Wall Street And Nursing Homes?

I came across an article discussing the trend of Wall Street investment groups buying nursing homes and the effect it is having on residents and litigation.  Check out my summary:

In recent years the Long Term Care industry has seen thousands of nursing homes across the nation taken over by Wall Street investment groups and unfortunately, this change has not been to the advantage of the residents.  Many of the nursing homes purchased were struggling financially before ownership changed hands and are now returning millions in profits at the expense of the residents who rely on these facilities for their daily needs.

Take for example Habana Health Care Center in Tampa, Florida.  It was purchased along with 48 other nursing homes in 2002 by Wall Street Investors including Warburg Pincus and The Carlyle Group.  The Carlyle Group bought out Dunkin’ Donuts.  (I’m sure that makes them good health care providers.)  Since these groups have taken over, costs have been cut to pull Habana out of its struggling financial situation.  The Centers for Medicare and Medicaid Services indicate that the number of Registered Nurses employed at the facility has been cut in half.  Florida’s Agency for Health Care Administration reports that budgets for nursing supplies, resident activities and other services have also been cut.  The nursing home was repeatedly  warned by regulators that staffing was below the required levels and inspections revealed several violations.

In just three years 15 Habana residents died resulting in lawsuits claiming neglect.  Vivian Hewitt is one of the family members who filed a lawsuit against Habana when her mother passed away.  Mrs. Hewitt’s mother had a bedsore that became infected with feces.

Data collected by the Centers for Medicare and Medicaid Services indicate that residents at facilities owned by large private investment firms generally do not do as well as  residents in publicly owned facilities.

There is another problem created when a nursing home is owned by private investment firms.  Typically these companies make litigation difficult for plaintiffs by spreading ownership across many firms, including management, real estate, holding companies, etc.  Some companies are created just to hire staff or purchase equipment.  Many companies have no actual office or staff.  This allows corporations to protect themselves from litigation as well as increase their profits by renting the nursing home from themselves, buying equipment from themselves, and so forth.  Many plaintiffs don’t know who to sue or end up having to name 10 or 15 defendants to cover all companies involved with the facility.

When Mrs. Hewitt filed suit against Habana over her mother’s death, her attorney began investigating the corporate side of the facility.  Three years and $30,000 later and they haven’t made much progress.

Nathan P. Carter, a plaintiffs’ attorney in Florida said he once had to sue 22 companies in a nursing home case.  He also said he believes that about 70 percent of plaintiffs’ attorneys who used to sue nursing homes no longer do because the complicated corporate structures make it so difficult.

There are currently groups who are lobbying to make the corporate structure at nursing homes simpler and smaller in hopes that resident care will get better and litigation will get easier.  One such group is the National Citizens’ Coalition for Nursing Home Reform.