Links at the end.
We wrote a thing a few days ago about the accelerating assault on health care providers by private equity firms, the business model of which can be broadly described as acquiring businesses, wringing them dry and selling them on within a few years.1 We have more on that today, courtesy of a long piece on the topic2 in Journalist’s Resource.
First, though, we’d like to bring your attention to The Autonomous Chemical Weapon: How Sentient Oil Took Control of Our History,3 which you can read as allegory or revelation about how oil has manipulated man since the onset of the industrial revolution. Jed Bickman, whom we met on Twitter and now count as a reader — and whom we’re reading in turn, obviously — wrote it and did so excellently well, according to us. It’s a two-parter, of which we’ve read the first.
We’ve touted the Journalist’s Resource before; it provides research-based tips to journalists covering an exhaustive range of subjects, and presents original reporting as well.
Their private equity piece today — “The impact of private equity ownership in health care: A research roundup and explainer” — by former Bloomberg and current freelance reporter Kelly Dooley Young, iterates and summarizes a bunch of research on the subject. The report that struck us most violently on first read is a product of the National Bureau of Economic Research (NBER) looking at private equity in nursing homes.
Being admitted to a private equity-owned nursing home increases the short-term probability of death by about 10%, implying about 20,150 lives lost due to private equity ownership of nursing homes, said Sabrina T. Howell, an associate professor of finance at New York University and one of that paper’s authors, during a congressional hearing last year, citing her research.
“Nurse staffing declines after buyouts, while rates of anti-psychotic medications and pain intensity increase,” Howell said, adding that both suggest decline in attention to patients. “Meanwhile, the amount billed to Medicare increases by 11%. Finally, we show that fees charged by the parent company, lease payments after real estate is sold, and interest payments all increase dramatically. This all suggests a systematic shift in the operating costs away from patient care.”
Emphasis ours. We’re reminded of then-Newark mayor and now-New Jersey senator and erstwhile presidential candidate Cory Booker’s response to Obama’s attacks on private equity (Romney) in 2012: “It’s nauseating to the American public. Enough is enough. Stop attacking private equity.” (To be fair, he briefly called for a cease-fire in the attacks on Jeremiah Wright — who was about to be trucked by Obama — thus equating impassioned anti-racist preaching with state-sanctioned piracy.)
Cory Booker as Danny DeVito as Owen Lift: Throw mama in the private equity-owned nursing home, and drug her til she dies.
The mention of real estate sales and leases refers to a practice for which private equity firms are notorious: purchasing real estate owned by newly acquired businesses, selling it to another company in the firm’s portfolio, and then leasing it back at a profit to the business which used to own it, transforming it from an asset to a liability. When the private equity firm cashes out, it can either retain the leases or sell the property on at an additional profit to the next buyer.
Despite the business model of buying in, reaping profits and cashing out, private equity has its fangs buried increasingly deep into the health care sector. (“Sector” … jaysus, listen to us.)
There were more than 1,400 private equity deals in health care last year (2021) totaling $208.7 billion, more than double the 664 transactions, valued at a total of $58.5 billion, in 2016, according to PitchBook Data, Inc., a Seattle-based firm that tracks mergers and acquisitions.
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Private equity firms owned 11% of U.S. nursing homes, along with 4% of U.S. hospitals as of 2021, according to the Medicare Payment Advisory Commission (MedPAC), a nonpartisan independent legislative branch agency that advises Congress. Private equity firms also acquired at least 2% of physician practices in the U.S. from 2013 to 2016, an estimate that does not take into account previous acquisitions, according to MedPAC. Private-equity firms have continued to expand in primary care since 2016, according to MedPAC.
And as we’ve said elsewhere, PE companies are also jumping into mental health care in a big way: at least 200 of those 1400 deals last year involved mental health care providers.
Is every private equity foray into health care a disaster? That can’t be said, if for no other reason than that nobody has looked at the outcome of every single transaction. But the horror stories, big and small, continue to accumulate.
We’ve never been big on Britain’s National Health Service model, in which the state owns health care facilities and pays the salaries of the doctors and nurses and others who staff them — and which until last year had remained popular with the majority of British subjects despite decades of attacks from both Conservative and Blairite Labor governments — mostly because it’d be a much longer slog to get there than to achieve Medicare for All, but we’re beginning to tilt toward it now, along with other impossible things.
Perhaps if we lived long enough we could see the christening of the first U.S. NHS hospital by the light of the final bonfire.
We’re really not that depressed about it, honestly.
We try to write with the small screen in mind, but these posts are more easily read on larger screens than telephone ones.
Jamila Wood is really good. “Legacy! Legacy!” is her second album. “Expoodibent” is a 1960 album from trumpet maestro Lee Morgan, backed by Art Blakey of Jazz Messengers fame, and others. Morgan was murdered by his wife in the middle of a club set in 1972 at the age of 33. Acting on another tip from reader Hilary Held, we followed Morgan with pianist Brad Mehldau and “The Art of the Trio, Vol 1,” which preceded “Cowboy Tears” from Oliver Tree, who played us out.
That, comrades, is all we got. Take care, be well.
thanks for the plug brother.
The article mentions antipsychotic medications, which are vastly over-used and over-prescribed in eldercare, in any kind of long-term healthcare, in prisons, in juvenile facilities and teenage boot camp facilities (of the type discussed in the recent TrueAnon series), and of course mental hospitals. In each of these situations, the authority can compel the subject to take meds; the patients have no right to refuse. When prescribed in over-dose quantities (which they frequently are), these drugs are basically chemical lobotomies. Regardless of whether or not the patient has any "psychotic" attributes, private equity eldercare places like these meds because they take away any concern about what their patients do during the day, any need for stimulation or human connection or engagement or anything that makes life living. The power to force another person to take a drug shouldn't be so widely distributed in a society.