PE acts as vultures (not in a negative way) who come in and clean up dead carcasses. They are typically not the cause but a symptom of a failing company.
We all have nostalgia for small chains or companies at the mall in our youth. Almost all of those are terrible and failing businesses now. It's a bit like the movie Up In the Air where Clooney goes around firing people. He's the face of the bad news, but he's not the cause.
For the article at hand, hospitals really should be non-profit. Providing great care at low costs means the goal is a terrible business.
>They are typically not the cause but a symptom of a failing company.
This isn't true in most cases. PE has killed many profitable companies by taking deliberate steps which resulted in the companies directing their incomes to servicing unsustainable debts rather than running or improving the businesses.
For example the eldercare company ManorCare was profitable and successful prior to being bought and destroyed by a PE group. The PE firm loaded ManorCare with the debt that the PE firm used to buy it in the first place and then sold ManorCare's real estate and forced ManorCare to rent it back, causing ManorCare to spend $500 million/year on rent[0]
Forcing companies to take on debt and sell their assets is a standard part of the PE playbook and inevitably ends in the death of the company regardless of how it was performing prior to being taken over.
I put a company like ManorCare under healthcare. In fact after bankruptcy it was taken over by a non-profit group.
Also, profitable is not the measure. Blame capitalism or investors or ourselves. I know I'd rather put my money earning 5% rather than 1%. Both are profitable, but the 1% is not the best use of my capital.
As I said above and again here, healthcare related services should not be under the profit pressures of regular businesses (though then you have to deal with other issues of inefficiencies and waste).
We all have nostalgia for small chains or companies at the mall in our youth. Almost all of those are terrible and failing businesses now. It's a bit like the movie Up In the Air where Clooney goes around firing people. He's the face of the bad news, but he's not the cause.
For the article at hand, hospitals really should be non-profit. Providing great care at low costs means the goal is a terrible business.