Nursing Home Abuse at Privately-Held Facilities Should be Investigated, Say Senators Clinton and GrassleyOct 3, 2007 | Parker Waichman LLP
To US Senators want to know if nursing home abuse and neglect are more prevalent in facilities owned by private Wall Street equity firms, and they are asking the Government Accountability Office (GAO) to find out. Their requests come on the heels of a New York Times investigation that found that the quality of care at nursing homes dropped sharply after they were acquired by private investment concerns.
Senators Hilary Clinton (D-NY) and Charles Grassley (R-Iowa) based their requests on the report in the New York Times that said drastic cost cutting measures imposed on nursing homes once they were purchased by private equity firms made nursing home neglect and abuse far more likely. Recently, private investment firms have looked to nursing homes as a possible route to easy money. These firms buy facilities, drastically reduce their costs, then turn around and sell them at huge profits.
Private investment groups have been targeting some of the biggest nursing home concerns, in turn affecting the care of millions of patients. Just this August, the private equity firm Carlyle Group won antitrust clearance to buy Manor Care Inc, the largest U.S. nursing home owner for $4.9 billion. Another chain, Genesis Healthcare Corp. agreed to be bought by private equity in January, and Beverly Enterprises went private in 2005.
But these acquisitions could be coming at a great cost to nursing home patients. According to the New York Times investigation, facilities owned by private investment firms score worse than national rates in 12 of 14 indicators regulators used to track ailments of nursing home residents. And the Centers for Medicare and Medicaid Services says that residents of such nursing homes suffer more from depression, loss of mobility and the loss of the ability to dress and bath themselves. And both federal and state regulators told the New York Times that citations for quality-of-care deficiencies, like moldy food and restraining residents for long periods of time, rose at every large nursing home chain that was acquired by a private investment group.
Unfortunately, these privately-owned nursing homes are not always subject to the same legal consequences that other facilities would face for providing inadequate care to nursing home patients. Normally, the family of a resident suffering from nursing home abuse or neglect might sue the home’s owners, and regulators could impose stiff fines if conditions weren’t up to standard. But private investment firms have created complex corporate structures that obscure exactly who owns a nursing home, making lawsuits more difficult. And the complex ownership structure also means that sometimes managers can even legally bypass Medicare and Medicaid reporting requirements.
In making his request to the GAO, Grassley asked that the agency analyze the number of private equity deals involving nursing homes, and quality and safety issues before and after changes in ownership. Clinton asked for an assessment of 63 firms in particular that the GAO cited in March as having a troubled history.
Advocates for nursing home residents can only hope that the Senators’ requests will eventually lead Congress to take action that will make private equity firms responsible for the nursing home abuse and neglect that occurs at the facilities they own.