News and Analysis -- Report blasts private equity for cutbacks
Private equity investors who have been hailed in long-term care circles for scooping up hundreds of facilities at high prices were ripped in a New York Times investigative article for allegedly cutting nursing hours and expenditures to boost profits...The report analyzed a survey that found that 60% of investor-owned facilities cut expenses and staff while simultaneously raising profits.
Facilities owned by private investment companies were 41% more profitable than the average skilled care facility in 2005, the paper reported. They also accounted for 19% more deficiencies, it noted. And they often have created complicated ownership structures that make it very difficult for people to sue them.
The article set off a maelstrom of negative attention for providers. Federal lawmakers called for an investigation and hearings while providers answered that the front-page Times article is unfair and incomplete.
The analysis was "far from representative of the total long- term care quality picture," said the president of the Alliance for Quality Nursing Home Care.
Equity fund leaders said they should be recognized for supporting the industry.