CONTACT: Andrew McDonald - 202-730-7338
Andrew.mcdonald@seiu.org
October 18, 2007
SEIU Applauds Bipartisan Leadership of Sen. Finance Committee in Push for Greater Oversight of Private Equity Takeovers of Nursing Homes
On the day after Manor Care shareholders approve $6.3B Carlyle Group buyout, top oversight committee asks Carlyle, other buyout firms, for info on nursing home ownership, management
WASHINGTON, DC – The nation’s largest healthcare workers union applauded the bipartisan leadership of the Senate Finance Committee today as it took new steps to hold private equity firms accountable for the care, staffing, and conditions at nursing homes they own.
“On the eve of the largest nursing home takeover in history, increased efforts by Congress to hold buyout firms accountable are timely and necessary,” said Gerry Hudson, Executive Vice President of SEIU Healthcare, the nation’s largest healthcare workers union. Yesterday, shareholders of the nation’s largest nursing home chain, HCR Manor Care voted to approve a $6.3 billion buyout by the Carlyle Group, in what will be the largest-ever private equity takeover of a nursing home chain. For more info, visit http://carlylefixmanorcarenow
Hudson continued, “Medicare and Medicaid resources that are intended to support vulnerable Americans are being diverted to the private benefit of wealthy executives and investors. CEO profits cannot come at the price of patient safety and care. The Senate Finance Committee is right to exercise bipartisan leadership to hold the Carlyle Group and other private equity firms accountable for the impact of their actions on people’s lives.”
Today the Chairman and Ranking Member of the Senate Finance Committee – the committee with oversight over Medicare, nursing homes, and private equity-related issues -- sent letters to the Carlyle Group and other four other private equity firms asking for information related to their ownership and management of nursing homes. Sens. Baucus (D-Mont.) and Grassley (R-Iowa) also sent a letter to the Centers for Medicare and Medicaid Services (CMS) asking the federal agency responsible for overseeing nursing home inspections to account for a report of higher health and safety violations in nursing homes that have been bought by private equity investors.
In their letters, the committee cited a recent front page exposé by the New York Times detailing how cuts to staffing and operations at nursing homes bought by private equity firms across the country have enriched top executives and buyout firms but left nursing home residents worse off. Read the article here.
On October 2, 2007, SEIU sent letters to the Senate Finance Committee and three Committees in the House of Representatives calling on Congress to take action to improve the quality of care and hold private equity firms accountable for their ownership of nursing homes. The SEIU letters requested that each committee hold hearings, exercise oversight authority, and consider new legislative reforms related to private equity ownership of nursing homes. Copies of the letters are available at www.CarlyleFixManorCareNow.org
Pending Carlyle Takeover of HCR Manor Care Largest-Ever
With more than 37,000 resident beds, HCR Manor Care is the largest nursing home provider in the country. The $6.3 billion Carlyle takeover deal will result in a windfall of as much as $250 million for top Manor Care executives and directors, including as much as $186 million for Manor Care CEO Paul Ormond. Carlyle stands to reap fees on the deal that could total hundreds of millions of dollars. Much of the money going to fees and executive compensation is from taxpayers: Manor Care receives approximately two-thirds of its revenue in taxpayer funded payments, such as Medicare and Medicaid.
In recent years, large private investment groups have agreed to buy 6 of the nation’s 10 largest nursing home chains, containing over 141,000 beds, or 9 percent of the nation’s total. Private investment groups own at least another 60,000 beds at smaller chains and are expected to acquire many more companies as firms come under shareholder pressure to sell, according to the New York Times article by Charles Duhigg, “At Many Homes, More Profits and Less Nursing,” published September 23, 2007.
www.CarlyleFixManorCareNow.org
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