PE acquisitions in healthcare impose rigid, cost-cutting operational models that strip physicians of their professional autonomy. This transforms them into cogs in a machine, driving burnout and fueling unionization efforts among doctors.
In a typical LBO, the acquired company, not the PE firm, is responsible for the massive debt used to buy it. A proposed legislative fix would force PE firms to have "skin in the game" by sharing joint liability for these loans.
The detrimental impact of PE on medical practices has created a rare consensus among doctors. Physicians with widely divergent political views, including those for and against unions, are unanimous in identifying private equity as a destructive force.
By insuring millions more Americans, the ACA created a new, guaranteed government-backed revenue stream. This made healthcare an extremely attractive and low-risk target for private equity firms, accelerating the industry's financialization.
Most consumers and even employees don't know their local hospital or retail store is PE-owned. This opacity shields PE executives from the public anger directed at more visible corporate leaders, allowing them to operate in the shadows.
Contrary to the narrative that PE firms create leaner, more efficient companies, the data reveals a starkly different reality. The debt-loading and cost-cutting tactics inherent in the PE model dramatically increase a portfolio company's risk of failure.
Unlike venture capital, which invests in founders to create new products, private equity acquires existing companies to extract value through financial tactics. The goal is making money from money, not necessarily improving the core business.
The PE firm acquiring Deadspin disregarded internal data showing non-sports content was twice as successful. They instead imposed a rigid, top-down mandate to "stick to sports," revealing a profound disconnect from the actual business model.