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Comment by balderdash | Hacker News Reader

I’m the furthest thing from having any knowledge here, but it feels like it should kind of be like how law firms can only have lawyers be owners with the idea that owners need to be aligned with codes of professional conduct/ethical obligations to clients etc

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"UK opposition Labour plans to give workers a third of seats on company boards"

https://www.reuters.com/article/us-britain-politics-labour-b...

The business lobbies freaked out when that was proposed, in spite of it being fairly moderate. It was one of the reasons for the character assassination extravaganza (anti semitism, "terrorist friends", etc).

This is true for the veterinary world, probably other professions too.

The result is that a veterinarian owns the business on paper, but the PE fund can take over or replace them as needed.

The veterinarian world is doomed. Increasingly PE is taking over entire neighborhoods when it come to vet hospitals. This is led to increased wait times, lower standards of care, higher cost to consumers and higher pet mortality rates. That can very well translate to human healthcare.

But the barriers to starting a new vet are pretty low. If existing vets are inadequate, new ones can start.

Capital is the barrier and the requirement is not low in the areas PE takes over.

It seems like a vet would be about as expensive as opening a restaurant, maybe 1-3x as much. That doesn't seem like the most capital intensive thing ever.

Other than the doctorate, of course.

Presumably there is already a supply of licensed veterinarians, unless the PE vet practices are hiring unlicensed practitioners.

How many of them have easy access to a million bucks?

Probably most of them. I don't think the limiting factor is access to capital, but rather the risk.

It is more expensive to open a clinic than a restaurant, with the costs being anywhere from $500k-$1M. The main difference between the two is that the vet clinic has higher running costs aka salaries in the early years before the practice takes off. For restaurants, it’s relatively lower (staff salaries and produce) if the demand is lower.

500K-1M seems about 1-3x a typical restaurant. I'd also be surprised to learn that running a vet is more expensive than a restaurant. The margins are seem like they'd be way lower in a restaurant.

No. My late father started his own solo vet practice in 1983, in that less capital intensive environment, and he still required a substantial amount of seed capital to procure and retrofit the building to meet regulations and have enough in the tank to keep it going through the initial lean business years. (There were other complications related to the specific property and title liens not relevant here.) In these days it's not much different than a solo medical practice in terms of startup costs.

Later VCA and Banfield asked him every year to sell out and he never did, but he was an already established practice by then. I can see why new vets are much less likely to embark on it.

Not sure what your point is. I'm not saying you can open a vet for free. All businesses require capital. But, as evidenced by your father, opening a new vet practice is not some totally new thing no one has ever done before. People have done it and people will continue to do it.

> opening a new vet practice is not some totally new thing no one has ever done before.

No one claimed no one had ever opened a vet practice. What they are claiming is that it is expensive. Nobody is accusing you of saying that someone can open a vet practice for free. What they are claiming is that it is expensive.

> People have done it and people will continue to do it.

Everyone knows this that independent vet practices have been opened in the past, and that some are likely to be opened in the future.

That model works well for professional services (eg. lawyers, accountants, consultants) because require very little capital. Everything from the office they work in, to the computers they type on can be leased. The same can't be said for hospitals, which cost hundreds of millions to build and equip. How are you going to raise all that capital from only the doctors? They're rich, but not that rich. Moreover, the payback on said investment is on the order of decades. A doctor late in their career has the most to invest, but they're also nearing retirement. What are you going to do with their shares? Sell them to newly graduated doctors who are hundreds of thousands in debt? Let them keep them, at which point they turn into quasi-investors?

That’s not true. There was a doctor owned clinic in Seattle (The Polyclinic) with multiple locations across the city. A few years ago it was purchased by Optum (United Healthcare), and the standard of care has fallen through the floor.

…and sadly the doctors have been fleeing too, all my doctors have left. Their replacements aren’t bad, but not to the same top notch level of care. The Polyclinic was honestly off the charts excellent, and now it’s just “fine”. In a few more years who knows. The alternatives are unfortunately not better.

I bet society would figure out how to make it work if the law changed.

There were a number of physician owned hospitals. Here's one compiled list [0] circa 2013. ACA seems to have limited growth of these hospitals [1]. My view with a local flavor of this in Indianapolis (St.V Heart Center) was pretty positive and matches with the WSJ articles assertion. When doctors feel in control and view the hospital as a reflection of their own community - holistically the entire operation embodies and reflects that from the doctors to the nurses to the staff themselves. Similar to how a small-town practice reflects the values of the doctor who runs it and depends on its reputation. Some of these hospitals have been sold off and I've heard nurses and doctors lament of the better times when they felt more autonomy when the doctors made the decisions based on shaping a hospital that they'd like to be admitted to rather than the vision from an MBA.

"Specialty physician-owned hospitals focused on cardiology and cardiac surgery were found to deliver higher-quality care than nonprofit hospitals, with lower rates of hospital readmission or mortality for high-risk surgery. Physician-owned specialty hospitals for orthopedic procedures, such as hip and knee replacements, offered lower costs and higher quality than nonprofit counterparts."

[0] https://www.beckersspine.com/lists/14578-56-physician-owned-...

[1] https://www.wsj.com/articles/end-obamacares-ban-on-physician...

1) There is a big difference between a hospital and medical practice, 2) this is a solved problem as it relates to other professional service firm (law firms, investment banks (back in the day)).

> 2) this is a solved problem as it relates to other professional service firm (law firms, investment banks (back in the day)).

How was it solved?

When people are invited to become partners, usually they needed to write a check, but also buy-in over a number of years using a percentage of their earnings, as well as the firm potentially providing financing to buy their partnership interest. On retirement, partners were bought out (in many cases, getting paid out over a time until they were fully bought out)

>When people are invited to become partners, usually they needed to write a check, but also buy-in over a number of years using a percentage of their earnings, as well as the firm potentially providing financing to buy their partnership interest

This doesn't address any of the main problem I brought up, which is that hospitals are capital intensive. "Writing a check" is easy to do when there isn't much capital tied up in the business in the first place, but what do you do when the hospital costs $100M to build and there are 100 doctors? I can't see how the numbers would work out using the methods you described.

See my point 1) medical practices <> hospitals 2) there aren’t many de novo hospitals, so the start from scratch example is not that relevant, but for fun, in your example you borrow $50m and and 25 of the doctors (the partners) pony up $2m (not a crazy amount given that average doctor pay is $300-$500k and these 25 would systems only be in the top quartile and later career

As I understand it, there actually are laws for this for medical practices in most states (but I think not all?)

Easy, hire a partner-figurehead as a rubber-stamp and you’re off to the races.

I’ve seen similar in Federal contracting, hire a tick-the-box preference point partner with a make-work role to get contracts.

The ACA enacted a completely opposite law—doctors are not allowed to own hospitals.

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