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Volume 12 Number 202 News: Nursing Homes Sens. Max Baucus (D-Mon.) and Chuck Grassley (R-Iowa) Oct. 18 asked the Centers for Medicare & Medicaid Services for a briefing to address the growing trend of nursing home ownership by large investment firms and its effect on quality of care. Expanding their inquiries into what they see as growing concerns about health and safety violations in nursing homes bought by private equity investors, Baucus and Grassley also sent letters to five private equity investor companies requesting information about nursing homes they own. According to the letters, thousands of nursing homes were purchased in recent years by large investment firms. Grassley earlier this month sent a letter to the Government Accountability Office, asking for a review of the effect of private equity ownership on the quality of care provided in nursing homes, following a New York Times article that examined the effect of private equity ownership on the quality of care provided to the nursing homes. Grassley said he was "alarmed" by information in the article, which used numbers from CMS to compare several investor-owned nursing home chains to industry-wide averages for several indicators (No. 191 HCDR 10/3/07 ). Lack of Transparency In a press release, Grassley and Baucus said they were troubled by the legal schemes used by investment firms to shield themselves from liability and, in effect, deny residents and their families legal remedies against nursing homes. The complex legal structures set up by the investment firms also can result in a lack of transparency about who is responsible for resident care and the operation of investor-owned nursing homes, the senators told CMS and private equity investors. "Nursing homes aren't just investment vehicles. They're homes for some of America's most vulnerable citizens," Baucus said. "The level of care at a nursing home must not be determined by the profit requirements of anonymous investors. Investor-owned facilities are by no means exempt from proper standards of care for seniors and the disabled." In their letter to CMS, Baucus and Grassley asked for a briefing to learn what information CMS has on the purchases of the nursing homes and their effects on nursing home care. In addition, the senators asked CMS what actions the agency has taken or is planning to take to address quality and safety concerns at investor-owner nursing homes and to ensure that the investment firm owners are identifiable and held accountable for their actions. They requested a response by Nov. 2. "[CMS] needs to do everything it can to make sure nursing home quality of care meets proper standards, no matter what," Grassley said. "It's also important for policy makers and regulators to understand fully the effect of this emerging ownership structure on nursing home residents. Profits of investors cannot be put ahead of providing quality care." The letter to the five private equity firms asked for detailed written responses by Nov. 9 providing information on any and all properties and entities used as nursing home facilities that are owned, in whole or in part, by the firms, subsidiaries, or related entities. The letter also asked the investment firms to provide all identifying and contact information and copies of any and all contracts or agreements related to the operation of the listed nursing homes. The letter was sent to the following private equity firms: Warburg Pincus LLC, New York; Fillmore Capital Partners, San Francisco; The Carlyle Group, New York; Formation Capital LLC, Alpharetta, Ga.; and Cammeby's Capital Group, New York. CMS oversees state-level inspections of nursing homes and is responsible for ensuring that federal standards for quality of care are met, the press release said. The vast majority of nursing home expenses are paid for by Medicare and Medicaid and the Senate Finance Committee, with Baucus as chairman and Grassley as ranking member, has legislative and oversight responsibility for those programs. The press release, the letter to CMS, and the letter to the private equity firms is available.
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