U.S. PIRG Consumer Blog: Wall Street firms warehouse older Americans in "hellholes" for profit

Nursing homes have never been nice places. But the corporatization and private buyouts of nursing home chains are making things even worse for the people who live there. Today's New York Times has a major story by Charles Duhigg called More Profit and Less Nursing at Many Homes. It's a great investigative story, because as the story points out, the Wall Street firms buying up nursing home chains have layered so many "byzantine" ownership structures together that even state and federal officials can't figure out the relationships for purposes of determining whether an operator is small, or is instead engaged in a pattern of massive unfair and unsafe practices across dozens of homes and therefore deserving of larger civil penalties and corrective actions. Duhigg manages to piece together the corporate webs that own many of the chains. From the story's lede:

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. [...] 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.

The story explains that the cost-cutting at the privately-owned chains has left residents in Dickensian conditions:

Federal and state regulators also said in interviews that such cuts help explain why serious quality-of-care deficiencies -- like moldy food and the restraining of residents for long periods or the administration of wrong medications -- rose at every large nursing home chain after it was acquired by a private investment group from 2000 to 2006, even as citations declined at many other homes and chains. The typical number of serious health deficiencies cited by regulators last year was almost 19 percent higher at homes owned by large investment companies than the national average, according to analysis of Centers for Medicare and Medicaid Services records.

The story concludes with buyout officials whining that without their complex structures, the homes would be subject to excessive lawsuits (by the families of mistreated residents). It quotes, for example, "Arnold M. Whitman, a principal with the fund that bought Habana [a nursing home chain] in 2002, Formation Properties I," who says: "Legal and regulatory costs were killing this industry." Killing the industry, hhmm. What about the residents?

For more information about nursing home advocacy, see the website of the National Citizens' Coalition for Nursing Home Reform.