Private equity is cancer. It honestly should be illegal, particularly to buy a company with a loan and then strip-mine the assets to pay back that loan.

Private equity looks for "pricing power". This just means "inelastic demand". So housing, vets, healthcare, food and utilities are great targets because you can't opt out of basic needs. Healthcare (and vets) have the added layer that PE tends to buy all the practices in an area at the same time so there's no competition. And, like you say, they sign all the medical providers with these big contracts with onerous non-competes

Those non-competes, while onerous, tend to be regional. The region can be large however but if you moved (which, admittedly, most people don't want to do) then you could practice medicine elsewhere.

Here are two big ways PE is trying to corner these markets with mixed success:

1. Some states (eg Oregon) have laws that forbid companies from "practicing medicine" so when Apollo came and tried to buy their way into emergency care (so the hospitals fired the physician-owned emergency medicine group that had been running it for decades), they try this convoluted corporate structure where there's a company that ostensibly owns the new healthcare operation and it has some doctor placed as the chief but really it's a Trojan horse for the PE firm. So far, judges in Oregon have rejected this end-run around the law; and

2. Envision Healthcare was a massive PE failure because of a law change. Here's how it worked. Whatever insurance you have will have in-network and out-of-network providers. In a hospital environment you generally have little control over the various providers who see you. This has led to some surprises where, say, the anesthesiologist for your surgery might be out-of-network while your surgeion was in-network. The surgeon is getting an in-network fee of $8000 but the out-of-network anesthesioligist is charging $100,000. Unscrupulous doctors would evngage in revenuemaxxing by intentionally bringing in an out-of-network provider then splitting the much higher fee rather than using the residents in the hospital, which were essentially "free".

That was Envision's entire business model: surprise out-of-network billing. Then in 2021, the No Surprises Act was passed that basically outlawed this practice. It forced hospitals to only receive in-network rates for things like this. And the entire $6.5B purchase of Envision imploded.

This is partially why I get so angry when people try and defend PE as a concept. It's entirely parasitic. It's not even theoretically making a business more efficient. It's just hiking prices in a way where people have no choice. That's it.

The interesting part is that the PE firm will try and exit by IPOing the "restructured" company, which will only last a few years before the complicated debt structure implodes, a bit like subprime loans. A textbook structure is to "sell" all the real estate to a holding company and that's not listed and then you have complciated leaseback contracts that only keep going up in rent.

One of favorite "fun" facts about healthcare is when passing the Affordable Care Act, somebody snuck in a provision that made physician-owned hospitals illegal. Who? Nobody really knows as best as I can tell. It just made it into the final bill. Someobody argued doctors would have an unfair advantage or something. Who? Insurance companies.

Honestly, this entire system needs to be burned to the ground, Boudicca style.