Private Equity Kills Grandma

The Carlyle Group took over HCR ManorCare, a nursing home chain, and turned it into a charnel house:

To the state inspectors visiting the HCR Manor­Care nursing home here last year, the signs of neglect were conspicuous. A disabled man who had long, dirty fingernails told them he was tended to “once in a blue moon.” The bedside “call buttons” were so poorly staffed that some residents regularly soiled themselves while waiting for help to the bathroom. A woman dying of uterine cancer was left on a bedpan for so long that she bruised.

The lack of care had devastating consequences. One man had been dosed with so many opioids that he had to be rushed to a hospital, according to the inspection reports. During an undersupervised bus trip to church — one staff member was escorting six patients who could not walk without help — a resident flipped backward on a wheelchair ramp and suffered a brain hemorrhage.

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Under the ownership of the Carlyle Group, one of the richest private-equity firms in the world, the ManorCare nursing-home chain struggled financially until it filed for bankruptcy in March. During the five years preceding the bankruptcy, the second-largest nursing-home chain in the United States exposed its roughly 25,000 patients to increasing health risks, according to inspection records analyzed by The Washington Post.

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The rise in health-code violations at the chain began after Carlyle and investors completed a 2011 financial deal that extracted $1.3 billion from the company for investors but also saddled the chain with what proved to be untenable financial obligations, according to interviews and financial documents. Under the terms of the deal, HCR ManorCare sold nearly all of the real estate in its nursing-home empire and then agreed to pay rent to the new owners.

Taking the money out of ManorCare constrained company finances. Shortly after the maneuver, the company announced hundreds of layoffs. In a little over a year, some nursing homes were not making enough to pay rent. Over the next several years, cost-cutting programs followed, according to financial statements obtained by The Post.

That sale and lease back arrangements are a central part of private equity looting.

The financialization of our economy is a very bad thing.