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In an effort to improve nursing home care in Florida, the state’s largest healthcare workers union today launched a new campaign calling on global buyout giant the Carlyle Group to put care above CEO profits in the $6.3 billion takeover of nursing home chain HCR Manor Care. There is growing concern that the buyout may come at a high cost to seniors, taxpayers, and workers. Manor Care, the nation’s largest nursing home provider, runs 29 homes in Florida.
SEIU Healthcare Florida’s campaign joins campaigns being launched today by SEIU in more than half a dozen states where Manor Care operates.
“Nursing homes buyouts are great for CEO profits but nursing home residents and staff haven’t been sharing in the windfall,” said Monica Russo, President, SEIU Healthcare Florida. “Our members, Florida nursing home workers, are concerned that this takeover could again put profits before care at the expense of seniors, taxpayers, and workers. That’s why we’re calling on the Carlyle Group to assume full responsibility for improving care and ensuring the health and safety of the residents at these homes.”
A September 23 investigation by the New York Times detailed how cuts to staffing and operations at nursing homes bought by private equity buyout firms such as the Carlyle Group have enriched top executives and buyout firms but left residents worse off.
According to the Times’ report, “serious quality-of-care deficiencies — like moldy food and the restraining of residents for long periods or the administration of wrong medications — rose at every large nursing home chain after it was acquired by a private investment group from 2000 to 2006, even as citations declined at many other homes and chains.”
In each state SEIU this week is:
- Mobilizing a coalition of members, manor care workers, residents, family members of residents and advocacy groups
- Running radio ads and sending direct mail urging the public to contact Carlyle CEO David Rubenstein
- Reaching out to state lawmakers and regulators
- Calling on Carlyle to make specific commitments to improve care at Manor Care nursing homes (see list below).
- Launching a new website www.CarlyleFixManorCareNow.org to educate the public about the takeover and its impact on seniors, taxpayers, and workers.
SEIU is calling on the Carlyle Group, as part of the Manor Care deal, to:
1. Ensure that its nursing homes are in compliance with federal minimum resident care regulations at all times.
2. Ensure that its nursing homes are staffed at levels recommended by the Federal Government or required by state regulations where higher.
3. Disclose the impact of its Manor Care buyout to the nursing home residents, workers and taxpayers in each state.
4. Structure its buyout so that Manor Care staff has a role in the reorganization and benefit from its outcome.
5. Create a Quality Care Fund and a new advisory committee comprised of Manor Care staff, resident advocacy groups and other stakeholders to improve patient care in all Manor Care homes.
Existing Quality of Care Problems at Manor Care
Manor Care already has a record of failing to provide all its residents with quality care:
- Violations on the rise: Under federal law, nursing homes are required to be inspected every 9 to 15 months. In the past year, state inspectors have cited Florida Manor Care homes for almost 150 violations. During the last three survey cycles, the number of federal health standards violations in Florida Manor Care homes has increased 55 percent. [1]
- Staffing levels below government standards: Nearly 1 in 4 Manor Care nursing homes in Florida staffs below a standard recommended in a Centers for Medicare and Medicaid Services (CMS) study as putting residents at risk.[2]
Behind the Buyout: What the takeover means to Florida
Top Executives at Carlyle and Manor Care to Reap Huge Windfalls, Fees
- The takeover will result in a windfall of as much as $254 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.
State Tax Revenues to Be Cut
- Because of the way the deal is structured, Manor Care will pay no corporate taxes while it is owned by Carlyle, cutting federal, state and local tax revenue by more than $600 million over five years, based on an SEIU analysis using conservative assumptions. Nearly $60 million of that total will come out of state and local tax revenue. Manor Care, like most nursing home companies, receives two-thirds of its revenue from federal and state taxpayer-funded payments, including Medicare and Medicaid.
Heavy Debt Load Could Increase Pressure to Cut Costs
- As part of its leveraged buyout plan, Carlyle will increase Manor Care’s debt to $5.5 billion—a figure more than 11 times greater than Manor Care’s 2006 profits. This massive debt will increase pressure to cut costs, potentially exacerbating existing quality problems at Manor Care and increasing the risk of bankruptcy.
Potential for Layoffs and Unsafe Staffing Levels
- According to the New York Times investigation, “At 60 percent of homes bought by large private equity groups from 2000 to 2006, managers have cut the number of clinical registered nurses, sometimes far below levels required by law. During that period, staffing at many of the nation’s other homes has fallen much less or grown.” In the last year alone, 6,000 layoffs have been announced as a result of buyouts involving the Carlyle Group.
Corporate Restructuring
- While Carlyle so far has refused to discuss specific plans for the restructuring and future operations of Manor Care, the New York Times investigation revealed how private equity firms that buy nursing homes create “byzantine structures” to avoid responsibility and regulation: “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...The Byzantine structures established at homes owned by private investment firms also make it harder for regulators to know if one company is responsible for multiple centers. And the structures help managers bypass rules that require them to report when they, in effect, pay themselves from programs like Medicare and Medicaid.”
More background for reporters:
About HCR Manor Care
HCR Manor Care, based in Toledo, Ohio, is the largest nursing home provider in the country, with more than 37,000 resident beds nationwide and $3.6 billion in annual revenue.
About the Carlyle Group
With more than $71 billion in assets under management, the Carlyle Group is one of the five largest corporate buyout firms in the nation. Washington, DC-based Carlyle owns companies that together employ more than 280,000 workers. The firm’s three co-founders, David Rubenstein, William Conway, and Daniel D’Aniello each have a net worth estimated by Forbes at more than $2.5 billion. A recent study estimated Rubenstein’s 2006 compensation at $260 million.
About SEIU Healthcare Florida
SEIU is the largest and fastest growing health care workers union in Florida, representing hospital and nursing home employees at more than 90 facilities across the state.
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[1] Based on information from “About the Nursing Home – Inspections,” Centers for Medicare and Medicaid Services Nursing Home Compare data, downloaded 8/23/2007.
[2] Schnelle, et al. Appropriateness of Minimum Nurse Staffing Ratios in Nursing Homes: Phase II final report. Centers for Medicare and Medicaid Services, December 2001. |