By Patrick Woodall and Milly Silva
As COVID-19 swept through New Jersey nursing homes, residents and workers fell ill and died, families struggled to get basic information about loved ones, and caregivers rightly were terrified of bringing the virus back to their own families. What few people have realized is how much a covert Wall Street takeover of much of the long-term care industry has magnified the health risks for those who live and work in nursing homes.
Last March, U.S. Representative Bill Pascrell chaired a hearing at the House Ways and Means Oversight Subcommittee to examine the same topic – exploring the growing and damaging role private equity plays in our investment system. health, and in nursing homes in particular. As the congressman put it in his opening statement, âthe expansion of private equity in health care is troubling because the primary focus of profit risk capital is often at odds with this. which is best for patient care. The business model of private equity is to buy companies, subject them to mountains of debt, and then squeeze them like oranges for every dollar.
It’s a pattern we’re seeing unfolding in New Jersey amid a pandemic that has exacerbated many long-standing nursing home issues – issues such as chronic understaffing and underinvestment. in supplies, due to the cost of operators -cutting strategies to maximize profit. With a reduced and ill-prepared workforce, the industry has been unable to prevent the spread of a highly infectious and deadly disease and maintain adequate standards of care in the event of a crisis.
Americans may be surprised to learn that some of the wealthiest people on Wall Street – the private equity lords – invest in or control many nursing homes. The money these private equity firms extract from institutions, using often complex and opaque financial arrangements, shell companies and related party transactions, is diverted from the care of the most vulnerable.
Last fall, Americans for Financial Reform looked at pandemic data from New Jersey nursing homes and found that residents of privately funded or operated nursing homes were more likely to catch COVID-19 and more likely to die than in public, nonprofit, or other for-profit nursing homes. About 59% of residents of private nursing homes have contracted COVID-19 – an infection rate 25% higher than the state average and 57% higher than in public nursing homes. More infections mean more residents have also died from COVID-19 in private nursing homes. The study found that nearly 170 in 1,000 nursing home residents died during the pandemic, about a third more than the state average.
There is evidence that private equity contributes to greater racial disparities in health: Private equity-funded establishments in counties where people of color make up the majority of the population had COVID-fatality rates. 19 higher than in predominantly white counties, and this racial disparity was greater than in non-privately funded nursing homes.
Private equity firms are using financial tricks to strip value, profits, and assets from nursing homes while dramatically reducing spending on care. For example, Wall Street financiers often use debt buyouts in the retirement home industry, charging a company with debt to fund its own takeover. Academic studies have provided strong evidence that private equity affiliated homes offer lower quality care, have fewer staff, and break health rules more often than nonprofit and for-profit nursing homes.
The tragic consequences of the pandemic on nursing home residents and workers unfortunately do not appear to have slowed the growth of private equity. In fact, after adding several more nursing homes to its portfolio, New Jersey’s fastest growing and now largest skilled nursing facility operator is privately funded – Complete Care Management . Complete Care’s pursuit of profit was swift and punitive: On April 1, hundreds of frontline workers at 1199SEIU nursing homes in five facilities saw their health insurance, education benefits, and retirement plans of. quality eviscerated overnight. Is this how our âhealth heroesâ should be treated after everything they’ve been through in the past year? Isn’t that detrimental to building a stable and healthy workforce to provide dignified end-of-life care to our aging society?
Over the years, private equity has seeped into every corner of the healthcare system, from birth (fertility clinics) to death (palliative care). The COVID-19 pandemic has highlighted the structural problems of a long-term care system that too often prioritizes profit over quality care, thus contributing to greater disparities in health and wealth in our communities. . We applaud Rep. Pascrell for bringing this issue to light and call on lawmakers in Washington and Trenton to urgently seek solutions to protect nursing home residents and their caregivers from private equity malice.
Patrick Woodall is Principal Investigator at Americans for Financial Reform, a non-partisan, non-profit coalition working to build the foundation for a strong, stable and ethical financial system.
Milly Silva is Executive Vice President of 1199SEIU United Healthcare Workers East, the largest healthcare union in the country.
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