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Overview and Overview
Reference pages
Overview
..... 1996-1999
.....
2000-June 2001.....
2001-2003
The corporate chains
Sun
Healthcare ...
Beverly
... Vencor/Kindred
... IHS
... Genesis
...
Mariner
... Extendicare
... NHC
... Centennial
...
Guardian
AGED CARE & NURSING
HOMES
ACCESS TO WEB
PAGES
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 nation‚s 10 largest nursing home chains, containing over
141,000 beds, or 9 percent of the nation‚s 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, Florida‚s 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 state‚s
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
LINKS TO THE NURSING HOME
PAGES
A. Overview of Corporate Nursing Home
Care
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
B. Individual Nursing Home Chains
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.
Other sites
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
<http://www.agedcarecrisis.com>
LINKS TO MAPS
Central
Map .....
Initial
Map
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USA Map .....
Australian
Map
.....
International
Map
.....
Corporate
Practices Map.....
(to
print)
Path
Home
Page ........
US
Corporate page
Overview and Overview
Reference pages
Overview
..... 1996-1999
.....
2000-June 2001.....
2001-2003
The corporate chains
Sun
Healthcare ...
Beverly
... Vencor/Kindred
... IHS
... Genesis
...
Mariner
... Extendicare
... NHC
... Centennial
...
Guardian
This page created April
2000. Rewritten March 2001 by Michael Wynne
Updated Aug 2001 and Aug 2003, Oct 2007
