A crown on a four-year-old's tooth? That's just one of the consequences of private equity's leap into the dentist's chair.
That's because dental management companies frequently overtreat their patients when backed by private equity, often to those patients' detriment, according to a Bloomberg report.
The problem has become serious enough that the U.S. Senate and six state governments have begun investigating allegations of both inferior and over-treatment by dental management companies, such as unnecessary braces and crowns on baby teeth, according to Bloomberg.
Private equity firms tend to be great at turning a profit for their investors. But that can come at the expense of customers, as exemplified here, or employees; private equity firms, after buying companies, frequently lay off workers in an attempt to boost bottom lines.
Take, for example, Bain Capital, the private equity firm co-founded by presidential candidate Mitt Romney, which laid off many workers, and even watched some of the companies that it sold for a profit later go bust, according to The New York Times and Wall Street Journal.
Private equity's reach isn't limited to dentistry either. It's been criticized as an industry that has taken advantage of prospective college students in the past. When private equity investors, including Goldman Sachs, bought Education Management Corp. in 2006, the company became relentlessly focused on recruiting as many students as possible, regardless of whether they were able to pay off their resulting student loan debts or find a job after college, according to a report from The Huffington Post.
In this case, over-treatment of dental patients would be just one unintended consequence of basing a health care system on a profit motive. Large hospitals, for example, are pushing some patients out before they're ready because of pressure to meet financial obligations, according to two studies by Bruce Golden, a professor at University of Maryland's business school.
This is partly because hospitals' revenue-driven model pushes surgeons to perform as many surgeries as possible, according to Golden. But that extra revenue doesn't appear to be saving much money for the Americans themselves. The U.S. spent $7,960 per capita on health care in 2009, almost three times as much as Japan, according to a recent study.
"Health care quality in the U.S. varies and is not notably superior to the far less expensive systems in the other study countries," that report said. It went on to say that rising health care costs are "more likely due to higher prices" than "higher income, an older population or greater supply or utilization of hospitals and doctors."
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