Nursing Assistant Resources On The Web

More Congressional fallout for the private equity buyouts of nursing homes.

Private equity firms have been rapidly buying up nursing homes in the last few years, sometimes using complex ownership structures to shield them from lawsuits. Now they have attracted attention in Washington.

Two members of the United States Senate on Thursday asked the federal agency that oversees nursing home inspections to account for what The New York Times described in September as an increase in health and safety violations at nursing homes bought by private investors. The lawmakers, Max Baucus of Montana of Chuck Grassley of Iowa, also sent letters to private equity firms, including the Carlyle Group and Warburg Pincus, seeking information about their nursing home investments.

Mr. Baucus, a Democrat, and Mr. Grassley, a Republican, are the chairman and ranking member, respectively, of the Senate Finance Committee. They have already squared off with some of the biggest players in the private equity industry. Earlier this year, they proposed a bill that would more than double the tax rate on publicly traded investment firms such as the Blackstone Group and the Fortress Investment Group. Such a measure would also likely apply to Kohlberg Kravis Roberts if it goes through with its plan to go public.

On Thursday, the two lawmakers turned their attention to private equity’s role in the nursing home industry. Most nursing home fees are paid by Medicaid and Medicare, two programs overseen by the Senate Finance Committee.

In a press release, Mr. Baucus and Mr. Grassley expressed concern about the findings in the report, by The Times’ Charles Duhigg, that after nursing homes were acquired by buyout firms, their residents were generally worse off than under the previous owners.

“Nursing homes aren’t just investment vehicles,” Mr. Baucus said in a statement. “They’re homes for some of America’s most vulnerable citizens.”

Let’s hope this attention from Congress scares off some of these unethical groups. Sometimes though, these investigations and hearings only serve to create more unscrupulous investing deals- the bad guys learn how to hide themselves even more. We will stay on top of this.