Private Capital Groups Buying Up Nursing Homes, Reducing Care

The New York Times has a long expose today on how private capital groups are buying up the large chains of nursing home and cutting staff and care. If you have a loved one in a nursing, you should read it. It's very frightenting. First, what the Times did:

The Times examined more than 1,200 nursing homes purchased by large private investment groups since 2000, and more than 14,000 other homes. The analysis compared investor-owned homes against national averages in multiple categories, including complaints received by regulators, health and safety violations cited by regulators, fines levied by state and federal authorities, the performance of homes as reported in a national database known as the Minimum Data Set Repository and the performance of homes as reported in the Online Survey, Certification and Reporting database.

What it found:

As such investors have acquired nursing homes, they have often reduced costs, increased profits and quickly resold facilities for significant gains. But by many regulatory benchmarks, residents at those nursing homes are worse off, on average, than they were under previous owners, according to an analysis by The New York Times of data collected by government agencies from 2000 to 2006.


....The typical nursing home acquired by a large investment company before 2006 scored worse than national rates in 12 of 14 indicators that regulators use to track ailments of long-term residents. Those ailments include bedsores and easily preventable infections, as well as the need to be restrained. Before they were acquired by private investors, many of those homes scored at or above national averages in similar measurements.

The Times found that after the acquisitions, the nursing homes cut expenses and staff, "sometimes below minimum legal requirements."

Regulators say residents at these homes have suffered. At facilities owned by private investment firms, residents on average have fared more poorly than occupants of other homes in common problems like depression, loss of mobility and loss of ability to dress and bathe themselves, according to data collected by the Centers for Medicare and Medicaid Services.

Because of the way the deals are structured, it's difficult to determine the actual investors and to sue, and almost impossible to win a suit when brought.

private investment companies have made it very difficult for plaintiffs to succeed in court and for regulators to levy chainwide fines by creating complex corporate structures that obscure who controls their nursing homes.

By contrast, publicly owned nursing home chains are essentially required to disclose who controls their facilities in securities filings and other regulatory documents.

The latest buyout is the Carlyle Group which is paying $6.3 billion for Manor Care. The deal is expected to close this quarter. The FTC has already appoved it.

On Wednesday, the the Service Employees International Union held a protest of Carlyle's takeover of Manor Care.

The SEIU, which wants to organize Manor Care's 60,000 health-care workers, expressed concern that the $6.3 billion buyout could lead to layoffs and cuts in benefits for employees, and to a reduction in the quality of care for patients. The union has also begun an initiative to draw attention to what it calls the growing concentration of wealth in a few private-equity companies such as Carlyle.

Manor Care is huge.

Manor Care, which traces its roots to a single nursing home in Wheaton 48 years ago, has grown into one of the largest providers of long-term care and services in the country, with more than 500 facilities under the Heartland, ManorCare Health Services and Arden Courts brands.

It employs 60,000 workers.

On the subject of "the growing concentration of wealth in a few private-equity companies such as Carlyle", Carlyle announced this week it had sold a 7.5% stake in its company to an investment company named Mubadala Development Company in Abu Dhabi, the capital of the United Arab Emirates.

Those protesting the buy-out are calling on Carlyle to:

1. Ensure that its nursing homes are in compliance with federal minimum resident care regulations at all times.

2. Ensure that its nursing homes are staffed at levels recommended by the Federal Government.

3. Disclose the impact of its Manor Care buyout to the nursing home residents, workers and taxpayers in each state.

4. Structure its buyout so that Manor Care staff has a role in the reorganization and benefit from its outcome.

5. Create a Quality Care Fund and a new advisory committee comprised of Manor Care staff, resident advocacy groups and other stakeholders to improve patient care in all Manor Care homes.

Why am I writing about this? Because the care of the elderly is a huge social justice issue. Elder abuse is a crime. It hits particularly close to home for me because as I've mentioned a few times on TalkLeft, the TL mom resides in a "skilled nursing facility." It happens to be a Manor Care facility.

So, I'll be following this and future articles on changing conditions at nursing homes around the country following buyouts by private equity companies, and in particular, the Carlyle takeover of Manor Care.

I also want to know what provisions the Democratic candidates are making for the elderly in their new health care plans.

Nursing homes costs are exhorbitant ($6,000 a month and more is common for room and board) and Medicare doesn't cover it except for 100 days following release from a hospital. While private medical insurance helps with the associated costs (prescriptions, doctor visits, etc.) it doesn't pay for the room and board.

As boomers age, the number of Americans needing assisted living and nursing home care is going to exponentially increase.

These capital groups buy the nursing homes for one reason: profit. Who has the authority to investigate and hold them accountable if they slide on care? Stay tuned.

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  • Display: Sort:
    paul krugman (5.00 / 1) (#13)
    by cpinva on Mon Sep 24, 2007 at 03:19:13 AM EST
    has basically addressed the entire issue of health care in this country, with his analysis of the WHO report. it shows the US at (i believe) 37th, just above cuba, in terms of quality, cost and availability of health care to the entire country's population. hey, we're # 37!

    if hillary clinton would stand up to the "that's socialism (and money out of my pocket))crowd, and note that britain spends 40% of what we do, with better overall care, she might be able to get people's attention. i think she's still scarred from her earlier experience, unfortunately.

    as it is, "investors & health care" most definitely qualifies as an oxymoron, or maybe just a moron. you make the call.

    I've seen it happen (none / 0) (#1)
    by cmpnwtr on Sun Sep 23, 2007 at 02:11:18 PM EST
    This is not a new trend, but a growing one. I recently retired from a job which involved mental health consulting with nursing homes. I saw again and again the deterioration in quality of care and the decline in staff morale and tenure when these money grubbers take over and squeeze these places from what already is very low profit. Is the Fed. agency that oversees nursing home, doing anything about it? Not on your life. Is W going to do anything to protect powerless Medicaid frail elderly so he can deprive his father and Carlyle of more income? I don't think so. And remember, about 75% of all nursing home residents are paid for with Medicaid. So the Feds should have a lot to say about this.

    for the uninitiated (none / 0) (#2)
    by ksh on Sun Sep 23, 2007 at 03:09:00 PM EST
    Is Medicaid the supplemental to Medicare in these instances?  And are most elderly entitled to Medicare and Medicaid?  

    Medicaid vs. Medicare (none / 0) (#4)
    by Jeralyn on Sun Sep 23, 2007 at 04:10:56 PM EST
    Medicaid is only for the very poor. It's different than Medicare which is available to everyone.  And many private nursing homes won't take Medicaid patients.

    Medicaid- nursing home coverage for middle class (none / 0) (#7)
    by cmpnwtr on Sun Sep 23, 2007 at 04:50:07 PM EST
    Your statement "Medicaid is only for the very poor" is misleading. The 70 plus % of nursing home residents who are covered by Medicaid mostly are middle class people. They may have substantial retirement income. They qualify for Medicaid because their resources can no longer pay for the very expensive cost of long term intermediate nursing care. How many middle class people can afford $4-6 thousand per month, and for how long? So these middle class folk turn over all their retirement income to the state govt. and they qualify for Medicaid coverage, and they get $25 a month for personal expenses. That is the fate for use middle class folk if we should end up requiring long term care for an extended period of time. That's why Medicaid coverage in nursing homes is not an issue of the "poor." It is a middle class issue that effects all but the very affluent.

    put another way (none / 0) (#9)
    by Jeralyn on Sun Sep 23, 2007 at 06:01:06 PM EST
    You also can't own assets worth anything to speak of and qualify for Medicaid. If you give them your retirement income and have no assets, aren't you then in fact "poor?"

    So I don't think it's misleading. A person with a modest income and a house can't qualify, until after getting rid of both.


    Medicaid is for us all. (none / 0) (#10)
    by cmpnwtr on Sun Sep 23, 2007 at 06:33:41 PM EST
    It is misleading in this sense, a very large number of nursing home residents, at the time they developed the need for long term care had substantial incomes and assets. Their disability caused them to have a need for care where the cost of care outweighed their income and assets. They then became medicaid recipients. When you say it is "only" for the very poor, then most of us disqualify ourselves. The fact is, it is a fate that may await many, if not most us. The right wing has been chipping away at Medicaid funding for nursing care. AARP has correctly been resisting this and pointing out that this affects potentially most Americans, because so many of are going to end up on Medicaid and in nursing care of one sort or another. So it is important to identify this as an issue that potentially impacts most Americans and income levels, not just "the very poor." All of us are just an accident or a diagnosis away from it.
    A case in point, a woman in her 50s,  a divorced mother with adult children, has worked as a nurse most of her adult life with a fairly good professional income. She hasn't saved much, being a single parent provider. She develops Multiple Sclerosis and becomes disabled and not able to work. She is non ambulatory and requires help with all her activities of daily living,  bathing, washing, toileting, transfers, etc.  Like any number of Americans she is a few paychecks from the streets. She requires 24 hour care and long term care for this degenerative condition. So she turns over her few assets and she is now a Medicaid recipient. Yes, she has become "very poor" over night. But otherwise she is like a lot of middle income Americans. And her lot is not different from many if not most Americans. (This is an actual case, by the way.)
    In this case I wasn't trying to split hairs or be combative, but to make a point so that readers understand that Medicaid is a program that helps a large sector of middle and lower income Americans. And we all need to protect it for others as well as for ourselves.  Because we may be a recipient one day. If you think Medicare is going to take care of your nursing care when you get older, think again.

    Where we differ (none / 0) (#12)
    by Jeralyn on Mon Sep 24, 2007 at 12:39:35 AM EST
    I don't disagree with you on the importance of Medicaid. In fact, I'm complaining that it's not available to enough people.

    If you think you can get Medicaid to pay for your nursing home just by telling them you'll go broke otherwise, that's just wrong. You basically have to be indigent before you are eligible for Medicaid. It's not enough that it will make your broke in the future.

    They may do this by getting you to sign over your house, income or assets, but the point is, once you've done that, you're poor and have nothing left for your kids or your spouse. For the middle class, or almost anyone over the poverty line, Medicaid isn't available while you own any kind of substantial assets. Why should people have to lose everything they've worked their adult lives for just to get medical care at the end of life?

    You also can't wait until you're sick to transfer your assets to your kids so you qualify. You have to plan early for this. If you don't get your assets out of your name more than three or five years before you become ill (I forget which), there's no Medicaid for you.

    I've said twice now Medicare doesn't cover room and board at nursing homes...it will cover the first 100 or so days when you leave a hospital to go to rehab or a nursing home and then you are on your own, if you don't qualify for Medicaid.  Medicare will kick in again during your residency at a nursing home only if you get sick and have to go to the hospital and are kept at the hospital for 3 or 5 days (I forget which.) Then Medicare kicks in again, but only up to that same 100 day or so limit, and in my experience, they are less apt to go the full period for returns from subsequent hospitalizations. Medicare also pays for drugs and some extended therapy under Part B, I think it's called.

    I'm not a medicare/medicaid specialist or an elder care lawyer. But I have been dealing with these issues and examining the bills for the past four years.  As have my friends with elderly parents. We talk to experts and compare notes all the time. Even with medicare, secondary insurance and long term care insurance, the cost of a nursing home stay is way beyond most people's means. And again, some of the better quality homes won't take people on Medicaid.

    If you want to be eligible for Medicaid, you need to check with an expert in your state who can tell you the maximum amount of assets you are allowed to have and still be eligible. It's not much, something like $30 or $50,000 and that includes your home.

    I think we both agree that our government should provide for the elderly who need nursing homes, and not just the poor and that's it doing a dismal job of it. One way might be to relax the Medicaid eligibility requirements. But that's way beyond my expertise.  All I know is that Nursing home costs are beyond what anyone but the well to do can afford and Medicaid will strip you to the bone before you can qualify.


    Medicare not for long term care (none / 0) (#6)
    by cmpnwtr on Sun Sep 23, 2007 at 04:35:45 PM EST
    Medicare does not pay for long term care. Medicare is only for skilled medical nursing care or for 60 days rehab. Most nursing home residents are receiving long term care. Most people then have to spend down their resources until they are impoverished and unable to pay the 5 thousand or so a month it costs, then they apply for Medicaid. So if you end up in nursing care long term, you will end up on Medicaid and impoverished, or mostly. In recent years they let your spouse keep the house, but that's about it. If you have paid for long term care insurance, it will usually cover your for two years or so,and not everything. After that, you're on your own. That is the fate of many, if not most of us, impoverished and in long term nursing care. So perhaps we should care about this issue.

    New laws have been passed.. (none / 0) (#8)
    by dkmich on Sun Sep 23, 2007 at 05:39:59 PM EST
    After spouse dies, medicaid comes in and requires they be paid back off the top from the remaining assets.  Bill O'Reilly is right.  I hate this country.  Greed, corruption, lies, and hipocracy have become the foremose and only value system.

    Profit over people (none / 0) (#3)
    by Dadler on Sun Sep 23, 2007 at 03:34:18 PM EST
    Just like medical insurance, this is no different.  Money matters more than human beings.  Which is why "choice" in medical care MUST include the ability to choose a public plan, in which profit is not placed above your actual health care.

    Again (none / 0) (#5)
    by koshembos on Sun Sep 23, 2007 at 04:24:55 PM EST
    Time and time again we are faced with the reality of health and well being are in the hands of vultures who disregard the main responsibility they are in charge of. Examples are health insurance companies, nursing home operators and pharmaceutical companies.

    Both health care insurance and nursing home operators provide services the government or non-profit organizations can provide. The military, schools and foreign affairs are run by the government; I see no reason why we have to enrich the rich who run essential services badly just to make profit.

    Whever the words (none / 0) (#11)
    by Nowonmai on Sun Sep 23, 2007 at 06:35:23 PM EST
    'Investors and Health care' are said in the same sentence you just know the companies are going to look out for the companies Executives and their shareholders, to hell with the ones they are supposed to be taking care of.

    The health of Americans need to be taken out of the hands of greedy corporations. For all those who say "On NOES not socialised medicine like those foreign countries", let me remind you of what is currently socialised in the US. The Postal Services, Public Education, Police Force, Fire Brigades/Firemen, Public Libraries, Public Transportation. Just to name a few. If the current gov't can find 100 billion for 'overseas projects', then it can 'find' the monies to fund public health care.