PE

Like lots of other physicians, I have tended to give Private Equity a bit of the side eye stare. I didn’t really understand their business model and when I started to, I adopted the morally outraged stance that so many of my more knowledgeable colleagues have readily espoused. So now I’m going to take a contrarian stance, one that might get me ostracized from polite society: PE isn’t as evil as everyone says and *might* actually be a good thing.

Judging from some of the vitriol on social media (like this, for example), PE is akin to collaborating with the Nazis: a crime against humanity (or healthcare, in this case). While I’m pretty sure PE firms can’t be neatly slotted into the “aggressively evil” category (versus the “moderately evil” or the Hallmark movie-esque “not evil at all, just misunderstood” categories), no one will deny that they are out to make profits; after all, that’s why PE firms exist: to garner substantial or even outsized returns for their investors.

My question to the PE skeptics out there is this: are there any so-called “non-profit” healthcare systems or private groups out there that are NOT looking to garner substantial or even outsized returns? And what about the healthcare systems who are more than happy to wrap themselves in the noble cloak of academia and yet conduct their business in ways that would make PE firms blush? Let me ask you: who is the cynic now?

I can understand how physician-owned groups “selling out” to PE is viewed as an inexorable erosion of autonomy (a trait that we as physicians deeply value- more on that in a separate post). But just like IR as a disruptive force in healthcare, PE is also a disruptive force, regardless of how we feel about the loss of autonomy. The groups that choose to partner with PE do so of their own accord and I will neither guess nor judge (the obvious “cash out” seems the most popular explanation floating around out there but there are plenty of others). These groups, before partnering with PE, aimed to generate substantial or even outsized returns for themselves. This is no different than what PE aims to do just with a different, unfamiliar (to us physicians, at least) methodology. The truth is that the long-term implications of PE in medical imaging are simply unknown. Profit (whether generated by PE, private practice, university faculty, or healthcare systems) is not a crime nor is it unethical, as our system currently stands at least.

The fundamental question (in the US, is healthcare a right or a privilege?) remains unanswered. Until it is, I don’t think that any of us are entitled to point accusatory, holier-than-thou fingers at any business entity and hold it accountable for our collective downfall. For now, whether we like it or not, healthcare in America is still a business and, therefore, profit is not just expected but required, in private practice AND academia. I’m not saying that I agree with this, or that I think our healthcare system works well (spoiler alert: it is ridiculously broken). But until we decide to change the narrative or go broke, US healthcare will be subject to all of the same disruptive economic forces and innovations as any other business. At this point, we cannot predict the effects, good or bad, that PE will or won’t have in the mid- to longer term view.

But don’t even get me (and my hypocritical holier-than-thou finger) started on insurance companies. Any healthcare company that bases its business model on NOT paying for healthcare despite folks paying their premiums with hard earned money, not to mention the egregious delay tactics, random rejections, ludicrous “peer to peer” (lol) appeals, payment rate squeezes despite nosebleed-inducing executive compensation…man, THOSE dudes are evil. Comparatively speaking, I find the transparency of PE refreshing.

And now, as you release the hounds, I will scream “it’s just my opinion!” while they chase me into eternity.