On Monday, November 26, the Illinois House Aging Committee held a hearing about the acquisition of Manor Care by the Carlyle Group. (Some of you may remember the Carlyle Group being prominently featured in Michael Moore's documentary "Fahrenheit 911" and their connection with the Bush family.) I had the opportunity to give oral and written testimony before the Committee and listen to what others had to say on the issue. The public has become concerned with private equity groups buying nursing homes and concentrating on profit margins and not the people residing in them.
In September, the NY Times published an investigative report which looked at what has happened to nursing homes when private equity groups acquire them. Their conclusion came down to a lower quality of care (mainly due to staffing cuts and less skilled employees) and new, complex corporate structures that shield the "real owners" from liability.
During the Illinois hearing there were a large group of people there ranging from CJ&D, SEIU, Illinois Citizens for Better Care, the IL Attorney General's Office, IL Department of Public Health and of course Manor Care. Noticeably missing was the Carlyle Group, which the Chairman made not of on a few occasions.
As you might have guessed, many suggested that the acquisition would lead to less care for Illinois' seniors at these homes, as well as greater obstacles for state regulators and victims to hold people accountable for bad actions. Of course, Manor Care assured the Committee that this was not the case, that the same quality standards would be in place, and that the Carlyle Group had no plans to change the structure of the company. looking at these assurances, I just don't buy them.
First of all, Manor Care is far from an example of great quality of care. Many of their homes across the state have been sued (and found guilty) for neglect of their residents. While the representative from Manor Care stressed that they were the best in the industry, a woman whose mother is one of their facilities told horror stories that she had witnessed in the home. Additionally, I have spoken with victims' families that have suffered at Manor Care's hands and they also paint a very dim picture of Manor Care's quality of care. If Manor Care is the "best" in the industry, then that is very scary.
As far as Manor Care's claims that the Carlyle Group will leave their management and corporate structure intact - the NY Times reported that there are already signs that this is not true: "...documents filed with Maryland regulators indicate that Carlyle plans to reorganize Manor Care to make each nursing home a stand-alone company, and to separate ownership of the homes' real estate and operations." This is the same tactic that many private equity firms have used in the past to help escape liability for wrongful actions.
Also, keep in mind that the Carlyle Group has no history in the nursing home industry. What kind of problems will be created and how many residents will suffer because of them?
With nursing home abuse and neglect on the rise, Illinois should take a close look into this acquisition and consider the ramifications. While it is hard to stop business transactions like these, the State can make every effort that if this deal does go through their regulators try to prevent residents from suffering because of it.