When private equity takes over a nursing home
newyorker.com
newyorker.com
To have ONE bottom-rung direct care staffer available, 24x7x365, and paid ~$12/hour... After employer-contributed payroll taxes, unemployment insurance, and workman's comp. insurance, figure the home's actual cost is $15/hour. $15 x 24 x 365 is $131,400.00 per year. More-skilled staff (you do want a nurse or few around, right?) are proportionally more. Plus, even the leanest-run facility will need a few folks cooking the residents' meals, doing their laundry, doing physical therapy, handling paperwork in the office, etc. The most humble of donated buildings (so we're imagining no mortgage payments) still requires ongoing maintenance, utilities, & such.
Add all this up, and you can easily hit $250,000/year per bottom-most-rung direct care staff person.
Now, assume that you (or the society you're doing thought experiments on) can't actually afford $250,000/year for each and every person who needs nursing home care. What fraction of that "one per one" care are you willing to settle for? Notice that even at "one per ten" staffing, your cost of running the facility is still $25,000 per resident per year. Multiply that by as many millions, or tens of millions, as need such care. (Yes, one per ten is well below the legal minimums in many states.)
Does your society have the actual resources to do that? If "yes" - are you really comfortable with how capable, caring, and responsible the bottom-rung caregivers willing to accept ~$12/hour to clean up incontinent and disoriented elderly folks at 3am actually are? And you're aware that our "suitable building was donated" fudge is a really big fudge?
Oops, also - that nursing home bill only covers the nursing home care. If your residents need to have some medications, doctor office visits, occasional hospital stays when (say) they fall & break something - that's all additional costs & resources.
Society has cared for it's elderly basically forever, and _now_ we're saying it's too expensive? As the article mentioned, the incentive for the religious group running these places was theological and human centric. Those religious groups are/have collapsed so there is this giant vacuum attracting all the wrong people. I honestly can't believe there isn't enough money in the 'system' to provide decent care for the vast majority of elderly. The numbers cited today (likely correct) aren't sustainable b/c it's basically free money to harvest (at the cost of human comfort). Regulate the industry and prosecute the bad actors. If member's of congress had family in these facilities, it would like be solved. They likely don't for the same reasons they don't have the same healthcare benefits as most Americans. Disconnected from reality.
(I say this as someone well aware of the costs of nursing homes, and specialized care.)
Because individuals used to look after their own elderly. Now there's a lot more institutions involved, meaning a lot more other people work, meaning a lot more other people need wages paid.
It's a bad, crappy job that no one wants to work in, and no one wants to pay high fees for looking after mum and dad
I've been thinking about this a lot lately, and it seems there are many causes. Increased ability to move, and desirability of moving (school, jobs, exploration). Bad city design (at least in North America, we have a car problem) meaning it's difficult to have a local community. The decline in religious involvement and no replacement lined up. A culture of extreme individualism to the point of absurdity.
These all seem tractable, but it is sad that we've let it get to this point. I feel there is a shifting in the wind though. At least for younger people, American capitalism and individualism seems to be viewed with increasing skepticism.
That is also why Social Security seemed like a good idea at one time.
https://en.wikipedia.org/wiki/Population_pyramid
The pyramid shape for traditional (generally pre-modern-medicine) societies is very, very different from the shape for modern, "wealthy" societies. In the former, infirm old folks are a lot rarer. Add in far larger, tighter family networks, and the "women care for the old" social standards, and the "outside of what families quietly manage themselves" portion of the problem, which society needs to deal with, is vastly smaller.
Science fiction gave us the obvious economic answer with "Logan's Run" and "Soylent Green" many years back.
How many residents (or patients, or ...) each 1 staffing unit has to care for is brought in later. I briefly assumed 10 residents per staffing unit.
(I am not sure how to interpret your "even the start of the 131k is actually three persons manning the phone" comment. Though from my own experience - quite a bit of staff time is consumed by talking on the phone with the family members of residents, with outside doctors & such for residents, with insurance providers for residents, with pharmacies, etc., etc.)
https://perfectunion.us/a-place-to-die-for-profit-health-car...
> What they often do is form a corporation or an LLC or any kind of corporate form, and the legal owner will be the corporate form, not the true owners. So they have insulated themselves from any connection between the operations and the health care and themselves.
> Often we see the actual property that the health facility is on put into a separate LLC and—owned by the same owners, of course—however, they then lease themselves that building. There’s also various ways that they can further vertically integrate through pharmacies, through staffing companies, through housekeeping and hospitality companies.
> All of these can be owned by the same individuals theoretically but placed into separate corporate forms and transact in business with one another. And so really it’s just kind of musical chairs of moving money around from one pocket to another.
This is what happens, when one tries to force nurses to do overwork for $30 per hour (2015 rates for nursing homes in southern California).
Something bad happens. It's determined to be the fault of a CNA or the procedures (never the doctors and rarely the nurses are blamed, always the CNA).
The procedure is updated at the state level to require MORE things to be done, but there is no time to actually do them, so something happens again.
More documentation and procedures are added, and the cycle repeats.
If nurses are lying, thats a poor management system. Punish the bad actors, not the patients
Yea, I've been in places that have those types of systemic issues and in general those places sucked to be at and work at. Would hope those with enough morals recognize the situation and bail. As mentioned, there 'skillset' or willingness to do certain activities is sorely needed in this current labor market and has been needed for some time.
The nursing home was a -good- nursing home and they still couldn’t follow the daily weight check order until I sent them an email calling it out on the hospital discharge paperwork as a medical order, and noting where I had been told in writing that they had only been doing monthly weight checks per the facility’s standing order.
It was very frustrating. When I would have a call with his nurse case manager or emails with his social worker, those would sometimes happen at 8 or 9 in the evening, because that’s when they could get to it. And that was one of the better places.
The experience has solidified my mindset. I _will not_ live in a 'home' when I'm old, and will not let my mom enter on of those facilities.
So really, it's a very strong suggestion - don't let your family members go to a nursing home lightly. Hospitals will often push for it as the only option, and sometimes it may be necessary for a time, but really think about the situation for yourself. Think of nursing homes as existing mainly because euthanasia is illegal and repugnant to many people.
I've now had close experience with two family members who have ended up at one for inpatient rehab (one during covid, one afterwards), and they're fucking death traps. And this was a facility that another family member had worked at for some time as the head physical therapist, and they recognized the last name!
I don't know if private equity was involved, but as the top-level comment points out the continual screw tightening overwork incentive is there regardless.
Systematic, unbiased auditing and extreme penalties not just for the individual but for the business employing the person are sorely needed.
We want nurses to do their actual jobs to administer health based assistance to seniors.
First search result:
"Registered nurses in California earn an average of $124,000 per year (or $59.62 per hour)"
Show your work.
We tried to move her around, but Grandma died a few months ago, with us constantly fighting to get proper care for her in places that seemed to get progressively worse over time.
Just had constant fights to make sure anyone was checking on her or taking care of her or anything at all and seeing constant signs that everything vaguely medically related is horribly under-staffed.
Of course, a shortage means they aren't paying enough (at $100/hr they'd have no limit of applicants) but they may not be able to adjust fast enough.
of their own doing.
"Within two weeks, management laid out plans to significantly cut back nurse staffing."
The problem is enormously complex.
First, there's been a labour shortage in geriatric care for years.
Then the pandemic came along and exacerbated things.
Meanwhile, elder care in highly supportive settings is very labour intensive, which means it's expensive.
But it's also a service people have no choice to buy. i.e., eventually some percentage of elders will require full time care, and right now, in most of the western world, that means an institutional setting.
And the consumers of the product are some of the least represented in our political systems. Even with organizations like the AARP, the reality is the needs of an aging population get about as much attention as the needs of the poor.
When you combine a product with very high and inelastic demand, combined with high costs, and no consumer advocacy, and then privatize that service, guess what: the quality of the product is going to go down in order to cut costs and maximize profits.
Given that the primary cost of elder care is staffing, that creates downward pressure salaries, which drives even more people out of an already very challenging industry.
The answer is simple: Elder care should be a publicly delivered service.
But, the neoliberal answer is to Privatize All The Things. And so here we are.
It is. Medicare pays for almost all Elder care. Which of course is the problem - private pay nursing homes are way better than the publicly funded ones because Medicare pays far less.
Or at you implying that the Government should directly own nursing homes, and hire the staff directly? That has a whole different set of problems - don't advocate for that without understand what you are asking.
You end up with centralized decision making for something very local.
You are misunderstanding the problem - the issue is not privatization, the issue is that Medicare does not pay enough, and nursing homes try to find private pay clients to make up the shortfall.
It's both.
America has chosen the worst of both worlds: public under-funding and private delivery.
Private delivery leads to cutting corners to maximize profits.
Lack of sufficient public funding exacerbates the issue.
The solution is to fix the public funding problem by properly investing in the system, and killing private delivery.
I don't think there is any easy answer. Spending drastically more on the problem is necessary, but obviously not sufficient. Then again, dying from laying in your own feces ("bed sores") when you're 80+ years old isn't the worst way to go out in the US.
The US government is not directly delivering either of those systems.
The US government is using public funds to subsidize private delivery, and doing it with virtually no cost controls to ensure those private companies aren't gouging the public.
The rest of the world has figured out how to make public healthcare and education work. The fact that the US can't is an indictment of US political leadership and, frankly, cultural values.
Education and healthcare are two examples of inherently social enterprises. Allowing profit-seeking firms into these spaces has caused nothing but trouble.
Having CEOs in charge of healthcare and education is as stupid of an idea as having government planners deciding the price of cars and how many cars each factory will produce per year.
Most enterprises are capitalistic, but some like education and healthcare are inherently social.
Across multiple countries, only the United States has this problem.
Figured this proposal would be on here somewhere. There are government-run nursing homes, always have been, even in America. People do everything they can to avoid them, because they're way worse than the private ones.
Right.
Would you put your parents into a facility run by the same people who run the NYC public school system or the DC Metro?
I’m not a “neoliberal” by temperament. I want to believe the government can do stuff in an efficient and non-abusive way. I’m just repeatedly disappointed.
Would you put your parents in a nursing home paid for by Medicare? I would, because I saw the care my grandmother received from such a facility.
They’re the same people. Government employees, belonging to the same unions, subject to the same incentives.
> Would you put your parents in a nursing home paid for by Medicare? I would, because I saw the care my grandmother received from such a facility
Medicare and Medicaid go out of their way to not be “publicly delivered services.” Medicare pays for privately managed elder care facilities, which may well be owned by a private equity company.
Similarly, private equity is the same people with the same incentives as Enron, Toys R Us, Sears, and other major collapses. I'm not sure this is a good argument except as to say that nobody should run anything?
Government is supposedly less efficient, I'm not sure this is a bad thing, and I'm not sure government is worse at health care than private industry when we are talking about care for the bottom X% (25%?) of society that can't do private payment.
Healthcare has inelastic demand, so the perfect market would drive the price to infinity (that is, demand as much money from patients as possible).
Oh look, that's exactly s what's happening!
For people who love capitolism, Americans are surprisingly uneducated on the concept.
Healthcare in America is about as far away from "capitolism"(sic) as one could possibly get.
Due to Federal mandates and tax incentives, health insurance is predominately provided by employers rather than the individual market (unlike Switzerland, Germany, or the Netherlands). What we're seeing in healthcare costs is analogous to what you might see happen to airline ticket costs if we all got our air tickets through our employers: the vast majority of us would fly business class, while the unemployed would be simply unable to pay for business class fares out of pocket. Employers (especially medium-to-large businesses) have a much higher purchasing power (and hence, willingness to pay) than individuals.
If you take this behavior and combine it with the fact that health insurers' profit margins are capped by law, insurers pay more absolute dollars for treatments (which doctors happily accept), charge more to employers (who are generally less price conscious vs individuals), thus bring in more absolute revenue, and therefore more profit because a capped profit percentage of a higher revenue is higher than a capped percentage of lower revenue. It's somewhat counter-intuitive, but the policy combination of an employer mandate and insurance profit cap results in prices rising to infinity. The furthest thing possible from a "perfect capitol(sic) market".
For Switzerland & Germany the way the incentives work are different than in the US, but the market for compulsory health insurance is very strictly regulated and the cost distribution for healthcare is distributed across public and private entities (particularly for very expensive treatments, rare diseases, treatments involving machines of great complexity/cost [like for proton therapy]).
Right, and the key difference is that there are several other options for all of those things. When private enterprises become unsustainable, they go out of business. When government programs become unsustainable, we increase their budget. With private enterprises, it becomes possible for other alternatives to be introduced in parallel — neither Enron, Toys R Us, nor Sears are monopolies, and with their demise, we still have plenty of energy, toys, and retail. That's not the case for government endeavors.
That said, many countries have solved this problem through the provision of competing state-owned enterprises (state capitalism), which are often traded on public stock markets. This is pretty common in the Scandinavian countries, as well as the East Asian Tigers.
> I'm not sure government is worse at health care than private industry when we are talking about care for the bottom X% (25%?) of society that can't do private payment.
As we all know, there are several countries that are able to pay for care in a way that the government is the monopoly payer (i.e. single-payer), but there are also countries that are able to pay for care in a way that there are multiple payers, with similar (if not better) outcomes. Switzerland and the Netherlands both have purely private health insurance systems, and there's no sign of that changing any time soon, and both enjoy excellent health outcomes with broad approval of their respective healthcare systems (https://www.forbes.com/sites/theapothecary/2011/04/29/why-sw...).
Even in the US, we're essentially running this A/B test with Medicare (ironically). When you turn 65, you have the option to enroll either in "Original Medicare", which is what we usually think of when we talk about "single payer healthcare in America", or you can enroll in Medicare Advantage (aka Medicare "Part C"), where the premiums that would go to the CMS instead go to private insurers like Humana, United, Oscar Health, Aetna, Clover, etc. These plans replace Original Medicare.
- 48% of Medicare beneficiaries are on private Medicare Advantage plans instead of the public "Original Medicare". Because everyone is entitled to "Original Medicare", this is purely voluntary. This number has been growing so rapidly that the CBO projects that by 2023, the majority of beneficiaries with choose the private over the public option. The CBO further projects this proportion to increase to 61%(!!) by 2032. (https://www.kff.org/medicare/issue-brief/medicare-advantage-...)
- For most beneficiaries, Medicare Advantage costs about 40% less than Original Medicare and are, on average, of higher quality than Original Medicare (https://healthpayerintelligence.com/news/medicare-advantage-...)
- In Urban areas, Medicare Advantage costs less per capita to administer than Medicare — and that's not including the extra Medicare Part D insurance that you would have to buy if you're on the Original Medicare plan (https://www.commonwealthfund.org/publications/issue-briefs/2...)
I personally don't think one is necessarily better than the other (single payer can have good outcomes!), it's just that each have trade-offs that optimize for different things, and it's up to societies to decide which of those trade-offs they prefer. The US has, unfortunately, chosen the worst of both worlds, given that our health insurance market is heavily distorted by the government, and the welfare system that underpins it is inefficiently distributed.
It seems like it's either a shared social failure where everyone has access to the same semi-inefficient gov't monopoly, or it's an uneven distribution with some guaranteed failures that are exceptionally painful for a smaller number of people. The net amount of pain/suffering is constant, it's just how we distribute it.
[1] https://www.alternet.org/2008/07/billionaires_are_gouging_yo... [2] https://www.youtube.com/watch?v=bcsxGxzrTsc
At least, I'm assuming that very few people will die. I'm not a magazineologist.
[1] https://www.ft.com/content/e9cc796e-351c-462b-8b72-e9e3c5bdd...
I will note that private equity was involved in none of these situations.
On top of that, financialization is counter to the social aspects of nursing home. Support or quality of life improvements of their users is marked as expenses, while from a social perspective they are gains. Furthermore the service is not very elastic as many people just do not have an alternative but to require nursing home services. The alternative being they load working age relatives, externalizing the costs. In many countries to open a company you set it up as a social contract, where society allows you to open a business because it believes it improves society. If it does not, it will not take long for the law or lawmakers to come after you. That seems to be the case.
Better to keep them barely alive with the minimum funding possible
You don't want them dying too quickly as that's leaving money on the table, but you don't want to have to evict them once they run out of money
Bonus points if you can extract money from relatives too