Sunday, September 23, 2007

Invisible Hand

And they wonder why we’re so cynical about the Great And Glorious Power of the Free Market:
More Profit and Less Nursing at Many Homes

Habana Health Care Center, a 150-bed nursing home in Tampa, Fla., was struggling when a group of large private investment firms purchased it and 48 other nursing homes in 2002.

The facility’s managers quickly cut costs. Within months, the number of clinical registered nurses at the home was half what it had been a year earlier, records collected by the Centers for Medicare and Medicaid Services indicate. Budgets for nursing supplies, resident activities and other services also fell, according to Florida’s Agency for Health Care Administration.

The investors and operators were soon earning millions of dollars a year from their 49 homes.

Residents fared less well. Over three years, 15 at Habana died from what their families contend was negligent care in lawsuits filed in state court. Regulators repeatedly warned the home that staff levels were below mandatory minimums. When regulators visited, they found malfunctioning fire doors, unhygienic kitchens and a resident using a leg brace that was broken.

But hey, if your loved one receives poor care, is injured or even dies, you can always turn to the courts, right? After all, the courts are where we traditionally have gone for restitution, and more importantly, to deliver a punitive smack at corporations. You know, a $3 million judgment certainly eats into the profits, right?

Heh, well, funny thing about Bush’s America:

In the past, residents’ families often responded to such declines in care by suing, and regulators levied heavy fines against nursing home chains where understaffing led to lapses in care.

But private investment companies have made it very difficult for plaintiffs to succeed in court and for regulators to levy chainwide fines by creating complex corporate structures that obscure who controls their nursing homes.

By contrast, publicly owned nursing home chains are essentially required to disclose who controls their facilities in securities filings and other regulatory documents.

The Byzantine structures established at homes owned by private investment firms also make it harder for regulators to know if one company is responsible for multiple centers. And the structures help managers bypass rules that require them to report when they, in effect, pay themselves from programs like Medicare and Medicaid.

Someone remind me, how is the free market supposed to work here? For the Carlyle Group, their chain of nursing homes is just a profit center alongside businesses like Dunkin' Donuts. When all you care about is profits, how is this supposed to be good for people?