Republicans scoff as Carlyle Group aims to take over nursing homes

Last year, officials in the state of Ohio expressed concerns about the purchase of the "troubled family" known as HRC Manor by The Carlyle Group, a private equity firm that includes as its directors some of the most prominent names in American politics.

Toledo-based HCR Manor Care operates 44 nursing homes caring for 5,100 people in Ohio and has been under close watch by state authorities. Officials fear that recent problems could continue under the ownership of Carlyle, which owns Dunkin' Donuts and Hertz, but it's only health care related venture is Lifecare, a nationwide chain of 21 long-term care hospitals.

"These aren't the kind of nursing homes that they can just take over and keep status quo," said Beverly Laubert, long-term care ombudsman for the Ohio Department of Aging. "When you have facilities with such quality problems, someone is going to have to fix them."

State investigators have found instances in which residents at HRC Manor Care facilities did not receive proper care, including instances in which residents didn't receive physician-ordered lab tests or the proper treatment for incontinence, hampering their ability to progress toward using the bathroom on their own.

Michigan's own ombudsman for long-term care expressed the same kinds of reservations this week, but the response she got from one side of the aisle was scoffing. Via Gongwer:

Union, lawmakers challenge sale of Manor Care nursing homes

TALLAHASSEE, Fla. (AP) -- Some Florida lawmakers and a union are questioning a private equity firm's pending purchase of the nation's largest nursing home chain, demanding answers about how it will affect the 3,000-plus residents in the chain's 29 homes in this state.

The lawmakers and the Service Employees International Union are asking that state regulators closely examine Carlyle Group's plan to take over Manor Care Inc. The $4.9 billion buyout, which has already been approved by Manor Care shareholders, is also being examined by officials and lawmakers in other states.

Nursing home advocates demonstrate outside Carlyle's headquarters -- again

Washington Business Journal - by Neil Adler Staff Reporter

A national caravan of caregivers and advocates for seniors arrived in D.C. to hold a demonstration on Monday outside the headquarters of private equity giant The Carlyle Group, which is taking over nursing home chain Manor Care Inc. for $6.3 billion.

A large health care workers union, SEIU Healthcare, is organizing the demonstration. The union, which held a similar demonstration outside Carlyle's headquarters about a month ago, is concerned about the buyout's effect on seniors, taxpayers and nursing-home workers.

At Monday's demonstration, nursing-home workers, family members of patients and seniors advocates spoke about the need for safe staffing levels and improved care. On Tuesday, they plan to visit Capitol Hill and lobby Congress to hold hearings on private equity ownership of nursing homes.

Toledo, Ohio-based Manor Care (NYSE: HCR) runs about a dozen nursing homes in the Washington area and hundreds more nationwide. The acquisition is expected to close by the end of November, Carlyle said in a statement.

The protesters want Carlyle executives discuss their specific plans for Manor Care. Officials with SEIU Healthcare say they are worried about the fate of nursing-home workers and are afraid that care may deteriorate.

They also say Carlyle's purchase will result in a windfall of millions of dollars for top Manor Care executives, and Carlyle stands to reap fees on the deal that could total hundreds of millions of dollars.

On Monday, Carlyle pledged a commitment to quality care at Manor Care. The pledge emphasizes education and training of caregivers, staffing levels that ensure proper clinical care is given, appropriate capital investment to maintain facilities and technology, and abiding by federal and state requirements.

"Meeting the care needs of Manor Care's patients and residents is our top priority," said Karen Bechtel, a Carlyle managing director and head of its health care team, in the firm's statement. "Manor Care is poised to become an even stronger health care provider under Carlyle's ownership."

SEIU Healthcare leaders say the pledge is a public relations tactic designed to help the private equity firm get the deal wrapped up.

"SEIU caregivers, senior advocates, and community leaders will continue to work to hold the Carlyle Group accountable for improving care and staffing at Manor Care," said Gerry Hudson, executive vice president of SEIU Healthcare, in a statement released by the union.

U.S. Senate Finance Committee Takes New Steps To Hold Carlyle Accountable

FOR IMMEDIATE RELEASE

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.org/behind-the-buyout/

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

Union calls for good care of nursing home residents

Patient care — not profits — should be the prime concern when an investment group purchases a large nursing home company, a union representing health-care workers said Wednesday.

The Carlyle Group, an investment company, is nearing completion of a $6.3 billion takeover of HCR Manor Care, which has 27 nursing homes with 3,902 beds in Illinois and about 350 facilities nationwide. It operates under the names of ManorCare Health Services, Heartland and Arden Courts.

“We want to make sure that the residents are taken care of properly when Carlyle takes over,” Tim Thomas, secretary-treasurer for Local 4 of the Service Employees International Union, said at a Statehouse news conference.

He and others pointed to a Sept. 23 analysis by the New York Times that showed staffing levels and patient care often suffer when investment firms purchase nursing home companies.