Few corners of daily living escape it. Hospitals, daycare centers, workplace tools, support hotlines, the quiet hum of just-enough-ness. Not broken, precisely, yet nowhere does anything strive to feel right anymore. Functioning? Yes. But stretched thin, slowed down, hemmed in by rules. What once flowed now stutters. Getting through often means spending not just money, but energy, minutes, and tolerance. Smoothness has been sanded off, leaving something duller behind.
It’s common to hear fingers pointed at vague forces, like late-stage capitalism, say, or tech advances, perhaps even a supposed cultural slackness. Yet one sharper cause tends to slip past notice: relentless refinement absent any built-in pause signal. The focus shifts toward boosting something trackable, profit margins, asset usage, what some call efficiency, maybe earnings before interest and taxes, and the push keeps going. This goes on until the whole setup grows thin-skinned, prone to cracking. Such brittleness rarely shows in rows of data; it hides, then surfaces suddenly when things fall apart.
Few sectors shape momentum like private equity does, yet the force exists beyond its reach. What PE does is systematize that motion, turn instinct into repeatable mechanics.
Enshittification, But in Real Life
In tech circles, a quirky term has gained traction: “enshittification.” Coined into wider awareness by Cory Doctorow, it sketches how digital spaces rot from within once profit starts outweighing people. Not quite slang, not quite academic, the word sticks because it feels true. Over time, platforms tilt, their care shifting from visitors to revenue streams. What began as useful tools slowly turn hollow, cluttered with nudges and paywalls. People started using the label beyond jokes, as it named something they’d sensed but never voiced.
Here’s what matters for a private equity blog: enshittification goes beyond tech. It ties back to how money is stacked. Once the aim shifts to pulling value (higher fees per person, lower expenses per service, shrinking staff per client), experience starts bleeding unless someone pays extra or rules step in.
This is precisely the kind of setting where private equity finds its rhythm, scattered industries, steady customer needs, control built by merging pieces together, while streamlining countless small operations behind the scenes
A sense of constant pressure often ties back to a principle from organizational studies: slack. This refers to resources beyond the essentials needed just to function. When those buffers shrink, everything seems more strained.
Extra staff, spare time, and added training, these are forms of slack. So are stockpiles, backup systems, and unused bandwidth. What ties them together isn’t efficiency but resilience. They act like cushions when things go off track. Unexpected delays? Sudden shifts? Judgment calls under pressure? Slack helps handle it all without collapsing routines. A study on organizational behavior puts it plainly: companies build slack by holding onto assets beyond bare-minimum costs. That surplus becomes a shield against instability. At the same time, it opens room to test new approaches. The catch? Its absence often slips under the radar at first. The effect grows quietly until there’s nothing left to give. At first glance, things seem better: staff stay busy, tasks move more quickly, timing feels precise. Yet once reality steps in, unexpected absences, surges in need, a key failure, an intricate case, a seasonal shift in student numbers, and the so-called smooth operation begin to strain. What looked like progress reveals its thin margins.
Far from abstract, this plays out plainly beyond private equity. Lean thinking, when fixated on metrics, risks breeding brittleness. As seen in Wharton’s observations on just-in-time models, where shrinking stock turns into an overriding target, companies start resembling shock-absorbing failures, caught off guard by disruptions they never built resilience against.
When slack acts like a cushion, what unfolds if the way things are run values stripping that away those values?
Optimization Without a Stopping Rule (How KPIs Eat the Product)
A rule emerges once measurements start guiding rewards or penalties: that’s Goodhart’s Law. It states simply that once a metric is chased, its value as an indicator fades. What begins as observation turns into manipulation. The focus shifts from understanding to gaming. Numbers get twisted when tied too tightly to outcomes.
When sufficiency fades, questions like customer satisfaction or patient safety slip away. Little thought goes into whether children are growing well. Progress in the product? Rarely comes up anymore. Concern shifts elsewhere, quietly and subtly. Inquiry dims where it once sparked.
Questions come first. Is the margin met? Costs per item – were they lowered? What about average revenue per user? Has that gone up? Fewer labor hours are used now? That matters too.
Picture a basic framework: quality lives across many layers, tough to pin down. Extraction, though, fits neatly into one box – simple to track. When paychecks, loan terms, and stories about selling off pieces hinge on numbers, focus slides there. Not by design, but by quiet habit. What gets counted starts counting more. The unmeasured fades, even if it matters.
Not every performance metric comes from private equity. Still, when PE takes charge, targets tend to carry heavier consequences, and financing terms turn small shortfalls into high costs.
Why Private Equity Is a Powerful “Slack-Removal” Machine
What drives private equity, particularly in rollup strategies, isn’t automatically harmful. Beneath it lies a framework of motivations shaped by specific rewards:
- Debt pressure: Leverage creates fixed obligations. Interest doesn’t care if the quarter was messy.
- Time pressure: Funds are judged on realized returns. The clock is always ticking toward a liquidity event.
- Comparable metrics: “Professionalization” often means standardization (common systems, centralized procurement, staffing models, and target) that look great in a deck.
- Extraction pathways: Management fees, recap dividends, sale-leasebacks, and pricing changes can create returns even if the underlying experience worsens over time.
Frequent buyouts now draw sharper scrutiny from oversight bodies. A shared investigation by the FTC and DOJ describes market consolidation through rollups as potentially damaging, pointing to effects on shoppers, employees, even progress. Notably candid, the head of the FTC has described such deals as leading to steeper costs, weaker offerings.
What stands here isn’t rooted in ethics. Instead, it emerges from design, about how merging firms, amplifying debt, chasing narrow metrics, and facing timed exits align to quietly erode resilience. Predictability comes not from intent, but configuration.
What It Looks Like on the Ground (When “Enough” Becomes the Strategy)
1) Health care: measurable savings, unmeasurable harm
Measured results emerge most clearly within health care, and large-scale analysis makes that possible.
A analysis published in JAMA tracked hospitals taken over by private equity firms- revealing a notable 25.4% uptick in avoidable complications like falls and specific infections when measured against similar institutions not acquired. In parallel, another paper in the same journal reported dips in patient satisfaction ratings following ownership shifts, with performance eroding more sharply as years passed; evidence hinting at how small behind-the-scenes adjustments may accumulate into deeper setbacks. While individual decisions might seem minor, their combined effect appears measurable in outcomes.
In nursing facilities, a study published in JAMA Health Forum revealed links between acquiring physical restraints and both elevated expenses and more frequent avoidable trips to emergency departments or hospitals, outcomes seen across multiple care settings. Though intended for safety, these measures sometimes led to complications demanding acute attention. Patterns emerged even after adjusting for baseline health differences among residents.
A piece in the Stanford Law Review pulls together findings across studies pointing to troubling patterns. Private equity ownership in health care appears tied to higher costs, lower quality, fewer staff. Gains in care standards? Hardly any proof shows up. The trend stands out clearly when you follow the data.
A glimpse into healthcare reveals what “enough” losing looks like: functionality preserved, yet stripped of the qualities that give care its depth. The machinery ticks on, even as empathy thins and attention frays. What remains works just well enough to mask what’s missing.
2) Hospice: when reimbursement meets extraction logic
What makes hospice such a weighty case lies in how effortlessly motives can shift. Long-term patient enrollment, once seen as a medical necessity, risks tilting toward financial gain when reimbursement structures come into play. Reports have pointed out subtle but steady moves to position Medicare payouts less as support and more as revenue streams. Oversight hasn’t stayed silent. Over the years, legal actions have revealed recurring patterns in which billing practices blur into questionable territory.
Whistleblowers often step in where audits hesitate, turning compliance concerns into court filings.
Should every provider claim moral high ground, the pull of incentives still tilts the same way, with steady income, tangled supervision, results that resist quick judgment. In such conditions, adequacy quietly drifts toward mere acceptability.
3) Child care: recurring demand, fragile staffing, and consolidation interest
A service built on presence can’t be streamlined like machinery. Efficiency gains here hit hard limits. When the work itself is people paying attention, cutting fat often means cutting care.
A report by the Congressional Research Service identifies private equity firms operating within major for-profit childcare providers, highlighting that the actual impact of such investments remains unclear, due in no small part to spotty disclosure and inconsistent reporting. This lack of clarity isn’t incidental; it shapes conditions where caregivers and parents absorb pressure behind seemingly orderly balance sheets, especially when evaluating service quality feels out of reach.
4) Steward Health: when financial engineering becomes the business model
A story unfolding around Steward Health Care now serves as an informal warning, highlighting what emerges when profit-driven models erode institutional durability. Recent reporting by Reuters outlined the chain’s financial collapse alongside shuttered medical centers, peeling back layers of a strained infrastructure. Meanwhile, scrutiny from Harvard’s health policy analysts turned attention toward how property deals, structured as sale-leasebacks, helped shape its downward path. The pattern wasn’t sudden; signals scattered well before the fall.
A single thread can reveal the weave. When finances steer operations, elements like upkeep, reserve staff, dependable suppliers, or equipment upgrades shift from essential to optional, quietly, then all at once.
The Real Thesis: Financial Logic Replacing Human Judgment
“Enough” is a human judgment.
It’s the moment a manager says: “We could cut another person from the schedule, but we shouldn’t.”
Or: “We could raise prices again, but we’re already straining trust.”
Or: “We could turn support into a ticket maze, but we’ll pay for it in churn and reputation.”
Optimization systems hate that kind of judgment because it’s messy and not easily legible to dashboards. Yet such choices are precisely what safeguard standards when people deliver intricate care. Should private equity control shape a company solely around meeting numbers, nuance often vanishes under labels like “inefficiency.” Flexibility loses value, dismissed as unused capacity. What emerges keeps moving, just barely, yet somehow drains the sense of ease once present. Systems hum tighter with each adjustment, calibrated so precisely they begin to grate.
Can PE Scale Without Sacrificing Quality?
Yes, sometimes. Yet conditions apply, ones frequently at odds with prevailing motivations:
- Guardrails on staffing and training (especially in care industries) that can’t be “optimized away.”
- Longer time horizons and genuine reinvestment rather than extraction-first moves.
- Transparency and measurement of outcomes that matter, not just outputs that look good (the Goodhart’s Law problem)
- Competition that limits pricing power, because monopoly-like rollups make degradation easier to monetize.
Fundamentally, private equity functions adequately only under pressure like regulatory frameworks, binding agreements, actual market rivalry, or the threat of damaged standing. When these forces are present, a sufficient portion tends to remain intact.
Leave a Reply