Private Does Not Equal Better

Here is a link to a recent NY Times article about the poor quality of care in nursing homes acquired by private investment firms. I've heard the argument many times before (and believed) that private companies outperform governmentally-owned institutions because they obey the laws of the market, but apparently, that's not always true. Some shocking excerpts from the article:

"But by many regulatory benchmarks, residents at those nursing homes are worse off, on average, than they were under previous owners, according to an analysis by The New York Times of data collected by government agencies from 2000 to 2006. The Times analysis shows that, as at Habana, managers at many other nursing homes acquired by large private investors have cut expenses and staff, sometimes below minimum legal requirements. "

"But private investment companies have made it very difficult for plaintiffs to succeed in court and for regulators to levy chainwide fines by creating complex corporate structures that obscure who controls their nursing homes. By contrast, publicly owned nursing home chains are essentially required to disclose who controls their facilities in securities filings and other regulatory documents. "

"About 70 percent of lawyers who once sued homes have stopped because the cases became too expensive or difficult, estimates Nathan P. Carter, a plaintiffs’ lawyer in Florida. “In one case, I had to sue 22 different companies,” he said. “In another, I got a $400,000 verdict and ended up collecting only $25,000.” "

"... in recent years, large private investment groups have agreed to buy 6 of the nation’s 10 largest nursing home chains... The typical large chain owned by an investment company in 2005 earned $1,700 a resident, according to reports filed by the facilities. Those homes, on average, were 41 percent more profitable than the average facility."

"Homes owned by large private investment firms provided one clinical registered nurse for every 20 residents, 35 percent below the national average, the analysis showed. "

"Florida’s Agency for Health Care Administration has named Habana and 34 other homes owned by Formation and operated by affiliates of Warburg Pincus as among the state’s worst in categories like “nutrition and hydration,” “restraints and abuse” and “quality of care.” Those homes have been individually cited for violations of safety codes, but there have been no chainwide investigations or fines, because regulators were unaware that all the facilities were owned and operated by a common group, said Molly McKinstry, bureau chief for long-term-care services at Florida’s Agency for Health Care Administration."

So please do your research and think twice before putting your loved ones into a privating owned nursing home!