Thursday, October 25, 2007

NYT's Article on Nursing Home Buyouts Prompts Action

In a follow-up to its September 23rd article "At Many Homes, More Profit and Less Nursing" by Charles Duhigg, the New York Times yesterday reported that the article has prompted a flurry of Congressional activity. Last week, Senators Max Baucus, who chairs the Finance Committee, and ranking member Charles Grassley sent letters to five private investment firms requesting information about their ownership and management of nursing homes–the Finance Committee oversees Medicaid and Medicare, which pay for more than two-thirds of nursing home patients. Among the firms they contacted was the Carlyle Group, one of the world’s largest private equity firms, which was in the process of buying Manor Care at the time of the report. Manor Care operates 552 facilities in 32 states. Senator Grassley has also asked the Government Accountability Office to examine how private equity ownership has affected the quality of nursing home care. And, earlier this week, two Congressional committees, the Energy and Commerce Committee and the Financial Services Committee, announced that they would also be investigating private investment firms' practices with respect to nursing homes.

The Carlyle Group also acted quickly, sending letters to regulators and officials in states where Manor Care has facilities, promising to maintain staff levels and other standards. The firm also sent letters to residents and families criticizing the Times article and denying its claim that they were intending to overhaul Manor Care to make it harder for regulators to trace ownership. But yesterday's article cites documents filed with Maryland regulators that indicate that Carlyle plans to reorganize Manor Care to make each home a stand-alone company and to separate ownership of the homes' real estate and operations, a move that other private investment groups have used to avoid liability and scrutiny by regulators.

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