The Nursing Home Industry: Killing Patients for Profit

There are few places in American life where the clash between profits and people is more stark than in the our present health care system, and there is no place in the health care system where that clash is more brutally clear than in the nursing homes where we store our elderly like unwanted pets. As a matter of fact, in the Bushian universe our pets get better care at the pound than our elders get in corporate nursing homes. And the reason is simple to explain: conservatives in charge of both parties, at state and federal levels, have all but abandoned their oversight of the nursing home industry. As an exhaustive and damning study reported in this weekend’s NYT shows, profits have replaced nursing and the patients are dying.


It isn’t hard to see why.

The Times analysis shows that…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.

When I said regulators have abandoned their oversight of the industry, you probably thought I was talking about oversight of the care provided in these homes. I wasn’t. What has allowed this deplorable situation to flourish is the deregulation and lack of govt oversight in the field of investment banking.

In the past, residents? families often responded to such declines in care by suing, and regulators levied heavy fines against nursing home chains where understaffing led to lapses in care.

But 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 Byzantine structures established at homes owned by private investment firms also make it harder for regulators to know if one company is responsible for multiple centers. And the structures help managers bypass rules that require them to report when they, in effect, pay themselves from programs like Medicare and Medicaid.

Before the Reagan Revolution made widespread deregulation of critical industries fashionable, those “Byzantine structures” were forbidden by law. Even after that, it wasn’t until the Bush regime renounced regulatory oversight of private health care operations as odious and unnecessary “interference” in corporate prerogatives that the investor class began to look seriously at the profit potential in owning hospitals and nursing homes. What they saw was an industry beset by financial difficulties largely brought on rising health care costs that was ripe for profiteering by anyone willing to cut corners and not overly concerned with the effect of those cuts on residents and patients.

Between 2001 and 2005, there was an acquisition orgy in the nursing home industry that rivaled the orgy of hospital-buying in the 90’s. The huge profits made possible only by lax oversight and the protection from lawsuits afforded by investment deregulation attracted some mighty big players – for instance, non-regulated equity funders like George HW Bush’s home-away-from-home, the Carlyle Group – and before you knew where you were, the money was flowing like water from a busted pipe.

How did they do it? they took the “nurse” out of “nursing home”.

Nurses are often residents? primary medical providers. In 2002, the Department of Health and Human Services said most nursing home residents needed at least 1.3 hours of care a day from a registered or licensed practical nurse. The average home was close to meeting that standard last year, according to data.

But homes owned by large investment companies typically provided only one hour of care a day, according to The Times?s analysis of records collected by the Centers for Medicare and Medicaid Services.

For the most highly trained nurses, staffing was particularly low: Homes owned by large private investment firms provided one clinical registered nurse for every 20 residents, 35 percent below the national average, the analysis showed.

Regulators with state and federal health care agencies have cited those staffing deficiencies alongside some cases where residents died from accidental suffocations, injuries or other medical emergencies.


?The first thing owners do is lay off nurses and other staff that are essential to keeping patients safe,? said Charlene Harrington, a professor at the University of California in San Francisco who studies nursing homes. In her opinion, she added, ?chains have made a lot of money by cutting nurses, but it?s at the cost of human lives.?

The Times?s analysis of records collected by the Centers for Medicare and Medicaid Services reveals that at 60 percent of homes bought by large private equity groups from 2000 to 2006, managers have cut the number of clinical registered nurses, sometimes far below levels required by law.

The response from the new owners? Predictable and disturbing. At best callous, at worst ruthless. Everything is justified, as far as they’re concerned, by the fact that they’re making money. One equity fund principal, Arnold M Whitman of Formation Properties 1,  which is being sued for negligence in the death of one of the patients at its Florida facility, Habana Health Care Center, actually wants credit for his corporation’s cruelty.

?We should be recognized for supporting this industry when almost everyone else was running away,? Mr. Whitman said in an interview.

There you have the US corporatocracy in a nutshell: it wants “recognition” for its profiteering even though the vicious cost-cutting that creates those profits is killing people.

Well, after all, why not? The govt doesn’t seem to care. The politicians who have the power to enforce the laws and restore regulatory oversight don’t seem to care. The pigs are feeding at the trough.

As Will Rogers once said when describing the corrupt Harding administration, “My back is turned, boys. Get it while you can.”

2 Responses to “The Nursing Home Industry: Killing Patients for Profit”

  1. Laura says:

    I’ve had grave concerns about this trend for the last 20+ years when I saw the Beverly Corp begin buying homes, slapping on a new coat of paint and kicking back, waiting for the checks to roll in. I don’t see a real difference here between this trend and a private home situation I became familiar with in the late 80’s. A woman was taking in elderly, homeless people in Sacramento. She’d get them to sign their government checks over to her and she’d continue to cash the checks long after they were dead. I guess not reporting their deaths since she had killed them and buried them in her backyard was to her advantage. At least, as far as we know, nursing homes are still reporting deaths in a timely manner. She did go to jail… unlike her slick counterparts running these facilities. We’re all disposable, I guess, so beware of any kind of “buy-in” programs where they get their money up front.

  2. Debbie says:

    A national chain, Sun Heatlhcare Group Inc., was sued for wrongful death/elder abuse of my mother, Evelyn Calvert. Their medical director testified in April, 2008, he quit due to their lack of staffing, repeated broken equipment and other problems that caused her death and other deaths in 2003-2004 in a Newport Beach, Calfiornia facility. The medical director’s name is L Scott Stoney, M.D, of Newport Beach, California. and this is an exerpt of his testimony:

    Q Why did you resign from Sunbridge?
    17 A I resigned because the quality of care they were
    18 giving patients.
    19 Q What about the quality of care was the reason for
    20 your resignation?
    21 A It had to do with staffing of nursing, proper
    22 treatment of general medical care, the ventilation systems,
    23 there were multiple reasons as outlined even in the citations.
    24 Q What other reasons come to mind?
    25 A Well, they — the facility didn’t respond to my

    1 recommendation to take appropriate action in fixing the
    2 problems, not in a timely matter, and that’s the reason I
    3 resigned.
    4 Q Which problems?
    5 A What’s that?
    6 Q Which problems are you referring to?
    7 A Well, for example, there was — blood pressure cuffs
    8 weren’t working and there was incidents where there was a lack
    9 of ventilation, there’s incidents of inappropriate care of
    10 feeding tubes.

    I’ll gladly testify against Sun in any lawsuit.
    Deb Calvert
    PO Box 11221
    Newport Beach, CA 92658

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