The corporate provision of aged care provides one of the best insights into the health and aged care corporate marketplaces. It enlarges our understanding of this marketplace in new areas. Because care is so heavily dependent on nursing care alone and because nursing care is the biggest cost the impact on care of the pressure for growth and profit is not only greater but it is easier to document. The consequences of failures in care are also more readily apparent. It is clear that in spite of this it has taken years to document accurately what is happening and state regulators are still not detecting the problems. The reasons why there is so little hard data available about the much more complex general hospital care is apparent. It is likely that very similar things are happening there.
Institutional aged care in nursing homes in the USA is provided predominantly by for profit nursing homes and the majority were owned by market listed corporate chains. I wrote these pages in 2000 as company after company collapsed. By 2003 here was a vast amount of additional information indicating the extent to which the system had been exploited for profit. It was the story of fraud, the neglect of helpless citizens, and financial irresponsibility. Many web pages on this site are devoted to these corporations. There were a number of excellent reviews during 2001, 2002, and 2003
Perspective:- I ask you to remember as you read this material that corporate executives are the people whom US society has entrusted with the care of the most vulnerable people in that society - citizens who have fought to preserve the life style which Americans enjoy today. I ask you to consider how much interest these commercial "providers" have in the elderly and how much they have in furthering their ambitions in the marketplace.
Private Equity acquires aged care (Update October 2007)
There have been major developments since these aged care pages were updated in 2003. The most recent and most important of these has been the targeting of the nursing home chains by large private equity groups pursuing ever larger profits. Six of the 10 largest chains have been acquired. Over the last few years Habana (2002), Beverly (2005), Genesis Health Care (2006), Manor Care (2007) and a number of other groups, have all been taken private via private equity buyouts.
This has increased the pressure for profits while reducing accountability. The worst fears of the critics were realised in September 2007 when the New York Times published a study showing reduced staffing and deterioration in care at those nursing homes that were now controlled by private equity.
In addition to this the study found that complex corporate structures created a situation where it was almost impossible for residents, who had been harmed, and regulators, imposing fines, to find out who was responsible. If they eventually tracked down the responsible subsidiary it was found to have no money. The private equity groups had effectively muzzled the two groups that made cost cutting and staff reduction costly for them. These were residents' families, whose targeted court actions caused juries to award massive punitive penalties, and state regulators who imosed fines. They were free to reduce staffing and make profits.
I have addressed the private equity purchase of nursing homes in Australia and there is some relevant information there. I do not have time to explore these issues in the USA but may do so in the future. The extracts below from The New York Times and from the Bill Moyers show will give some idea of the issues.
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 jobs and other expenses, sometimes below minimum legal requirements
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.
But in recent years, private equity firms have agreed to buy 6 of the nations 10 largest nursing home chains, containing over 141,000 beds, or 9 percent of the nations total. Private investment groups own at least another 60,000 beds at smaller chains and are expected to acquire many more companies as firms come under shareholder pressure to sell.
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.
Representatives of all the investment groups that bought nursing home chains since 2000 Warburg Pincus, Formation, National Senior Care, Fillmore Capital Partners and the Carlyle Group were offered the data and findings from the Times analysis.
Private equity is buying up this industry and then hiding the assets, said Toby S. Edelman, a nursing home expert with the Center for Medicare Advocacy, a nonprofit group that counsels people on Medicare. And now residents are dying, and there is little the courts or regulators can do.
For instance, Floridas Agency for Health Care Administration has named Habana and 34 other homes owned by Formation and operated by affiliates of Warburg Pincus as among the states worst in categories like nutrition and hydration, restraints and abuse and quality of care.
Profits Rise as Care Slips at Nursing Homes New York Times September 23, 2007 For more see "More Profit and Less Nursing at Many Homes" on Aged Care Crisis web site
Sen. Hillary Clinton of New York, who is seeking the Democratic presidential nomination, and Republican Sen. Charles Grassley of Iowa asked the investigative arm of Congress to review whether private equity ownership of nursing homes leads to shoddier care.
Senators seek private equity nursing home probe Reuters Oct 2, 2007
JOHN BOGLE: Well, first, it's a national disgrace. Simply put. And there are some things that must be entrusted to government and some things that must be entrusted to private enterprise. And what we see there, at least in my judgment, is that we've taken medical care, healthcare and going from making it a profession in which the patient is the object of the game &emdash; preserving the patient "first do no harm" as Hippocrates would say or would have said and turn that into a business. And so, it's a bottom line. I've often said we're in a bottom line society. We're measuring the wrong bottom line.
JOHN BOGLE: There's no accountability. And it's wrong. It's fundamentally a blight on our society.
BILL MOYERS:So, the private equity nursing homes have added to their wealth. But, they've subtracted from society the care for people who need it.
JOHN BOGLE: That is exactly correct. Not good.
Bill Moyers talks with John Bogle The Bill Moyers TV show http://www.pbs.org/moyers/journal/09282007/transcript1.html
Nursing home care in the USA is the oldest privatised government funded system. It provides a unique insight into the way the corporate mind thinks and the application of market principles to those who are unable to protect themselves. There are many reviews to draw on. I have broadly analysed the events and the processes at work on an overview web page. It provides access to a large number of references with pertinent extracts which tell the story in greater detail. This is the MAIN PAGE DESCRIBING AND ANALYSING CORPORATE NURSING HOME CARE IN THE USA. It analyses the consequences for the elderly of the meteoric growth of the industry in the first 8 years of the 1990's and then the financial collapse which put half of the companies into voluntarily bankruptcy.
CLICK HERE -- for this overview of nursing homes in the USA
While all of the chains operated in the marketplace they responded to it differently. They adopted different approaches to make profits out of citizens in nursing homes. I have devoted pages to several of the major chains. Large numbers of references and extracts can be accessed from these pages.
Sun Healthcare:- Sun Healthcare entered Australia amidst controversy and opposition. We therefore have much more information about it. The manner of its entry provides a unique insight into political thinking and the operation of government processes in Australia. It eventually ran foul of probity regulations in Victoria and its US reputation for poor care probably kept it out of aged care. It eventually went bankrupt in Australia and sold up.
Sun was predominantly a provider of aged care and subacute care in the USA and the United Kingdom. It was at the centre of the aged care scandal in the USA and spent a long time in Chapter 11 bankruptcy. It is an excellent example of corporate culture, corporate blindness, corporate justifications and the role played by a charismatic leader who marched to the beat of a personal drum totally out of sync with the aged care context. It has not done well since trading out of bankruptcy and has warned that it may re-enter bankruptcy during 2003.
CLICK HERE -- to access the pages about SUN HEALTHCARE
Beverly Enterprises:- Beverly is the oldest and the largest of the chains. It is very credible and the face of the establishment. It exerts considerable political power. Its entire focus has been on the marketplace. To citizen's groups and nurses it is the ultimate evil empire. It has pleaded guilty to defrauding Medicare. Beverly has sustained large losses and its share prices have fallen. It did not become bankrupt and still conducts its business as if it were a fast food chain selling tacos which is what its CEO previously did.
CLICK HERE -- to access the pages about Beverly Enterprises
Vencor (now called Kindred Healthcare):- Vencor is a group which like Sun and IHS grew very rapidly. It developed a reputation for the callous disregard of unprofitable patients and for defrauding government which is pursued it for US $1.3 billion. Its leader and its management were totally out of touch with the people whom it claimed to serve and it did some unconscionable things. It entered Chapter 11 bankruptcy. Government, then handled it with kid gloves allowing it to enter an integrity agreement, pay US $219 million and trade out of bankruptcy. The collapse of a company owning hundreds of homes would have had a disastrous impact on care. Government did not have the resources to step in. The latest information suggests that it is now very profitable but that the care in its homes is still very poor.
CLICK HERE -- to access the pages about VENCOR/KINDRED
Integrated Health Care (IHS):- IHS was founded by Dr. Robert Elkins renowned for the massive remuneration he received and his disturbing political activities. It too expanded rapidly and promoted the idea of diversification and one stop care. It embraced post-acute care and expansion. There were serious problems in its facilities. If faced a fraud probe which was forgotten when its entered Chapter 11 bankruptcy. It did not recover and sold its nursing homes to to Abe Briarwood Corp, owners of Trans Health, leaving its creditors and its shareholders with almost nothing.
CLICK HERE -- for information about Integrated Health Systems (IHS)
Genesis Health Ventures:- Genesis promoted its own version of Eldercare which it believed would provide superior care and also make money. The market imposed its own standards of care. It too overextended itself and was alleged to have neglected its residents. It came into conflict with the nursing unions who blew the whistle on poor care in its facilities. It attempted to secure market dominance so that it could dictate the terms of contracts with HMO's but was unsuccessful. It entered Chapter 11 bankruptcy. When it emerged from bankruptcy it struggled to sell of its nursing homes but could not find a buyer. They were spun off as Genesis Healthcare Corp. and the original company took the name of its Neighborcare pharmacy business which is now its main activity.
CLICK HERE -- for information about Genesis Health Ventures
Mariner Post-Acute Network:- Mariner differs from most of the other chains in not having a charismatic leader. It was the product of a group of financiers who jumped on the bandwagon and absorbed all of the nonsense which was popular in 1996 and 1997. They used a company Grancare, which had a very poor record for care as the vehicle for a series of rapid acquisitions and name changes from which the diversified and integrated entity Mariner emerged in 1998. It was the second largest chain in the USA. They built up an enormous debt and within months they were losing money and still providing poor care. Share prices spiraled downwards and they entered Chapter 11 bankruptcy. They re-emerged in May 2002 but there are still reports of poor care in its homes.
CLICK HERE -- for information about Mariner Post-Acute Network
HRC/Manor Care:- This is a company which I have not paid much attention to. It has adopted a rather different business strategy and although its profits have declined it has remained financially viable. It has also been the object of allegations of poor care and Qui Tam court actions relating to these. I ran out of steam and have not written a web page about it.
Extendicare:- Extendicare is a Canadian company which operates primarily in the USA. It has a poor record for care and has the distinction of a US $20 million damages award by a jury who were disturbed about the care it provided. It has been extensively sued in Florida and it has sold its homes in that state and in Texas because of the costly litigation. Instead it is expanding in Canada where a director is a senator and it has the strong support of the government of the province of Ontario. It became profitable in 2002 for the first time since 1999.
CLICK HERE -- for information about Extendicare
National Health Corp:- National Health Corp is a smaller privately owned company which was so heavily sued for poor care in Florida that no one would insure it. It was forced to sell up in that state. It has settled a large fraud action brought by the US government.
CLICK HERE -- for information about National Healthcare Corp. (NHC)
Centennial Healthcare:- Centennial is interesting because of the approach it adopted. Faced by plunging profits and falling shares Centennial tried to sell itself to wealthy financiers. The deal fell through when a fraud investigation commenced. Centennial temporarily escaped bankruptcy by selling itself to another group of financiers with deep pockets for a fraction of the original price. It was converted to a private company which did eventually go into chapter 11 bankruptcy in 2002.
CLICK HERE -- for information about Centennial Healthcare
Guardian Healthcare:- Guardian is a private company with a record of very poor care. It is unique in that instead of being sued for fraud, criminal felony charges of elder abuse and neglect were laid. It pleaded no contest. This was a new approach to the problem.
CLICK HERE -- for information about Guardian Healthcare
Home Care and Assisted Living:- Many elderly are cared for at home by home care organisations, many of them corporatised. Others live in Assisted Living complexes where some services are provided. This is preferable for citizens and cheaper than institutionalisation.
Both are fertile sources of referrals to nursing homes. Large profits could be made by providing "therapies" to these citizens and charging Medicare for this. As part of the policy of diversification and integration corporations acquired subsidiaries in these areas. There is enough information to indicate that fraud and neglect have been serious problems here as well.
When the system of funding Medicare was changed so that it could no longer be exploited the big corporations started selling or closing down their home care and assisted living subsidiaries. Patient who once received help at home are now having difficulties. The market has concentrated on profit without much regard for the needs of the community and its citizens.
None of the Assisted Living groups have attempted to enter Australia and I have taken less interest. There is plenty of information about corporate activity on this site and I have elected not to included web pages addressing assisted living and home care. It should be clear that problems, similar to those described on this web site will emerge whenever services to vulnerable citizens are subjected to the pressures for profit generated by a strongly competitive marketplace.
A debt.:- Australian citizens owe an enormous dept. to those in the USA who have willingly supplied so much information not only about Sun Healthcare but of the many other corporations. I started by inquiring about Sun Healthcare when it entered Australia in 1997. I had learned in 1995 that groups in the UK were even more concerned about it than about Tenet/NME. The other material I have been sent shows quite clearly that Sun's conduct is no more than representative.
I did not collect all this material. It was collected by groups and individuals in the USA and Canada. Information about many of the major and some of the minor chains is also provided here.
These web pages make the content of the material I was sent available to Australian citizens. I am hopeful that they will draw the obvious conclusions and force our politicians to confront not only what has happened but the reasons why it has happened.
A number of sites some of them government sites give information about nursing homes and the results of surveys and other oversight processes. Try these
<http://www.medicare.gov/NHCompare/home.asp> is a government site.
<http://www.myziva.net> is an independent site
An independent site examining aged care and nursing homes has been set up in Australia at