March 27, 2026
Dear Interested Readers,
Private Equity in Healthcare Is the Wrong Road to High-Quality, Universal, Equitable, Affordable, and Sustainable Healthcare.
I must remind myself every week that the intended purpose of this weekly letter is to reflect on the challenges facing healthcare. We have been on a journey of many decades toward the goal of equitable universal access to care of the highest possible quality. We have been trying to leverage the latest advancements in medical science and practice to deliver effective, efficient care for everyone at a sustainable cost to society and individuals, while also providing a satisfying and rewarding professional experience for all healthcare professionals. Your first response to such a loquacious, audacious, and distant goal might be a sarcastic, “Yes, that will be possible right after pigs learn to fly.” Or, maybe you will snarl, “Get real!”
When you look at care where you live, tap into the Internet for a podcast on current events, watch the evening news, or read essays and editorials about domestic and international problems in the opinion pieces and editorials of newspapers and magazines, your most likely conclusion is that my “pie in the sky” wishes seem unlikely to occur in my lifetime or yours. These thoughts led me to do two things. First, I asked Google for the visions and missions of the IHI, the Commonwealth Fund, the Robert Wood Johnson Foundation, and the Millbank Fund. Each of those organizations has a purpose aligned with the objectives I discuss in these notes. Perhaps, more accurately, I resonate with their objectives. I don’t know it for a fact, but I would expect that all of these noble endeavors expect that the world they want to help create will be a long time coming, and that there will be many moments of frustration, disappointment, and loss of momentum from resistance from the status quo, mixed with occasional moments of progress. Nevertheless, they persist.
As I process the frequent pain and disappointments associated with the Trump administration’s rollback of progress toward the Triple Aim and the goals outlined in Crossing the Quality Chasm between 1995 and about 2016, with a brief reprieve between 2021 and 2025, I am reminded of the Jewish theological concept of Pirkei Avot. Since I couldn’t remember the exact quote, I typed into Google my personal version of the idea, which was. “Just because a project can’t be completed in your lifetime is no reason not to begin the effort.” What I got back was:
This sentiment, often quoted as, “You are not obligated to complete the work, but neither are you free to abandon it,” is a powerful call to action derived from the Pirkei Avot (Ethics of the Fathers) 2:16, a collection of Jewish moral teachings.
It emphasizes the importance of making a contribution, even if the ultimate goal is larger than a single lifetime.
Core Principles
- Action Over Outcome: The value lies in the effort, persistence, and initiation of important work, rather than solely on reaching the finish line.
- Long-Term Vision: It encourages taking on monumental tasks—such as education, community building, or lasting change—that require generational effort.
- Purpose Beyond Self: It is a call to create lasting impact that transcends one’s own existence.
Related Concepts
- “If your life’s work can be accomplished in your lifetime, you’re not thinking big enough.” (Often attributed to Wes Jackson).
- “Don’t wait for things to get easier, simpler, better. Life will always be complicated and time will always be hard to find. Don’t waste time waiting for inspiration or the “right time.” Make time, begin, and inspiration will find you.” (H. Jackson Brown Jr.).
The quote serves as a reminder to overcome procrastination, perfectionism, or the fear that a task is “too big,” and instead focus on the value of beginning.
There is no question in my mind that maintaining progress toward equitable care that meets the highest goals of our healthcare aspirations seems like a lost cause to many healthcare professionals every time the president speaks about healthcare. It seems that every day we lose more ground toward the goal of better care for everyone. These dark times match the concept of VUCA, an acronym for “volatile, uncertain, complex, and ambiguous.”
I have used the concept of VUCA many times over the history of these notes, as I did in a letter dated September 8, 2020. I have never been quite sure whether I have defined it succinctly enough for all my readers to appreciate the beauty of the concept. I have hoped that some of my readers will be encouraged to work the benefits of the analysis into their understanding of the world and personal attempts at strategy formation.
If you click on VUCA above, you get a link that applies VUCA thinking to healthcare. It occurs to me that we are now in a global VUCA moment that will have a profound impact, with reverberations extending across the entire world for an unforeseeable, but probably longer, time than our severely compromised president can appreciate or navigate. So, I asked AI to help me be succinct and accurate about VUCA. What I got back from my request to have VUCA explained was close to what you might have read in my letter from September 2020.
VUCA is an acronym standing for Volatility, Uncertainty, Complexity, and Ambiguity, describing the chaotic, fast-changing, and unpredictable nature of the modern business environment. Originating from the U.S. Army War College in the late 1980s, it now serves as a framework for leaders to develop strategic foresight and adaptability to manage constant disruption.
Key Components of VUCA:
- Volatility (V): The speed, volume, and intensity of change occurring in an industry, such as rapid shifts in stock prices or consumer trends.
- Uncertainty (U):
The lack of predictability and inability to foresee events, making it difficult to plan for the future.
- Complexity (C): The web of interconnected factors influencing an organization, where cause-and-effect relationships are difficult to untangle, such as global supply chains.
- Ambiguity (A): The lack of clarity about how to interpret a situation; the “fuzziness” of reality where the “rules of the game” are unclear.
Navigating a VUCA World (VUCA Prime):
To combat these challenges, leadership experts suggest a “VUCA Prime” approach to turn challenges into opportunities:
- Vision to counter Volatility.
- Understanding to counter Uncertainty.
- Clarity to counter Complexity.
- Agility to counter Ambiguity.
VUCA is often used to describe the “new normal” in business, requiring companies to be more flexible, adaptable, and communicative.
The description above was articulated for a corporation, but also applies to nations. Unlike many VUCA moments, this VUCA moment for our nation, precipitated by a very unwise president who consults with no one but himself, precludes progress toward our core healthcare goals until the political landscape changes. The earliest out seems to be the midterm elections this November. On Wednesday, in an article entitled “When A Narcissist Goes To War,” the New York Times columnist Jamelle Bouie described the broader context of Mr. Trump’s senseless and impulsive acts that turned a world I would have described as in a state of “manageable VUCA” into out-of-control VUCA, with potentially unmanageable and catastrophic consequences and expense for much of the world. You can expect no attention to healthcare improvement coming from this very unstable administration. Bouie begins with a description of the problem and some background information, followed by questions:
If you can set aside both the unconstitutionality and the immorality of President Trump’s unprovoked war on Iran and focus on the operation itself, it is hard not to be bewildered by the utter lack of real planning, or even basic strategic thinking, that has gone into it.
Neither Trump nor his aides, according to recent reporting, planned for Iran to target shipping and close the Strait of Hormuz. They also do not seem to have planned for serious and sustained retaliation against America’s gulf state allies. They did not plan for an energy crisis and the potential disruption to the global economy, and they did not plan for America’s European allies to, by and large, reject their call for support.
To read about the administration’s decision-making process is to learn that it did not really plan for or expect much in the way of anything that now defines the war. This raises two obvious questions: What did they plan for? And what exactly did they expect to happen?
Boule never uses the term VUCA, but he is describing our VUCA moment and trying to work through the obvious volatility, uncertainty, complexity, and ambiguity of this moment that should have most reasonable people feeling quite anxious about the possibility of even more volatility, uncertainty, complexity, and ambiguity in the days and weeks ahead. We are metaphorically riding in a vehicle driven by a deranged man whose response to not knowing where he is and having forgotten where he was going is anxiety and confusion, which causes him to drive even faster and more recklessly. Ironically, it was our military in the late 80s that evolved the VUCA concept, explicitly to understand how to proceed in complex situations like the tensions with Iran while avoiding predictable disasters.
Bouie suggests that we are trapped in a cycle of failed initiatives launched to the mutual harm of many nations by this man, whose style is some combination of flawed transactional strategy learned during a shady real estate career and the tactics of a playground bully. He is a sociopathic narcissist for whom everyone is without value unless obsequiously loyal and flattering to him. He is never open to others’ opinions and becomes angry when opposed. Further along, Bouie writes:
What’s striking is how familiar this pattern feels. The administration did not expect the public to be repelled by DOGE. It did not expect outrage over the treatment of Kilmar Abrego Garcia. It did not expect Democrats to respond to threats of partisan gerrymandering with their own push to wring as many Democratic seats as possible out of so-called blue states. The administration certainly did not expect the mass mobilizations against the deployment of National Guard troops and the use of ICE and Customs and Border Protection as a roving paramilitary force. Minnesota in particular appears to have caught them entirely off guard — a tendency toward docility, it seems, is their base-line assumption about everyone they oppose.
Bouie has a key question:
Which raises another key question: Why can’t the White House see what others could easily predict?
He answers his own question:
Trump is famously indifferent to the concerns of those around him. He is a consummate narcissist, and he is, without question, the most solipsistic person ever to occupy the Oval Office. Over his decades on the public stage, we have seen little to no evidence that he believes in the existence of other minds.
If you rarely use the term solipsistic, and are a little unsure of its exact meaning, as I was, it means, according to Google:
… an extreme form of self-centeredness or a philosophical viewpoint where only one’s own mind or consciousness is sure to exist. It characterizes someone entirely focused on their own needs, feelings, and existence, often ignoring the reality or perspectives of others.
We are in trouble in foreign affairs, as in healthcare, because we are subjected to the whims of a man who totally lacks an understanding and appreciation of our past, no appreciation of our most critical current needs, and a lack of a viable vision of what could be a sustainable future direction for our country. We have the collective misfortune of being led by a man who claims he can ensure our future by following his gut instincts. He claims that he and he alone is capable of guiding us toward always “winning.”
Writing this week from his new home at The Atlantic, David Brooks outlines the personal characteristics of a leader who has the strength of character to lead us through difficult times by making better decisions. Brooks calls the optimal leaders “Trimmers.” His description places them between those who lead by “gut and vision” and those who emphasize data. When I read Brooks’ article, my first response was that a “Trimmer” was a leader who naturally understood how to manage the country’s affairs in a VUCA moment. He describes the characteristics of such a remarkable leader:
The Trimmer understands that reality is more complicated than any single person can comprehend, and therefore he insists that no decision be taken until there has been a collision of diverse views. He maintains trust and communication with the broadest possible range of stakeholders but refuses to be owned by any of them. He governs through cooperation and compromise, not through domination and fear. His greatness comes in the art of holding his nation together, not in the exercise of arbitrary power. He perceives that if a leader loses the affection of his people, he can no longer govern except by threat of violence.
He implies that Clinton, Bush II, Obama, and even Biden, considering all their flaws and misadventures, come closer to the type of leadership we need than the incumbent. All four possessed an appreciation of the history of our values, a desire to maintain and advance those values, and a commitment to building on the knowledge of past failures and successes, and were striving toward a vision of improvement. Trump demonstrates only a memory of past grievances, a desire to bend the moment primarily to his personal benefit, and his vision of the future is mostly about securing his own grandiosity in perpetuity.
Well, I have done it. I have failed my personal goal of not venting my continuing concerns about the future of the nation because of our current, deeply flawed, and ignorant leadership. My original intent had been to continue reflecting on the very worrisome process of the corporatization of American healthcare, as presented in the latest installment of the ongoing series published over the last eight months in the New England Journal of Medicine.
If you have not been aware of the series, click on the link to see an overview of all nine articles plus the “kickoff” editorial. The most recent article, “Private Equity’s Transformation of American Medicine — Implications for Health Equity was written by Ruqaiijah Yearby, J.D., M.P.H., and Marcella Alsan, M.D., Ph.D., M.P.H. I highly recommend reading the whole series, but this may be the most important article in it because ownership and finance drive much of what can and cannot be true in the future. The problems for patient experience, cost, quality, professional satisfaction, and access created by private equity ownership are especially severe in rural, small-town, and even inner-city America, where there is often only one hospital available by easy transportation.
I have witnessed the damage that can occur when private equity ownership is abusive. I am referring to the well-documented disaster of Steward Health Care as chronicled in the Boston Globe. It began when the system of Catholic hospitals in Massachusetts, which served several small towns and disadvantaged neighborhoods, mostly in Eastern Massachusetts, was purchased by Cerebrus Capital Management, a private equity fund. To this day, Cerberus remains a diversified, profitable organization with over 65 billion in resources, but the hospitals it once owned through Steward Health Care are mostly gone, plundered for $800 million in profits.
The article begins by describing the current state of healthcare’s private equity problem:
In recent years, private equity (PE) firms have gained increasing control of U.S. health care infrastructure. Along with other potential consequences, this growth threatens to undermine progress in health equity, defined by the Centers for Disease Control and Prevention as “the state in which everyone has a fair and just opportunity to attain their highest level of health.” PE investors often promise to eliminate inefficiencies in fragmented U.S. health care markets, raise capital for starved systems, and exploit economics of scale and scope. Yet mounting evidence suggests that PE investment in health care has generally resulted in curtailed access to affordable, high-quality care for rural populations, older people, low-income communities, and members of marginalized racial and ethnic groups. Absent robust regulation and enforcement, the lucrative accounting and operational practices used by PE firms will most likely continue to proliferate, further transforming U.S. health care in ways that harm patients and exasperate many clinicians.
The problem is not new, but it is growing:
In the first two decades of the 21st century, the U.S. government made efforts to support progress in health equity by addressing economic and social barriers to health care. During the same period, however, corporatization of the financing and provision of U.S. health care increased rapidly. PE investments in health care, an extreme example of this trend, increased by a factor of 20 (from $5 billion to $100 billion) between 2000 and 2018. Facing less regulatory oversight than publicly traded corporations, PE firms raise capital from high-net-worth individuals and institutional investors, often using leverage to acquire “portfolio companies,” with the goal of generating higher returns than those that could be generated in the stock market. Fund managers do not face incentives to improve patient outcomes or health equity.
It has been a growing patch of weeds, aided by minimal, if any, regulation and by external realities that served as fertilizer, while most of us paid little attention to the growing threat. I was never comfortable with Steward Health’s presence in Massachusetts and resisted multiple pressures, including significant potential “sweeteners,” to participate in their process by using their hospitals and forming affiliations that would give us significant billing advantages for services offered in conjunction with a hospital. If something is too good to be true, or ethical, even if marginally legal, it probably isn’t. The authors provide more insights about what has happened and some cautionary advice about what could happen.
The rapid growth of PE in health care has been fueled by regulatory failures as well as monetary and fiscal policies. The number of health care systems in financial distress increased after the 2008 Great Recession, in part because of reductions in employer-sponsored health insurance coverage and reduced access to credit. Regulations implementing the 2010 Affordable Care Act were also associated with increased compliance costs. Near-zero interest rates created attractive opportunities for debt financing, while fiscal policies increased demand for health care services, enhancing the perception that the sector was “recession-proof” and an ideal target for investment. Health care systems are again facing strain because of the One Big Beautiful Bill Act’s $1 trillion in Medicaid cuts over the next 10 years, which is creating favorable conditions for buyouts and PE expansion…
The authors point out that the objectives of private equity in healthcare are counter to the objectives of healthcare equity, increased quality, and lower healthcare costs, especially in rural and lower-income populations:
Increasing access to health care, boosting affordability, and improving quality of care for rural populations, older people, low-income communities, and members of marginalized racial and ethnic groups are key goals for achieving health equity. But many of the accounting and operational practices that are the hallmarks of PE investment run counter to these aims. Accumulating evidence presented in scholarly articles and government reports indicates that the proliferation of PE in health care has reduced access to care, increased costs, and compromised quality of care.
A big “ugh” to that reality, but what should we have expected? If there is anything worse than fee-for-service practice, it must be fee-for-service practice in a healthcare organization owned and operated by a private equity investor.
In terms of accounting practices, PE firms often extract value using tactics that obscure a health care system’s profitability while maximizing financial returns for the firm and its investors. These tactics include sale–leaseback transactions, in which facilities are sold to entities affiliated with a firm and then leased back to the seller at inflated rates. Another strategy is dividend recapitalization, whereby fund managers take on additional debt to pay partners instead of putting money toward staff, critical maintenance, or supplies.
One of their tricks is to sell the assets to a subsidiary they own and then “rent” them back at an unsustainable cost, putting the system into bankruptcy after the assets have been monetized or fleeced to the disadvantage of those it serves or employs. The authors present examples of questionable practices that led to the closure of hospitals in rural communities and to damage to care delivery in those that have survived. The situation with Cerebrus and Steward Health played out along similar lines. In summary:
In terms of operational restructuring, PE investors achieve cost savings by laying off workers, reducing salaries and the number of full-time employees, assigning services previously provided by physicians to other health care professionals, and cutting critical but low-profit services, such as obstetrics. Hospitals owned by PE firms often take on large amounts of debt, creating pressure to cut costs quickly, which frequently undermines care quality and access. To increase revenues, PE-backed groups use upcoding and exploit out-of-network billing loopholes…hospital acquisitions by PE firms have been associated with increases in emergency department deaths and deaths after emergency surgeries.
After describing the horrors of the current reality and essentially accepting the fact that there is no way to make them go away, the authors offer 6 suggestions, which I will briefly present.
- …states could enact laws that explicitly forbid and levy substantial penalties for engaging in the most egregious and harmful accounting and operational restructuring practices used by firms, such as making cuts to critical staff and services, entering into sale–leaseback agreements, inflating costs, cream skimming, and upcoding.
- … to ensure that access to care is not compromised and health disparities are not exacerbated after an acquisition by a PE firm, states could monitor health care entities after a transaction is approved to assess distribution of health care resources…
- …deteriorating conditions or violations of quality-of-care standards should result in swift legal action by states.
- …to ensure that states can recoup taxpayer funds provided to PE firms directly or indirectly by means of subsidies and reimbursements, laws could require that states be notified within 30 days after a bankruptcy filing by a PE-funded health care entity, be made a secured creditor in the bankruptcy proceedings, and be granted land rights to all public health infrastructure in the state owned by the firm or related parties.
- … if health care transaction agreements are violated, states should use the federal False Claims Act and analogous state laws, which prohibit making fraudulent statements to the government, to seek damages.
- …like physicians, PE fund managers and executives could be made personally liable for practices that result in harm to patients.
I expect that in time, some of these possibilities will be tried. Until then, many of our most vulnerable citizens will suffer. The authors end by saying:
…Evidence has shown that excessively high returns often come at the expense of rural populations, older people, low-income communities, and members of marginalized racial and ethnic groups — populations that already have trouble affording care and navigating the health care system. States can mitigate these problems by monitoring the effects of PE’s operational and accounting practices and punishing entities that compromise access to affordable, high-quality care.
President Trump didn’t create the damage being done by the piracy of private equity investment in healthcare delivery, but I see little or no hope that he could understand the problem, have sympathy with the victims of private equity, or see the situation as something that deserved his attention, except perhaps as an investor. It is my hope that some of the “blue states” he despises will see the problem of private equity investment in healthcare as a subject they can address during these VUCA times.
They Are Playing Baseball, So Sooner or Later, Spring Will Come.
I know that spring is on the way because they are playing baseball. It just hasn’t quite gotten to where I am yet. We have had light snow two or three times in the last week, but we also topped 60 yesterday. Today we woke up to another dusting of snow and the expectation that the temperature won’t get out of the low 30s. Spring has to make several false starts before it can take hold.
It seems like the start of baseball season keeps getting earlier. Even though I still have snow in my yard, and the lake is still frozen, the season has started. I am all set with my Fantasy Baseball team. But I don’t know what I’m doing. I am a first timer, bullied into competing in a league with two of my sons, my granddaughter, her boyfriend, and my former brother-in-law, the uncle of my sons. I think I am bound for last place in the league since all the other players are more experienced, but maybe over time I will figure out a winning strategy.
Today’s header pictures Mount Sunapee, where they are still skiing as baseball starts. I took the picture with my iPhone from a clear spot on the other side of the lake from where I live. It is one of my favorite spots for a great view and is about 1.5 miles into my daily walk. The perspectives are distorted because the picture was taken at the maximum zoom on my phone. From where I was standing, it is over a half mile directly across the frozen lake to the shore under the mountain, and from that shore to the mountain is at least ten miles.
What always works for me as I try to manage my own VUCA moments, no matter the season, is my daily walk. The walks get easier, and I go faster as the weather warms. The best time of the year will be here soon. Get out and enjoy a walk this weekend, whatever the weather is. You can always make a bad day better with a brisk walk.
Be well,
Gene
