Since 2005 there have been at least 46 buyouts of nursing home operators. Private equity firms now own three of the five largest nursing home chains in the United States, including HCR Manor Care which was bought by the Carlisle Group for more than $6 billion dollars in 2007.
The private equity firms claim that, even though they are “for profit,” they can still provide excellent care for seniors. However, recent studies show that is simply untrue.
In a recent study published in Health Services Research by the University of California, San Francisco, the authors found that for-profit nursing home chains reduce staffing in order to lower costs and help enhance their corporate profits. In doing so the studies show that there were fewer nursing hours on average and fewer registered nursing hours in particular. The researchers also found that for-profit nursing home care centers receive 36% more deficiencies when surveyed by the California Department of Health than those facilities that were either nonprofit or government sector nursing homes. Further, the deficiencies were found to be 41% greater in their severity.
If that weren’t enough, because of budgetary cutbacks the California Department of Health is simply not living up to its task to appropriately inspect those facilities for problems. In a February 27, 2012 report by the Office of Inspector General which examined how the California Department of Health handled investigations at three nursing home facilities, they found that the California nursing home inspectors underestimated the severity of the problems 13% of the time and that, in 77% of the cases that required nursing homes to follow corrective action plans, the State accepted plans that did not meet federal requirements. In addition, the inspectors did not verify that the facilities corrected their problems in four of the nine surveys conducted.
Is it any wonder, then, that nursing home litigation continues to increase? Until the root causes of this problem - both investment by private equity firms with no significant stake in the health and welfare of the residents, and a lack of adequate regulatory oversight - are resolved, families must be extremely wary about putting their loved ones into such homes.