Full Transcript Podcast Introduction and Healthcare Critique 0:00 The UnitedHealthcare controls 11 different distribution points in the patient journey. 0:05 Think about that. 0:07 You want to know what area they make their least amount of money in? 0:09 They make the least money. 0:11 Healthcare premiums. 0:12 If I was taking a pure business school view of this and I had leverage over my competitor and then I could force them out of business and buy them for 0:22 pennies on the dollar, I would absolutely consider it. 0:24 Hey everyone, welcome to Out of the System, the podcast that helps lead doctors out of the nightmare of insurance-based care. 0:51 Today, I am going to talk to you about venture capitalists in medicine, the bad and the ugly. 0:58 Now, you'll notice that I'm not talking at all, saying it all about the good, bad, and ugly, but I personally believe there are three main things that 1:06 have made healthcare in our country atrocious and absolute shit show, if you will. 1:14 One is the Affordable Care Act. 1:16 That essentially, and I've talked about this before, that essentially gave power to the insurance companies to consolidate. 1:22 And it's happened. 1:24 Care has gone down, costs have gone up, And the only thing that's really happened is that the politicians and the health insurance company have, 1:32 quite frankly, made billions of dollars. 1:35 The second thing, which has really hurt healthcare in America, is the lack of oversight from the FDA and the CDC and agencies that are there to protect 1:47 the consumers. 1:48 They have completely sold themselves out prior to this current administration to big money, giving, you know, as many people probably don't even realize, 1:58 the F.D.A., if you're an executive at the f.d.a. 2:01 and CDC, You actually get a percentage of the patents of things that you approve.
ACA, FDA, and the Rise of Venture Capital in Medicine 2:06 But I've talked about those in other podcasts. 2:09 So the third one that I want to talk to you about today is the atrocious negative impact that venture capitalism has had in healthcare. 2:18 Let me give you a little bit of a background first and foremost. 2:20 I think this is really important for you to understand. 2:24 Well, and I'll just say this. 2:31 buying hospitals, buying practices, and inserting itself in its healthcare in the United States is as bad for the American public as leeching was as a 2:43 way to fix sicknesses. 2:48 There is nothing I can find that has been a benefit for the patient and for doctor. 2:54 Now, there's been benefit from people that have invested in the venture capital groups and the people who run those things. 2:58 They've made a fortune in a lot of cases, not every single one, but in lot cases. 3:03 But for real intent of healthcare, the whole purpose of health care is to take care of the patients, for that patient-doctor relationship. 3:15 Let's take a look at some things, okay? 3:17 Let us just take look what has been going on in the industry. 3:20 And let us go back to the 1980s and let's go to Stark Law. 3:26 The Stark law was put in place essentially so that, and this is a summary, so this not giving you all the exact historical parts of it. 3:36 But star clause were put in place specifically so that doctors, doctors used to get compensated by the pharmaceutical companies for recommending their 3:49 drug or their device or whatever. 3:50 And so the doctors were given a percentage of that. 3:53 If you had a. 3:56 let's just say $1,000 joint or something or device, the doctors were getting compensated on that. 4:01 They had a commission program. 4:03 Well, they had to plan in place that if you did so much, you got paid more, okay? 4:07 This happened with the Sacklers and the opioid crisis. 4:11 they were given bonuses based on how much not only the pharmaceutical rep sold, but also the doctor, Okay? 4:19 Well that wasn't really good for the patient because the Doctors were being incentivized just to prescribe something, or give something. 4:25 And so what they did is they put in Stark laws, and I believe the late 1980s. 4:31 And what the did was they outlawed the impact of a doctor being compensated based on revenue, performance, just like a salesperson. 4:41 Well, that also applied to, by the way, to lawyers. 4:44 So if you look up Stark Laws and its intent, you can find very specifically that it states that doctors cannot be given bonuses and commissions.
Stark Law, Incentives, and Unnecessary Procedures 4:52 Last, let's fast forward to today. 4:55 Today, what they've done is they are giving bonuses and commissions to doctors, and it's called RVUs. 5:06 RVU's are nothing more than a form of bonus compensation for the doctors. 5:11 Now, I'm not opposed to the doctor's making more money, not in the least bit. 5:16 However, there becomes a conflict of interest Now, the Stark laws are still law in this country. 5:23 However, they are not enforced. 5:26 I believe that that is a horrible thing for the patient and the horrible things for a doctor. 5:39 And we, uh, he and I and his wife were out to dinner and we were walking around. 5:45 We were going to these multiples, one of those like wine kind of things. 5:48 And one place you go try this, a bottle of wine and that kind wine. 5:51 and We're walking. 5:53 The downtown where we lived and, we probably had to walk a good, I don't know, 15 blocks around or something like that. 6:02 His wife said to me, Oh, by the way, am I going be getting a hip replacement? 6:06 looked at her I said why I was watching her watch she was fine she had a slight limp she goes yeah my hips been really bothering me and I go well did you 6:15 by the way it was November okay and it said what are you gonna have that surgery done she's I'm gonna get it done right after Christmas get done before 6:24 the end of the year okay when you went to go see the doctor Did they do an MRI? 6:30 Nope. 6:31 Did the do a ultrasound? 6:32 No. 6:32 Do they an x-ray? 6:34 How much time did they spend with you? 6:36 About 10 minutes. 6:37 Told me I need a hip replacement and scheduled it. 6:38 Okay. 6:40 Why don't you go see my doctor over here who does Regen. 6:43 She says, because Linda, I'm not a doctor. 6:46 I can't sit here and tell you based on how you walk whether or not you need hip replacements. 6:50 However, it seems a little odd to me. 6:54 Well, she went and saw my friend. 6:56 Got an M.R.I. 6:57 X-rays, all this stuff. 6:59 He's like, she doesn't need a hip replacement. 7:01 She just needs, you know, some regenerative therapies, which she got and she's much better. 7:06 And that got me thinking. 7:09 How many of these surgeries are done? 7:10 I'm not going to say that every doctor is doing this. 7:12 Okay. 7:12 Please understand me. 7:14 But how many these are surgeries done that are not required simply so that people can meet their end of the year bonuses? 7:22 I don't know this for a fact, but let's just hypothesize that that was the case, that this doctor needed to hit so many in order for him or her to get 7:31 another bonus. 7:32 I'm not opposed to people making more money. 7:33 In fact, I am a big advocate of it. 7:35 I think that if you're highly trained, you should be highly paid. 8:02 that are traditionally owned by venture capitalists.
Private Equityu2019s Impact on Doctors and Patients 8:07 If you just take a look, I think it's utterly fascinating. 8:13 I have yet to meet any doctor who works for a venture capitalist-owned practice or hospital that is happy. 8:21 In fact, let me give you some statistics. 8:24 And I think this is going to be rather fascinating to you, but I'm going give you some statistics of what we see in the industry, 8:31 okay? 8:32 So there was a survey. 8:33 Bottom line, here's the bottom line. 8:36 Clinicians overwhelmingly describe venture capitalists' private equity involvement in healthcare as bad. 8:44 They prioritize investor returns over patient care. 8:48 And the numerous surveys that have been done in the peer-reviewed research back up their complaints with hard outcome data. 8:53 Here's what the data says. 8:55 What physicians are reporting? 8:56 In 2025, CERMO barometers surveyed 500-plus positions and found that 54% believed that private equity investment has decreased care quality, 9:05 while only 2% saw meaningful improvement. 9:08 78% said private-equity investment could compromise patient care outright. 9:12 49% rated PE-owned facilities worse or much worse than nonprofit ownership. 9:19 Majorities also had negative views on physician well-being, 58%. Healthcare cost, 57%. And health equity, 51%. Doctors describe moral injury, 9:31 the sense that corporate revenue driven ownership forces them to violate core clinical values. 9:36 An emergency physician by the name of Robert McNamara, who's the co-founder of Take Medicine Back. 9:41 By the way, if you know Robert Mcnamara and co founder of take medicine back, have him contact me. 9:45 Love to have them on the podcast. 9:47 He put it bluntly, working for investor ensure interest conflicts with the physician's duty to put the patient first. 9:54 There are some states where they have outlawed doctors owning hospitals. 10:00 Who better to own a hospital? 10:03 I know that there's Mayo's owned by the doctors. 10:05 I understand that that's a pretty good place. 10:08 You know, we have taken a purely American view to how to fix healthcare. 10:13 And we believe the answer to everything is private equity in Wall Street. 10:22 When you look at the amount of private equity that has been put into U.S. 10:27 health care, buying hospitals, buy practices, what has happened since 2010 with the passing of the Affordable Care Act, if you looked at what happened, 10:38 it has completely decimated the autonomy and the freedom of a doctor. 10:47 And to mention the nurses and nurse practitioners and PAs and entire staff. 10:53 It is all driven by how quickly can we turn the bed and how we quickly move on to the next patient. 11:00 It's no different than a restaurant, quite frankly, or a hotel. 11:05 Nurses and their unions report and describe a consistent pattern across private equity-owned hospitals. 11:11 The hospitals prioritize profits over patient care. 11:15 There is a hospital in Connecticut. 11:17 It's called Connecticut's Waterbury Hospital, formerly steward-owned, organized, reported nurse-to-patient ratios far exceeding safe staffing and committee limits. 11:27 The Massachusetts Nurses Association pointed to the Stewart HealthCare collapse, which was a big collapse as confirming what the Nursers Association has 11:37 been saying for years, that private equity ownership starved hospitals of staffing resources. 11:42 There are common complaints, substituting cheaper, less qualified staff for RNs and physicians, delaying equipment and facility investment, 11:48 and executives sitting on hospital boards with no clinical background. 11:51 That to me is probably the worst thing that can happen. 11:56 Look, I'm fine. 11:58 Private equity in hotels, private equities in golf courses, Healthcare should be about creating an environment where we can increase delivery in the speed 12:10 of delivery, in speed care, it should about prevention. 12:13 It shouldn't be getting somebody addicted to a statin or a pill or whatever thing like that so they can never get off it. 12:20 This is, its horrible what has been going on. 12:25 Here's some other research. 12:27 Full-time staffing fell 12% and salary spend dropped 16 to 18% in ICUs and emergency departments after PE acquisitions. 12:38 Private equity-owned hospitals show more advanced events, bloodstream infections, surgical site infections falls and increased emergency department mortality 12:47 and inter-hospital transfers. 12:50 In 2025, health affairs study found private equity owned practices cut access to retinal detachment surgery by nearly 20%. Okay? 12:59 So, this is not, if you look at this overwhelmingly, most physicians do not view private equity as a benefit.
Insurance Leverage and Corporate Practice of Medicine 13:11 Now, some do, the ones that own it, I have some friends of mine that have sold to private-equity, and they've done very, 13:15 very well. 13:16 They think it's great. 13:18 But overall, data tells us differently. 13:21 The data suggests that private equality in healthcare, owning hospitals, buying practices, not only hurts the doctors, but it hurts, 13:31 the patient. 13:32 The exact person, that doctor has been designed to heal and fix and cure. 13:40 Now look, patients are not clients. 13:47 They are customers, they are patients. 13:50 And that word delineation to me is incredibly important because very simply put, A customer is someone that is saying, Hey, 13:59 you know, I'm going to do this. 14:00 I need this thing. 14:01 Give a barbecue pit put in my backyard or something like that. 14:06 Right. 14:06 And they go through a process and they decide to spend the money. 14:09 A patient is coming to you because they have something that hurts them, that ails them that they want to get fixed, but they won't relief from that, 14:19 they wanted some comfort. 14:22 Private equity doesn't understand that Private equity has one role and one rule only. 14:30 That is very simply to improve the return on investment. 14:36 Now, can private equity and healthcare live together? 14:42 Sure. 14:43 Why not? 14:44 Of course it could. 14:46 But it has to change. 14:49 So what do we do, okay? 14:52 Well, in many cases, as a friend of mine says, the horse is already out of the barn. 14:57 I mean, this has been in play for a good 10 to 15 years. 15:01 Practices are getting bought and sold every three to seven years. 15:04 Hospitals, things are trading back and forth. 15:06 However, there is a reckoning starting to happen that I'm starting see. 15:10 First and foremost, and there was a belief by the venture capitalists and the private equity that because if they had a lot of locations, 15:17 they could have leverage in negotiating with the insurance companies. 15:21 There are some signs now. 15:25 And when I say some sign, this is whisper conversations that hear at conferences. 15:30 and from my friends in the industry, that is not the case. 15:33 That actually, the UnitedHealthcare's and the Blue Cross Blue Shields of the world's, and Edna's have figured out, well, 15:40 wait a minute. 15:41 We actually control the purse strings. 15:43 If we lower the reimbursement rate, maybe that practice or hospital will go bankrupt and we can buy it cheaper. 15:52 By the way, this is happening. 15:53 You see, United Healthcare controls 11 different distribution points in a patient journey. 15:59 Think about that. 16:01 You want to know what area they make their least amount of money in? 16:03 Make the least money amount in healthcare premiums. 16:06 Okay? 16:09 So if I was taking a pure business school view of this and I had leverage over my competitor and then I could force them out of business and buy them for 16:19 pennies on the dollar, I would absolutely consider it. 16:25 One, we have to realize that the horse is out of the barn and there's some stuff that is going on. 16:30 So what do we do? 16:31 Well, one, some states are beginning to enforce another little known part of this entire process, and that's corporate practice of medicine. 16:43 I'm very familiar with corporate practices of In North Carolina, we had three clinics. 16:49 And our arrangement was, is that we get a business arrangement with the doctor. 16:52 The doctor owned the clinic. 16:53 We had the management company. 16:54 When we put up the money, and we did all that, at least the employees, We did it by the book. 16:58 I know because we have everything reviewed. 17:01 and we followed the letter of the law. 17:02 We did it from a legal standpoint, okay? 17:04 The doctor had all of medical decisions, we took care of business decisions and it was a psoriatic relationship. 17:11 There were challenges in the relationship and in conversations, but the fact of matter is, is it worked, kay? 17:18 Now, the problem with that is that has been abused. 17:23 One of ways that you can get around the for-profit corporate practice of medicine is for many states, not every. 17:31 Now I'm not speaking of every single state because every state has their own different corporate practice medicine. 17:35 So for example, in Virginia, I can own a medical practice as a non-doctor, at least the last time I reviewed it, which was probably nine months ago. 17:42 In North Carolina, cannot. 17:43 California, can not. 17:45 There's all the laws for corporate practiced medicine, there's a different state by state. 17:51 But overwhelmingly in most of the states it's very simple. 17:56 If the entity is a non-profit, then the doctor doesn't have to own it. 18:06 Now, there are a lot of loopholes that exist out there. 18:09 There are some states like Connecticut that are now saying, hey, any transaction has to be reviewed by the state. 18:16 The state's starting to get involved. 18:17 I'm not necessarily one for more governmental oversight.
Why Private Equity Harms Healthcare 18:21 However, I believe it is warranted in this case. 18:25 I believe we have to go and we to look at how this is being done because it's not in the best interest of the American public. 18:33 VCs, PE, ownership of hospitals and medical practices is not the in best interests of a patient. 18:43 It has not lowered healthcare costs. 18:46 it has increased capacity. 18:54 In fact, it has increased costs, restricted access, and it's worsened and contributed to the declining health of America. 19:06 All the while, you, the physician, are the one getting screwed. 19:12 You are holding the bag. 19:13 The patient doesn't understand this. 19:15 They don't know why you can't spend more than seven minutes with them because you have a metric to hit. 19:25 You are getting burned out. 19:27 Your fellow doctors are committing suicide at a rate that's two and a half times more than any other profession. 19:34 You were the ones that are leaving medicine early after sacrificing your 20s and early 30s to the betterment and the healing of the human grace. 19:43 Yeah. 19:44 Private equity, venture capitalists, they're about as good for health as leeching was. 19:52 And by the way, if you don't know the reference, former president of the United States, George Washington, after he had served our country dutifully and 20:00 led us to freedom from the British and served eight years as president in the united states, got sick and they used leeches to try and heal him. 20:12 He didn't make it. 20:13 They bloodled him, in fact, some people will tell you that the bloodletting is what actually precipitated his death. 20:23 I can't find any reason why private equity and venture capitalists are good for healthcare in America. 20:29 I'd love to know your thoughts. 20:30 Post them below. 20:32 Send us a note. 20:33 Check us out on YouTube, LinkedIn, Instagram. 20:36 We'd like to hear it. 20:37 And I would love continue the conversation. 20:39 This is just the first. 20:40 If you want to come on the podcast and discuss it in depth, I will love hear from you. 20:45 All right. 20:45 My name is Matthew. 20:51 from a non-doctor leading doctors to the promised land of healthcare. 20:54 You have a great day.
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