Investigate Private Equity Companies That Own Nursing Homes

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Nursing Homes

The House Energy and Commerce and House Financial Servicescommittees on Tuesday said they would begin an investigation into thebusiness practices of nursing homes owned by private equity companies,the New York Times reports (Duhigg, New York Times, 10/24). The committees announced the investigations in response to concerns raised by the Service Employees International Union that private equity companies purchase nursing homes and reduce services to increase profit (Edney, CongressDaily, 10/23).

In addition, the committees cited a Times articlepublished last month that said private equity companies "often cutexpenses and staff, sometimes below minimum legal requirements, toincrease their profit" and use "complicated corporate structures toavoid liability when residents suffered from neglect," the Times reports (New York Times, 10/24).

Energyand Commerce Chair John Dingell (D-Mich.) and Financial Services ChairBarney Frank (D-Mass.) on Tuesday met with the SEIU to discuss theissue. They said that they likely will not introduce legislation toaddress the issue this year (CongressDaily, 10/23).However, the investigation and subsequent committee hearings might"lead to significant shifts within the nursing home industry," the Times reports.

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In addition to the investigation by the House committees, Senate Finance CommitteeChair Max Baucus (D-Mont.) and ranking member Chuck Grassley (R-Iowa)last week sent letters to five private equity companies that asked forinformation on their ownership of nursing homes. The lawmakers alsoasked CMS for information on oversight of nursing homes owned by private equity companies.

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Dingell said, "There are serious concerns that private equity firms arereducing the care at nursing homes by decreasing the number ofemployees," adding, "We've been made aware that nursing home residentsare losing their ability to use lawsuits to fight poor care and thatpeople may be suffering" (New York Times, 10/24).

Franksaid, "If you look at what private equity brings to the table, I'mskeptical that's what the nursing home industry needs" (CongressDaily,10/23). SEIU President Andy Stern said, "We've spent the last fiveyears trying to improve long-term care for working Americans, and nowprivate equity wants to come in and pocket as much as they can" (New York Times, 10/24).

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