Difference between revisions of "Private equity and health care"

Revision as of 03:13, May 13, 2024

Private equity and health care

In recent years, private equity has bought up hospitals, medical practices, and other aspects of the health care sector. Multiple studies have shown that causes far more harm than good.

Private equity is a form of investment whereby wealthy individuals pool their assets and deduct losses in one business venture against unrelated profits in another, such that it is common for private equity managers to walk entirely away from a losing investment such as large hotels in San Francisco to take a massive deduction against profits elsewhere. Also, private equity managers typically have no personal connection with the community where each investment is located, and thus have no qualms about converting a children's hospital into more profitable luxury apartments. Finally, private equity managers typically have no experience in the fields in which they invest, such that only the bottom line financially matters to them at the expense of, for example, the complication rates in a hospital they acquired.

It is common for private equity managers to borrow money for each investment, and then deplete assets from the company to finance the loans. This is known as "value extraction" and can result in laying off experienced employees or cutting corners on capital equipment.