My parents ended up being forced by circumstances to move into a retirement home about five years ago. Fortunately, the place turned out to be run by people who mostly cared about their clients and so my parents' lives were basically OK, except that the food sucked (which AFAICT is par for the course at retirement homes). But a few months ago the place was acquired by a different company, which is trying to squeeze out higher profits. Staffing and services are being cut, and prices are going up. Even the food got worse, which I didn't think was even possible. The response when someone complains is, "If you don't like it you are free to leave."
Yeah, right. My barely mobile 90-year-old parents, one of whom has Parkinson's, are just going to pack up and go. They know perfectly well that they have a captive audience.
Thankfully, my mother died before the acquisition, and my father died last week, only a few months after the acquisition, so I don't have to deal with this any more. But caveat emptor: if you ever go into a retirement home, think about what will happen if they change ownership. Even if it looks great, or even acceptable, now, there is no guarantee that it will still be great, or even acceptable, tomorrow, unless you somehow manage to negotiate such a guarantee. I have no idea what a contract provision like that would even look like. But I am going to be facing this problem myself some day, so I'd love to hear ideas.
The biggest sign something is broken is when someone writes: "Thankfully, my mother died before the acquisition, and my father died last week, only a few months after the acquisition, so I don't have to deal with this any more."
To be fair, my mother had cancer and my father had Parkinson's, and that was a much bigger factor in their ultimate quality of life than any deficiencies in the retirement home they found themselves in. So I don't mean "thankfully" in the sense that "thankfully they died prematurely so they didn't have to suffer under their home's new management", I mean it, "Thankfully the natural course of their lives timed their deaths so that they were minimally affected by the new management."
But yeah, it kinda sucks, and not just for the residents who are still there. It sucks for the rank-and-file staff as well, most of whom still really care about their clients, but who now have to answer to people who absolutely do not care about anything other than money.
I didn't read that as saying anything about your character; it's an understandable way to react. It is an indictment of the system that people have to feel that way when it really shouldn't have to feel that way.
I think most of us read it the way you meant it. Sorry for your loss.
The concern you raise is front and center for me, because my mother is 87 and we’ve been looking for a place. All the options are terrible, without considering PE.
Where I live Medicare and Medicaid want people to live (and die) in their own homes. They send out nurses and nurse practitioners to you. That is what I want. After some research I realized the provider that I want which is UTSW in Dallas has a geographical radius that they serve. I am planning to eventually move to be within that radius.
That was my parents' original plan. But they were in denial about how much preparation would be needed to make that happen. They lived in a split-level house and my father had severe osteoarthritis in his knees. It's actually a miracle that he didn't fall and break his neck going up and down the stairs. But one day he fell in the shower and could not get back up, and that was the beginning of the end.
That’s totally doable and encouraged, as it’s by far more cost effective.
But you really, really need a support system of willing people who care about you, and are savvy enough to effectively advocate for you when you lose that ability. Independent home care works well when you need help, not constant care.
Our family worked with this for 6 years with my bad post stroke and for about a year with my mom and cancer. My siblings were all on board and my mom was uniquely positioned - she was a regulator at the state level who was adept with the rules (and had in fact wrote many!).
Even so, as things progressed it was hard. My mom was devoted to my dad, and filled every gap. We depended on hired help for mom, and despite the financial resources it was difficult to get staff.
This is going to sound a bit wild, and only viable under 70 or so, but I've met a lot of 55-70 expats in walkable southeast asian cities. There's obviously varying circumstances so do the research, but you can almost get adopted by your landlord family, where you're getting home cooked meals, rides, doors held open, etc. This part of the world is so family oriented, it just comes naturally to many of them.
It's a nice idea, though I hope I'm humble enough to vacate my house for a younger family that will make the most use of it. By which time I hope to be in a manageable apartment, or perhaps a group home where I can pass the time with others at a similar stage in life.
For some (like one of my family members), circumstances are such that they need more social attention than the family/medical system can provide. That's one of the reasons we are considering.
Thank you. But he was two months shy of his 90th birthday and, except for struggles with osteoarthritis and Parkinson's, he had a good run. I'm sad that he's gone, but it's not like it took anyone by surprise. And I'm glad that his suffering, which towards the end was not insignificant (though he was very stoic about it), is over.
The last week has actually been pretty (ahem) interesting in a lot of ways. I should probably write a blog post about it.
> Fortunately, the place turned out to be run by people who mostly cared about their clients and so my parents' lives were basically OK, except that the food sucked (which AFAICT is par for the course at retirement homes).
My dad unfortunately never made it to a retirement home (cancer onset when he just turned 70), but in his one week hospice stay, he couldn’t help but complain about the food.
The people that perform these acts to the elderly should be tortured to death. You may think "wow thats some hyperbole right there!" but active torture is effectively what they're engaged in against the people in their care.
As a (former) paramedic, PE-run SNFs (skilled nursing facilities) are an absolute evil that absolutely kills people. I do want to be clear before any of the following that while there is a truth that many of the nursing staff at these facilities are often the lower quality tier of nursing care, they often care greatly for their patients/residents.
Staffing/flooring ratios? Laughable correlation to reality. Many a time? A single LPN "supervising" a floor of CNAs. Doctor consultation? The CNA oftentimes leaves a voicemail for the physician to review and care decisions are made without the physician talking to either the patient or a nurse (I'm not sure how this isn't malpractice, and I'm not convinced it's not). Facility "policy", often hidden behind "insurance requirements" have the facility overburdening the local EMS system because "we are required to call 911 for anything larger than a bandaid", and we can find ourselves doing anything from the most basic wound care to pointing out to a sleep-deprived CNA "you know your patient appears to have had a stroke sometime recently, right?". EMS arrives and often gets woefully incomplete or inaccurate history information (often for patients who are unable to be reliable historians themselves).
There is, however, ALWAYS money for the colorful glossy brochures/books at the front desk, or the big shiny billboard or TV ad that talks about "mom being in good hands with round the clock nursing care!" (and of course, a facility fee per month that would make you feel like she has her own personal RN and on-call MD 24/7").
Also a former medic, the best care homes I ever went to were the Jewish Home for the Aged. They were so much nicer and the patients there never had decubitus ulcers or staph infection in skin folds from not being cleaned.
The worst place I ever saw was Atherton Long Care which supposedly is fancy and expensive but they had neglected an old lady so poorly I actually reported them to CDPH and the ombudsman. She had full on necrotized tissue under both her breasts and a rotted unchanged g-tube that you could smell all the way down the hallway to the nursing station it was so sad. John George Psych hospital and Cordilleras MHRC are both also very sad hellholes. Patients sleeping laying on the floor in the hallways with a blanket because the rooms are full etc. We had a lady who purposely stabbed herself in the eye so she could go to the ER to get out of Cordilleras because it was so awful.
What I found if you ever need to place your loved on in a care home is the sniff test is the best assessment of how well it's run and if the patients are cared for. If patients are cleaned regularly and not left to sit in their own diapers it really shows there is enough staff ratio and attention given to the patients. Go on a random evening or day and at different times. Food quality is also a good indicator - eat lunch with your parents there. Would you eat this yourself voluntarily? If yes, it's probably a good place not run on a shoestring budget.
Also - hn readers - if your mom is in a care home please always check under her breasts to ensure she is clean and dry there every time you visit. Far far too many old ladies get candida and bacterial infections under their breasts that are never cleaned or taken care of because it's embarrassing to check or clean and dry so then it just gets wet and rots and is painful, sad and gross and can lead to even worse things like cellulitis or an abscess.
> There is, however, ALWAYS money for the colorful glossy brochures
OMG, so much this! One of the things that happened after the acquisition is that they changed the phones to play a marketing pitch whenever you were on hold. (They even did this on the resident's phones!) One of the things the pitch said was that the place featured "chef-inspired meals" which was about as disconnected as you could possibly get from what I knew first-hand to be reality. It was one of the most bald-faced lies I have ever heard in my life, and it really steamed my clams because I knew there was nothing I could do about it.
I’m sure the new owners are scummy, but the fundamental problem isn’t scummy people. There’s lots of markets that are okay-ish notwithstanding scummy people. Even those with natural lock in effects.
The fundamental problem is it is at the intersection of two out of the three areas of the economy that have had insane cost growth over the last 30 years—-housing and healthcare (the third is education.) For the first one we know roughly what we need to do but won’t. For the second we don’t even have that.
The other fundamental problem is the demographic profile in most developed countries. We have aging populations, and proportionally fewer young people to care for them. I'll bet most HN users wouldn't want to work at a retirement home or assisted living facility even if it paid well. My father spent his final years in such a facility and dealing with him was quite difficult for the staff there. This will inevitably cause higher costs and lower quality.
The other other fundamental problem is that dealing with elderly people often is difficult and unpleasant and what can you really expect from people who aren't related to them? Daycares and preschools are often very loving places because babies are cute and trigger people's nurturing instincts but that's not true of the elderly.
In some parts of the facility, workers are recognized by older folks who are aging with poise. That connection looks mutual.
In other parts, memory care, you are never recognized by the patients. Prepare for combative, confused ill people; your job depends on not treating them like animals.
I see adult children visiting their parent, who doesn't recognize them, and wouldn’t understand that $115,000/year isn’t entirely paid by the state.
Yet daycare costs are also exploding. In both cases it’s not primarily about wages going to the direct care workers—-though steep minimum wage increases are a factor in some jurisdictions.
> There’s lots of markets that are okay-ish notwithstanding scummy people.
It is not at all clear to me that there are "lots" of such markets, but that is neither here nor there. A prerequisite for an okay-ish market is that buyers need to be able to choose not to buy, and when you have literal limited mobility it becomes very difficult to walk away from your housing and care provider, either literally or figuratively.
> housing and healthcare (the third is education.) For the first one we know roughly what we need to do but won’t. For the second we don’t even have that.
Healthcare costs increasing is of very little concern to nursing facility ownership. Almost none of that is borne by the facility itself. They'll often hire skeletal crews of CNAs and LPNs (I was a paramedic, rare was it to see a facility in our area that even had an RN, and if they were, they were the DON, Director of Nursing, and had no direct hand in patient care). The facilities would contract with a physician service who oftentimes would not even speak to the patient, let alone -see- them.
And every, every single interaction with actual care provision was fully billed to the patient/resident's insurance. Anything that is not a profit making center for facility ownership is ruthlessly subcontracted out. A solid portion of the SNFs in my county will openly call 911 for anything beyond the most absolute basic first aid, even when their employees are ostensibly better educated/trained than the EMTs who might be responding.
Healthcare costs in the US are an abomination, but that's not the issue here, or not directly.
It’s worse than that — not only are the subcontracted entities often affiliated with the owners, but when your EMTs transport a resident, the SNF “holds their spot” (ie invoices the government) for 30 days.
It’s in their interest to dump the resident on the hospital and get paid for services not rendered. Also, as residents decline they need more care, are often on Medicaid (lower reimbursement), each time they go to the hospital there is a probability they they won’t come back, and will be replaced by a Medicare patient (Medicare pays for ~90 days) at a higher rate, and perhaps higher margin services like PT/OT.
It’s an evil system. Most of the people who died in NYC during early phases of COVID did because of intense lobbying to send them back to the SNF.
Scummy people are like flies to shit - they thrive in the chaos.
People buying up nursing homes are using tactics like what you’d see in the movie Goodfellas. They’ll structure the buy so that they are assuming the license to operate while “renting” the facility from an affiliated entity, cut opex, fraudulently bill Medicare and Medicaid for rehab, and exit through bankruptcy of the operating entity.
The fundamental problem is that we have ceased demanding that our government produce reasonable outcomes.
The reasons for that are many, but it's a core sign of how far we've fallen that there's even a discussion or argument about this obvious fact. We are in charge. We can just ban private equity companies from doing this you know.
There didn't used to be ambiguity about the point of having a society and having that society governed by the people and having those people's representatives solve problems like this.
That ambiguity was created on purpose, for money, by specific people. Not coincidentally, they're the same people making the profits in this story.
The actual truth is far worse. It’s 100 million homeowners, it’s 20 million healthcare workers, it’s an entire generation too online, etc.
There’s no magic bullets. Propagating the idea that there are is how we end up with garbage legislation and regulations that don’t improve anything.
What people need to start respecting and demanding from their government is competence. The ideologues of every stripe need to go sit in a corner for a decade or three while we build back up working institutions.
We have more private equity funds than McDonalds, looking to do this kind of extraction everywhere, because we have huge wealth inequality and therefor those at the top needing to park more money in more places. Then end goal is modern feudalism, with the top owning everything and extracting more and more from every single transaction/event in a person's life.
We can't fix competence when we have one political party working to make the government incompetent so that they can leverage that to tear down government. They have internal politicides such as 'starve the beast', all with the goal to make American government unable to function.
No it really isn’t. That’s just the latest in a long line of boogeymen. The prior ones being banned somehow didn’t lead to paradise on earth. California is the world champion and banning boogeymen. How’s that going for them?
And it’s not just one party that’s working to make the government incompetent. Both are. One for the reasons you cite, the other because it is beholden to public employees that want more money and less work. Just visit nyc or Chicago to see how that goes.
> We can just ban private equity companies from doing this you know.
From doing what exactly? Do you think small businesses are any better about cutting corners for profit? They're often worse because they have worse economies of scale and face more cost pressure.
We have done quite the opposite. We have insisted that the government allow, and even encourage, unreasonable outcomes, so long as they benefit the right people at the cost of... well, if you have to ask, it's you.
I'm sorry about your parent's death, and sorry you guys were forced into this circumstance in the first place. Venture capital is one of the biggest stains on the concept of free market enterprise. I don't offer any solutions.
I worked for a while selling fractional nurses into for-profit nursing/retirement homes at the end of Covid, got to interview some industry experts, who told me that these for-profit homes are the 21st century equivalent of 19th century insane asylums. If you or your loved ones have to enter one, seek at all costs a home that is not for profit (Catholic orders run some, Jewish organizations others, the VA also offers these homes to vets). Every single one will uphold higher values than the for-profit entities sucking resources from people who are no longer in a position to advocate for themselves.
100% agree- the Jewish home for the aged is the nicest facility I ever saw in my career as a medic. I asked some of the nurses I worked with about why they were on such a different level - better than even the fanciest most expensive $30k a month places in Portola Valley or Palo Alto - and was told it's because taking care of the elderly is a fundamental tenet of Judaism.
In my own quest in the SF East Bay, right before COVID stole the scene, I ended with choosing a board and care for my parents that is owned and administrated by a retired nurse with a Filipino background. It is a family-run affair rather than some corporate warehouse. It is a converted small motel, with about 15 rooms, not the typical converted single-family home. This means they are just large enough to have an overnight staff shift and multiple daytime staff roles, instead of one person struggling to handle everything.
It's by no means one of these places that puts on a facade of being a retirement resort. A first impression might be that it is dingy. But, for the combination of dementia and other care needs we have had on our plate, they have provided just about the best care I could hope for.
Along the way, I've had to disregard superficial judgements from some extended family or family friends, who seem to harbor a fantasy image of elder care as an elevated experience with the trappings of a luxury hotel stay and experiences fit for aristocrats. In a dream, I too wish my mom could have stimulation and education in her final years like immersion in an artist colony combined with a Parisian salon from a novel.
I settled for a place that consistently keeps her safe, gives her communal meals, manages her hygiene, manages her medications, monitors her health, and communicates reasonably well with me on these topics. I also visit weekly and take her to all her medical appointments etc., so I think I have an accurate view of how things really go there.
My biggest lesson from this, applicable to future generations, is to find your enriching experiences and setup your end of life plans while you are young. By the time you or your family realize you are in decline, you likely have lost the cognitive and/or emotional flexibility and/or agency to really adopt the most enjoyable lifestyle or life setting. Your more basic care needs will start to dominate all decision-making.
> taking care of the elderly is a fundamental tenet of Judaism
As it's done in most of Europe, Latin America, Asia, Africa. US/Canada were turned against family and tradition thanks to decades of brainwashing by movies, TV, and ads. To be cool you had to go to a college in another state. Then move to a big city. Pick career over family and having children. Take antidepressants.
The market is perfectly efficient, value is well attributed, lobbying is a social good, being rich means you’re smart and should have special privileges, optimizing for returns on investment is equivalent to optimizing for a better society
Americans often confuse socialsim for handing out money freely and letting people commit crimes without going to jail, both the left and right, so its this wierd catch 22 going on or something
The actual problem is how do we give people things that are way more expensive than those people will ever be able to cover themselves?
The answer is to make someone else pay for it. But man, have you ever gone to dinner with your large tech salary and been advised you have a moral obligation to cover 80% of the table's bill, and then be demonized for scrutinizing what people ordered?
Socialism is great when you can get yourself to believe that the government is a bottomless money pit fed by evil people with infinite money harvested from captive forced labor.
Capitalism is great when you can get yourself to believe that the lives of people who cannot carry (or did not carry) their weight don't matter.
I think you’re a magnitude or two off in the current state of wealth inequality. It’s more like people are asking you with a 400k/yr salary to pitch in to buy candy bars and you’re upset someone picked out a king size for fifty cents more.
Socialist policies would be decidedly less popular if people knew that most of the money to fund them would come from middle and upper middle class earners.
While those people as individuals have nowhere near "billionaire" money, they as a contingent have the most wealth.
While the "1% have more money than the bottom 50%" is true, they have less than half the money of the 70%-95%. America's cash cow is in the suburbs, not the Hamptons. Kinda forbidden knowledge to know that.
Insane binary choice fallacy. The choices are more akin to centralised control or free-ish markets. We see from experience how centralised control has completely butchered healthcare, both in the US and also my country of Canada. It's time to drop the insane authoritarian control and let people freely chose their own destiny, so to speak.
I don't understand how PE manages to get debt financing for LBOs? Seems like a big risk for the creditors?
If I buy a corp at 10% net margin for 5x ebidta on 80% leverage, i’ve really paid 1x ebidta. then lets say 20% of revenue was going to R/D and stuff that would only pay off in a few years. I cut all R/D so now its at 30% net margin.
So I can triple my money every year because it’s now generating profits of 3x my original downpayment every year (minus interest payments). After a few years of zero R/D the company has no good products to sell, demand falls, and it’s declared insolvent. Well, I dont care about my 20% equity downpayment because I already got like a 3-9x return. But the debt financers are screwed.
Yeah, that’s the idea. The loans get bundled up and resold to insurance companies, pension funds, and retail bond investors.
Funds are plenty willing to lend other peoples money to get guaranteed dividends and fee payments and not be left holding the risk. Retirement funds are the bag holder - but they won’t realize till later.
There’s structural pressure to buy from PE because insurance/pension is designed as fixed payout requiring say 7% yield forever. In a world where investment-grade bonds pay 4% and demographics are shifting from net-inflow to net-outflow, liquidity is _tight_. Meanwhile PE was promising 10% a year or whatever (someone call Madoff…) so that was preferable to the hard conversations of the funds failing. At the cost of kicking the can down to the road and making it worse in the future.
If this sounds like 2008 that’s because it is. But bigger and worse, and happening in wayyy more than just mortgages this time.
I'll sketch a few points to illustrate the inner workings here:
- It's hard to buy a decent company at 5x EBITDA today. A typical EBITDA multiple nowadays is like 10x-15x.
(e.g. EQT bought SUSE for $3B in 2023, and the adjusted EBITDA was $240M, which implies 12x EBITDA)
- Debts are tranched. Banks typically get a senior slice, often secured by real assets (a.k.a. collateral), so they can recoup the money even when the company goes straight into a ditch. The real risk lies in the junior loans ("mezzanine"), which demand very high yields to compensate for that risk.
- In a typical PE deal, most profits are earned at exit, not via dividends en route. So managers have incentive to make the target company (look) better for the next buyer, rather than neglecting it.
A more fundamental reason why the situation you describe rarely happens is that PE fund managers treat their operation as an "on-going" business. Lenders are gonna be really pissed if they lose their money. So fund managers try to avoid that scenario to keep the credit flowing for their next deal.
> I’m reaching out to start a dialogue regarding a possible non-executive founding directorship role for a new senior care deal.
> We are doing a roll-up. Acquiring and consolidating various senior living revenue generating companies, eliminating redundant operations, improve and expand service offerings and ultimately exit via private sale or IPO.
It was so bonkers I forwarded it to my wife, who works in a research center on aging, and she was like, "how many red flags can you fit into one email?"
The (excellent) Megan Greenwell wrote Bad Company, all about private equity; I'd recommend it. It does a good job of telling the story through a few specific and illustrative examples of people/industries[1], while still explaining everything in detail. Greenwell has a perspective, to be sure, but she's not wrong.
1: IIRC, it's a Toys 'R Us employee, a nurse at a rural hospital, a journalist at local newspaper, and a resident in a PE-owned apartment.
Operational efficiency and care for the elderly will never have mutually beneficial outcomes. Nor will the expectations of the participants on either side of the transaction be compatible.
I fear the objectives of both will always be mutually exclusive.
There are more PE firms than there are McDonalds in the US. Most of them exist to buy solid companies where ownership wants to cash out or fixing failing cash-poor businesses with good bones.
PE has become shorthand for "thing I don't like", and admittedly there are a lot of horrible evil people in PE. As a concept though, it's pretty benign.
PE is a very broad practice. It's kinda hard to make a single-blanket argument for it (it's like asking "Is Software good for society?" Yes, maybe?).
So here are some positive things that I think PE funds can contribute:
1) Private equity serves as an exit path for small business builders. Suppose that you have built a small, profitable trucking company. Now you are old and want to retire. You kids have no interest in the business, and have already built different careers elsewhere than managing a fleet of Super Greats. Oftentimes, PE funds are only realistic buyers of your business.
2) At a more subtle level, PE can supply better management. For example, a supermarket owner I know accepted capital from a PE fund specifically to acquire better talent (his remark: "very talented people are rarely excited to operate a rural food & beverage shop").
3) PE-backed companies are, arguably, structurally better than the public counterparts. The cliche is that many public firms are run like third-world fiefdoms (the board are focused on empire building; the executives are spending money lavishly on perks). Most of these concerns vanish once each director are given a shared, transparent objective set by the deal structure. (As Henry Kravis often remarks, PE is mostly about alignment of the interests)
Private equity is just a type of investment. It can be run by scumbags or regular people.
The growing role of PE in everything and everywhere is IMO a symptom of wealth inequality. PE didn't invest in veterinary practices, retirement homes, or plumbing businesses 30 years ago. They're just running out of places to put all that cash.
Private equity is good for society because it provides a financial incentive for owners of the equity to increase the value of a company. The value of a company is tied to how much value it provides society. Financial incentives do work in practice in affecting behavior in humans. Especially with the scale that some companies can reach. In conclusion the concept of privately held equity existing accelerates the betterment of society.
Broadly speaking, private equity is used to describe anything leveraged we don’t like. When we like it, we tend to describe it as a start-up, family business or simply “firm.”
Hey, it's you again! I was wondering if you would pop up in the comments defending private equity as you've done in the past.
Continuing our discussion from last time, can you elaborate on why you think quoting Revlon is sufficient to excuse the practical differences between public and PE companies?
I had worked with PE firms for over 6 years from the other side where we would invest in PE funds operating primarily in emerging markets, about 50 or so during my time and reviewed another 50 more that we did not invest in. Most of them are pretty benign. We invested primarily in transportation, energy and infrastructure but also hospitality and industry. There are many many poorly run private companies out there that PE funds buy out and rehabilitate. One major segment for a couple of funds is the purchase of poorly run family businesses where the founder was successful because they had drive and energy and built something at the right time (or sometimes, they knew the right people) but lacked the interest or vision to take it to the next level. Or the founder is getting old and the family has managed to turn the once successful business into a money loser. This is a long about way of saying, the majority of PE firms are benign and have invested in many successful businesses that many of us use. There are bad actors and more so in the US where corporations are allowed to eat the weak. It is not a case of PE bad but much more so that US business laws have relatively weak protections for consumers.
> > There is a legal requirement for directors of public companies to act in the financial interests of all shareholders
> No, there isn't.
The whole point of Revlon duties is that they trigger "in certain limited circumstances indicating that the 'sale' or 'break-up' of the company is inevitable" [1]. Outside those conditions, "the singular responsibility of the board" is not "to maximize immediate stockholder value by securing the highest price available."
I'll leave it up to you to recontextualize with the remainder of that thread if you want to continue discussing.
Within that context, what's confusing you? And where did I argue that "quoting Revlon is sufficient to excuse the practical differences between public and PE companies?"
Revlon duties are a specialised duty that apply in certain circumstances. They don't in others. The other situation is what we were talking about; herego, those special duties don't apply to the other situation, which is part of the general situation. It's an old piece of rhetoric [1].
If you're consistently getting downvoted in a thread, and the other side getting upvoted, try re-reading it instead of presuming sanctity. Especially if you haven't worked in a field, are mixing up terminal and are e.g. citing legal argument about a private company to make arguments about a public one (Ford).
> If you're consistently getting downvoted in a thread, and the other side getting upvoted, try re-reading it instead of presuming sanctity.
Lol, what a humble take. We all know in this VC owned forum that only truth is upvoted, and lies downvoted, especially on topics like private equity.
> Revlon duties are a specialised duty that apply in certain circumstances. They don't in others. The other situation is what we were talking about
Again you're operating insincerely, because as I told you last time, and this time, Revlon does not relate to what I'm referring to. I even quoted you Dodge v Ford Motor Co as a jump off point for your education, which you refused to acknowledge due to it being "from over 100 years ago".
Anyways I'm curious if you'll share your background, and why you're consistently in these discussions about private equity, rabidly playing defense?
Someone needs to create a kind of JSON for care homes, if you will. Something like a super simple spec of what a goddamned care home object is for, and the minimum number of actually fairly-paid full-time staff one needs to achieve that in practice.
Then it doesn't matter how many baroque shell companies it takes represent the thing internally. Either the thing can output a response in Care Home Object Notation, or it's just a bunch of crafty bullshit disguised as a care home.
You'd just walk in with your one-page CHOM spec and read down the sheet: "Number 1: Can I speak to a full-time nurse, please?" If they respond, "No, but here's two high-school interns in a trench coat," you can just be like, "Not a care home. Got it," and move on to the next one.
Once upon a time, I heard someone tell me a fairytale about this thing called a ‘law' and they said that laws could be used to enforce compliance with standards across an entire country. Pure fantasy I know, but a man can dream.
I emphasize that I'm not excusing the stories of clear mistreatment in the source article. But the central challenge is that this kind of care is incredibly expensive, which poses awkward and sometimes brutal tradeoffs that people often don't want to honestly discuss.
For example, the article blazes past a claim that £550/week/bed was too little to provide good care, but a super simple spec suggests it might be. Subtract the UK average rent of £1367/4 = £342, divide the remaining £208 by a fully-loaded nurse cost of ~£20/hr * 1.3 * 168, and even with no other costs you're left with a completely inadequate 1 hour of nurse time per resident per day. But if Guy Hands had produced a worksheet like this proving that pumping more taxpayer money into his pockets would achieve adequate staffing ratios, would that make even a single person more willing to do it?
in the US a sickening % of marketing for SNFs is actually describing state-mandated requirements. "...and we even have a community led residents' association!"
depends on your state ofc. none of them are a single page tmk. this makes sense, regulations are famously written in blood. don't do this if you're unprepared to be in a terrible mood, ofc.
I have read that the big wealth transfer from boomers won't be as inheritance to their kids but most of it will go the the health and elderly care sectors. Hearing this stuff I totally believe it.
I am thinking about more and more about a plan to off myself once I need expensive care so I am not a burden to the next generation.
>Private equity relies on a basic technique known as the leveraged buyout, which works like this: you, a dealmaker, buy a company using just a small portion of your own money. You borrow the rest, and transfer all this debt on to the company you just bought. In effect, the company goes into debt in order to pay for itself. If it all goes well, you sell the company for a profit and you reap the rewards. If not, it is the company, not you, that is on the hook for this debt.
——
Not how I've seen this work. These often require a personal guarantee, in some cases the homes of whoever is applying for the loan. So, whoever wrote this article has no idea of the real acquisition process.
What you're describing is accurate when an individual or partnership buys a small business. Regular bank loans usually require additional security guarantees beyond just the business assets. But large PE firms have access to other sources of financing beyond traditional loans.
That statement ignores that there are multiple political parties. We have had political parties fail, just like corporations.
In the US we have one that recognized we are a society and need things to work. and one that wants to get rid of government at all costs, to the point they have for the last 40 years had policies such as 'starve the beast' with the sole intention of making government completely unable to function.
People created limited liability and private equity. Fiction is not something you get rid off. Its something you live with. It is a permanent side effect of how the over rated Humam Brain works. The brain makes predictions over multiple time horizons. When there are contradictions between these predictions how is the 3 inch chimp brain supposed to handle it while not splitting? Make up a story for the sake of coherence. Everyone is doing it everyday. They are all making up fictions to handle unpredictability.
There are a finite number of legislative girders underpinning the judicial capacity to support these fictions. When they're removed, it will not be legally possible to maintain them. They are not a product of nature, they are a product of real humans, and as such are subject to human change and intervention. They are among the least durable constructs we interact with.
Revoke corporate charters. Prevent and break up consolidation.
All corporate entities require a registration to operate in a state if they have a physical presence.
In this instance, you can also pass a law along the lines of "After setup, all care homes are required to spend 90/95/99% of their income on direct care of the residents or your charter gets revoked." This would prevent the incentives to buy them in the first place.
Don’t require states to uniformly respect limited liability granted in other states. Allow them to add limits, requirements, etc. let the different states explore the trade off.
Do you believe that states are the laboratories of democracy, and have rights, or do you believe that reducing the cost of regulatory compliance is a more important goal?
I take no position on this currently, but it's an important question that deserves a serious answer. Trading off the costs of "state experimentation" and "enforced regulatory conformity" is non-trivial to do.
The reality of most multi-generational households is that the wife is eventually coerced into becoming an unpaid caregiver for elderly parents (who often constantly criticize how the household is managed). This sort of "worked" in traditional societies when women didn't have other options but when they're educated and have their own careers it usually doesn't seem like such an attractive choice anymore.
I'm not opposed to multi-generational households and I have friends who have made it work well. Let's just not assume that it can be a scalable solution.
It was never an attractive choice- people simply did not have options. In my country it was not until the 1950s that retirement homes were invented and the elderly finally got their social security (remember pensions did not exist).
It could happen this year; legislatures just need to pass laws. The hardest part is people posting comments like yours as a diversion from doing real work (though there are other hard parts too).
You say all it takes is for the legislature to pass the laws and seem to assume our government is functioning as expected without any bugs.
And yet we’re talking about an extremely well-connected and powerful industry in PE. Do you really think they won’t lobby intensely against legislation that would cripple their profits? Are the majority of our legislators really immune from considering corporate interests?
That's always been true, bugs and lobbyists, and yet our predecessors have gotten a lot done. People get things done now (including people you don't agree with).
It's not a fairy tale; it is hard; and yet our predecessors moved mountains.
I find it interesting that you assume ill intent as the default when I was genuinely asking for actionable steps we could take to address a very real problem.
Perhaps consider giving people the benefit of the doubt instead of projecting your cynicism onto others.
We each have power, influence, and responsibility. You're spending yours on cleverness, and wasting others by shifting the focus and undermining their efforts. Cleverness, in the end, doesn't matter.
Care sector in the UK is a dumpster fire. Corporations get paid often thousands per day per service user, hire incompetent staff at below minimum wage (if you count unpaid overtime) and pocket the massive margin. It desperately need proper regulation.
I read recently that companies are getting almost resentful that they have to go through yuo to get your money. I keep thinking about that because I think it's true.
I read some of comments here and on other threads about PE and I keep seeing some variation of "this particular PE crime is an outlier, we can fix it". No, no you can't. PE isn't an aberration. It's just the natural extension to capitalism. It's inevitable.
This can be understood easily in Marxist terms, as unpopular as that is. What we're talking about is the workers relationship to the means of production.
You have a nusing home. The people who work there should own it. There's no reason not to. Instead there's this intermediary, some capital owner, who demands to extract profits from that. We've simply replaced the feudal lords of old with investment bankers. It's the ultimate in rent-seeking behavior.
Years ago I remember hearing about PE firms buying up trailer parks. For many this is their last refuge from being homeless. When they are homeless, it's not only devastating to them but it's expensive for everyone. Health issues, going to the ER more often, violence, law enforcement making sure homeowners don't have to see homless encampments, people can't hold down drugs, self-medication with drugs and so on.
We absolutely shouldn't drive up the price of mobile home pricing so rent-seekers can extract profits but we as a society choose that over housing security for people. That's not just wrong. It's state-sanctioned violence.
This nursing home PE squeeze is also state-sanctioned violence. Make no mistake. Arguably, it's even social murder [1].
And once again, it's super easy to understand in terms of the workers relationship to the means of production. Yet everybody thinks they'll be Jeff Bezos one day so it's super-important now to vote in the interests of the billionaire class. Yo uwon't be. And even if you are, do you really want to become rich this way? Is that what you want your legacy to be? That you made the last years of elderly people who needed care miserable?
Why do people think this is good? Or fixable by the politicians who are bought and paid for by the people profiting off of this?
Every company turns people into ATMs, taking their money for a good or service. It is naive to think that companies do not want people unloading their money and consuming whatever it is the company is offering.
I just don't see what it has to do with the source article, unless you and the original commenter are suggesting that care homes shouldn't exist. How would a care home work without receiving money to pay for the services provided to residents?
It isn’t the fault of private equity that banks make excessive loans against assets in a leveraged buyout. Banks (such as per the article, The Royal Bank of Scotland) have a duty to ensure that their loans are of properly assessed risk, and if the PE firm that wants to or has bought an asset does not look qualified to run it, then the banks should not be making the loans. Articles that keep casually dropping triggers like “[t]hey rubbed their hands together and said, 'Sooner or later, as the demand increases, the prices must go up'” are not seeking workable solutions but capitalizing on their ability to raise ire. It’s much more yet another article that does its best to paint a profit motive as an evil, completely ignoring that any endeavor that is not profitable is going to die sooner rather than later, and when it’s a government run endeavor then the taxpayers, who were completely uninvolved in the deicsions of where their money should be spent, are the ones left on the hook - HTF is that better?
> It isn’t the fault of private equity that banks make excessive loans against assets in a leveraged buyout
Credit lends. Equity owns. It’s absolutely the fault of the owners, first, if their business is fucking up. That’s why they lose their chips before the banks do.
We had a society that functioned. That people could live a life. We no longer have that due in part to private equity buying up retirement homes, dental offices, HVAC/plumber shops, doctor offices, funeral homes, etc, etc and restructuring them for optimal extraction.
When I deal with bob renting his house, we come from a kind of equal place. When I rent from XYZ agencies, there is no fair deal, there is their deal or no deal, designed to be as exploitive of me as possible. There is no coming to terms from somewhat equal place, there is only agreeing to corporates terms. The same with dental work. Getting a roof put on. The society we had didn't work that way in every transaction in life, and the society we have now doesn't really work for large swaths of society anymore.
Systems with no slack become brittle. In the case of modern society, that brittle aspect is people not able to afford to live and businesses so 'optimized' they can't afford to do their core businessing well, their workforce unable to themselves live, and their workforce pushed in a way that isn't sustainable long term, but since their owners have purchased large amounts of the competition the business is able to stumble along for a while. Until they get their exit by selling the unsustainable bundle to a retirement fund, with PE yet again destroying another aspect of what made society work in the past.
My parents ended up being forced by circumstances to move into a retirement home about five years ago. Fortunately, the place turned out to be run by people who mostly cared about their clients and so my parents' lives were basically OK, except that the food sucked (which AFAICT is par for the course at retirement homes). But a few months ago the place was acquired by a different company, which is trying to squeeze out higher profits. Staffing and services are being cut, and prices are going up. Even the food got worse, which I didn't think was even possible. The response when someone complains is, "If you don't like it you are free to leave."
Yeah, right. My barely mobile 90-year-old parents, one of whom has Parkinson's, are just going to pack up and go. They know perfectly well that they have a captive audience.
Thankfully, my mother died before the acquisition, and my father died last week, only a few months after the acquisition, so I don't have to deal with this any more. But caveat emptor: if you ever go into a retirement home, think about what will happen if they change ownership. Even if it looks great, or even acceptable, now, there is no guarantee that it will still be great, or even acceptable, tomorrow, unless you somehow manage to negotiate such a guarantee. I have no idea what a contract provision like that would even look like. But I am going to be facing this problem myself some day, so I'd love to hear ideas.
The biggest sign something is broken is when someone writes: "Thankfully, my mother died before the acquisition, and my father died last week, only a few months after the acquisition, so I don't have to deal with this any more."
Depressing to read. I'm not sure on which side.
To be fair, my mother had cancer and my father had Parkinson's, and that was a much bigger factor in their ultimate quality of life than any deficiencies in the retirement home they found themselves in. So I don't mean "thankfully" in the sense that "thankfully they died prematurely so they didn't have to suffer under their home's new management", I mean it, "Thankfully the natural course of their lives timed their deaths so that they were minimally affected by the new management."
But yeah, it kinda sucks, and not just for the residents who are still there. It sucks for the rank-and-file staff as well, most of whom still really care about their clients, but who now have to answer to people who absolutely do not care about anything other than money.
I got what you were saying. I read it the same way. I’m sorry for your loss.
No one leaves this planet alive, and the best you can hope for is that the majority of your time is spent relatively healthy and independent.
I didn't read that as saying anything about your character; it's an understandable way to react. It is an indictment of the system that people have to feel that way when it really shouldn't have to feel that way.
> I didn't read that as saying anything about your character
I didn't take it that way, I just wanted to make sure there was no misunderstanding. This is an emotionally charged topic.
I think most of us read it the way you meant it. Sorry for your loss.
The concern you raise is front and center for me, because my mother is 87 and we’ve been looking for a place. All the options are terrible, without considering PE.
Where I live Medicare and Medicaid want people to live (and die) in their own homes. They send out nurses and nurse practitioners to you. That is what I want. After some research I realized the provider that I want which is UTSW in Dallas has a geographical radius that they serve. I am planning to eventually move to be within that radius.
https://utswmed.org/medblog/geriatrics-cove-team-makes-house...
That was my parents' original plan. But they were in denial about how much preparation would be needed to make that happen. They lived in a split-level house and my father had severe osteoarthritis in his knees. It's actually a miracle that he didn't fall and break his neck going up and down the stairs. But one day he fell in the shower and could not get back up, and that was the beginning of the end.
>Where I live Medicare and Medicaid want people to live (and die) in their own homes. They send out nurses and nurse practitioners to you.
In NY State at least that's turned into a cashgrab too. One they are having trouble reforming.
That’s totally doable and encouraged, as it’s by far more cost effective.
But you really, really need a support system of willing people who care about you, and are savvy enough to effectively advocate for you when you lose that ability. Independent home care works well when you need help, not constant care.
Our family worked with this for 6 years with my bad post stroke and for about a year with my mom and cancer. My siblings were all on board and my mom was uniquely positioned - she was a regulator at the state level who was adept with the rules (and had in fact wrote many!).
Even so, as things progressed it was hard. My mom was devoted to my dad, and filled every gap. We depended on hired help for mom, and despite the financial resources it was difficult to get staff.
Family and friends are key.
This is going to sound a bit wild, and only viable under 70 or so, but I've met a lot of 55-70 expats in walkable southeast asian cities. There's obviously varying circumstances so do the research, but you can almost get adopted by your landlord family, where you're getting home cooked meals, rides, doors held open, etc. This part of the world is so family oriented, it just comes naturally to many of them.
Makes sense. If you travel regularly, you can see that in relative terms, the standard of living in the US has declined relative to many places.
It's a nice idea, though I hope I'm humble enough to vacate my house for a younger family that will make the most use of it. By which time I hope to be in a manageable apartment, or perhaps a group home where I can pass the time with others at a similar stage in life.
For some (like one of my family members), circumstances are such that they need more social attention than the family/medical system can provide. That's one of the reasons we are considering.
The way you nonchalantly mentioned your dad died last week caught me off guard -- my condolences!
Thank you. But he was two months shy of his 90th birthday and, except for struggles with osteoarthritis and Parkinson's, he had a good run. I'm sad that he's gone, but it's not like it took anyone by surprise. And I'm glad that his suffering, which towards the end was not insignificant (though he was very stoic about it), is over.
The last week has actually been pretty (ahem) interesting in a lot of ways. I should probably write a blog post about it.
> Fortunately, the place turned out to be run by people who mostly cared about their clients and so my parents' lives were basically OK, except that the food sucked (which AFAICT is par for the course at retirement homes).
My dad unfortunately never made it to a retirement home (cancer onset when he just turned 70), but in his one week hospice stay, he couldn’t help but complain about the food.
The people that perform these acts to the elderly should be tortured to death. You may think "wow thats some hyperbole right there!" but active torture is effectively what they're engaged in against the people in their care.
So let's give them an eye for an eye.
Sorry for your loss.
As a (former) paramedic, PE-run SNFs (skilled nursing facilities) are an absolute evil that absolutely kills people. I do want to be clear before any of the following that while there is a truth that many of the nursing staff at these facilities are often the lower quality tier of nursing care, they often care greatly for their patients/residents.
Staffing/flooring ratios? Laughable correlation to reality. Many a time? A single LPN "supervising" a floor of CNAs. Doctor consultation? The CNA oftentimes leaves a voicemail for the physician to review and care decisions are made without the physician talking to either the patient or a nurse (I'm not sure how this isn't malpractice, and I'm not convinced it's not). Facility "policy", often hidden behind "insurance requirements" have the facility overburdening the local EMS system because "we are required to call 911 for anything larger than a bandaid", and we can find ourselves doing anything from the most basic wound care to pointing out to a sleep-deprived CNA "you know your patient appears to have had a stroke sometime recently, right?". EMS arrives and often gets woefully incomplete or inaccurate history information (often for patients who are unable to be reliable historians themselves).
There is, however, ALWAYS money for the colorful glossy brochures/books at the front desk, or the big shiny billboard or TV ad that talks about "mom being in good hands with round the clock nursing care!" (and of course, a facility fee per month that would make you feel like she has her own personal RN and on-call MD 24/7").
Also a former medic, the best care homes I ever went to were the Jewish Home for the Aged. They were so much nicer and the patients there never had decubitus ulcers or staph infection in skin folds from not being cleaned.
The worst place I ever saw was Atherton Long Care which supposedly is fancy and expensive but they had neglected an old lady so poorly I actually reported them to CDPH and the ombudsman. She had full on necrotized tissue under both her breasts and a rotted unchanged g-tube that you could smell all the way down the hallway to the nursing station it was so sad. John George Psych hospital and Cordilleras MHRC are both also very sad hellholes. Patients sleeping laying on the floor in the hallways with a blanket because the rooms are full etc. We had a lady who purposely stabbed herself in the eye so she could go to the ER to get out of Cordilleras because it was so awful.
What I found if you ever need to place your loved on in a care home is the sniff test is the best assessment of how well it's run and if the patients are cared for. If patients are cleaned regularly and not left to sit in their own diapers it really shows there is enough staff ratio and attention given to the patients. Go on a random evening or day and at different times. Food quality is also a good indicator - eat lunch with your parents there. Would you eat this yourself voluntarily? If yes, it's probably a good place not run on a shoestring budget.
Also - hn readers - if your mom is in a care home please always check under her breasts to ensure she is clean and dry there every time you visit. Far far too many old ladies get candida and bacterial infections under their breasts that are never cleaned or taken care of because it's embarrassing to check or clean and dry so then it just gets wet and rots and is painful, sad and gross and can lead to even worse things like cellulitis or an abscess.
> There is, however, ALWAYS money for the colorful glossy brochures
OMG, so much this! One of the things that happened after the acquisition is that they changed the phones to play a marketing pitch whenever you were on hold. (They even did this on the resident's phones!) One of the things the pitch said was that the place featured "chef-inspired meals" which was about as disconnected as you could possibly get from what I knew first-hand to be reality. It was one of the most bald-faced lies I have ever heard in my life, and it really steamed my clams because I knew there was nothing I could do about it.
Aren’t these kind of borderline fraudulent business practices the sort of thing state attorney generals are supposed to investigate?
I am very sorry for your loss.
I’m sure the new owners are scummy, but the fundamental problem isn’t scummy people. There’s lots of markets that are okay-ish notwithstanding scummy people. Even those with natural lock in effects.
The fundamental problem is it is at the intersection of two out of the three areas of the economy that have had insane cost growth over the last 30 years—-housing and healthcare (the third is education.) For the first one we know roughly what we need to do but won’t. For the second we don’t even have that.
The other fundamental problem is the demographic profile in most developed countries. We have aging populations, and proportionally fewer young people to care for them. I'll bet most HN users wouldn't want to work at a retirement home or assisted living facility even if it paid well. My father spent his final years in such a facility and dealing with him was quite difficult for the staff there. This will inevitably cause higher costs and lower quality.
The other other fundamental problem is that dealing with elderly people often is difficult and unpleasant and what can you really expect from people who aren't related to them? Daycares and preschools are often very loving places because babies are cute and trigger people's nurturing instincts but that's not true of the elderly.
In some parts of the facility, workers are recognized by older folks who are aging with poise. That connection looks mutual.
In other parts, memory care, you are never recognized by the patients. Prepare for combative, confused ill people; your job depends on not treating them like animals.
I see adult children visiting their parent, who doesn't recognize them, and wouldn’t understand that $115,000/year isn’t entirely paid by the state.
Yet daycare costs are also exploding. In both cases it’s not primarily about wages going to the direct care workers—-though steep minimum wage increases are a factor in some jurisdictions.
> There’s lots of markets that are okay-ish notwithstanding scummy people.
It is not at all clear to me that there are "lots" of such markets, but that is neither here nor there. A prerequisite for an okay-ish market is that buyers need to be able to choose not to buy, and when you have literal limited mobility it becomes very difficult to walk away from your housing and care provider, either literally or figuratively.
> housing and healthcare (the third is education.) For the first one we know roughly what we need to do but won’t. For the second we don’t even have that.
Healthcare costs increasing is of very little concern to nursing facility ownership. Almost none of that is borne by the facility itself. They'll often hire skeletal crews of CNAs and LPNs (I was a paramedic, rare was it to see a facility in our area that even had an RN, and if they were, they were the DON, Director of Nursing, and had no direct hand in patient care). The facilities would contract with a physician service who oftentimes would not even speak to the patient, let alone -see- them.
And every, every single interaction with actual care provision was fully billed to the patient/resident's insurance. Anything that is not a profit making center for facility ownership is ruthlessly subcontracted out. A solid portion of the SNFs in my county will openly call 911 for anything beyond the most absolute basic first aid, even when their employees are ostensibly better educated/trained than the EMTs who might be responding.
Healthcare costs in the US are an abomination, but that's not the issue here, or not directly.
It’s worse than that — not only are the subcontracted entities often affiliated with the owners, but when your EMTs transport a resident, the SNF “holds their spot” (ie invoices the government) for 30 days.
It’s in their interest to dump the resident on the hospital and get paid for services not rendered. Also, as residents decline they need more care, are often on Medicaid (lower reimbursement), each time they go to the hospital there is a probability they they won’t come back, and will be replaced by a Medicare patient (Medicare pays for ~90 days) at a higher rate, and perhaps higher margin services like PT/OT.
It’s an evil system. Most of the people who died in NYC during early phases of COVID did because of intense lobbying to send them back to the SNF.
Scummy people are like flies to shit - they thrive in the chaos.
People buying up nursing homes are using tactics like what you’d see in the movie Goodfellas. They’ll structure the buy so that they are assuming the license to operate while “renting” the facility from an affiliated entity, cut opex, fraudulently bill Medicare and Medicaid for rehab, and exit through bankruptcy of the operating entity.
That's not the fundamental problem.
The fundamental problem is that we have ceased demanding that our government produce reasonable outcomes.
The reasons for that are many, but it's a core sign of how far we've fallen that there's even a discussion or argument about this obvious fact. We are in charge. We can just ban private equity companies from doing this you know.
There didn't used to be ambiguity about the point of having a society and having that society governed by the people and having those people's representatives solve problems like this.
That ambiguity was created on purpose, for money, by specific people. Not coincidentally, they're the same people making the profits in this story.
> We can just ban private equity companies from doing this you know.
Ideologues love to identify some small group of bad guys that if we only rein in everything will be great.
It’s private equity! It’s health insurance executives! It’s trial lawyers! It’s CNN!
The actual truth is far worse. It’s 100 million homeowners, it’s 20 million healthcare workers, it’s an entire generation too online, etc.
There’s no magic bullets. Propagating the idea that there are is how we end up with garbage legislation and regulations that don’t improve anything.
What people need to start respecting and demanding from their government is competence. The ideologues of every stripe need to go sit in a corner for a decade or three while we build back up working institutions.
it's private equity.
We have more private equity funds than McDonalds, looking to do this kind of extraction everywhere, because we have huge wealth inequality and therefor those at the top needing to park more money in more places. Then end goal is modern feudalism, with the top owning everything and extracting more and more from every single transaction/event in a person's life.
We can't fix competence when we have one political party working to make the government incompetent so that they can leverage that to tear down government. They have internal politicides such as 'starve the beast', all with the goal to make American government unable to function.
No it really isn’t. That’s just the latest in a long line of boogeymen. The prior ones being banned somehow didn’t lead to paradise on earth. California is the world champion and banning boogeymen. How’s that going for them?
And it’s not just one party that’s working to make the government incompetent. Both are. One for the reasons you cite, the other because it is beholden to public employees that want more money and less work. Just visit nyc or Chicago to see how that goes.
> We can just ban private equity companies from doing this you know.
From doing what exactly? Do you think small businesses are any better about cutting corners for profit? They're often worse because they have worse economies of scale and face more cost pressure.
We have done quite the opposite. We have insisted that the government allow, and even encourage, unreasonable outcomes, so long as they benefit the right people at the cost of... well, if you have to ask, it's you.
What was the standard of care that the government used to provide for elderly nursing in the good old days?
It seems like you are remembering a history that never existed
I'm sorry about your parent's death, and sorry you guys were forced into this circumstance in the first place. Venture capital is one of the biggest stains on the concept of free market enterprise. I don't offer any solutions.
I worked for a while selling fractional nurses into for-profit nursing/retirement homes at the end of Covid, got to interview some industry experts, who told me that these for-profit homes are the 21st century equivalent of 19th century insane asylums. If you or your loved ones have to enter one, seek at all costs a home that is not for profit (Catholic orders run some, Jewish organizations others, the VA also offers these homes to vets). Every single one will uphold higher values than the for-profit entities sucking resources from people who are no longer in a position to advocate for themselves.
100% agree- the Jewish home for the aged is the nicest facility I ever saw in my career as a medic. I asked some of the nurses I worked with about why they were on such a different level - better than even the fanciest most expensive $30k a month places in Portola Valley or Palo Alto - and was told it's because taking care of the elderly is a fundamental tenet of Judaism.
In my own quest in the SF East Bay, right before COVID stole the scene, I ended with choosing a board and care for my parents that is owned and administrated by a retired nurse with a Filipino background. It is a family-run affair rather than some corporate warehouse. It is a converted small motel, with about 15 rooms, not the typical converted single-family home. This means they are just large enough to have an overnight staff shift and multiple daytime staff roles, instead of one person struggling to handle everything.
It's by no means one of these places that puts on a facade of being a retirement resort. A first impression might be that it is dingy. But, for the combination of dementia and other care needs we have had on our plate, they have provided just about the best care I could hope for.
Along the way, I've had to disregard superficial judgements from some extended family or family friends, who seem to harbor a fantasy image of elder care as an elevated experience with the trappings of a luxury hotel stay and experiences fit for aristocrats. In a dream, I too wish my mom could have stimulation and education in her final years like immersion in an artist colony combined with a Parisian salon from a novel.
I settled for a place that consistently keeps her safe, gives her communal meals, manages her hygiene, manages her medications, monitors her health, and communicates reasonably well with me on these topics. I also visit weekly and take her to all her medical appointments etc., so I think I have an accurate view of how things really go there.
My biggest lesson from this, applicable to future generations, is to find your enriching experiences and setup your end of life plans while you are young. By the time you or your family realize you are in decline, you likely have lost the cognitive and/or emotional flexibility and/or agency to really adopt the most enjoyable lifestyle or life setting. Your more basic care needs will start to dominate all decision-making.
> taking care of the elderly is a fundamental tenet of Judaism
As it's done in most of Europe, Latin America, Asia, Africa. US/Canada were turned against family and tradition thanks to decades of brainwashing by movies, TV, and ads. To be cool you had to go to a college in another state. Then move to a big city. Pick career over family and having children. Take antidepressants.
This started in the 70s and is well documented.
> I worked for a while selling fractional nurses into for-profit nursing/retirement homes
If that sentence fragment isn't a dystopian summary of the current state of at least US society, I don't know what is.
The market is perfectly efficient, value is well attributed, lobbying is a social good, being rich means you’re smart and should have special privileges, optimizing for returns on investment is equivalent to optimizing for a better society
Obviously I’m kidding, and something is rotten
We let capitalism run too far. Need to swing hard towards socialism or the whole thing will collapse
Americans often confuse socialsim for handing out money freely and letting people commit crimes without going to jail, both the left and right, so its this wierd catch 22 going on or something
I live in Spain and that’s what socialism means basically. At least here.
> and letting people commit crimes without going to jail
Looking at the administration, the feudal internet lords and other megacorps, the US is deeply socialist then.
But, see, there is a fundamental difference.
We prefer to let capital (and its representatives) commit the juiciest crimes...
> and letting people commit crimes without going to jail
So US is the most socialist country by far. Both rich and poor commit crimes without going to jail
"handing out money freely and letting people commit crimes without going to jail"
Sounds pretty much like Trump and the modern GOP
The actual problem is how do we give people things that are way more expensive than those people will ever be able to cover themselves?
The answer is to make someone else pay for it. But man, have you ever gone to dinner with your large tech salary and been advised you have a moral obligation to cover 80% of the table's bill, and then be demonized for scrutinizing what people ordered?
Socialism is great when you can get yourself to believe that the government is a bottomless money pit fed by evil people with infinite money harvested from captive forced labor.
Capitalism is great when you can get yourself to believe that the lives of people who cannot carry (or did not carry) their weight don't matter.
I think you’re a magnitude or two off in the current state of wealth inequality. It’s more like people are asking you with a 400k/yr salary to pitch in to buy candy bars and you’re upset someone picked out a king size for fifty cents more.
Socialist policies would be decidedly less popular if people knew that most of the money to fund them would come from middle and upper middle class earners.
While those people as individuals have nowhere near "billionaire" money, they as a contingent have the most wealth.
While the "1% have more money than the bottom 50%" is true, they have less than half the money of the 70%-95%. America's cash cow is in the suburbs, not the Hamptons. Kinda forbidden knowledge to know that.
As pointed out by Rosa Luxemburg, the choices are socialism or barbarism. In the US, barbarism seems to be a far more likely outcome.
More than likely, it's daily reality.
Insane binary choice fallacy. The choices are more akin to centralised control or free-ish markets. We see from experience how centralised control has completely butchered healthcare, both in the US and also my country of Canada. It's time to drop the insane authoritarian control and let people freely chose their own destiny, so to speak.
As far as I know, very few senior care facilities of any sort are run by non-profits. And reimbursement rates don't incentivize that. Why is that?
Not saying nonprofit hospitals are a panacea, but they sure are better than for-profit ones.
I don't understand how PE manages to get debt financing for LBOs? Seems like a big risk for the creditors?
If I buy a corp at 10% net margin for 5x ebidta on 80% leverage, i’ve really paid 1x ebidta. then lets say 20% of revenue was going to R/D and stuff that would only pay off in a few years. I cut all R/D so now its at 30% net margin.
So I can triple my money every year because it’s now generating profits of 3x my original downpayment every year (minus interest payments). After a few years of zero R/D the company has no good products to sell, demand falls, and it’s declared insolvent. Well, I dont care about my 20% equity downpayment because I already got like a 3-9x return. But the debt financers are screwed.
Time to pay the piper:
Blue Owl sinks as investor withdrawals halted at private credit fund https://seekingalpha.com/news/4523155-blue-owl-sinks-as-inve...
BlackRock fund limits withdrawals as redemptions rattle private credit https://www.reuters.com/business/blackrock-limits-withdrawal...
Yeah, that’s the idea. The loans get bundled up and resold to insurance companies, pension funds, and retail bond investors.
Funds are plenty willing to lend other peoples money to get guaranteed dividends and fee payments and not be left holding the risk. Retirement funds are the bag holder - but they won’t realize till later.
There’s structural pressure to buy from PE because insurance/pension is designed as fixed payout requiring say 7% yield forever. In a world where investment-grade bonds pay 4% and demographics are shifting from net-inflow to net-outflow, liquidity is _tight_. Meanwhile PE was promising 10% a year or whatever (someone call Madoff…) so that was preferable to the hard conversations of the funds failing. At the cost of kicking the can down to the road and making it worse in the future.
If this sounds like 2008 that’s because it is. But bigger and worse, and happening in wayyy more than just mortgages this time.
> don't understand how PE manages to get debt financing for LBOs? Seems like a big risk for the creditors?
Hype aside they tend to pay it back. When they don’t, recovery is streamlined.
I'll sketch a few points to illustrate the inner workings here:
- It's hard to buy a decent company at 5x EBITDA today. A typical EBITDA multiple nowadays is like 10x-15x. (e.g. EQT bought SUSE for $3B in 2023, and the adjusted EBITDA was $240M, which implies 12x EBITDA)
- Debts are tranched. Banks typically get a senior slice, often secured by real assets (a.k.a. collateral), so they can recoup the money even when the company goes straight into a ditch. The real risk lies in the junior loans ("mezzanine"), which demand very high yields to compensate for that risk.
- In a typical PE deal, most profits are earned at exit, not via dividends en route. So managers have incentive to make the target company (look) better for the next buyer, rather than neglecting it.
A more fundamental reason why the situation you describe rarely happens is that PE fund managers treat their operation as an "on-going" business. Lenders are gonna be really pissed if they lose their money. So fund managers try to avoid that scenario to keep the credit flowing for their next deal.
I got this email in mid-March:
> I’m reaching out to start a dialogue regarding a possible non-executive founding directorship role for a new senior care deal.
> We are doing a roll-up. Acquiring and consolidating various senior living revenue generating companies, eliminating redundant operations, improve and expand service offerings and ultimately exit via private sale or IPO.
It was so bonkers I forwarded it to my wife, who works in a research center on aging, and she was like, "how many red flags can you fit into one email?"
This stuff is depressingly real.
The (excellent) Megan Greenwell wrote Bad Company, all about private equity; I'd recommend it. It does a good job of telling the story through a few specific and illustrative examples of people/industries[1], while still explaining everything in detail. Greenwell has a perspective, to be sure, but she's not wrong.
1: IIRC, it's a Toys 'R Us employee, a nurse at a rural hospital, a journalist at local newspaper, and a resident in a PE-owned apartment.
The authorities need to make leveraged buyouts illegal. I see no benefit coming out of it apart from pain for society.
Is there any benefit that I am missing? (Apart from the money it generates for the investors and the related politicians whose pockets get lined)
Operational efficiency and care for the elderly will never have mutually beneficial outcomes. Nor will the expectations of the participants on either side of the transaction be compatible.
I fear the objectives of both will always be mutually exclusive.
Could someone (please not an LLM) attempt to steel man the following position for me:
Private equity is overall good for society
There are more PE firms than there are McDonalds in the US. Most of them exist to buy solid companies where ownership wants to cash out or fixing failing cash-poor businesses with good bones.
PE has become shorthand for "thing I don't like", and admittedly there are a lot of horrible evil people in PE. As a concept though, it's pretty benign.
PE is a very broad practice. It's kinda hard to make a single-blanket argument for it (it's like asking "Is Software good for society?" Yes, maybe?).
So here are some positive things that I think PE funds can contribute:
1) Private equity serves as an exit path for small business builders. Suppose that you have built a small, profitable trucking company. Now you are old and want to retire. You kids have no interest in the business, and have already built different careers elsewhere than managing a fleet of Super Greats. Oftentimes, PE funds are only realistic buyers of your business.
2) At a more subtle level, PE can supply better management. For example, a supermarket owner I know accepted capital from a PE fund specifically to acquire better talent (his remark: "very talented people are rarely excited to operate a rural food & beverage shop").
3) PE-backed companies are, arguably, structurally better than the public counterparts. The cliche is that many public firms are run like third-world fiefdoms (the board are focused on empire building; the executives are spending money lavishly on perks). Most of these concerns vanish once each director are given a shared, transparent objective set by the deal structure. (As Henry Kravis often remarks, PE is mostly about alignment of the interests)
Private equity is just a type of investment. It can be run by scumbags or regular people.
The growing role of PE in everything and everywhere is IMO a symptom of wealth inequality. PE didn't invest in veterinary practices, retirement homes, or plumbing businesses 30 years ago. They're just running out of places to put all that cash.
Private equity is good for society because it provides a financial incentive for owners of the equity to increase the value of a company. The value of a company is tied to how much value it provides society. Financial incentives do work in practice in affecting behavior in humans. Especially with the scale that some companies can reach. In conclusion the concept of privately held equity existing accelerates the betterment of society.
> The value of a company is tied to how much value it provides society.
https://en.wikipedia.org/wiki/Goodhart%27s_law
Broadly speaking, private equity is used to describe anything leveraged we don’t like. When we like it, we tend to describe it as a start-up, family business or simply “firm.”
Hey, it's you again! I was wondering if you would pop up in the comments defending private equity as you've done in the past.
Continuing our discussion from last time, can you elaborate on why you think quoting Revlon is sufficient to excuse the practical differences between public and PE companies?
I had worked with PE firms for over 6 years from the other side where we would invest in PE funds operating primarily in emerging markets, about 50 or so during my time and reviewed another 50 more that we did not invest in. Most of them are pretty benign. We invested primarily in transportation, energy and infrastructure but also hospitality and industry. There are many many poorly run private companies out there that PE funds buy out and rehabilitate. One major segment for a couple of funds is the purchase of poorly run family businesses where the founder was successful because they had drive and energy and built something at the right time (or sometimes, they knew the right people) but lacked the interest or vision to take it to the next level. Or the founder is getting old and the family has managed to turn the once successful business into a money loser. This is a long about way of saying, the majority of PE firms are benign and have invested in many successful businesses that many of us use. There are bad actors and more so in the US where corporations are allowed to eat the weak. It is not a case of PE bad but much more so that US business laws have relatively weak protections for consumers.
> Continuing our discussion from last time
I have genuinely no idea who you are or what we were talking about.
> can you elaborate on why you think quoting Revlon is sufficient to excuse the practical differences between public and PE companies?
Revlon duties concern hostile takeovers [1]. You’re confusing orthogonal concepts.
[1] https://en.wikipedia.org/wiki/Revlon,_Inc._v._MacAndrews_%26....
> Revlon duties concern hostile takeovers [1]. You’re confusing orthogonal concepts.
No sir, it was you who were confused - you brought them up here:
https://news.ycombinator.com/item?id=46186549
> > There is a legal requirement for directors of public companies to act in the financial interests of all shareholders
> No, there isn't. The whole point of Revlon duties is that they trigger "in certain limited circumstances indicating that the 'sale' or 'break-up' of the company is inevitable" [1]. Outside those conditions, "the singular responsibility of the board" is not "to maximize immediate stockholder value by securing the highest price available."
I'll leave it up to you to recontextualize with the remainder of that thread if you want to continue discussing.
> you brought them up here
Within that context, what's confusing you? And where did I argue that "quoting Revlon is sufficient to excuse the practical differences between public and PE companies?"
Revlon duties are a specialised duty that apply in certain circumstances. They don't in others. The other situation is what we were talking about; herego, those special duties don't apply to the other situation, which is part of the general situation. It's an old piece of rhetoric [1].
If you're consistently getting downvoted in a thread, and the other side getting upvoted, try re-reading it instead of presuming sanctity. Especially if you haven't worked in a field, are mixing up terminal and are e.g. citing legal argument about a private company to make arguments about a public one (Ford).
[1] https://en.wikipedia.org/wiki/Exception_that_proves_the_rule...
> If you're consistently getting downvoted in a thread, and the other side getting upvoted, try re-reading it instead of presuming sanctity.
Lol, what a humble take. We all know in this VC owned forum that only truth is upvoted, and lies downvoted, especially on topics like private equity.
> Revlon duties are a specialised duty that apply in certain circumstances. They don't in others. The other situation is what we were talking about
Again you're operating insincerely, because as I told you last time, and this time, Revlon does not relate to what I'm referring to. I even quoted you Dodge v Ford Motor Co as a jump off point for your education, which you refused to acknowledge due to it being "from over 100 years ago".
Anyways I'm curious if you'll share your background, and why you're consistently in these discussions about private equity, rabidly playing defense?
Someone needs to create a kind of JSON for care homes, if you will. Something like a super simple spec of what a goddamned care home object is for, and the minimum number of actually fairly-paid full-time staff one needs to achieve that in practice.
Then it doesn't matter how many baroque shell companies it takes represent the thing internally. Either the thing can output a response in Care Home Object Notation, or it's just a bunch of crafty bullshit disguised as a care home.
You'd just walk in with your one-page CHOM spec and read down the sheet: "Number 1: Can I speak to a full-time nurse, please?" If they respond, "No, but here's two high-school interns in a trench coat," you can just be like, "Not a care home. Got it," and move on to the next one.
Once upon a time, I heard someone tell me a fairytale about this thing called a ‘law' and they said that laws could be used to enforce compliance with standards across an entire country. Pure fantasy I know, but a man can dream.
I emphasize that I'm not excusing the stories of clear mistreatment in the source article. But the central challenge is that this kind of care is incredibly expensive, which poses awkward and sometimes brutal tradeoffs that people often don't want to honestly discuss.
For example, the article blazes past a claim that £550/week/bed was too little to provide good care, but a super simple spec suggests it might be. Subtract the UK average rent of £1367/4 = £342, divide the remaining £208 by a fully-loaded nurse cost of ~£20/hr * 1.3 * 168, and even with no other costs you're left with a completely inadequate 1 hour of nurse time per resident per day. But if Guy Hands had produced a worksheet like this proving that pumping more taxpayer money into his pockets would achieve adequate staffing ratios, would that make even a single person more willing to do it?
in the US a sickening % of marketing for SNFs is actually describing state-mandated requirements. "...and we even have a community led residents' association!"
depends on your state ofc. none of them are a single page tmk. this makes sense, regulations are famously written in blood. don't do this if you're unprepared to be in a terrible mood, ofc.
I have read that the big wealth transfer from boomers won't be as inheritance to their kids but most of it will go the the health and elderly care sectors. Hearing this stuff I totally believe it.
I am thinking about more and more about a plan to off myself once I need expensive care so I am not a burden to the next generation.
I have a lot in common with other commenters here. I’m close to people who are close to death.
There are some diseases which will rob you of the choice of assisted suicide. You must legally prepare while you are still of sound mind and body.
>Private equity relies on a basic technique known as the leveraged buyout, which works like this: you, a dealmaker, buy a company using just a small portion of your own money. You borrow the rest, and transfer all this debt on to the company you just bought. In effect, the company goes into debt in order to pay for itself. If it all goes well, you sell the company for a profit and you reap the rewards. If not, it is the company, not you, that is on the hook for this debt.
——
Not how I've seen this work. These often require a personal guarantee, in some cases the homes of whoever is applying for the loan. So, whoever wrote this article has no idea of the real acquisition process.
What you're describing is accurate when an individual or partnership buys a small business. Regular bank loans usually require additional security guarantees beyond just the business assets. But large PE firms have access to other sources of financing beyond traditional loans.
Leverage buyout is what private equities do and works exactly as described. It usually destroys the company.
People who think the government is bad have never met a corporation.
People who think the government is bad generally point out that there's only one government, but typically multiple corporations.
I am not one of those people, but their point does need to be fully addressed.
There are numerous governments in any given country, if you consider the various overlapping jurisdictions.
Taleb sees business and government as equally incompetent, but businesses are supposed to die and so make room for better ideas to thrive.
Unless, of course, you bail them out of their mistakes.
That statement ignores that there are multiple political parties. We have had political parties fail, just like corporations.
In the US we have one that recognized we are a society and need things to work. and one that wants to get rid of government at all costs, to the point they have for the last 40 years had policies such as 'starve the beast' with the sole intention of making government completely unable to function.
Hey now, the Trump admin will get offended if you downplay their incompetence!
A human ATM is just a teller.
A teller would be paid for doing the job.
Private equity didn't. People did. We really need to get rid of limited liability and corporate fictions.
I’ll generally defend PE. But when it comes to healthcare, private ownership and leverage are just a bad mix.
People created limited liability and private equity. Fiction is not something you get rid off. Its something you live with. It is a permanent side effect of how the over rated Humam Brain works. The brain makes predictions over multiple time horizons. When there are contradictions between these predictions how is the 3 inch chimp brain supposed to handle it while not splitting? Make up a story for the sake of coherence. Everyone is doing it everyday. They are all making up fictions to handle unpredictability.
There are a finite number of legislative girders underpinning the judicial capacity to support these fictions. When they're removed, it will not be legally possible to maintain them. They are not a product of nature, they are a product of real humans, and as such are subject to human change and intervention. They are among the least durable constructs we interact with.
The intentions may be good but that's unlikely to happen in our lifetime.
What might be a more feasible solution?
Get private equity out of healthcare.
Revoke corporate charters. Prevent and break up consolidation.
All corporate entities require a registration to operate in a state if they have a physical presence.
In this instance, you can also pass a law along the lines of "After setup, all care homes are required to spend 90/95/99% of their income on direct care of the residents or your charter gets revoked." This would prevent the incentives to buy them in the first place.
Don’t require states to uniformly respect limited liability granted in other states. Allow them to add limits, requirements, etc. let the different states explore the trade off.
Oof, talk about making compliance difficult and expensive if a company has 50 different sets of regulations to comply with to do business in the US.
Do you believe that states are the laboratories of democracy, and have rights, or do you believe that reducing the cost of regulatory compliance is a more important goal?
I take no position on this currently, but it's an important question that deserves a serious answer. Trading off the costs of "state experimentation" and "enforced regulatory conformity" is non-trivial to do.
multi-generational households
The reality of most multi-generational households is that the wife is eventually coerced into becoming an unpaid caregiver for elderly parents (who often constantly criticize how the household is managed). This sort of "worked" in traditional societies when women didn't have other options but when they're educated and have their own careers it usually doesn't seem like such an attractive choice anymore.
I'm not opposed to multi-generational households and I have friends who have made it work well. Let's just not assume that it can be a scalable solution.
It was never an attractive choice- people simply did not have options. In my country it was not until the 1950s that retirement homes were invented and the elderly finally got their social security (remember pensions did not exist).
I would rather have access to a suicide pod.
careful dont let private equity hear you say that
I'm more worried about Catholics and other people that want to enforce their religion on others preventing access to suicide pods.
It could happen this year; legislatures just need to pass laws. The hardest part is people posting comments like yours as a diversion from doing real work (though there are other hard parts too).
You say all it takes is for the legislature to pass the laws and seem to assume our government is functioning as expected without any bugs.
And yet we’re talking about an extremely well-connected and powerful industry in PE. Do you really think they won’t lobby intensely against legislation that would cripple their profits? Are the majority of our legislators really immune from considering corporate interests?
That's always been true, bugs and lobbyists, and yet our predecessors have gotten a lot done. People get things done now (including people you don't agree with).
It's not a fairy tale; it is hard; and yet our predecessors moved mountains.
I find it interesting that you assume ill intent as the default when I was genuinely asking for actionable steps we could take to address a very real problem.
Perhaps consider giving people the benefit of the doubt instead of projecting your cynicism onto others.
that's right! if only I wasnt posting snarky crap on HN we'd have a Utopia. Paging Upton Sinclair!
We each have power, influence, and responsibility. You're spending yours on cleverness, and wasting others by shifting the focus and undermining their efforts. Cleverness, in the end, doesn't matter.
> Upton Sinclair
Upton Sinclair didn't waste it.
i certainly don't want to use my cleverness for power or influence, no thank you.
Private equity is not a free market artifact, it could not exist without the government controlling the currency and providing very cheap loans.
Care sector in the UK is a dumpster fire. Corporations get paid often thousands per day per service user, hire incompetent staff at below minimum wage (if you count unpaid overtime) and pocket the massive margin. It desperately need proper regulation.
I read recently that companies are getting almost resentful that they have to go through yuo to get your money. I keep thinking about that because I think it's true.
I read some of comments here and on other threads about PE and I keep seeing some variation of "this particular PE crime is an outlier, we can fix it". No, no you can't. PE isn't an aberration. It's just the natural extension to capitalism. It's inevitable.
This can be understood easily in Marxist terms, as unpopular as that is. What we're talking about is the workers relationship to the means of production.
You have a nusing home. The people who work there should own it. There's no reason not to. Instead there's this intermediary, some capital owner, who demands to extract profits from that. We've simply replaced the feudal lords of old with investment bankers. It's the ultimate in rent-seeking behavior.
Years ago I remember hearing about PE firms buying up trailer parks. For many this is their last refuge from being homeless. When they are homeless, it's not only devastating to them but it's expensive for everyone. Health issues, going to the ER more often, violence, law enforcement making sure homeowners don't have to see homless encampments, people can't hold down drugs, self-medication with drugs and so on.
We absolutely shouldn't drive up the price of mobile home pricing so rent-seekers can extract profits but we as a society choose that over housing security for people. That's not just wrong. It's state-sanctioned violence.
This nursing home PE squeeze is also state-sanctioned violence. Make no mistake. Arguably, it's even social murder [1].
And once again, it's super easy to understand in terms of the workers relationship to the means of production. Yet everybody thinks they'll be Jeff Bezos one day so it's super-important now to vote in the interests of the billionaire class. Yo uwon't be. And even if you are, do you really want to become rich this way? Is that what you want your legacy to be? That you made the last years of elderly people who needed care miserable?
Why do people think this is good? Or fixable by the politicians who are bought and paid for by the people profiting off of this?
[1]: https://en.wikipedia.org/wiki/Social_murder
Frankly given the sorry mid/long-term state of the UK economy, yes, this is the absolute essential thing to be moaning about...
And frankly moaning about this used to be right wing conspiracies a few years ago so yey for another pendulum swing...
Every company turns people into ATMs, taking their money for a good or service. It is naive to think that companies do not want people unloading their money and consuming whatever it is the company is offering.
It's every for profit company. No exception. Charities and certain non profits may not count, but most are bad too.
How is it even possible that you got down voted for this?
I just don't see what it has to do with the source article, unless you and the original commenter are suggesting that care homes shouldn't exist. How would a care home work without receiving money to pay for the services provided to residents?
It isn’t the fault of private equity that banks make excessive loans against assets in a leveraged buyout. Banks (such as per the article, The Royal Bank of Scotland) have a duty to ensure that their loans are of properly assessed risk, and if the PE firm that wants to or has bought an asset does not look qualified to run it, then the banks should not be making the loans. Articles that keep casually dropping triggers like “[t]hey rubbed their hands together and said, 'Sooner or later, as the demand increases, the prices must go up'” are not seeking workable solutions but capitalizing on their ability to raise ire. It’s much more yet another article that does its best to paint a profit motive as an evil, completely ignoring that any endeavor that is not profitable is going to die sooner rather than later, and when it’s a government run endeavor then the taxpayers, who were completely uninvolved in the deicsions of where their money should be spent, are the ones left on the hook - HTF is that better?
> It isn’t the fault of private equity that banks make excessive loans against assets in a leveraged buyout
Credit lends. Equity owns. It’s absolutely the fault of the owners, first, if their business is fucking up. That’s why they lose their chips before the banks do.
We had a society that functioned. That people could live a life. We no longer have that due in part to private equity buying up retirement homes, dental offices, HVAC/plumber shops, doctor offices, funeral homes, etc, etc and restructuring them for optimal extraction.
When I deal with bob renting his house, we come from a kind of equal place. When I rent from XYZ agencies, there is no fair deal, there is their deal or no deal, designed to be as exploitive of me as possible. There is no coming to terms from somewhat equal place, there is only agreeing to corporates terms. The same with dental work. Getting a roof put on. The society we had didn't work that way in every transaction in life, and the society we have now doesn't really work for large swaths of society anymore.
Systems with no slack become brittle. In the case of modern society, that brittle aspect is people not able to afford to live and businesses so 'optimized' they can't afford to do their core businessing well, their workforce unable to themselves live, and their workforce pushed in a way that isn't sustainable long term, but since their owners have purchased large amounts of the competition the business is able to stumble along for a while. Until they get their exit by selling the unsustainable bundle to a retirement fund, with PE yet again destroying another aspect of what made society work in the past.