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Posts Tagged ‘private equity’

“Of all the forms of inequality, injustice in health care is the most shocking and inhuman”*…

Why are health care costs so high in the U.S.? Harvard public health scholar John McDonough chalks it up to a “wrong turn” in 1980, and the consequences that have ensued…

“What happened in 1980?” John McDonough wondered every time he looked at the numbers.

After 1980, U.S. healthcare became far more expensive than care in peer nations such as France and Germany. In 1980, the U.S. was at the top of a tight pack of industrialized democracies. After that, the cost of American healthcare soared. By 2024, U.S. spending as a percentage of GDP was about 50 percent higher than that of peer nations.

“In the early 1980s, we can see a significant upsurge,” McDonough, professor of the practice of public health at the Harvard T.H. Chan School of Public Health, said in an interview. “All of a sudden, we jumped from the rest of the crowd and were now in a category by ourselves. Over the following 40, 45 years, the distance kept growing.”

McDonough knew what he could rule out: Any suggestion that Americans get more for their money. On the contrary, millions of U.S. citizens are uninsured; out-of-pocket costs and medical debt are high; and even people with insurance have trouble getting appointments. Meanwhile, physician satisfaction is low, leading to early retirements and migration to nontraditional models like concierge care.

When the pandemic hit, McDonough had time for a deep dive into the issue. This month, after a five-year “labor of love,” he’s presenting his answer in a new book, America’s Wrong Turn: US Health Care in the Neoliberal Era [here]. In it, McDonough links increases in healthcare costs to a new political and economic era dominated by a belief in an unfettered free market, tax cuts, deregulation, privatization, smaller government, increased immigration, and free trade.

This trend in U.S. policy — “Reaganomics” before it became “neoliberalism” — included tax, spending, and regulatory overhauls instituted during President Ronald Reagan’s eight years in the White House. But McDonough, a Democrat who served 13 years in the Massachusetts House of Representatives, isn’t just interested in Reagan. Over the next 40 years, some presidents adhered to neoliberalism’s tenets but even those who didn’t were influenced by its deep penetration into the nation’s political and economic ecosystem, he says.

McDonough found a guide in the writings of Yale University political scientist Stephen Skowronek, who suggests that presidents should be measured by the durability and influence of their ideas and values well beyond their terms in office. Skowronek identified only five singular and decades-long eras in U.S. history, those of Thomas Jefferson, Andrew Jackson, Abraham Lincoln, Franklin Delano Roosevelt, and Ronald Reagan.

While Reagan was the first president to espouse neoliberal political and economic philosophy, the core ideas date back decades, fostered by Nobel Prize-winning economist Milton Friedman, who became a key economic adviser to Reagan.

“There was a New Deal-FDR era between 1933 and 1980,” McDonough said. “The neoliberal era that Reagan kicked off saw itself as the corrective to the pro-government prior era. Important dynamic consistencies persisted among Ronald Reagan and Bill Clinton, George W. Bush, and even Barack Obama. There were sets of beliefs with a Republican conservative flavor and with a Democratic flavor that were surprisingly consistent.”

When describing the U.S. healthcare system under neoliberalism, McDonough, who worked with U.S. senators on the Affordable Care Act, cites several major effects, chief among them a permissiveness toward corporate mergers and consolidations that reduces competition, and an unleashing of private equity.

Since the 1980s, U.S. healthcare has become increasingly consolidated, dominated by fewer and larger organizations. The two largest dialysis centers have 92 percent of the U.S. market, for example, while the two largest providers of intravenous solutions control 75 percent of the market. The two largest syringe manufacturers have a 69 percent market share.

Consolidation extends to physician and hospital markets, with 90 percent of hospital markets, 65 percent of physician specialist markets, and 74 percent of health insurance markets considered highly concentrated, McDonough writes.

One argument for larger organizations is the potential for cost saving through both efficiencies and a greater ability to negotiate savings, but the cost-saving record of larger organizations in healthcare is poor, McDonough says. He cites a 2022 RAND study that indicates that price increases of between 3 percent and 65 percent accompany hospital mergers.

Private equity’s focus on generating profits to maximize shareholder value conflicts with improving patient care, McDonough argues. When private equity firms target businesses, enhance their operations, and quickly resell them at a profit, critics say the value extraction from the deals creates harmful operating cuts and dismantling rather than business improvement.

McDonough reviews other key forces in the evolution of U.S. healthcare in recent decades, including fragmentation leading to high administrative costs, low spending on public health and preventive care, unequal access and uneven quality of care, and cost shifts onto consumers via copays, coinsurance and other cost-sharing mechanisms, which result in high levels of medical debt.

McDonough offers prescriptions, but recognizes that change will require political buy-in for things such as strengthened antitrust action to break up megacompanies and stronger regulation of prescription drug pricing, both difficult in an era of sharply divided politics. Government, along with industry, needs to reaffirm a commitment to patient care as the center of its efforts, he says, while also foregrounding equity, access, affordability, and population health.

“The damage to U.S. health and medical care from the 40-year neoliberal era has left considerable harm for patients and consumers, for medical workers at all levels, and for public/population health,” McDonough said. “It will take radical action to reinvigorate the values and principles of our health system that have been lost and eroded. An essential way to do this is to understand how we got to this position in the first place.”…

How we got here and how to respond: “How to fix U.S. healthcare? ‘Radical action’,” from @harvardmagazine.bsky.social.

For a case in point, see David Oks‘ “Why American ambulance rides are so expensive” (source of the image at the top).

And for a more straightforward, but somewhat more “radical” prescription than McDonough’s, see: “Universal Health Coverage Could Save $1 Trillion and 114,000 Lives Every Year, Yale Study Projects,” from the Yale School of Public Health: “A single-payer universal health care system could cover every American, save more than 100,000 lives a year, and still cost $1 trillion less than the system it would replace…”

Finally: this is the third (R)D in a row that focuses on (some of) the consequences of the unholy infection of government by business, largely in the U.S. (though, of course, we can see the phenomenon all over the world). The focus shifts with tomorrow’s post. But before we go, Dylan Riley‘s pithy diagnosis of “the chaotic obscenity of our current moment”: “The Thesis of Political Capitalism.”

* Dr. Martin Luther King, Jr.

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As we actually make America healthy again, we might recall that it was on this date in 1793 that prominent Philadelphia physician (and Declaration of Independence signatory) Benjamin Rush alerted the city’s mayor that an epidemic of mosquito-borne yellow fever was fast emerging.

In the summer of that year, refugees from a yellow fever epidemic in the Caribbean fled to Philadelphia. Within weeks, people throughout the city were experiencing symptoms. By the middle of October, around 100 people were dying from the virus daily. Caring for the victims so strained public services that the local city government collapsed. Philadelphia was also the seat of the United States government at the time, but federal authorities simply evacuated the city in the face of the raging epidemic. Eventually, a cold front eliminated Philadelphia’s mosquito population, and the death toll fell to 20 per day by late October. By the time the epidemic ended, roughly 5,000 people had died.

Today, a vaccine prevents yellow fever in much of the world, though thousands of unvaccinated people still die every year from the disease.

The Yellow Fever Epidemic of 1793 (source)

“You don’t have to be in shape to bowl. It’s the only sport where there’s a way to signal for a cocktail waitress.”*…

An illustrated scene of a bowling alley featuring colorful lighting and a scoreboard displaying scores. Several bowlers are visible on the lanes, with spectators seated in the foreground, holding drinks and phones, enjoying the game.

Bowling has been around for over 5,000 years; it’s played by over 120 million people in more than 90 countries, almost 70 million of whom are in the U.S. But, as Dave Denison reports, the state of play is challenged…

Bowling is an old sport—ancient, really… There’s a lot of churn in the bowling world; alleys go out of business all the time. I bowled in leagues for several years at a venerable old heap just outside of Boston. Opened in 1942 and originally called the Turnpike Bowladrome (for its location on the Concord Turnpike in Cambridge), it had one level devoted to candlepin bowling, a once-popular New England variant, and an upper floor for regular tenpin. I met people in the leagues with whom I would otherwise never have rubbed shoulders: a genial postal worker with noticeably less genial political views; a retired military man who also ran the nearby Air Force base’s bowling alley; and a Thai immigrant who told me he developed his technique by watching YouTube videos—he delivered the ball with a precise, balletic style. I even got to know the mechanic who fixed the automatic pinsetters and ran the machine that oiled the lanes. But developers had been eyeing the land for years, and finally, in its seventy-fifth year, the place then called Lanes & Games fell to the wrecking ball, replaced by a “luxury” apartment complex.

Most longtime bowlers can tell a similar story. Their home lanes were sitting on land too valuable to justify its use as a bowling alley. Or their family-owned center had no one to maintain the business. Or there just weren’t as many regulars as there used to be. It’s been said that the industry overbuilt when the development of automatic pinsetters in the 1940s led to a bowling boom in the 1950s and 1960s. Bowling leagues were especially popular in the industrial Midwest, where factory workers could bowl and drink beer after a shift. Budweiser sponsored a team in 1954 that launched bowlers Dick Weber and Don Carter to fame. Four years later, the Professional Bowlers Association was founded in Akron, Ohio, giving superstars like Weber, Carter, and the dominant left-hander Earl Anthony the chance to go on tour and make a good living.

But the number of bowling centers in the United States, which peaked at about twelve thousand in the mid-1960s, has been steadily falling for four decades. The number was down to about 3,800 in 2023, according to the USBC. Political scientist Robert D. Putnam [see here] famously cited the decline of league bowling in his 2000 book Bowling Alone as one of many indicators that civic engagement was collapsing across America, noting that league bowling declined by 40 percent between 1980 and 1993. The updated figure is even more dramatic: from a high of about 9.8 million league bowlers at the end of the 1970s, the number of USBC members in leagues for the 2022–23 season was 1.09 million. That’s a decline of 89 percent…

Denison explores the consequences of the consolidation of ownership (of both lanes and equipment manufacturers– spoiler alert: private equity) and the impact of technology. But mostly (and best), he explores the culture of the pastime.

Bowling, America’s most popular declining sport: “Changing Lanes,” from @thebaffler.com‬

* Robin Roberts

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As we grab our balls, we might recall that it was on this date in 1960 that Marlene Dietrich visited a new bowling facility in Knokke-le Zoute, Belgium to roll a few frames and to inspect their new automatic pin-setting equipment.

A bowler in white attire crouches down on the bowling lane, preparing to roll the ball towards the pins, with several bowling pins visible in the background.
Marlene studying the workings of the automatic pinspotter (source)

Written by (Roughly) Daily

August 16, 2025 at 1:00 am

“We sort of read two or three big newspapers but we don’t get the flavor of the local events, the local news as much”*…

Your correspondent is off again– back on March 13… and then (for all your sins) around for a while…

The Media Power Collaborative (a project of Free Press) compares local news to public goods like safe roads and public education and argues that it needs– and deserves– public funding. But those funds need to support authentic local journalism, not the zombiefied private equity-mined operations currently passing for “local news.” Sarah Scire reports…

What would a local media system that prioritizes working and middle classes over corporate profits and the interests of billionaires look like? A new public policy agenda released this week has some ideas.

The Media Power Collaborative, which released its policy framework on Tuesday, describes itself as an organizing space for media workers and their allies in research, activism, and education. The collaborative grew out of a peer networking group — now known as the News Futures collective — and is part of the media reform group Free Press. If you remember the much-discussed Roadmap for Local News that argued that the future of local news is “civic information,” this is the same crowd.

The local news industry, as Nieman Lab readers well know, has been devastated by ad revenue losses, layoffs, and profit-driven corporate ownership over the past couple of decades. Over that time, local newspapers have shrunk faster than a new crop of local news sites and nonprofit newsrooms have been able to grow. Through the policy agenda, policy tracker, and a new network of regional coalitions, the Media Power Collaborative wants to push the public policy conversation toward support for some of the more community-minded local media that’s emerged to fill that gap…

… The Media Power Collaborative agenda highlights local news and information as a public good that deserves “robust public funding” whether it comes from a legacy newsroom or not. From the report:

Just like safe roads and strong public-education systems, public-service journalism and civic information are public goods that benefit entire communities. Unfortunately, the market is critically underproducing these public goods: Estimates of what it would cost annually to bridge current community-information gaps range from $1 billion to $10 billion or more. Even with promising new philanthropic investments in local news and civic media, public funding is essential to addressing a deficit of this magnitude and building toward a community-centered local-news system.

The agenda also reflects a widespread frustration with public policy proposals that would benefit legacy newspaper chain owners such as Alden Global Capital. This has been a consistent theme for civic information advocates though by no means limited to them.

“Corporate media and hedge funds and broadcasters — these are folks who have the ears of lawmakers. They have resources to lobby. And so every starting place in the conversations about media policy is something that protects their interests,” Rispoli said. “A bit of it is saying this [civic media] part of the field deserves a seat at the table. But a bit of it is saying we should be the ones setting the table.”…

… The agenda attempts to address some of the biggest questions in local news policy, including how to protect editorial independence; which local news orgs should qualify for assistance; and, given finite public funding, which communities should be prioritized. Limiting public funds to legacy news organizations does not address their history of underserving communities of color as well as rural and low-income groups. It seems more likely to reinforce existing news deserts and information gaps. Candice Fortman, a John S. Knight Fellow at Stanford and former executive director of Outlier Media, was one of the 10 members that met over the course of 2024 to craft the public policy agenda.

“Many minds are working to build the agenda for the future of local news and how we will protect and fund reporting,” Fortman said. “This initiative, however, is about more than just saving local news; it’s about rebuilding it in a way that is equitable, sustainable, and deeply rooted in community needs.”…

[Scire recounts the elements of the Media Power Collaborative’s agenda (which is resonant with the thinking that led to the Public Broadcasting Act of 1967)…

… No one is saying any of this will be easy. Those estimates for closing the local news gap are enormous and it’s unlikely public funding alone is the answer. There are also important and fair questions about editorial independence and giving anyone — never mind the government — the power to decide which journalists and news organizations will receive taxpayer dollars.

Perhaps more pressingly, though, is that although majorities of both Democrats and Republicans approve of local media, the political polarization and harsh rhetoric at the national level has trickled down to state and local policy conversations. Funding for public media — already lower in the U.S. than in many other democracies — is under threat. Even paid news subscriptions for government workers have been criticized and exploited for political purposes in recent weeks. Federal legislation seems off the table for now, and we’ll have to see how many states and cities will see proposals to support local news become law. 

I noted one other ominous sign. The Media Power Collaborative’s policy agenda mentions that research tells us low-income communities, communities of color, immigrant communities, and rural communities are the most underserved by our current local media system. The report includes a link to research published by the FCC. The report, which was live in late December, now shows a “page not found” error message…

On a possiblle future for local journalism: “A new public policy agenda has a vision for ‘local news for the people’,” from @sarahscire.com and @niemanlab.org.

See also: “America Needs a Working-Class Media” from @columjournreview.bsky.social (source of the image above)

* Jane Smiley

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As we pay attention, we might recall that it was on this date in 1954 Edward R. Murrow and his CBS news program, See It Now, examined Senator Joseph McCarthy’s record and anti-communist methods, now widely understood to have been a witch-hunt.

The program is often remembered for these words:

“We will not walk in fear, one of another. We will not be driven by fear into an age of unreason, if we dig deep in our history and our doctrine, and remember that we are not descended from fearful men — not from men who feared to write, to speak, to associate and to defend causes that were, for the moment, unpopular.

This is no time for men who oppose Senator McCarthy’s methods to keep silent, or for those who approve. We can deny our heritage and our history, but we cannot escape responsibility for the result. There is no way for a citizen of a republic to abdicate his responsibilities. As a nation we have come into our full inheritance at a tender age. We proclaim ourselves, as indeed we are, the defenders of freedom, wherever it continues to exist in the world, but we cannot defend freedom abroad by deserting it at home.

The actions of the junior Senator from Wisconsin have caused alarm and dismay amongst our allies abroad, and given considerable comfort to our enemies. And whose fault is that? Not really his. He didn’t create this situation of fear; he merely exploited it — and rather successfully. Cassius was right. ‘The fault, dear Brutus, is not in our stars, but in ourselves.’

Good night, and good luck.”

– Poynter Institute

It is often referred to as “television’s finest hour.”

(One notes that McCarthy’s right-hand man, Roy Cohn, went on to become a Mafia lawyer (before being disbarred), a political fixer, and Donald Trump’s mentor.)

Written by (Roughly) Daily

March 9, 2025 at 1:00 am

“Private equity has absolutely no reason to exist. The private equity holder has all the upside and the banks all the downside.”*…

As private equity investors become much more active in the Global South, Farwa Sial adds local economies and their labor forces to the list of those shouldering the risks of falling into the hands of operators whose m. o. is “slash and burn” (or here). Her point of reference is, as you’ll see the U.K., where private equity has wreaked havoc with essential services. But she might well have cited examples from U.S. (e.g., healthcare [or here] or infrastructure [or here]…

The effectiveness of private equity has been a subject of ongoing debate in countries of the Global North. There is substantial evidence highlighting the extractive practices associated with private equity operations across Western nations. Examples include the decline of the British high street and the financial instability of local councils in the UK, particularly in the provision of child care. Similarly, in the United States, private equity has been linked to the attrition of an already fragile healthcare system. In France, Germany and the UK., its influence has contributed to the deterioration of care homes, raising significant concerns about its broader social and economic impact.

In a recent blog, Michael Roberts characterized private equity as “vampire capital“, encapsulating the widely recognized critique that private equity firms function through a rentier model. These firms are frequently associated with practices such as asset stripping, worker lay-offs, and opting for excess leverage that increases the debt burdens of their acquisitions, all while failing to provide compelling evidence of value creation. This perspective aligns closely with earlier criticisms of private equity. During the 2000s, private equity operations were similarly likened to a swarm of locusts, reflecting widespread disapproval of their extractive and often detrimental economic practices.

In summary, such analogies emphasize the aftermath of private equity operations, leaving behind “carcasses and barren landscapes.” Nevertheless, the evidence of a hollowed-out socio-economic landscape in the Global North has not deterred the international expansion of private equity into countries of the Global South. On the contrary, ongoing reports of American private equity capturing British markets have emerged in tandem with the globalization of Western private equity. In so-called “emerging markets,” this expansion manifests in various forms, including an enthusiasm for deploying “moral money” through international development initiatives.

This article examines the role of private equity in Global South countries, focusing on three key characteristics: the escalation of indebtedness, the weakening of public markets, and the public subsidy function of development finance in facilitating private equity investments…

Exporting pain: “Private Equity in the Global South: Locusts? Vampires? The contagion effect” by @farwasial in @DevEconNetwork.

* Nassim Nicholas Taleb

(Image above: source)

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As we muse on models of modernization, we might recall that on this date in 1995, the Japanese Nikkei index fell more than 1,000 points from 19,241 to 17,785 as traders panicked over the devastation of the Hanshin (or Kobe) Earthquake. In total, the Nikkei had fallen 7.6% since the earthquake on January 17th. 

The decline was the leading trigger of the failure of the 232-year-old Barrings Bank. A young trader, Nick Leeson, had speculated on Japanese derivatives. By this date in 1995, Leeson had make big bets that the Nikkei would remain between 19,000 and 21,000. As the market sank Leeson added to his positions, eventually accumulating over 60,000 futures contracts. Within a month Leeson quit the bank and was on the run (eventually he was arrested and served 3 years in jail). The losses he accumulated took Barings down; it failed and was sold to ING for 1 pound on March 6th.

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Written by (Roughly) Daily

January 23, 2025 at 1:00 am

“I analogize it to sex. You realize there were certain things you shouldn’t do, but the urge is there and you can’t resist.”*…

The estimable Cory Doctorow on the incursion of private equity into health care…

As someone who writes a lot of fiction about corporate crime, I naturally end up spending a lot of time being angry about corporate crime. It’s pretty goddamned enraging. But the fiction writer in me is especially upset at how cartoonishly evil the perps are – routinely doing things that I couldn’t ever get away with putting in a novel.

Beyond a doubt, the most cartoonishly evil characters are the private equity looters. And the most cartoonishly evil private equity looters are the ones who get involved in health care.

Writing for The American Prospect, Maureen Tcacik details a national scandal: the collapse of PE-backed hospital chain Steward Health, a company that bought and looted hospitals up and down the country, starving them of everything from heart valves to prescription paper, ripping off suppliers, doctors and nurses, and callously exposing patients to deadly risk…

[There follows an illuminating– and truly terrifying (backed up sewage in the wards; bats colonizing hospital floors; stiffed employees and vendors)– an unpacking of Steward’s deeds and a location of them in the larger landscape of private equity.]

… But despite Steward’s increasingly furious creditors and its decaying facilities, the company remains bullish on its ability to continue operations. Medical Properties Trust – the real estate investment trust that is nominally a separate company from Steward – recently hosted a conference call to reassure Wall Street investors that it would be a going concern. When a Bank of America analyst asked MPT’s CFO how this could possibly be, given the facility’s dire condition and Steward’s degraded state, the CFO blithely assured him that the company would get bailouts: “We own hospitals no one wants to see closed.”

That’s the thing about PE and health-care. The looters who buy out every health-care facility in a region understand that this makes them too big to fail: no matter how dangerous the companies they drain become, local governments will continue to prop them up. Look at dialysis, a market that’s been cornered by private equity rollups. Today, if you need this lifesaving therapy, there’s a good chance that every accessible facility is owned by a private equity fund that has fired all its qualified staff and ceased sterilizing its needles. Otherwise healthy people who visit these clinics sometimes die due to operator error. But they chug along, because no dialysis clinics is worse that “dialysis clinics where unqualified sadists sometimes kill you with dirty needles“

…

The PE sector spent more than a trillion dollars over the past decade buying up healthcare companies, and it has trillions more in “dry powder” allocated for further medical acquisitions. Why not? As the CFO of Medical Properties Trust told that Bank of America analyst last week, when you “own hospitals no one wants to see closed.” you literally can’t fail, no matter how many people you murder.

The PE sector is a reminder that the crimes people commit for money far outstrip the crimes they commit for ideology. Even the most ideological killers are horrified by the murders their profit-motivated colleagues commit.

Last year, Tkacic wrote about the history of IG Farben, the German company that built Monowitz, a private slave-labor camp up the road from Auschwitz to make the materiel it was gouging Hitler’s Wehrmacht on…

Farben bought the cheapest possible slaves from Auschwitz, preferentially sourcing women and children. These slaves were worked to death at a rate that put Auschwitz’s wholesale murder in the shade. Farben’s slaves died an average of just three months after starting work at Monowitz. The situation was so abominable, so unconscionable, that the SS officers who provided outsource guard-labor to Monowitz actually wrote to Berlin to complain about the cruelty.

The Nuremberg trials are famous for the Nazi officers who insisted that they were “just following order” but were nonetheless executed for their crimes. 24 Farben executives were also tried at Nuremberg, where they offered a very different defense: “We had a fiduciary duty to our shareholders to maximize our profits.” 19 of the 24 were acquitted on that basis.

PE is committed to an ideology that is far worse than any form of racial animus or other bias. As a sector, it is committed to profit above all other values. As a result, its brutality knows no bounds, no decency, no compassion. Even the worst crimes we commit for hate are nothing compared to the crimes we commit for greed…

“When private equity destroys your hospital,” from @doctorow. Eminently worth reading in full– and following his newsletter (from whence this comes).

* David Rubenstein, co-founder and co-chairman of the private equity giant The Carlyle Group, at a Harvard Business School Conference

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As we rethink returns, we might recall that it was on this date in 1944 that Louis Buchalter (AKA Lepke Buchalter, AKA Louis Lepke) was executed in the electric Chair at Sing Sing.  One of the premier labor racketeers in New York City in the 1930s, he is better remembered as the creator (in 1929) and overseer (thereafter) of an efficient system for performing mob hits; while Buchalter never named it, it became known in the press as “Murder, Inc.“

The Cosa Nostra mobsters wanted to insulate themselves from any connection to these murders. Buchalter’s partner, mobster Albert Anastasia, would relay a contract request from the Cosa Nostra to Buchalter. In turn, Buchalter would assign the job to Jewish and Italian street gang members from Brooklyn.

None of these contract killers had any connections with the major crime families. If they were caught, they could not implicate their Cosa Nostra employers in the crimes. Buchalter used the same killers for his own murder contracts. The Murder, Inc., killers were soon completing jobs all over the country for their mobster bosses…

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Murder, Inc. was believed to be responsible for as many as 1,000 contract killings before it was exposed in 1941, and Buchalter was finally charged and convicted of murder that same year.

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