WaPo has a look at a senior care brand that was bought up and wrung out by the Carlyle Group, and how that seems to have affected the level of care:
Under the ownership of the Carlyle Group, one of the richest private-equity firms in the world, the ManorCare nursing-home chain struggled financially until it filed for bankruptcy in March. During the five years preceding the bankruptcy, the second-largest nursing-home chain in the United States exposed its roughly 25,000 patients to increasing health risks, according to inspection records analyzed by The Washington Post.
The number of health-code violations found at the chain each year rose 26 percent between 2013 and 2017, according to a Post review of 230 of the chain’s retirement homes. Over that period, the yearly number of health-code violations at company nursing homes rose from 1,584 to almost 2,000. The number of citations increased for, among other things, neither preventing nor treating bed sores; medication errors; not providing proper care for people who need special services such as injections, colostomies and prostheses; and not assisting patients with eating and personal hygiene.
It’s always suspicious to me when a private sector group intrudes into medicine – which happens all the time – but it appears that others are catching on. Long time readers will find this to be a familiar sentiment:
Ludovic Phalippou, a professor at Oxford who wrote the textbook “Private Equity Laid Bare,” says it is a question of whether private-equity methods are appropriate in all fields.
He has praised the ability of private equity to streamline companies but he has also described the firms’ approach as “capitalism on steroids.”
He said, for example, that while private-equity ownership of nursing homes is accepted in the United States, people in some other countries would be “aghast” at the idea.
If this doesn’t ring any bells, click here to see my previous meditations on moving the processes of one societal sector into another.
Naturally, private sector folk think they’re doing good:
One of the founders of Carlyle, David Rubenstein, explained to Freakonomics Radio last year the role of private equity: “You spend three to five years improving the company, incenting the managers to work harder, do more efficient things, and ultimately, after three or five years, you sell or otherwise liquefy the investment.”
He sees private-equity firms as a force for good.
“Private-equity people think that, while we’re not perhaps guardian angels, we are providing a social service, and that social service is making companies more efficient,” he said.
Unfortunately, the processes developed for the private sector are optimized for enhancing revenue and profit, not for stabilizing and enhancing care to seniors. I don’t dispute that it sounds good to make companies more efficient, but that’s not the whole story – a better description is that they make companies more efficient in terms of financial results as their first priority, which is an inevitable result of importing processes optimized for financial results; the care delivered to the seniors, or more generally the patients, turns out to be secondary.
