Certificate of Need: basically, prove to regulators that there is enough "need" before opening up new facilities.

https://en.wikipedia.org/wiki/Certificate_of_need

As someone already pointed out, PE owned hospitals are in states with, and in states without, CON requirements. Certainly on the face of that fact it would appear the existence, or nonexistence, of CON requirements has no effect on PE hospitals charging more and having far inferior outcomes.

Do you have a hypothesis as to why CON requirements are driving inferior outcomes and increased cost metrics at PE owned hospitals? (A hypothesis that accounts for the fact that PE owned hospitals underperform even in the absence of CON requirements.)

Serious question. I'm trying to get my head around this.

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dodobirdlord 2 days ago | parent | next [-]

How does this relate to the original post? The original post posits that overregulation contributes to the dysfunction of the US healthcare system. The next response calls for specifics. The comment you responded to provides a specific regulation that may be contributing.

You respond questioning how that could explain why PE operated hospitals have worse outcomes. I agree, this doesn’t seem to have an explanatory power for why PE operated hospitals have worse outcomes, but how does that relate?

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bilbo0s 2 days ago | parent [-]

Uh, because the original post implied that over regulation was the cause of substandard metrics in PE owned hospitals. It even went so far as to state, "..I'm not surprised by this finding.." after outlining a case for why over regulation was a problem.

Which "finding", presumably, being that PE owned hospitals have substandard metrics.

My question is natural given the context of a discussion that's literally titled:

"Death rates rose in hospital ERs after private equity firms took over"

It's literally the entire subject of the discussion. Why would anyone think it's irrelevant?

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dodobirdlord a day ago | parent [-]

I think you misread the original post. It is about overregulation fostering the spread of PE operated hospitals. Not about overregulation causing PE operated hospitals to have worse outcomes.

	▲	bilbo0s a day ago \| parent [-]
		The material point is that the PE operated hospitals proliferate even in the absence of the regulations.

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landl0rd 2 days ago | parent | prev | next [-]

Yeah, don't you think a. there would be less PE demand for these hospitals if they didn't come with a free state-enforced local monopoly, and b. it would be easier for competitors that don't suck to open up, and c. PE guys could get away with less quality degradation if there wasn't the aforementioned local monopoly?

	▲	bilbo0s a day ago \| parent [-]
		But PE owned hospitals also suck when there is no locally enforced monopoly. They even suck when it is easy to open competing hospitals.

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SkyBelow 2 days ago | parent | prev [-]

Sample hypothesis with only minimal amount of knowledge on it.

PEs seek to make profit, and are looking for places where they can either raise prices or lower costs (which will quickly correlate with worse outcomes) while not losing customers (yes, you could call them patients, but PE will view them as customers), or at least losing so few that the overall numbers result in more profit. One way of doing this is looking for barriers to competition/moats. CON is just one type of moat, and so is one factor PEs evaluate, but the presence or absence of other moats can still override the presence or absence of this one moat. One could try to work this out from data with some sort of regression, but with so many possible moats and a relatively limited number of data points, it would be easy to overfit the data.

In comparison, non-PE hospitals might have some profit motive (or keeping to budgets, not going bankrupt, ect.), but will be less driven by this mentality and thus their relationships to moats will be more complex, and so something like a CON requirement won't be as fully exploited to raise prices or lower costs.

This also fails to account for other ways that PE can seek to make money, which involves more complex parts of law and financing that I'm not well versed on (I've ready some things about real estate, but don't know enough to fairly analyze the claims).