Comment by cogman10
1 day ago
I really dislike this, especially because it ultimately results in worse care for the kids.
I think the place I take my kid to for therapy is likely private equity owned, but it's also about the only place available in my area.
I know they are charging around $80 per season, and I also know that the salaries for their therapists are around $25 to $30 per hour.
That leaves a very healthy margin for everything from employee benefits to building rental to admin (which I think is probably where the majority of margin goes).
I think you're over-estimating how much slack there is in the organization.
A rule of thumb is that benefits cost an employer 25-30% of salary. So you're already pushing to 50% of revenue going to direct salary costs. Then there are employees in non-revenue roles (HR, legal, accounting, IT, etc...) and employees doing non-revenue work.
Finally, you have rent, licensing, insurance, and all the other fixed costs.
An awful lot of businesses go under from underestimating what their expenses inevitably will be. Everyone they deal with has their hand out to get paid.
Which is why successful business means being a sociopath.
Anthem Blue cross pays $125-$150/hr. $80/hr is cheap.
It's worth asking if you're curious or have a good relationship with the provider. Some may be willing to tell all about their ownership or management situation if prompted politely.
I know of a childcare center that was acquired recently. Not sure if by PE or just another business, but the employees are less than thrilled with the changes.
having work in an industry affected by PE buyouts, a lot of these are transactions acted on at management level by businessmen and MBAs/consultants in their offices with no clinician input, yet the hate seems directed at front-line staff.
applying this same kind of logic that PE uses, equating healthcare workers to machines is the bane of the industry.
and then people complain why ther doctors burn out. what do you expect when you ingrained on them that every hour not booked is $80 lost, so we need to book them 24/7, cut their lunch break and squeeze every inch of life from them.