A study of 350 Florida nursing homes, conducted between 2000 and 2007, published in the Journal of Health Care Finance, showed that nursing homes run by private equity groups have more deficiencies and fewer registered nurses than other for-profit facilities. Private equity-run homes had a 9% higher pressure sore risk, and  had a (probably related) 29% lower registered nurse hours per-patient, per-day.

Private equity groups target ‘underperforming chains’, which they buy with bank loans secured with the money of private investors. The new management company receive a management fee (often 20% per anum), and the private investors receive a high fixed return, both irregardless of profit or loss, and both guaranteed contractually. The ‘real money’, however, is to be made by making the acquired asset more attractive to future investors, who will buy it at a much higher price than the private equity group paid, enabling the equity group to clear its debts and make a substantial profit. Private equity groups are ‘turnabout artists’, engaged in a form of gambling. They maximise care home profits by such means as employing lower grades of nurses, and more certified nursing assistants to undertake traditional registered nurse tasks. They also tend to employ more foreign nurses, whose raison d’etre, understandable, is to send money ‘back home’, rather than to disobey their ‘master’s voice’. They tend to be compliant, live-on-the-premises slaves, disabused by all.

What possible relevance is this to the NHS?, asks Doctor and Nurse Ostrich.

The answer is that ‘underperforming’ NHS hospitals will be acquired by private equity trusts, and the services they offer will be split, rather like an auctioneer who splits a collection into separate lots, hoping to maximise profits, with services being outsourced to other investors, who will operate ‘in the community’, taking advantage of any reduced rate, out of town, business park offer the local council dangles in front of them. Anyone doubting this has only to consider the American experience of private equity acquisition in the health care market, and understand that this is the exact model being gradually imposed on the NHS.

Examples of this ‘splitting the lot’ abound: Private equity companies aggressively invest in a number of lucrative areas of health care in America. Hospitals – where they buy not-for-profit chains and turn them into for-profit systems, which is the ‘name of the game’ – making them saleable assets, not public health sector services. Specialist Services – such as anaesthesiology and radiology – where private equity is investing in management companies that employ a network of hospital specialists. The largest ‘hospital specialist’ company in America is financed by AEA Investors, founded in 1968 to make investments on behalf of S.G. Warburg & Co., as well as the Rockefeller, Mellon, and Harriman families. Surgery Centres – which provide ‘significant cost benefits’ of relocating  inpatient  services in the community. Healthcare Technology Systems – a very large area of investment, because of the perceived need to create ‘efficiencies’ made necessary by projected (56% lower) government reimbursements. Such companies also manage ‘claims processing’, ‘data mining’, and ‘medical records’ systems. Chronic Disease Centres – speciality pharmacies with device and drug technologies are seen has a lucrative way forward in providing ‘customised therapies’ for asthma and diabetes. Cancer Care Centres – a vast amount of equity money is being invested in oncology services. Outpatient cancer care centres provide radiation therapy, chemotherapy and PET/CT imaging. Hospices – private equity firms view these as sure-winners, which is underpinned by an ageing population. A Baff Industry study in 2011 showed 10 hospice transactions in the first quarter of that year. The ‘unholy’ combination of hospice care and the profit motive was shown in a court case brought by the American government, which alleged that a company  ‘through its reckless business practices, admitted and retained individuals who were not eligible to receive Medicare hospice benefits, because it was financially lucrative’

In its complaint, the government describes a corporate culture in which AseraCare employees were given heavy incentives to enroll and retain hospice patients – even if they don’t qualify – because hospice providers are paid per patient per day. Top performers were rewarded with prizes like massage chairs, while those who didn’t meet patient admission goals were disciplined

But in addition to problematic certifications, the original Alabama case also claims that Golden Living games the Medicare system and maximizes profits by misclassifying patients and funnelling the same patients through its various health care services. This corporate initiative is referred to internally by staffers as “synergy,” court documents said.

In some instances, Golden Living patients were admitted to hospice care, then discharged just before the date at which the patient would reach the Medicare payment cap. That individual is then placed in the company’s nursing home facilities until that Medicare cap is reached, before being admitted once again to its hospice care, according to court documents.

The lawsuit also contends that some hospice patients are recruited by staffers who troll public hospitals, tour public housing complexes or ride along with Meals-on-Wheels food deliveries.

“AseraCare employees are trained to market hospice services to these patients regardless of qualification and to admit these patients to hospice,” the Alabama complaint said, by “appealing to the needs of the patients and obfuscating the true nature of hospice care.” Corporate training materials remind staffers that “effective communication is the transfer of emotion, not information.”

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