Mamdani’s appointment of Lina Khan a warning to private equity, experts say | New York
New York Mayor-elect Zohran Mamdani’s selection of former Federal Trade Commission chief Lina Khan for his transition team serves as a warning to private equity firms that are driving up rents in the state and monopolizing local healthcare industries, experts say.
Across the United States, private capital has increasingly monopolized industries through the practice of “aggregation,” buying up many small local firms and turning them into one larger firm, giving them the power to simultaneously raise prices and lower quality.
This app particularly problematic in healthcare sectors where private equity participation is associated with worse health outcomes, including death.
Khan, who served as FTC chairman under Biden’s presidency, was among the top aggressively pursuing this practice Nationally, Martin Kenney, author and distinguished professor in the Department of Human Ecology at the University of California, Davis, said: Private Capital and the Collapse of the Local.
While Khan has relatively little authority over the transition team for a city government, where he will advise on how to run a municipal cabinet, Kenney said his appointment is a warning to New York private equity firms and, more positively, a “signal” that young Democrats like Mamdani are taking a new approach.
“Kamala Harris should have campaigned on some kind of populism,” Kenney said, noting that Harris’ message should have been: “We’re going to break up monopolies, you know, we’re going to go after Wall Street. There’s a lot of Americans out there who hate Wall Street, you know.”
Khan will now be in Wall Street’s backyard.
A more populist campaign might have emphasized Khan’s mission to scrutinize private equity “roundups” and big tech acquisitions. Meta’s acquisition of WhatsApp and Instagram During his time at the FTC, Khan filed numerous lawsuits against him. private equity and big tech monopolies. He didn’t win them all, but he still had an impact.
“He started doing investigations at the FTC about these types of rollups. So for private equity, that meant they couldn’t just go in and buy these various transactions.” [medical] “They are applications,” he said.
His work also influenced real estate. “Mobile home parks operated by a lot of independent owners, private capital would come into an area and buy up all the mobile home parks, then raise all the rents.” Just knowing that they could be scrutinized made companies more cautious. “Once you start investigating the FTC, you become more careful,” Kenney said.
In New York City, private equity firms have been known to use aggressive tactics to get residents of rent-controlled buildings to leave so they can raise rents.
“They made it hell for the tenants. They played all kinds of crappy little tricks on them and eventually they moved out,” Kenney said.
Real estate private equity firm Sugar Hill Capital Partners is charged causes buildings to become uninhabitable – through problems like rat infestations – so that tenants in rent-controlled units can leave and raise rents. Mamdani’s campaign focused specifically on making rent more affordable; Kenney thinks Khan’s appointment is geared more toward private-equity landlords.
When it comes to private equity-owned healthcare companies, “there’s been a heavy focus on solarizing private equity firms buying a bunch of smaller practices and combining them into a larger entity,” said Loren Adler, associate director and researcher at the Brookings Institution’s Center for Health Policy.
For example, Khan filed a complaint against US Anesthesia Partners and its private equity owners for trying to monopolize Texas’ anesthesia industry (though he ultimately lost).
Adler agreed with Kenney that Khan’s appointment was largely symbolic, given that “municipal power only gets so strong.” But there are a few ways Mamdani is making things difficult for private equity-backed healthcare companies in New York.
While the mayor does not have the authority to stop purchases, “it is pretty easy to force transparency at the municipal level.”
One reason private capital has been able to avoid monopolizing healthcare industries is that they generally don’t have to disclose purchases below a certain threshold, so ownership of a clinic can change without consumers knowing. This is something Khan did He worked for change in the Biden administration.
“There’s a lot of facility approvals, land use permits and things like that going on at the municipal level. So there is some power to mandate that type of disclosure,” Adler explained.
Mamdani could also create more competition for private equity firms by strengthening New York City’s already strong public hospital system and resisting contracts with private equity firms for things like ambulance services and medical devices.
“New York also already has one of the most robust public hospital systems. It’s already a good starting point,” Adler said.
