January 19, 2012

Nursing Home Care As Real Estate Business Does Not Prioritize Elder Care

by Levin & Perconti

Much ado has been made about “vulture capitalism” and the attacks made in the GOP Presidential nomination campaign against Mitt Romney. In a former life, the Massachusetts Governor made literally hundreds of millions of dollars creating and running a private equity firm. There has always been much disagreement about the merits of private equity work, which seeks to increase the value of businesses that are taken over—often with layoffs and similar unsavory budget cuts. However, many argue that such work is at the center of capitalism, where streamlining services and maximizing efficiency are paramount.

However, one need not get into complex financial debates about capitalism in order to see that there are some areas where it clearly is not a good thing to prioritize profits over services. Elder care is a prime example. Our Chicago nursing home neglect lawyers have often railed against the dangers posed by for-profit nursing homes. These facilities are consistently shown to harbor more nursing home abuse and neglect than their non-profit counterparts. Unfortunately, the trend toward privatization of elder care is part of the private equity movement, and it something of which that those on all sides of the aisle should rightly take note. Treating nursing homes and elder as simply an investment opportunity or a potential profit center is a dangerous trend to go down. But it is one increasingly found attractive by those who specialize in so-called “vulture capitalism.”

Recently Wall Street financiers have begun entering the nursing home sector, as the aging of the American population suggests that the market is a good one to get into now, because long-term demand will be high. For many involved, running nursing homes is just a business, but many others remain concerned about how this attitude affect the actual care provided to residents and the prevalence of elder abuse at these facilities.

A new article published by the Center for a Just Society suggests this trend toward viewing nursing home ownership as essentially a real estate business has proven incredibly damaging to nursing home residents. It is suggested that poorer quality nursing home care, more nursing home abuse, and increased violations of health and safety regulations are said to result from this shift.

The main concern of each Chicago nursing home attorney at our firm (and shared by most elder care advocates) is the worry these institutions seek to improve profitability by cutting costs—often essential costs. Labor is usually one of the first budget items to get the ax, after all nursing costs always represent the largest discretionary portion of most facility budgets. Inadequate staffing levels perhaps the single biggest reason why residents are neglected, often suffering life-ending injuries in the process. Quite simply, providing proper care necessitates time and manpower. Residents need to be repositioned properly and consistently, certain residents need close careful assistance anytime that they leave a bed, others need to consistently be provided proper fluids to avoid dehydration and malnourishment. There are no shortcuts to these tasks. They must be provided by real people who spend quality time on each tasks. Understaffed facilities cannot do this job properly. The influx of private equity capital in this industry has unfortunate been shown to lead to deadly cuts to nursing home staff levels.

See Our Related Blog Posts:

For-Profit Nursing Homes May Be Overcharging Medicare

Nursing Home Lawsuit Makes Accusations of Resident Cycling for Profit