9 ms·

When private equity takes over a nursing home

108 points by sebg 4y ago

sebg 4y ago
"The data revealed a troubling trend: when private-equity firms acquired nursing homes, deaths among residents increased by an average of ten per cent."
- deleted 4y ago
  [deleted]
- ptsneves 4y ago
  That is why, as per [1] the hammer is about to fall on private equity and it's total finantialization of markets. The finantialization per-se is harmful as per the quote, but the worse is that there are often board members seating on competing enterprises, which is kind of incredible that it is possible. [1] https://www.ft.com/content/e9cc796e-351c-462b-8b72-e9e3c5bdd2fe?emailId=6302ff20b5c87000235714d1&segmentId=22011ee7-896a-8c4c-22a0-7603348b7f22#comments-anchor https://www.ft.com/content/e9cc796e-351c-462b-8b72-e9e3c5bdd...
  - missedthecue 4y ago
    How does one "financialize" a nursing home? When people talk about the financialization of corporate America, they're usually talking about how GE and Caterpillar went from being manufacturing companies to being lending companies that also manufacture stuff. Or how airlines turned from transportation companies into banks that fly for a side-gig. I will note that private equity was involved in none of these situations.
    - ptsneves 4y ago
      It does by the fact that private equities are purely financial institutions with massive economic and legal leeway, able to buy all the nursing homes. From a market perspective that already creates a distortion, which is the point of the article i linked. On top of that, financialization is counter to the social aspects of nursing home. Support or quality of life improvements of their users is marked as expenses, while from a social perspective they are gains. Furthermore the service is not very elastic as many people just do not have an alternative but to require nursing home services. The alternative being they load working age relatives, externalizing the costs. In many countries to open a company you set it up as a social contract, where society allows you to open a business because it believes it improves society. If it does not, it will not take long for the law or lawmakers to come after you. That seems to be the case.
- deleted 4y ago
  [deleted]
- iso1631 4y ago
  That is troubling, if they die, they aren't paying money, it's bad for profits Better to keep them barely alive with the minimum funding possible
  - koheripbal 4y ago
    Theoretically, if they increased profits per tenant by 30% a 10% reduction in tenants would still equate to a 20% increase in profit.
    - deleted 4y ago
      [deleted]
    - rdtwo 4y ago
      Nah dead tenants just get replaced with live ones. Minus minor acquisition costs they probably make like 28% more
      - iso1631 4y ago
        If there's more supply you could expand. The ideal situation from the owner point of view is you extract the entire net worth of the tennant and then move them on (coffin or just kick them out), while at the same time spending the least amount possible. You don't want them dying too quickly as that's leaving money on the table, but you don't want to have to evict them once they run out of money Bonus points if you can extract money from relatives too
  - 11101010001100 4y ago
    I believe that's what they are doing, with an acceptable error rate.
  - spaetzleesser 4y ago
    You can increase your rates and wait until people have lost all their money. then it's more profitable to have people dying.
bsenftner 4y ago
- brianwawok 4y ago
  I think you overestimate the damage that your name being called out for grabbing some money out of an industry. Most people would take the millions in profit even if their name is on some obscure nerd website as being naughty.
  - koheripbal 4y ago
    While I agree that the damage is minimal to them - the point is that protecting them behind the meaningless label of "private equity" outright shields them.
  - bombcar 4y ago
    More importantly, nobody invests with the Piccolo group, they invest with a pension plan that invests with a mutual fund that invests with a hedge fund that has a portion invested with Piccolo.
  - giraffe_lady 4y ago
    Hm we might have to find something else to do then.
  - hotpotamus 4y ago
    I worked at a place that ultimately was owned by Apollo and I was there when it came out that the CEO had ties to Jeffery Epstein. It didn't change too many people's opinion of him (it was not very high to begin with).
- DaveExeter 4y ago
  - RichardCNormos 4y ago
    This management team clearly needs to work on its Diversity, Equity & Inclusion numbers. Wow.
RichardCNormos 4y ago
In other news, The New Yorker is owned by a private equity firm: Advance Publications.
- selectodude 4y ago
  How is that relevant?
  - BaseballPhysics 4y ago
    It's not, it's an ad hominem. Why, though, I wish I knew.
- rocket_surgeron 4y ago
  Very few people will die when Advance Publications runs The New Yorker into the ground due to extreme cost cutting measures designed to marginally increase investor return. At least, I'm assuming that very few people will die. I'm not a magazineologist.
gregw134 4y ago
Not excusing the Portopiccolo Group at all, but it sounds like half the problem is labor shortage. There was (is?) a severe shortage of nurses last year and a nursing home is an undesirable place to work.
- Natsu 4y ago
  I think there's some cost cutting going on too, not sure, but during Covid, the home that Grandma was in got much, much worse. They simply never had staff to help any longer, and this was (formerly) a good place to be. We tried to move her around, but Grandma died a few months ago, with us constantly fighting to get proper care for her in places that seemed to get progressively worse over time. Just had constant fights to make sure anyone was checking on her or taking care of her or anything at all and seeing constant signs that everything vaguely medically related is horribly under-staffed.
- bombcar 4y ago
  This is a very large factor - nurses and CNAs working at nursing homes will often jump at the chance to work at a "real" hospital (or even McDonalds, if the pay gets high enough). Of course, a shortage means they aren't paying enough (at $100/hr they'd have no limit of applicants) but they may not be able to adjust fast enough.
- JustSomeNobody 4y ago
  > ...but it sounds like half the problem is labor shortage. of their own doing. "Within two weeks, management laid out plans to significantly cut back nurse staffing."
- BaseballPhysics 4y ago
  > Not excusing the Portopiccolo Group at all, but it sounds like half the problem is labor shortage. The problem is enormously complex. First, there's been a labour shortage in geriatric care for years. Then the pandemic came along and exacerbated things. Meanwhile, elder care in highly supportive settings is very labour intensive, which means it's expensive. But it's also a service people have no choice to buy. i.e., eventually some percentage of elders will require full time care, and right now, in most of the western world, that means an institutional setting. And the consumers of the product are some of the least represented in our political systems. Even with organizations like the AARP, the reality is the needs of an aging population get about as much attention as the needs of the poor. When you combine a product with very high and inelastic demand, combined with high costs, and no consumer advocacy, and then privatize that service, guess what: the quality of the product is going to go down in order to cut costs and maximize profits. Given that the primary cost of elder care is staffing, that creates downward pressure salaries, which drives even more people out of an already very challenging industry. The answer is simple: Elder care should be a publicly delivered service. But, the neoliberal answer is to Privatize All The Things. And so here we are.
public_defender 4y ago
https://archive.ph/r6Vno https://archive.ph/r6Vno
tstrimple 4y ago
There has been increased reporting recently on the damage private equity firms have done to rural hospitals as well. https://perfectunion.us/a-place-to-die-for-profit-health-care-crises-exposed/ https://perfectunion.us/a-place-to-die-for-profit-health-car... > What they often do is form a corporation or an LLC or any kind of corporate form, and the legal owner will be the corporate form, not the true owners. So they have insulated themselves from any connection between the operations and the health care and themselves. > Often we see the actual property that the health facility is on put into a separate LLC and—owned by the same owners, of course—however, they then lease themselves that building. There’s also various ways that they can further vertically integrate through pharmacies, through staffing companies, through housekeeping and hospitality companies. > All of these can be owned by the same individuals theoretically but placed into separate corporate forms and transact in business with one another. And so really it’s just kind of musical chairs of moving money around from one pocket to another.
- m463 4y ago
  and veterinarians. https://news.ycombinator.com/item?id=31728350 https://news.ycombinator.com/item?id=31728350
raincom 4y ago
Before PE firms' take over of nursing homes, many nursing homes are run by entities controlled by doctors. In such places, they don't hire enough CNA nurses. You know what such nurses do? Just do critical stuff; everything else, they just mark it as done, without having done. (for instance, if nurses are asked to check blood pressure of some patients every 2 hours, they don't do it, they just put yesterday's numbers, and sign off). I knew a nurse, who did it. And she learned it from her colleagues at the same nursing facility. This is what happens, when one tries to force nurses to do overwork for $30 per hour (2015 rates for nursing homes in southern California).
- bombcar 4y ago
  It's worse than that, it's a perfect storm of bureaucracy. Something bad happens. It's determined to be the fault of a CNA or the procedures (never the doctors and rarely the nurses are blamed, always the CNA). The procedure is updated at the state level to require MORE things to be done, but there is no time to actually do them, so something happens again. More documentation and procedures are added, and the cycle repeats.
- kickout 4y ago
  This doesn't make sense. Let's fix a smaller, bureaucratic problem by allowing the entire industry to be taken over by people that purposefully exploit grey legal areas and transfer life quality into dollars and cents? If nurses are lying, thats a poor management system. Punish the bad actors, not the patients
  - rngname22 4y ago
    Nurse is given 50 hours of work for an 8 hour shift. Do you want the nurse to do the essential work and mark the rest as complete even if it wasn't, or do you want the nurse to just ignore what their coworkers are doing, not check off all the boxes, and get fired?
    - kickout 4y ago
      I want a system that can audit systematic records falsification leading to severely worse outcomes for human subjects and punish that company/hospice/nursing home/hospital/etc. accordingly. Yea, I've been in places that have those types of systemic issues and in general those places sucked to be at and work at. Would hope those with enough morals recognize the situation and bail. As mentioned, there 'skillset' or willingness to do certain activities is sorely needed in this current labor market and has been needed for some time.
bell-cot 4y ago
Not that there is anything the least bit good to say about nursing homes run by distant, uncaring, profit-obsessed managers...but also consider the brutal economic reality of 24x7 care, at even the best possible nursing home. (Excluding facilities for the actual wealthy, where cost isn't much a concern.) To have ONE bottom-rung direct care staffer available, 24x7x365, and paid ~$12/hour... After employer-contributed payroll taxes, unemployment insurance, and workman's comp. insurance, figure the home's actual cost is $15/hour. $15 x 24 x 365 is $131,400.00 per year. More-skilled staff (you do want a nurse or few around, right?) are proportionally more. Plus, even the leanest-run facility will need a few folks cooking the residents' meals, doing their laundry, doing physical therapy, handling paperwork in the office, etc. The most humble of donated buildings (so we're imagining no mortgage payments) still requires ongoing maintenance, utilities, & such. Add all this up, and you can easily hit $250,000/year per bottom-most-rung direct care staff person. Now, assume that you (or the society you're doing thought experiments on) can't actually afford $250,000/year for each and every person who needs nursing home care. What fraction of that "one per one" care are you willing to settle for? Notice that even at "one per ten" staffing, your cost of running the facility is still $25,000 per resident per year. Multiply that by as many millions, or tens of millions, as need such care. (Yes, one per ten is well below the legal minimums in many states.) Does your society have the actual resources to do that? If "yes" - are you really comfortable with how capable, caring, and responsible the bottom-rung caregivers willing to accept ~$12/hour to clean up incontinent and disoriented elderly folks at 3am actually are? And you're aware that our "suitable building was donated" fudge is a really big fudge? Oops, also - that nursing home bill only covers the nursing home care. If your residents need to have some medications, doctor office visits, occasional hospital stays when (say) they fall & break something - that's all additional costs & resources.
- kickout 4y ago
  It's a complex situation no doubt. There is massive shenanigans in the billing aspect of this (thus the attraction of profit hungry assholes). Society has cared for it's elderly basically forever, and _now_ we're saying it's too expensive? As the article mentioned, the incentive for the religious group running these places was theological and human centric. Those religious groups are/have collapsed so there is this giant vacuum attracting all the wrong people. I honestly can't believe there isn't enough money in the 'system' to provide decent care for the vast majority of elderly. The numbers cited today (likely correct) aren't sustainable b/c it's basically free money to harvest (at the cost of human comfort). Regulate the industry and prosecute the bad actors. If member's of congress had family in these facilities, it would like be solved. They likely don't for the same reasons they don't have the same healthcare benefits as most Americans. Disconnected from reality. (I say this as someone well aware of the costs of nursing homes, and specialized care.)
thelastgallon 4y ago
Billionaires Are Gouging Your Grandparents [1][2] [1] https://www.alternet.org/2008/07/billionaires_are_gouging_your_grandparents/ https://www.alternet.org/2008/07/billionaires_are_gouging_yo... [2] https://www.youtube.com/watch?v=bcsxGxzrTsc https://www.youtube.com/watch?v=bcsxGxzrTsc

108 points by sebg 4y ago

sebg 4y ago

"The data revealed a troubling trend: when private-equity firms acquired nursing homes, deaths among residents increased by an average of ten per cent."

deleted 4y ago
[deleted]
ptsneves 4y ago
That is why, as per [1] the hammer is about to fall on private equity and it's total finantialization of markets. The finantialization per-se is harmful as per the quote, but the worse is that there are often board members seating on competing enterprises, which is kind of incredible that it is possible. [1] https://www.ft.com/content/e9cc796e-351c-462b-8b72-e9e3c5bdd2fe?emailId=6302ff20b5c87000235714d1&segmentId=22011ee7-896a-8c4c-22a0-7603348b7f22#comments-anchor https://www.ft.com/content/e9cc796e-351c-462b-8b72-e9e3c5bdd...
- missedthecue 4y ago
  How does one "financialize" a nursing home? When people talk about the financialization of corporate America, they're usually talking about how GE and Caterpillar went from being manufacturing companies to being lending companies that also manufacture stuff. Or how airlines turned from transportation companies into banks that fly for a side-gig. I will note that private equity was involved in none of these situations.
  - ptsneves 4y ago
    It does by the fact that private equities are purely financial institutions with massive economic and legal leeway, able to buy all the nursing homes. From a market perspective that already creates a distortion, which is the point of the article i linked. On top of that, financialization is counter to the social aspects of nursing home. Support or quality of life improvements of their users is marked as expenses, while from a social perspective they are gains. Furthermore the service is not very elastic as many people just do not have an alternative but to require nursing home services. The alternative being they load working age relatives, externalizing the costs. In many countries to open a company you set it up as a social contract, where society allows you to open a business because it believes it improves society. If it does not, it will not take long for the law or lawmakers to come after you. That seems to be the case.
deleted 4y ago
[deleted]
iso1631 4y ago
That is troubling, if they die, they aren't paying money, it's bad for profits Better to keep them barely alive with the minimum funding possible
- koheripbal 4y ago
  Theoretically, if they increased profits per tenant by 30% a 10% reduction in tenants would still equate to a 20% increase in profit.
  - deleted 4y ago
    [deleted]
  - rdtwo 4y ago
    Nah dead tenants just get replaced with live ones. Minus minor acquisition costs they probably make like 28% more
    - iso1631 4y ago
      If there's more supply you could expand. The ideal situation from the owner point of view is you extract the entire net worth of the tennant and then move them on (coffin or just kick them out), while at the same time spending the least amount possible. You don't want them dying too quickly as that's leaving money on the table, but you don't want to have to evict them once they run out of money Bonus points if you can extract money from relatives too
- 11101010001100 4y ago
  I believe that's what they are doing, with an acceptable error rate.
- spaetzleesser 4y ago
  You can increase your rates and wait until people have lost all their money. then it's more profitable to have people dying.

bsenftner 4y ago

brianwawok 4y ago
I think you overestimate the damage that your name being called out for grabbing some money out of an industry. Most people would take the millions in profit even if their name is on some obscure nerd website as being naughty.
- koheripbal 4y ago
  While I agree that the damage is minimal to them - the point is that protecting them behind the meaningless label of "private equity" outright shields them.
- bombcar 4y ago
  More importantly, nobody invests with the Piccolo group, they invest with a pension plan that invests with a mutual fund that invests with a hedge fund that has a portion invested with Piccolo.
- giraffe_lady 4y ago
  Hm we might have to find something else to do then.
- hotpotamus 4y ago
  I worked at a place that ultimately was owned by Apollo and I was there when it came out that the CEO had ties to Jeffery Epstein. It didn't change too many people's opinion of him (it was not very high to begin with).
DaveExeter 4y ago
- RichardCNormos 4y ago
  This management team clearly needs to work on its Diversity, Equity & Inclusion numbers. Wow.

RichardCNormos 4y ago

In other news, The New Yorker is owned by a private equity firm: Advance Publications.

selectodude 4y ago
How is that relevant?
- BaseballPhysics 4y ago
  It's not, it's an ad hominem. Why, though, I wish I knew.
rocket_surgeron 4y ago
Very few people will die when Advance Publications runs The New Yorker into the ground due to extreme cost cutting measures designed to marginally increase investor return. At least, I'm assuming that very few people will die. I'm not a magazineologist.

gregw134 4y ago

Not excusing the Portopiccolo Group at all, but it sounds like half the problem is labor shortage. There was (is?) a severe shortage of nurses last year and a nursing home is an undesirable place to work.

Natsu 4y ago
I think there's some cost cutting going on too, not sure, but during Covid, the home that Grandma was in got much, much worse. They simply never had staff to help any longer, and this was (formerly) a good place to be. We tried to move her around, but Grandma died a few months ago, with us constantly fighting to get proper care for her in places that seemed to get progressively worse over time. Just had constant fights to make sure anyone was checking on her or taking care of her or anything at all and seeing constant signs that everything vaguely medically related is horribly under-staffed.
bombcar 4y ago
This is a very large factor - nurses and CNAs working at nursing homes will often jump at the chance to work at a "real" hospital (or even McDonalds, if the pay gets high enough). Of course, a shortage means they aren't paying enough (at $100/hr they'd have no limit of applicants) but they may not be able to adjust fast enough.
JustSomeNobody 4y ago
> ...but it sounds like half the problem is labor shortage. of their own doing. "Within two weeks, management laid out plans to significantly cut back nurse staffing."
BaseballPhysics 4y ago
> Not excusing the Portopiccolo Group at all, but it sounds like half the problem is labor shortage. The problem is enormously complex. First, there's been a labour shortage in geriatric care for years. Then the pandemic came along and exacerbated things. Meanwhile, elder care in highly supportive settings is very labour intensive, which means it's expensive. But it's also a service people have no choice to buy. i.e., eventually some percentage of elders will require full time care, and right now, in most of the western world, that means an institutional setting. And the consumers of the product are some of the least represented in our political systems. Even with organizations like the AARP, the reality is the needs of an aging population get about as much attention as the needs of the poor. When you combine a product with very high and inelastic demand, combined with high costs, and no consumer advocacy, and then privatize that service, guess what: the quality of the product is going to go down in order to cut costs and maximize profits. Given that the primary cost of elder care is staffing, that creates downward pressure salaries, which drives even more people out of an already very challenging industry. The answer is simple: Elder care should be a publicly delivered service. But, the neoliberal answer is to Privatize All The Things. And so here we are.

public_defender 4y ago

https://archive.ph/r6Vno https://archive.ph/r6Vno

tstrimple 4y ago

There has been increased reporting recently on the damage private equity firms have done to rural hospitals as well. https://perfectunion.us/a-place-to-die-for-profit-health-care-crises-exposed/ https://perfectunion.us/a-place-to-die-for-profit-health-car... > What they often do is form a corporation or an LLC or any kind of corporate form, and the legal owner will be the corporate form, not the true owners. So they have insulated themselves from any connection between the operations and the health care and themselves. > Often we see the actual property that the health facility is on put into a separate LLC and—owned by the same owners, of course—however, they then lease themselves that building. There’s also various ways that they can further vertically integrate through pharmacies, through staffing companies, through housekeeping and hospitality companies. > All of these can be owned by the same individuals theoretically but placed into separate corporate forms and transact in business with one another. And so really it’s just kind of musical chairs of moving money around from one pocket to another.

m463 4y ago
and veterinarians. https://news.ycombinator.com/item?id=31728350 https://news.ycombinator.com/item?id=31728350

raincom 4y ago

Before PE firms' take over of nursing homes, many nursing homes are run by entities controlled by doctors. In such places, they don't hire enough CNA nurses. You know what such nurses do? Just do critical stuff; everything else, they just mark it as done, without having done. (for instance, if nurses are asked to check blood pressure of some patients every 2 hours, they don't do it, they just put yesterday's numbers, and sign off). I knew a nurse, who did it. And she learned it from her colleagues at the same nursing facility. This is what happens, when one tries to force nurses to do overwork for $30 per hour (2015 rates for nursing homes in southern California).

bombcar 4y ago
It's worse than that, it's a perfect storm of bureaucracy. Something bad happens. It's determined to be the fault of a CNA or the procedures (never the doctors and rarely the nurses are blamed, always the CNA). The procedure is updated at the state level to require MORE things to be done, but there is no time to actually do them, so something happens again. More documentation and procedures are added, and the cycle repeats.
kickout 4y ago
This doesn't make sense. Let's fix a smaller, bureaucratic problem by allowing the entire industry to be taken over by people that purposefully exploit grey legal areas and transfer life quality into dollars and cents? If nurses are lying, thats a poor management system. Punish the bad actors, not the patients
- rngname22 4y ago
  Nurse is given 50 hours of work for an 8 hour shift. Do you want the nurse to do the essential work and mark the rest as complete even if it wasn't, or do you want the nurse to just ignore what their coworkers are doing, not check off all the boxes, and get fired?
  - kickout 4y ago
    I want a system that can audit systematic records falsification leading to severely worse outcomes for human subjects and punish that company/hospice/nursing home/hospital/etc. accordingly. Yea, I've been in places that have those types of systemic issues and in general those places sucked to be at and work at. Would hope those with enough morals recognize the situation and bail. As mentioned, there 'skillset' or willingness to do certain activities is sorely needed in this current labor market and has been needed for some time.

bell-cot 4y ago

Not that there is anything the least bit good to say about nursing homes run by distant, uncaring, profit-obsessed managers...but also consider the brutal economic reality of 24x7 care, at even the best possible nursing home. (Excluding facilities for the actual wealthy, where cost isn't much a concern.) To have ONE bottom-rung direct care staffer available, 24x7x365, and paid ~$12/hour... After employer-contributed payroll taxes, unemployment insurance, and workman's comp. insurance, figure the home's actual cost is $15/hour. $15 x 24 x 365 is $131,400.00 per year. More-skilled staff (you do want a nurse or few around, right?) are proportionally more. Plus, even the leanest-run facility will need a few folks cooking the residents' meals, doing their laundry, doing physical therapy, handling paperwork in the office, etc. The most humble of donated buildings (so we're imagining no mortgage payments) still requires ongoing maintenance, utilities, & such. Add all this up, and you can easily hit $250,000/year per bottom-most-rung direct care staff person. Now, assume that you (or the society you're doing thought experiments on) can't actually afford $250,000/year for each and every person who needs nursing home care. What fraction of that "one per one" care are you willing to settle for? Notice that even at "one per ten" staffing, your cost of running the facility is still $25,000 per resident per year. Multiply that by as many millions, or tens of millions, as need such care. (Yes, one per ten is well below the legal minimums in many states.) Does your society have the actual resources to do that? If "yes" - are you really comfortable with how capable, caring, and responsible the bottom-rung caregivers willing to accept ~$12/hour to clean up incontinent and disoriented elderly folks at 3am actually are? And you're aware that our "suitable building was donated" fudge is a really big fudge? Oops, also - that nursing home bill only covers the nursing home care. If your residents need to have some medications, doctor office visits, occasional hospital stays when (say) they fall & break something - that's all additional costs & resources.

kickout 4y ago
It's a complex situation no doubt. There is massive shenanigans in the billing aspect of this (thus the attraction of profit hungry assholes). Society has cared for it's elderly basically forever, and _now_ we're saying it's too expensive? As the article mentioned, the incentive for the religious group running these places was theological and human centric. Those religious groups are/have collapsed so there is this giant vacuum attracting all the wrong people. I honestly can't believe there isn't enough money in the 'system' to provide decent care for the vast majority of elderly. The numbers cited today (likely correct) aren't sustainable b/c it's basically free money to harvest (at the cost of human comfort). Regulate the industry and prosecute the bad actors. If member's of congress had family in these facilities, it would like be solved. They likely don't for the same reasons they don't have the same healthcare benefits as most Americans. Disconnected from reality. (I say this as someone well aware of the costs of nursing homes, and specialized care.)

thelastgallon 4y ago

Billionaires Are Gouging Your Grandparents [1][2] [1] https://www.alternet.org/2008/07/billionaires_are_gouging_your_grandparents/ https://www.alternet.org/2008/07/billionaires_are_gouging_yo... [2] https://www.youtube.com/watch?v=bcsxGxzrTsc https://www.youtube.com/watch?v=bcsxGxzrTsc