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Private Equity Firms Are Buying Up Nursing Homes and Reducing Quality of Care. In 2009, the United States Congress held hearings concerning the plummeting quality of health care elders receive when private equity firms purchase nursing homes. It was evident then that the care the members of our most vulnerable population was utterly deficient in facilities […]
Private Equity Firms Are Buying Up Nursing Homes and Reducing Quality of Care. In 2009, the United States Congress held hearings concerning the plummeting quality of health care elders receive when private equity firms purchase nursing homes. It was evident then that the care the members of our most vulnerable population was utterly deficient in facilities owned and operated as for-profit businesses. It is big business, to be sure. Many investment experts suggest that owning elderly housing and nursing homes is a safe and effective method of making money. The question that must be asked is: At what cost to our parents, grandparents, and family members who require care that the average person cannot provide?
Parker Waichman LLP, a national law firm, dedicates its practice to finding justice for people who were injured by others. Many older adults in nursing homes across our country have fallen victim to physical, psychological, and sexual abuse and neglect. Nursing homes operators owe a duty to the residents, and their families, to care for and protect those people who cannot take care of themselves so they can live out their time in peace, safety, and tranquility. So often, people take advantage of our elderly. At Parker Waichman, we want to make them pay.
By 2020, nearly 60 million Americans will be 65 years of age or older. The group represents approximately 16 percent of the total population of the United States. In essence, it means that the “Baby Boomer” generation is getting old. The number is going higher. According to the National Center on Elder Abuse, over 80 million people aged 65 or older will be living in the U.S. by 2050. Most significantly, the oldest age group, those who have attained 85 years of age will have about 9 million by 2030. Experts anticipate that number will double in the 20 years that follow.
It is common knowledge that women live longer than men. As if proof was required, the statistics bear that out. The U.S. Census Bureau determined that there were 89 men for every 100 women aged 65 to 69 in 2010. The number of men decreased to 39 for every 100 women aged 90 or older.
We know from commonexperience that as medicine advances we are able to live longer than generations past, and, hopefully, future generations will live longer than we will. The harsh reality of living longer for many people that they might live longer but will need help to do it. For most, living at an advanced age means residing in assisted living or in a nursing home.
Nursing home care is costly. Most people rely on the government through Medicare and Medicaid to pay for their residences and care for the remainder of their lives. That is where private equity firms can make their money. From a financial standpoint, it makes perfect sense. You have an aging population and guaranteed payment from the government as long as the nursing home satisfies minimum standards of health care.
According to the Centers for Disease Control (CDC), 15,600 nursing homes were in operation in 2014 in the U.S. Private firms owned an astounding 69.8 percent of those nursing homes, which accounted for 1.7 million beds. Not every bed was filled. At the time the CDC performed its analysis, 300,000 of those beds were empty.
Nursing home costs are expensive. As far back as 2012, the average price of a private room in a nursing home was over $90,000. A semi-private room was not a bargain either. Having a roommate cost an average of $81,000 per year. The national average annual nursing home expense has remained relatively level over the last four or five years,but as the pressure to increase facilities increases, the price will most inevitably increase as well.
Providing a residence for those who cannot care for themselves is a multi-billion dollar enterprise according to Seeking Alpha, a leading investment strategyclearinghouse. Owning a nursing home is one thing, but the real profit may be found in charging for add-on services that the nursing home residents require. Equity firms will charge their residents for transportation to medical appointments, physical therapy services, dental, and mental health services like ordering from an a la carte menu at your favorite five-star restaurant. The prices of the rooms and services will vary depending on location, just like real estate.
Two of the most profitable private equity firms hold a substantial number of space in nursing homes and after-care facilities. One of the largest healthcare private equity firms is Kindred Healthcare. Kindred operates 2,700 nursing homes and other nursing facilities across the country. Its annual revenues topped $7 billion in 2015 alone. Genesis Healthcare is another major player in the private equity market. Genisis holds 400 facilities in its portfolio that has 49,000 beds for its residents.
A hearing before Congress several years ago shed some light on the problems patients face when they reside in nursing homes owned by private equity firms. The testimony was given by experts in the field make a compelling case that the quality of care diminishes when a private equity firm purchases a nursing home. Nursing home “chains” lower the quality of care after buying the facility. State and federal regulators have a difficult time investigating the quality of care because of the layers of management and ownership. These layers decrease the level of transparency that nursing homes should have if they are properly caring for their residents.
Once they have taken control of the management, private equity firms tend to re-organize the nursing home structure. Restructuring management helps the owners make more money but results in diminishing care for the patients. One witness who testified at the hearing before the House of Representative’s Ways and Means Subcommittee on Health and the Senate’s Special Committee on Aging said that private equity firms lack the experience to run a healthcare facility in the manner in which it must be run. Private equity firms are typically real estate owners whose portfolios include shopping malls, parking garages, and multi-apartment housing complexes. These companies then create a holding company that owns the nursing home. Most significantly, the testimony included a discussion how private equity firms cut staffing levels to increase profits which places the patients at risk.
The problem for victims of nursing home abuse and neglect, when they are residing in a nursing facility owned by a private equity firm is determining who is responsible is close to impossible. Holding companies and complicated corporate structures make it difficult to pursue those who are responsible for managing the care and safety of the nursing home’s residents. It is not impossible, but it is unnecessarily difficult. One senator stated the point accurately and succinctly by concluding that it is easier to figure out who made a washing machine then to determine who is running a nursing home.
Call Parker Waichman LLP to schedule a free, no-obligation consultation to discuss your loved one’s rights if they were injured or abused in a nursing home owned by a private equity firm. The nursing home abuse lawyers with Parker Waichman will vigorouslypursue justice for your loved one. Call Parker Waichman LLP today at 1-800-YOURLAWYER (1-800-968-7529) and learn how to protect your rights and the rights of your loved one.