Medicine and Private Equity Firms (PEFs)

…or – Making Pain Pay!

Hippocrates, for whom the Hippocratic Oath is affectionately named, covers the breadth and depth of his knowledge and teachings from his life as a healer. Scholars believe it to be a compilation of his writings and teachings, estimating that it was written in the 4th or 5th century BC. The most memorable phrase attributed to Hippocrates, “First do no harm”, as an admonition to the physicians who would follow him, is a paraphrase of ‘either help or do not harm the patient,’ and probably ‘I will abstain from all intentional wrongdoing and harm.’

It offers a comprehensive list of cautions for covering topics such as Abortion, Religious Themes, and Euthanasia. Hippocrates’ central premise is to ‘Treat the patient, not the disease’, which is a real departure from where we find ourselves today in Merka and the Business of Medicine – or as I like to think of it, “Making Pain Pay”!

The ghastly adjunct to this is Big Pharma –  the Drug Companies!

You do realize that these drug companies provide incentives to doctors and clinics that ‘push’ their particular products, don’t you?

But… isn’t profit our primary focus in Merka? Nearly everything we do is for profit. Even being nice or kind to someone carries ulterior motives with personal gain as a consideration. If I’m kind, I’ll be rewarded somehow, turning generosity into a bargaining-chip or token of exchange – quid pro quo. I recall a phrase from many years ago… “Practice random acts of kindness and senseless acts of beauty.” It reminds us all that even a small gesture can have a positive impact on the world. But doesn’t this imply that our focus should be much larger than ourselves?

This article began with my annual financial contribution to the Business of Medicine (BoM) this morning during my obligatory Cardiologist visit. Insurance providers require a yearly visit to my ever-expanding ‘care-team’ to supposedly ensure your health is stable and that lurking diseases haven’t attacked you. My annual pilgrimage through this medical-maze begins in June, the month of my birth, and continues for several months, ending in late September or early October.

Appointments often take months to obtain, and my list of required practitioners grew to 15 this season. One referral to a specialist took three months to get an appointment. I’d almost forgotten why I was referred. It’s a damn good thing I have nothing else to do but spend time deciphering cryptic online scheduling apps and filling out redundant patient information forms. They were all created by IT professionals, born with a cellphone and computer tablet in hand, and live the technology they use.

I remember the advertisements from 1976 for the Apple 1 computer. It was supposed to make our lives better and simpler. It was only available as a circuit board (a do-it-yourself / home-built computer) with a prophetic price of $666.66. Does this number look familiar to anyone? I built one in 1977.

The promise of IT was to simplify our lives and provide us with more free time for leisure and recreational pursuits. I spend the majority of my day at a computer, writing or navigating through cryptic websites to complete redundant forms, or deciphering instructions written in millennial-speak to perform even the most basic tasks. Everything – Yes, Everything, is now done on a computer. And, oh, by the way, that cell phone glued to your hand is a computer.

It really sucks getting old, but then I remember that Merka’s aging population and our medical insurance coverage represent a veritable gold mine for those in the geriatric medical profession. Fidelity, a major insurer, estimates that a retired couple should have $315,000 saved to cover medical and healthcare costs through the remainder of their lives. The median savings for a retired couple is $87,000.

Maybe it’s a good idea, like scheduled maintenance on your car. However, there is also the co-pay to consider… Each visit requires an ‘out-of-pocket’ contribution for each and every visit. What about the thousands of dollars we send to the insurance companies each year?

The average annual family cost for coverage in 2024 was $26,572. The average worker contributes $6,926 to that cost… This is a 52% increase from 2014… Think about it… If your family income is $100,000 per year, that’s 26.6% of your income for health insurance.

I like my Doctor, he’s pretty astute. Not because his philosophy and observations on the BoM parallel mine, but because he usually provides some insight into how the BoM continues to track modern financial tactics in general. He voiced his abject discontent with the system during my recent visit.

This article was an epiphany, a realization, that his cardiology practice, like too many other medical practices, has been acquired three (3) times in the past 18 months by Private Equity Funds (PFEs) whose sole purpose is to squeeze every possible nickel out of the practice. He further explained that he and his partners in this practice have lost all control and are now ‘employees’ of the PFE. The business manager for the medical business has complete and total control over every aspect of this enterprise. As we walked to the payment window, he divulged that the rumor is that another PFE will acquire them very soon, “so please check on our status before your next appointment; we may not be here or combined with another cardiologist elsewhere in Phoenix.”

Private Equity Firms (PFEs) are increasingly active in the Business of Medicine, acquiring hospitals, physician practices, and other healthcare entities. This investment surge has led to significant changes in the healthcare landscape, raising concerns about the potential impact on cost, quality, and access to care.

The allure for these PFEs is the cash-rich environments, allowing them to double their investments. Harvard’s School of Public Health forecasts that this trend will come at the cost of patients, not just financially. Here are the main points:

– National study of quality of care in hospitals acquired by private equity shows worsening of fall and infection risk, other measures of quality, and safety.

– Some post-procedure adverse events increased even though private equity hospitals performed fewer procedures among younger and less disadvantaged patients.

– The new findings amplify existing economic concerns about the growth of this for-profit ownership model.

When a PFE purchases a medical practice, it’s done with a small amount of cash, and the majority with debt. This requires the purchased practice to generate a massive amount of money to pay down the debt. The PFE uses the practice’s physical assets as collateral for these loans. Here’s the link to the article.

What this means to us, the patient, is that Hippocrates’ tenets of medicine are out the window. It’s now ALL about the money, honey… It’s all about the cash…

Medicine may not be the final enterprise to fall prey to the PFE raiders – Raiders of the Lost Art – but you can imagine the impact on health services and care from a personal point of view, primarily as it affects you and your family.

When profit is the primary driver, there are no limitations to corner-cutting, and most certainly no conscience in the decisions. Everything is expendable and disposable, which eventually impacts quality. And isn’t quality most important when it comes to your health? I can imagine a home coronary bypass kit with a box of Band-Aids, a razor blade, a quart of cheap Vodka, and an internet link to “Home Surgery Made Easy” in 38 languages, narrated by Dr. Patel, from Patel, Sharma, Gupta, Kumar, and Singh: LLC – MDs in Mumbi.

Enter your Medicare – Medicaid, Insurance, and credit card information, and we’ll begin…

This may seem ludicrous, but whoever thought that we’d be facing this financial fiasco in our country? Healthcare in the hands of Robber-Barons – that’s a person who has become rich through ruthless and unscrupulous business practices. I suppose next we’ll have medically sanctioned murder, but not by the insurance companies, they only make money while they keep us alive and paying.

Consider the implications of this latest business scam. A doctor dedicates a significant portion of their life to learning their craft. Now, some MBA steps in to run the show. They may have a background in the Business of Medicine (BoM), but lack practical experience in treating patients or making life-altering care decisions. I expect AI to enter this field quickly, thereby expediting the decision-making process and eliminating any potential influences from human emotion, just cold, calculating logic.

There is no doubt that medical practices require real business acumen to be successful, and learning to manage this type of business demands a well-honed skill set in all aspects of the company. As Hippocrates alludes, “First, do no harm…” must be the litmus test of every decision in the medical business, or there will be no business to manage. If you kill people in the process of making a living, you’re a hitman, not a doctor. The admonition is that your reputation precedes you.

At issue here is that reputations are often hidden behind a curtain of plausible deniability and the legalese of the Limited Liability Corporation (LLC) and the Limited Liability Partnership (LLP), which hold the company liable for damages, not the practitioner. Then there’s the almighty Corporation – INC. Private Equity Firms are generally structured as Limited Partnerships (LP) where the partners are investors in the firm under a Limited Partnership Agreement (LPA). It means that the partners are generally not liable for the partnership’s debts beyond their initial investment.

Business requires the same cold, carefully calculated, logical process, especially when profit is the only meaningful measure of success. It’s often referred to as the “Take No Prisoners” approach. Is this what we want from our service providers? We know it’s prevalent in the corporate insurance industry, but does this really belong in medical care?

I asked the ‘Everlasting Know-it-all’, AI, if there is an approach to medical care that provides financial gains while providing exceptional care. Luckily for us, there is – it’s called Value-Based Care (VBC). In essence, the focus shifts from a “fee-for-service” model that incentivizes higher volume to a system that rewards quality, effectiveness, and efficiency. Ask AI for the details… VBC value-based care represents a significant shift in healthcare, aligning financial incentives with quality care and improved patient outcomes. While its implementation requires adaptation and may present challenges, it offers a path towards a more sustainable and patient-centered healthcare system. Again, you can ask AI for the list of providers that use this system successfully.

Their focus is on quality over quantity… but that doesn’t diminish or negate the damage done by the PEFs and the other Make Pain Pay organizations. Healthcare is still a multi-billion-dollar industry… “Thar’s Gold in them thar ills… and pills…” Big Pharma is another golden calf, with 2024 revenues exceeding $1.7 trillion for prescription and nonprescription drug sales. Prescription drugs generated over $800 billion in revenue for 2024.

There are multiple healthcare providers and insurers that actively engage in VBC successfully. The best measure of this success is patient satisfaction and corporate profit. Kaiser Permanente’s revenue for 2024 was $115.8 billion, up $15 billion from the year before, and that ain’t chicken feed… which proves that VBC can be a valuable and viable approach to health care.

This means that all of us, especially those so completely dissatisfied with the state of BoM in Merka, need to vote with our feet by finding someone who meets YOUR needs and stop taking the Insurance provider’s word for it. Here are a couple of simple steps you can take to protect your health from these companies that Make Pain Pay…

– Do some research about clinicians who use the VBC approach to care

– Check with your current provider. Ask for their recommendation for clinicians who use VBC and who are in your network, who your provider pays, and who are approved

– Interview the clinician before making an appointment; use your initial appointment to complete the interview. Remember: They Work for YOU!

– Share this information with your friends and family. Word-of-mouth is fantastic advertising and the quickest way to show your support for these clinicians.

Your health is YOURS to manage, not some bloated corporation or private equity fund. You always have options; learn what they are and how to exercise them. And… if you’re not satisfied with the care or service you receive – LET THE CLINICIAN KNOW IMMEDIATELY! And above all, don’t just complain, offer constructive suggestions to improve the service. If they care, they will take your suggestions to heart…

This suggestion applies to everyone with whom we interact in a business context. If all they hear from you are complaints, you’re nothing more than a ‘Grumpy, Crabby, Nitpicker.’ But if you offer some constructive ideas to improve their service, they will see you as a concerned customer. If they don’t care to listen to your suggestions, consider going somewhere else. There are hundreds of options… after all, it’s YOUR health and money we’re talking about, and no one will take better care of you than you!

~ Author’s Note ~

Have you ever wondered why we take the time to research and write these articles, or prepare for these shows and presentations? Sure, it’s a labor of love, but we all hope that you come away a bit smarter and better informed than when we began. After all, you never know when you might hear or read something that will open your eyes a little wider or encourage you to see things from a different point of view or adopt a new perspective. We’re not always right, but we do see things differently. Kind of makes you think, doesn’t it… and by the way, that is the point.

Unabashedly… For the Amalgamated Heavy,

 

 

July 3, 2025

~ The Author ~
Charles R. Dickens was born in 1951, is a veteran of the Vietnam war, for which he volunteered, and the great-great grandson of the noted author, whose name he shares.

He is a fiercely proud American, who still believes this is the greatest country on the planet, with which we’ve lost control and certainly our direction. He grew up in moderate financial surrounding; we’re not rich by any stretch, but didn’t go hungry – his incredibly hard working father saw to that. As most from that era, he learned about life from his father, whose story would take too long to tell, other than to say that, he is also a fiercely proud American; a WWII and Korean war, veteran Marine.

Charlie was educated in the parochial system which, demanded that you actually learn something, and have capability to retain it before you advance. He attended several universities in pursuit of a bachelor’s degree, and chased the goose further to a master’s, and has retained some very definite ideas about education in this country.

In addition, Charlie is a retired blues guitar and vocalist – a musician. This was his therapy career. Nothing brings him as much joy as playing music, and he wishes that he could make a living at it… but alas… life goes on!