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Volume 12 Number 205 News: Nursing Homes The chairmen of two House committees Oct. 23 announced plans for a "rigorous investigation" into the appropriateness of private equity ownership of nursing homes and whether nursing homes owned by these firms are providing proper care to patients. Following a meeting with members of the Service Employees International Union who work in nursing home facilities and home health care, Rep. Barney Frank (D-Mass.), chairman of the Committee on Financial Services, and Rep. John Dingell (D-Mich.), chairman of the Committee on Energy and Commerce, told reporters that there have been serious questions that need to be investigated about the suitability of private equity firms buying nursing home chains. Frank, whose committee has oversight over private equity firm related issues, said he and Dingell, whose committee has oversight over Medicaid and Medicare and quality of health care issues, would work together to investigate whether private equity firms are the "appropriate business form in this industry" and whether nursing homes owned by private equity firms are providing proper treatment for patients under federal laws. Dingell said that the two committees would look at whether equity firms buying nursing homes "impinge improperly" on patient care and whether the 1987 Nursing Home Reform Act is being implemented. That legislation requires nursing homes to provide certain services to each resident in order to secure quality care. Nursing homes must be in "substantial" compliance with the law in order to receive Medicaid and Medicare payments for long-term care of residents. Dingell said the committees would first "get the facts" by having investigators look at the issues. Once the facts are gathered, the next step could be to have hearings, and that could be followed by legislative activity, he added. Frank added that, as the investigation progresses, the private equity groups may "show that our fears are groundless" and they can provide proper care for nursing home patients. "Then we can fold our tents and go away," he added. Equity Firms Agree to Buy Six of Largest Chains According to SEIU, large private investment groups have agreed to buy six of the nation's 10 largest nursing home chains, which together have over 141,000 beds, or 9 percent of the nation's total. Concerned that the trend toward private equity ownership of nursing homes is diverting taxpayer money to enriching top executives and buyout firms at the expense of quality care, SEIU Oct. 2 sent letters to chairmen of four House and Senate committees asking them to hold hearings, exercise their oversight authority, and consider new legislative reforms related to private equity ownership of nursing homes. In addition to Dingell, letters were sent to Rep. Charles Rangel (D-N.Y.), chairman of the Committee on Ways and Means; Rep. Henry Waxman (D-Calif.), chairman of the Committee on Oversight and Government Reform; and Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee and Sen. Chuck Grassley (R-Iowa), ranking member of that committee. In response to SEIU's request, Baucus and Grassley Oct. 18, sent letters to five private equity firms asking for information related to their ownership and management of nursing homes (No. 202 HCDR 10/19/07 ). The senators asked the heads of the firms--Warburg Pincus, Fillmore Capital Partners, the Carlyle Group, Formation Capital, and Cammeby's Capital Group--to provide information on nursing home facilities owned by the company, a subsidiary, or related entity; information on entities that operate nursing home facilities; identifying and contact information for all the facilities; and copies of any and all contracts or agreements related to the operation of the nursing homes. Baucus and Grassley also asked the Centers for Medicare & Medicaid Services, which is responsible for overseeing nursing home inspections, to comment on a Sept. 23 report by the New York Times of higher health and safety violations in nursing homes that have been bought by private equity investors. In the letter Grassley wrote that the agency needs to "do everything it can to make sure nursing home quality of care meets proper standards, no matter what. 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." Also, earlier this month Grassley and Sen. Hillary Clinton (D-N.Y.) separately requested investigations of the issue by the Government Accountability Office, according to SEIU. By Michelle Amber
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