You’re making the assumption (from what I understand) that most of the inefficiency is in the administration side. I’m sure there is, but it’s also woefully complicated with insurance, laws, parties who may or may not be financially and cognitively sound, etc.
But let’s say you can make the administration side way more efficient. How much did that save? 20%? That’s not the kinds of returns being sought. So where does the 2x, 3x, or more returns expected come from? Cutting services.
I think you hit the nail on the head when you mention the complexities of the business being the cause for the inefficiencies. Private Equity has figured out that they can buy into businesses with high legal, regulatory, and 'friction'-related barriers to entries, and squeeze the clients (either by increasing prices or decreasing service level/quality). The solution would be to make entry into these businesses easier by reducing legal and regulatory barriers, but that seems vanishingly unlikely.
Forget efficiency. I want someone to pick up my phone call and pay my bill online. These guys leave a ton of money on the table. They can also better compete when the other guys are clowns
But let’s say you can make the administration side way more efficient. How much did that save? 20%? That’s not the kinds of returns being sought. So where does the 2x, 3x, or more returns expected come from? Cutting services.