I’ve hands on done these roll ups in mass (a ton of tiny M&A deals) and I would not characterize the physicians that way at all. They are generally fairly savvy small business owners and they always saw their practice as a retirement/nest egg. They also tend to burn out on all the insane regulations/insurance/employer/etc hoops they have to jump through and as a small business they tend not to have negotiating power or the scale to leverage shared services. These are the primary benefits of the roll up along with jacking up prices as much as possible obviously.

Like many physicians these days, they see benefits of just being a W2 employee. It’s also a demographic wave, there’s a lot of near retirement folks that are winding down and these PE firms are providing liquidity for their practice. For the consumer though, it’s probably not a good thing at all

As result of the acquisition you may notice appearance of a business practice manager - a non-vet guy lurking behind the nurses and doctors at whom they all look trying to understand whether he approves or disapproves each and every action they do/say.

Similar experience in PE a while back, know a lot of people who still do it, and yeah a lot of small business owners are cashing out right now as boomers retire. Between that and all the dry powder PE has on hand after recent massive raises there will be a lot of buying businesses going on, lots more than even a decade back. Especially now that inflation is stressing retirement savings and costs of everything are rising so fast while people will be looking more to private markets to up returns in bad economic conditions.

The inevitable march of capitalism: experts in every field are gradually relieved of their decision-making power by experts in finance, until finance guys control everything.

But you can have capitalism without financialization.

"financialization" is more a boogieman than a solid concept. More competition (the best interpretation of "de-financialization" I can imagine) is not very solid solution for something like healthcare (or yes pet care) where the demand being inelastic makes "ransoming" easy.

> best interpretation of "de-financialization" I can imagine

"Financialization" means the insistence on seeing "business" as a machine which is to be optimized to maximize return on money. It's in contrast to people doing good work for a fair price.

Compare these two veterinary practices.

One has an owner who is a vet, who got into the practice because they love animals. They hire staff who love animals. They charge enough money to live reasonably comfortable lives and pay off their vet school bills. They could charge more but they don't. They don't try to push unnecessary services to raise more money.

The second is owned by private equity, who got into the field because it has inelastic demand. Prices are carefully calibrated to extract the maximum amount of cash possible. They hire staff who focus on getting the most bang for the buck: they focus and push for expensive operations and do them in the shortest amount of time; operations which aren't cost-effective are passed over or simply not done. At every step of the road, "upselling" is a thing, to maximize money taken from pockets.

The first is what I consider the best kind of "business": Doing good fork for a fair price. Those kinds of businesses make the world a better place to live in.

The second is what I would call "financialization", and I consider the worst kind of business: Extracting as much money as possible for the least effort. Those kinds of businesses make the world a terrible place to live in.

The first kind of business is the kind of capitalism I want, not the second.

The second business goes on to make so much money it can buy the first, unless the owner is very determined to not be bought (insignificant minority).

and in the case of the insignificant minority, the second one sets up a competing shop directly across the street with artificially low prices and waits for the first one to go out of business.

It might make sense to split it into "professional services" v "business". Legally it's hard to tell them apart, but people tend to know the difference.

It makes sense for some businesses to actually be an "asset" - eg Coca Cola company. It is a reasonable argument that it doesn't make sense for a vet practice to be an "asset". Nor a law firm.

> The first kind of business is the kind of capitalism I want, not the second.

The problem is there's no rule you can apply that distinguished between those two, in a court of law or elsewhere. Unless you just look at if a bigger firm owns the vet office. But that doesn't help with the upselling vet or the large national organization who wants to help animals.

Yup exactly.

And say the owner-Vet who is doing it from a place of love takes a lone and needs to make some interest payments....what then!

Indebtedness and greed are hard to distinguish when black boxes. Always remember that.

Markets can work fine with inelastic demand if there is adequate information, freedom of choice and proper regulations.

More like, could than can as far as I can see. Markets kick ass under certain circumstances, but in some areas it's almost impossibly hard to achieve those circumstances.

My point is that I don't think the inelasticity of demand is why the healthcare markets work so poorly.

the problem is that some markets inherently can't have adequate information because the customers by nature of being customers don't have time to shop around.

Unfortunately government restricted the supply of doctors below population growth.

Doubtful. The point of capitalism is to optimize for maximum capital production. Ergo, the optimum solution always seems to end up being financialization, since it is so effective at producing capital.

A veterinarian cannot open a practice without doing a bunch of licensing and spending hundreds of thousands of dollars in education.

Meanwhile, the PA next to him has what it takes from years of training but she will never open a vet clinic of his/her own.

Thats not capitalism.

The solution to that is reforming the educational and licensing system, not putting finance people in charge.

Interestingly enough, a couple of states allow interested people to become lawyers by apprenticeship instead of the university route. Wonder if that would ever be feasible for veterinarians.

It's a fantasy of libertarians, etc., but I think it is exceedingly rare for someone to have a serious career as a lawyer without a law degree.

what do you mean? That's exactly capitalism, it favors inequality heavily. The Vet made it to the top of the heap, and is now utilizing the PA as an exploitable workforce.

Tech example, BigCo A gets first mover advantage, equally good BiggishCo B is a bit behind (for whatever reason), BigCo A leverages their position to prevent B from being able to compete long term - usually by acquisition, they work for us now.

It's not capitalism because a licensing cartel artificially keeps the supply of vets low by keeping out qualified PAs and nurses who could handle easy cases.

You have just realized that most actors in capitalism prefer to the rig the game rather than compete.

No idea how an increased number of vets would prevent capital from consolidating this industry.

You can’t have a monopoly in an industry with no barriers to entry. Cartels aren’t stable because every newcomer has an incentive to defect.

It costs more than zero dollars to set up a new vet clinic. I'd bet a bunch of the shit they need is really expensive.

Capital alone can't maintain a cartel. Investors can partner with doctors to set up a new vet clinic to help break the cartel, and there are significant rewards for both. In turn, the competition lowers prices across the board. Cartels are essentially a prisoner's dilemma without rules (like licensure) enforcing them.

Licensing can be used to monopolize markets and consolidate private ownership. Licensing isn't inherently bad but it can be used in a capitalist system to increase profits and drive out competition.

Capitalism doesn't become "not capitalism" because practitioners need to be licensed and public safety and/or public opinion demands regulations be put in place.

If someone recommends "don't do that" and you do that anyway, you can't reasonably blame their advice for being wrong because things went wrong when you did the thing anyway and then justify it with "well, sometimes people don't listen to your advice, so clearly it's not good enough, we really need to do more of the thing you advised against to fix this."

Are you saying that capitalism means completely open, zero regulation, zero licensure markets? Because it absolutely does not. It means (among other things) a competitive market with minimal information asymmetries between producer and consumer. Regulation can at time help this, e.g. requiring information disclosure, or preventing monopolistic practices.

Just because a lot of regulations are bad (or enforced poorly) and some licenses are onerous does not mean "regulation === bad" or "licensure === bad."

You're arguing against an extreme position I have not advocated for.

But when bad regulations cause bad outcomes, it's pretty weird to focus the blame on the people warning that bad regulations can cause bad outcomes instead of how the regulations are flawed and whether they can be fixed.

If your intent is to capture the market so that you can set the price, that is not capitalism. If licenses are limited, then the amount any one business can own should be limited. Having the ability and using it to artificially limit competition is called a cartel and should be illegal in the USA. An artificial limit on the amount of competition allowed <> capitalism.

See taxi medallions. Another example for a long time would have been FAA approval of new aircraft type certificates and the requirements creating a huge barrier for entry to get them that artificially prevented competition.

Capitalism kind of does become "not capitalism" when a small cartel of individuals uses these public safety rules to arbitrarily cap the number of professionals who can be certified. At that point, you have something approaching mercantilism. Rules can be good for markets, but in the medical industry in the US they are far past that point.

I haven't checked, but I assume that today there are more rules and regulations on doctors in the US than there were on the entire Soviet economy. Some of those rules are good, but most of them are in place because a hospital system or a medical association lobbied to put them in place so that they could keep barriers to entry high.

It's exactly capitalism because concentrations of capital form and end up with a critical mass that controls various aspects of society - in this case licensing. It's also something that's literally happening under capitalism, right now, in very capitalist America.

While I give your argument some merit, i.e. nobody should be able to corner a market, in this case a different concentration of capital keeps the supply low: the Big Higher Ed one, as opposed to Big Vet.

It’s a modern mixed economy. Full capitalism was the previous stage, when unlicensed doctors traveled around selling people radium cures.

It’s actually very surprising we trust doctors so much (have inelastic demand for them) because for most of history doctors were more likely to kill you than not.

It's not capitalism the same way soviet Russia wasn't communism

People seem to think capitalism == meritocracy.

We've had capitalism for 250 years, and are still far from this alleged inevitable end state.

If the finance guy is driving down costs and some of that makes it way to me, the consumer, I’m all for it.

We didn’t get dirt cheap electronic because some engineer squeeze costs down and competed on price.

It's happening to engineering firms too? The great duopoly America is coming swiftly.