In a recent study, the New York Times examined data to compare nursing homes purchased by private investment groups against the national average. The nursing home industry has suffered in the past, but revenues have begun to climb as large investors are taking over. Prominent private equity firms, such as the Carlyle Group and Warburg Pincus, have been invading the industry by acquiring nursing homes and reducing costs to increase profits. The study has revealed that, based on different regulatory benchmarks, patients at nursing homes acquired by these firms are worse off than they were under their previous owners.
The private investors increase profits by cutting costs, leading to reductions in staff. 60% of the new investor-owned facilities have cut the number of clinical registered nurses from 2000 to 2006. Understaffing is one of the largest contributors to the epidemic of nursing home abuse and neglect. Other indicators of quality-of-care have shown decline since the firms have been cutting costs. Some examples of these deficiencies include moldy food, placing residents under restraints for long periods of time, or administration of incorrect medications; these, among others, have risen at every large nursing home chain after it was acquired by one of these large firms. Other common problems that have arisen in homes since acquisition include depression and loss of mobility in patients, and their loss of ability to dress and bathe themselves. Consequently, the typical investment-owned chain has become 41% more profitable than the average facility.
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The means patients and the government have been using to send a message to the nursing home industry have been nursing home abuse and neglect or wrongful death lawsuits and by handing out heavy fines for violations. The bureaucracies of these investment companies have made it difficult for both plaintiffs and regulators to succeed in holding the firms responsible for understaffing, inadequate facilities and negligence. Profits have taken importance over patients in an industry where justice has become difficult to obtain