Forbes had a great article written by Mayra Rodriguez Valladares about The Carlyle Group’s private equity investments in nursing homes and long-term care. It appears they stole all the money and let the operating entities go bankrupt. Last year, the Washington Post and Esquire journalists exposed the suffering of nursing home patients at The Carlyle Group-owned ManorCare. While the Carlyle Group owned the ManorCare until it went bankrupt, 25,000 elderly nursing home residents were exposed to significant health risks. There were 2,000 health-code violations, a rise of 26% from 2013 to 2017, at the 230 residences of the ManorCare chain. According to Kaiser Family Foundation data, not-for-profit as well as for profit nursing homes receive significant Medicare and Medicaid funds. Private equity firms are manipulating the tax system to enrich themselves as the expense of vulnerable residents.
As a taxpayer like Ms. Valladares, I care where our taxpayer money goes and am also grateful that Senators and Representatives are asking important questions and sponsoring ‘Stop Wall Street Looting Act’ to “ close the legal, tax, and regulatory loopholes that have long allowed private equity firms to capture rewards of their investments while passing the risk on to target companies, investors, workers, and consumers.”
The Carlyle Group was asked to provide information including a list of all its investments in nursing home and any other long-term care facilities for the past twenty years; what services the nursing home and long-term care facilities offer; what its ownership stake in these facilities is; the total revenue each facility makes; and what percent of the revenue is from Medicare as well as from Medicaid. Answers to these questions can help taxpayers hold The Carlyle Group and other private equity firms accountable.
“Numerous research pieces and articles, especially those by Professor Charlene Harrington, show significant deterioration in the care of patients at nursing homes when private equity firms take over because they cut staffing, training, and supplies. According to the Journal of Health Care Finance a significant problem is that “Private equity nursing homes have lower RN [registered nurse] staffing intensity and lower RN skill mix compared to the control group.”
The Carlyle Group like most large for profit chains have a complex ownership and operation structure of private equity investments. This means that the private equity firm and the nursing home are often immunized from legal judgments, and nursing home residents and their families are left without justice.
“Another good question posed by the legislators is whether any of The Carlyle Group’s nursing homes or long-term care facilities benefit from Section 232 Department of Housing and Urban Development mortgage insurance on loans that cover residential care facilities. These loans help finance nursing homes, assisted living facilities, and board and care facilities. This mortgage insurance protects lenders against losses when borrowers defaulting on their mortgage loans. It is important to see whether the Carlyle Group is loading facilities up with debt, as many private equity companies do. Will taxpayers be left holding the bag if nursing homes default on their debt?”