselves as a collateral.

alejo2• 6 months ago

Water used to be managed by a local cool here where I live. I had been for decades.

A few months ago i got an email saying that PE had acquired it.

I was paying between ~$25/month before. Today i got the first bill from new management for $89.

Same volume/usage, nothing significantly different.

Sigh.

patmorgan23• 6 months ago

Definitely complain to you local water/utility regulator, and your state representative.

Fezzik• 6 months ago

Though less critical to our lives, PE has ruined loads of retail and restaurant options as well - Sears, Toy ‘R’ Us, Red Lobster, and Shari’s come to mind.

red-iron-pine2• 6 months ago

many of those deserved to die.

sears had a ceo who was obsessed with competition and pitted his units against each other. they could have created an online portal and then crushed amazon in the crib -- but didn't.

toys r us had a cto who pushed for internet stuff... and said no.

tmaly• 6 months ago

Toy Stores for kids should be on the list

shark_laser• 6 months ago

What did you think was going to happen when you've got guaranteed payments and a growing customer base as people celebrate their "neurodiversity" whilst at the same time demanding subsidies and yelling "ableist" at anyone who criticises them or the system?

So politicians pretend to care by throwing more money at their cronies and get away with it because won't someone PLEASE think of the children. And then people pat them on back and vote for them in the next election, and blame "capitalism" while the people they've just voted back in make millions.

They even say "We're also dealing with children who are largely insured by Medicaid programs" and yet still people are failing to join the dots...

foogazi2• 6 months ago

and yet still people are failing to join the dots

Where is this 'join' translated from ?

packeted2• 6 months ago

If anyone wants to see how private equity has transformed the veterinary industry check out www.privateequityvet.org/vet-list - over 7000 practices mapped across the US so far. Our dog died at the hands of a recently acquired PE practice :(

aristofun3• 6 months ago

Can anyone explain me like im 5 - what is the alternative and what’s so special about private equity firms in this context?

Like those centers are going to be owned by someone one way or another - what is so special or bad about equity firms vs alternatives?

Genuine question. Because I don’t have a clue how this works in US.

j-bos• 6 months ago

Just a driveby speculator but my guess is PE dillutes interest in and responsibility for the businesses.

Individuals or family holdings are more likely to have concern for their reputations in addition to finances, public companies are more likely to scrutinized offsetting what would be their much lower reputational concerns. But PE is diffuse and often distant enough to eliminate human reputational concerns while being held to far lower stadards than public companies.

fc417fc8025• 6 months ago

An individual likely (hopefully) has a moral compass.

A family introduces some perverse financial incentives but you also get long term (ie multi generation) planning and reputation concerns.

A group of practicing professionals who own the operation will hopefully exhibit some shared pride and professionalism.

A co-op or similar arrangement ties the interests directly to the local community.

The larger the public company the less overlap there will be with the customer's interests. At least they might worry about reputation and stock price though.

Pretty much the only concern PE has is avoiding litigation. Their primary motivation is maximizing value extraction over the short or medium term.

aristofun3• 6 months ago

Isn’t the government a worst alternative?

tekdude• 6 months ago

This won't be at a 5yo level, but here's an attempt: there are a two things specific to private equity that often leads to higher prices and worsening service:

1. PE aren't investors like you and me. We can go to our brokerage and buy shares of a public company, hold those shares, vote on directors and proposals, etc... Or we can buy and sell ETF/mutual fund shares that own companies. Then, we (or fund managers) can sell those shares after any period of time we want. Could be years, decades, or minutes. Whatever meets our investing goals. The same is actually true for hedge funds. We buy a a piece of a company, hold it as long as we want, then sell to take profit/loss. When PE buys a company though, they buy the whole company AND they have a specific timeline in mind. This is because PE firms are actually temporary private "investment funds": partners put in money and expect a certain return on investment after a certain period of time. At the end, that's when the fund needs to wind down and return capital + returns. So, there's already a ticking clock on anything a PE firm buys, and pressure to generate return before time runs out. They typically do this by taking a company public on the stock market (maybe again) or selling it to someone else. (This doesn't always succeed, but there are other options then, like continuation funds.)

2. PE funds also take on a lot of debt. They can't afford to buy whole companies or roll up entire industries just with their investors' funds, so they borrow a lot. Now, the companies they buy for their portfolios not only need to generate returns for their investors, they also need to do that AFTER making payments on that debt. It multiplies the pressure.

There are a lot of cases where PE bought struggling companies, and with discipline and incentives turned things around on a timeline. But there are also a lot of cases where PE bought stable but boring companies, used debt and pressure to force them to raise prices, cut services, lay off workers, and lower quality in order to generate returns at the pace required.

(Most of this I learned from reading Matt Levine columns, I'm not an expert and don't work in this industry at all, so I may have some details wrong.)

datsci_est_20152• 6 months ago

The acquisition of the company can also be financially "meta-strategic", where it doesn't actually matter what service the company provides, but how its assets can be structured or leveraged to extract more value for the PE's stakeholders: - https://www.businessinsider.com/red-lobster-endless-shrimp-b... - Here on HN: https://news.ycombinator.com/item?id=40233029

aristofun3• 6 months ago

That sounds to me then that the problem is not only that PE are incentivized only by profits.

But also by the system that disconnects end user’s satisfaction (families with kids on spectrum in this case) from the profit.

In other words if users of those centers were part of the profit equation - PE would not be a problem at all. Am I right?

If so then the real evil are people who created and support such a system I guess.

jostylr• 6 months ago

The optimal version of a PE is to take a failing business and either turn it around or carve up assets and reallocate people to do something useful and profitable. The more a business is failing, the cheaper it is to takeover and for the PE to do the work of a fungus. But this process can also become a disease if it is too easy for them to takeover, taking a healthy host and carving it up. This is mimicked in real life when conditions turn a fungus into a hostile organism on something that is living; maybe it is just a little sick but the environmental conditions help the fungus more than it ought to leading to it being a killer instead of a resource freer.

The real question to ask is why can they take on so much debt? And for that, one needs to acknowledge the fact that, particularly for the well-connected, debt is easy to obtain as banks essentially create money for loans. There are constraints (otherwise the banks would make themselves trillionaires), but the constraint is not the quantity of money. This creation of money through lending leads to inflation which further supports operating via debt as those who take out loans see the real value of the loans decrease. The banks just made up the money so there isn't a direct loser from the inflation other than everyone who has to deal with increased prices. You can think of it as a broad, regressive tax on the population to fund these firms doing far more than they should.

With an actual constrained money supply tied to real wealth in the economy, the PE firms would have to focus on the best deals which means the businesses that are truly dying and their role is to turn the nonproductive assets into something productive.

---

I asked ChatGPT to critique my answer (which is unaltered above) and it said to tone down the lending being propped up by inflation and instead emphasized the following:

Inflation can help leveraged borrowers, but in PE the bigger structural advantages are: • Interest deductibility (a massive tax subsidy to debt) • Limited liability (upside captured, downside partially socialized) • Fee extraction independent of performance • Ability to load debt onto the acquired company, not the PE fund

I then asked it to answer the question without regards to my context and it basically said PE is different because of

• short ownership horizons • high leverage • strong control • financial returns as the primary goal

Here is the link to the short conversation if interested: https://chatgpt.com/share/6963a0de-7a04-8012-8c36-afef5dd74f...

burnt-resistor2• 6 months ago

Try to buy an HVAC or heavy motor capacitor.. guess who owns all of the manufacturers?

whydoineedthis2• 6 months ago

They started slapping my kids hands, forcibly shoving him back in his chair, and grabbing my kids face and torquing his neck. Jon Paul Saunders, a leader in ABA, swore up and down 'this is the best in ABA'. When I looked at the data, my kid had all but stopped screaming/crying with other RBT's, but was more than double the crying/screaming with the rbt's doing the slap, push, face yank teqnique.

At this point, my son had done 18 months of ABA and was being used to train new RBT's (high turnover field of course). The prescribed hitting was creating behavioral problems at home, but was being used to justify extensive hours of ABA.

I dont think a profit driven model is great for these kids.

Private equity firms acquired more than 500 autism centers in past decade: study

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