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Florida Needs To Scrutinize For-Profit Nursing Home Industry

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The Tampa Tribune

Published: October 8, 2007

Large private investment groups wouldn't be buying up nursing home chains if there wasn't big money to be made. And there is nothing wrong with that. But it unconscionable that to maximize profits some firms neglect the needs of the frail and elderly in their care.

Both state and federal regulators need to respond to alarming trends in the nursing home business.

A recent New York Times report detailed how private investment firms have bought up nursing home chains and created nearly impenetrable webs of affiliated companies that minimize any one firm's responsibility for what happens in a home.

The Times showed that at 60 percent of the homes bought by large private equity groups from 2000 to 2006, managers cut the number of clinical registered nurses, sometimes far below legal requirements.

Those homes also typically scored worse than national rates in 12 of 14 indicators that regulators use to track ailments of long-term residents.

The Times told the story of Habana Health Care Center of Tampa - bought by Warburg Pincus and Formation Properties I - and run by 14 separate companies under its control.

When conditions at the home deteriorated and a series of lawsuits were filed, patients' families found it nearly impossible to penetrate the corporate structure.

It is dismaying the Florida Agency for Health Care Administration, the state's chief nursing home regulator, seems unconcerned about the Times's finding.

Florida should have learned from the go-go days of the 1990s, when nursing homes were snapped up by publicly traded companies like Beverly, Vencor and Manor Care that often put profits ahead of patient care. Residents in thousands of cases suffered neglect and unspeakable indignities.

Florida's nursing home laws underwent major reform in 1999 and again in 2001 that toughened inspections and fines and created programs that would encourage homes to improve care.

Now, those for-profit chains have been replaced by private equity firms like Warburg Pincus and the Carlyle Group, which in July paid $6.3 billion for the Manor Care chain. The companies have diverse holdings - Warburg Pincus also owns businesses like the Neiman Marcus department store and Carlyle Group owns Dunkin' Donuts.

But Molly McKinstry, chief of AHCA's Bureau of Long Term Care Services, says the state agency hasn't analyzed how health and safety citations correlate to nursing home ownership since these new corporate structures emerged.

Gov. Charlie Crist should order such an analysis immediately and determine if the state's current laws and standards - touted as the best in the nation - remain sufficient.

The government shouldn't fool itself: How these companies are structured does affect patient care. Firms that seek to enhance the bottom line by recklessly reducing staff and maintenance should be held accountable.

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