McKnight’s had an article on lawmakers attempts at figuring out the role of private equity firms in nursing home and long-term care, and how and why their involvement affects the quality of care provided.  Hint:  It is short-staffing to increase profits.

Letters asking for information were sent to Carlyle Group, Formation Capital, Fillmore Capital Partners and Warburg Pincus.  The letters questioned the firms’ impact on the “declining quality of care in nursing homes”  and their management of the facilities.  The legislators cited significant and credible research that “has shown that for-profit chain-affiliated companies often provide a lower quality of care and experience more serious health and safety deficiencies that non-profit facilities.”

“We have concerns about the rapid spread and effect of private equity investment in many sectors of the economy, especially industries that affect vulnerable populations and rely primarily on taxpayer-funded programs such as Medicare and Medicaid, like the nursing home industry,” the lawmakers wrote.

“We are particularly concerned about your firm’s investment in large for-profit nursing home chains, which research has shown often provide worse care than not-for-profit facilities,” they added.

Richard Mollot, executive director of the Long-Term Care Community Coalition, criticized real estate investment trusts’ role in the nursing home industry during a federal hearing last week.

The investment by (REITs) and other entities that have nothing to do with healthcare into the nursing home world has essentially savaged the industry and I think care across the country. We’re seeing that more and more with entities buy up nursing homes, they have no experience in the business, they sell out the underlying property,” Mollot added.

We’re seeing it over and over again that monies are being siphoned away from nursing homes and from care. They’re just being devalued and then sometimes even closing.”

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