Monday, June 17, 2019

PEU View from Ground Floor

Twice I've worked for a private equity owned healthcare company.  The first time was in the early 1990's and the second started a year ago when the same private equity underwriter (PEU) obtained majority ownership of my employer (alongside another PE firm). The two experiences were night and day.

In the early 90's I received regular raises and bonuses.  I met one of the principals of the PE firm at a national meeting.  He seemed personable.  I had no concept of private equity.  I just knew we were privately owned and I bought stock in the company in our initial public offering (IPO).  Today that company's debt is rated CCC by Standard and Poors.

In the last year the same private equity firm oversaw the destruction of our office.  Turnover soared to over 50%.  Our new owners cut the number of holidays by 25% and reduced holiday pay by 33%.  They installed unreliable cloud technology and implemented time wasting software which also underpaid employees.  They cut 10% of the workforce as Christmas and New Year's approached.  Our office space was cut in half when they moved us to another location.

Management exhorted us to grow in the midst of this chaos.  We were asked to serve our customers with fewer computers (75%).  The phone is a primary means for us to serve existing and get new patients.  They cut the number of office phones by 71%.  Oh, and my first raise in years amounted to a paltry 0.5%.

The company grew EBDITA by over $50 million during this time.  The principal I met in the 90's is still with the firm.  He no longer seems personable.  Greed ruined a once great local provider.

The PEU virus is now epidemic in healthcare and I directly witnessed its devastating symptoms.  I'm not sure our healthcare system can recover from PEU toxicity.

Update 6-19-19:  ZeroHedge ran a piece on the managerial elite enriching themselves via complexity and obfuscation,  Author Charles Hughes Smith sees healthcare as a failed system that will bankrupt the nation.  His view echoes that of Dr. W. Edwards Deming who once called rising healthcare costs one of management's seven deadly diseases.