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Comment by Panzer04 | Hacker News Reader

Easy to imagine practices where the primary owner is going to retire and looking for an out.

Maybe they find a buyer in a doctor, maybe they don't, but PE provides them an exit that keeps the practice operating in the community.

Many people don't really run businesses efficiently. There was an interesting video I saw recently where a sole doctor practice made a few changes to their workflow that allowed them to hire more doctors and handle 2x as many people - I would expect a PE firm would pursue similar changes that help increase the number of people they can service, increasing competitiveness and lowering prices in the long run.

I don't know how these tradeoffs interact with patient care, but I wouldn't inherently expect PE to be worse at this than any other operating model.

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Lots of other efficiencies to look at. Tons of them are directly bad for the patient (capturing more of the surplus is an efficiency that businesses generally go hard at).

Ultimately, I think the issue is when people making decisions are able to treat the impact as an abstraction.

> Many people don't really run businesses efficiently.

In many cases that's a good thing, depending on what we mean by efficient. Lots of people run businesses in ways that make less money than they could, and often that's good.

> I don't know how these tradeoffs interact with patient care, but I wouldn't inherently expect PE to be worse at this than any other operating model.

Doesn't the evidence suggest it is indeed often worse?

A structure to run business efficiently using practiced methods is always a good thing. However from what little I have understood, the goal of Private Equity is to maximize the dollar value on their investment. Somehow they have settled with the playbook that running a business even profitably isn't the best idea. Instead its much more profitable to take over the struggling business at good price, squeeze everything possible from the assets (thats where PE seem to be investing their expertise unfortunately) over duration of time. Update the books in a manner that it saves money on taxes and carry forwards the loss, making money in the process.

My favorite is to sell the building(s) to their private real estate company and lease back. Then IPO the company and keep the rent coming on a 25 year lease.

>> Maybe they find a buyer in a doctor, maybe they don't, but PE provides them an exit that keeps the practice operating in the community.

If the practice is to continue, there must still be practitioners working there. Id prefer they buy out the one retiring, but the retiree can sell to whoever they want.

As an owner of a medical clinic, there's an unbelievable difference between founder and inheritance.

One is ambitious, the other is a nepo baby.

This is ridiculous. Most clinicians prefer to be employees rather than business owners.

> and lowering prices in the long run.

My sweet summer child...

Why do you need to sell a private practice? There’s no brand to sell, it’s just you and that will be gone.

PE is scourge in this space. They’ve probably taken over every dental office already and now they push unnecessary procedures and whatever your insurance will bear just because.

It is a brand and a book of customers someone has built up with surprising stickiness.

If there is truly nothing as you say, there is nothing for PE to buy, and no problem. If there is nothing to sell of value, what stops new dentists from seamlessly opening an office?

They sell because it’s their retirement nest egg.

Most private practices are small groups, not individuals. It absolutely sucks to have to find a new doctor who’s a good fit for you, when you’ve been seeing the same person for years or even decades. Usually when your doctor retires you rely on them to make a recommendation for a replacement. Usually that’s another partner in their same practice. At the very least, you (historically) expect them to sell the practice to someone they think is a worthy successor. Patients are fairly sticky.

And many of these PE sales require the selling partner to stay on for at least a year or two to ease the patients through the transition and so the patients get used to the changes before the doctor actually retires. That way, sticking around after the doctor retires doesn’t feel like such an upheaval.

>At the very least, you (historically) expect them to sell the practice to someone they think is a worthy successor.

PE isn’t that.

Yes, obviously. But historically that was the case, so it’s what patients mostly expect. Hence the loyalty after the sale, and the value to PE.

Maybe in your neck of the woods vets operate out of the trunk of their cars, but all the ones I've ever engaged had offices, expensive medical equipment, an office building, and trained staff.

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