Investors Profit while Seniors Suffer

Not every elder American is as fortunate as Supreme Court Justice John Paul Stevens, who remains “vigorous and sharp” at the age of 87 and is the subject of an interesting feature story in today’s New York Times Magazine. For many Americans, the golden years are tarnished by declining health and ability, to the point where they must spend the rest of their days in a nursing home. While many, if not most, of these facilities provide their residents with good care and are responsive to their needs, there are some homes that are considerably lacking in this regard. One reason for such is the increasing propensity of large private investment companies to buy up scores of nursing homes and then cut staff and costs (in defiance of established regulations) in order to turn a sizable profit. In addition, these opportunistic capitalists add insult to injury by “creating complex corporate structures that obscure who controls their nursing homes” and impede any litigation that might result from their negligence. Such brazen profiteering is reprehensible, as the following New York Times exposé by Charles Duhigg reveals:

More Profit and Less Nursing at Many Homes

Habana Health Care Center, a 150-bed nursing home in Tampa, Fla., was struggling when a group of large private investment firms purchased it and 48 other nursing homes in 2002.

The facility’s managers quickly cut costs. Within months, the number of clinical registered nurses at the home was half what it had been a year earlier, records collected by the Centers for Medicare and Medicaid Services indicate. Budgets for nursing supplies, resident activities and other services also fell, according to Florida’s Agency for Health Care Administration.

The investors and operators were soon earning millions of dollars a year from their 49 homes.

Residents fared less well. Over three years, 15 at Habana died from what their families contend was negligent care in lawsuits filed in state court. Regulators repeatedly warned the home that staff levels were below mandatory minimums. When regulators visited, they found malfunctioning fire doors, unhygienic kitchens and a resident using a leg brace that was broken.

“They’ve created a hellhole,� said Vivian Hewitt, who sued Habana in 2004 when her mother died after a large bedsore became infected by feces.

Habana is one of thousands of nursing homes across the nation that large Wall Street investment companies have bought or agreed to acquire in recent years.

Those investors include prominent private equity firms like Warburg Pincus and the Carlyle Group, better known for buying companies like Dunkin’ Donuts.

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 Times analysis shows that, as at Habana, managers at many other nursing homes acquired by large private investors have 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.

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. [full text]

Not surprisingly, these private investors remain far removed and emotionally detached from the suffering they cause. I am reminded of a classic episode of the television series M*A*S*H, which included a storyline about a pilot who was rather blithe and even cavalier about the deadly consequences of his bombing runs until he was brought face to face with some of his potential victims. It’s easy, in a way, to cause harm from a safe distance. But what’s safe (and profitable) for one group of people can be terribly devastating and costly for others. Just ask the residents of Habana Health Care Center or any like facility. Or just ask an Iraqi.

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2 responses

  1. some nursing homes are a moral hazard to anyone who works there. nurses and nurse’s aides quit in droves because they just can’t stand the way the are expected to treat their patients. look at how long it took rhode island to prosecute the owner of Hillside nursing home. and that was for financial fraud, not elderly abuse.

  2. The way we look at our elderly and resist providing the level of care they not only need, but should have, is a national disgrace. At a time that we waste billions of dollars a week on projects that are meaningless such as bridges to nowhere, or a war that represents the hubris of an administration, or benefits to “elected” leader, our elderly languish and are neglected. There are circumstances that the “free market” notion simply does not apply in a civilized culture. Those times include availability of health care to the least of us, and a life free of pain and neglect for the oldest of us. The measure of a society can be taken by how we treat (or neglect) our sick and our elderly. Unfortunately in these regards we seem to come up short of the mark.

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