JustCare

Tag: Private equity

  • Private equity takes advantage of older adults in long-term care homes in Britain

    Private equity takes advantage of older adults in long-term care homes in Britain

    Christine Spolar reports for Kaiser Health News on the private equity takeover of long-term care in Britain and its toll on elder care. In short, private equity is doing to British long-term care facilities exactly what has been done in the US to nursing homes: Stint on care, sell off real estate, and burden care facilities with high rent. Four Seasons Health Care, a  long-term care company in Britain, with 500 sites and 20,000 residents is now likely going into bankruptcy.

    After helping its private equity investors profit enormously through complicated financing arrangements, Four Seasons has now sold off many of its properties. Private equity is never in it for the long haul. This story is simply another version of the story we keep hearing about private equity in health care.

    Four Seasons was ultimately unable to saddle long-term care residents or the British government with high costs. Four Seasons sold off the facilities’ real estate and then put the long-term care facilities in significant debt and forced them to pay high rent and interest payments to lease their properties.

    Private equity is not generally focused on the quality of care delivered. One study found that quality suffered at these British long-term care facilities after private equity invested in them. Private equity tried to cut staff or hire less qualified staff at lower cost in order to maximize profits. Consequently, residents were left at times with inadequate care or attention to their needs. “Residents sometimes went without the appropriate care, timely medication or sufficient sanitary supplies.”

    The long-term care homes in Britain are not part of the National Health Service. They get some government support but that support has dwindled. Private equity now owns three of the five largest providers of long-term care services in Britain. And, the government does not do a good job of overseeing private equity firms.

    To complicate matters, the private equity firms’ books are designed to be difficult to understand. The local governments do not have the skills or the resources to undertake the oversight that is needed.

    The four decades beginning in 1980 saw a massive shift away from local governments in Britain operating nursing homes and long-term care facilities to for-profit and not-for-profit organizations. By 2018, local authorities provided 88 percent fewer beds, 17,100, down from 141,719.

    The British government has been unable to put decent financial reporting rules in place for companies owning long-term care facilities. Consequently, it’s hard for anyone to decipher these companies’ books and hold them accountable for bad acts. Even Conservative Party members in England have expressed concern about private equity “taking advantage of some of the most vulnerable people in our society without oversight, without controls.”

    Here’s more from Just Care:

  • Socialized medicine v. incremental improvements

    Socialized medicine v. incremental improvements

    For the last several decades, David Himmelstein and Steffie Woolhandler, the founders of Physicians for a National Health Care Program, have been ardent advocates of a “single-payer” health care system, government-administered improved Medicare for All. They dismissed incremental improvements to hold corporate health insurers in check and stopped short of advocating for socialized medicine. As our health care has moved further away from Medicare for All, in a piece for The Nation they now argue that single-payer is not enough; we need socialized medicine. While that would be wonderful, with health care, slow and steady is more likely to win the race.

    Socialized medicine has always been a laudable and important goal for the US because, for the most part, it takes profit out of health care and puts patients first. The Veterans Administration and Federally Qualified Health Plans are forms of socialized medicine–in which the health care facilities are government-owned and the health care providers work for the government–that are known for their excellent care at lower cost. Members of Congress rely heavily on this type of care through Walter Reed National Medical Center, one of the best hospital centers in the nation. We could and should expand these facilities so everyone has the choice of using them.

    But, socialized medicine is a pipe dream at the moment. If we don’t focus now on curbing corporate power incrementally, it’s hard to see how there is not a total corporate takeover of our healthcare system in the near-term and fewer openings to achieve an equitable health care system down the road.

    For example, Medicaid, which had been administered exclusively by state governments, is now almost exclusively administered by corporations. With Medicare Advantage enrollment growing, Medicare is also increasingly run by corporate health insurers. And, a new government program in traditional Medicare–direct contracting–has opened the door to private equity and corporate insurers overseeing people’s care.

    We need to stop the privatization of Medicare and Medicaid. Since we can’t stop it right now, we need to slow it down. Privatization drives up costs and restricts access to care, with virtually no accountability for bad acts from the corporations. While curbing privatization is not easy, at the moment we cannot expect Congress to enact Medicare for All legislation, much less socialized medicine.

    We can galvanize Americans to speak up against our current system though. Everyone can see and feel how privatization of Medicare and Medicaid is driving up costs, restricting access to care, and hurting large swaths of the population.

    Medicare for All would save over $600 billion in administrative costs. It would generate the funds needed to guarantee good affordable coverage to everyone. It would also give everyone the freedom to choose the doctors and hospitals they want to use, eliminating provider networks. That’s not possible in our current system.

    But, today, doctors and hospitals are largely owned by corporations and private equity firms. These entities have been found to engage in practices that can keep health care providers from delivering the care people need. They put profits first and that can compromise quality of care.

    Himmelstein and Woolhandler argue that Medicare for All cannot achieve guaranteed affordable health care for all if the government is paying corporations and private equity firms to deliver care. Private equity is only about short-term gains for the purpose of sale. Corporations could be in business for the long-term, but profits always come first. Communities should be in charge of people’s health. Here’s how they describe what’s happening to health care in the US:

    “For-profits now own the vast majority of hospices, nursing homes, urgent care and dialysis clinics, imaging facilities, ambulance companies, and home care agencies. They garner nearly one-third of the total revenue of psychiatric and substance-use treatment hospitals, and control a growing share of general hospitals. Meanwhile, insurers are buying up clinics and doctors, eliminating any semblance of clinical independence. Optum—a subsidiary of UnitedHealth, the nation’s largest insurer—controls more than 1,500 clinics with 60,000 doctors, and CVS/Aetna already runs 1,200 Minute Clinics, with plans to expand its offerings in primary and behavioral care. Increasingly, Americans’ insurer is also their doctor.

    The rise of corporate ownership of American health care has been stunning. Even more malevolent actors have now entered the fray. Private equity firms’ health care acquisitions totaled about $750 billion over the last decade, more than $119 billion in 2019 alone. KKR and Blackstone now employ or control more than 40,000 doctors, physician assistants, and nurse practitioners, and provide staffing for about one-third of US emergency rooms. Those companies were largely responsible for the epidemic of surprise bills. And private equity has been gobbling up primary care practices and mental health, orthopedics, and vision care providers; they already employ nearly 10 percent of dermatologists.”

    This is all scary and bodes ill for the future of health care in the US. Still, given our Congress, the immediate fight should be to level the playing field between traditional Medicare and Medicare Advantage so that people have a meaningful choice between them and we are not overpaying Medicare Advantage plans. Congresswoman Katie Porter, Jan Schakowsky and Rosa Delauro as well as Senator Elizabeth Warren, along with 15 other members of Congress, recently led a letter to CMS arguing for a level playing field. We need scores of members signing on to these letters and driving legislation to strengthen traditional Medicare and end overpayments in Medicare Advantage.

    Traditional Medicare needs an out-of-pocket cap, so that people are not at financial risk if they do not have supplemental coverage. Right now, people in Medicare Advantage who want to switch to traditional Medicare are often locked out of traditional Medicare because, even if they can afford supplemental coverage, which can be costly, insurers in most states do not have to sell it to them.

    Here’s more from Just Care:

  • Patient safety at risk in private-equity controlled emergency rooms

    Patient safety at risk in private-equity controlled emergency rooms

    Gretchen Morgenson reports for NBC News.com on a medical director fired after exposing the risks of emergency treatment at his hospital in Kansas City. Inadequate staffing jeopardized patient safety. But, his private-equity employers, Kolberg Kravis (KKR) and, before that, Clayton, Dubilier & Rice, like other for-profit owners of medical groups, were focused on maximizing profits.

    Ray Brevont, the medical director and independent contractor, complained about the fact that, at times, understaffing in the emergency department meant no physician was present when a patient’s life was at risk. Brevont was let go. How often does this happen? For sure, many other doctors in Brevont’s position fear speaking out against their employers and putting their jobs at risk.

    Today, four in ten emergency departments are controlled by for-profit entities, which are responsible for the staffing. KKR, which owns Envision Healthcare, and Blackstone, another private equity group, which owns TeamHealth, are two big companies in this space.

    Private equity firms are generally in the business of buying up companies, finding ways to increase their profits, often through cutting costs, and selling them off a few years later at a profit. Because emergency departments are big profit centers, private equity firms are buying up control of these departments and have been charged with interfering in the practice of medicine to the detriment of patients.

    Private equity firms implement policies in hospital emergency departments that are often unavailable for public scrutiny. But, Brevont claimed that KKR’s “code blue” policy put patients’ lives in danger. Emergency room physicians were expected to care for patients outside the hospital’s emergency department. The consequence: No emergency room physician in the emergency department.

    Brevont sued Emcare, the company that hired him, which is a subsidiary of Envision, saying he had been wrongfully let go. Under federal law, the emergency department was required to have a physician present at all times. Brevont’s boss told him that profits explained the failure to have a physician present but “Profits are in everyone’s best interest.”

    This is not the first suit against KKR for interfering wrongly in the practice of medicine. Recently, ER physicians in California sued KKR’s Envision Healthcare for wrongful interference in the practice of medicine.

    Brevont won $26 million in damages. Envision blamed a hospital policy for the understaffing and took no responsibility. The appellate court ruling stated that Envision “makes a physician the owner of these subsidiaries to comply with the regulations, which prohibit a publicly traded company from providing medical services.” Of note, the named physician owner had nothing to do with the emergency departments he allegedly owned.

    Most states require physicians to be owners of these companies as nonphysicians cannot be practicing medicine or directing decisions about treatment. But, for-profit companies find ways around the issue. When they are found to violate the law, they tend not to be penalized in a way that would deter future activity of the same sort. The penalty too often does not fit the crime.

    Why is the profit motive so dangerous? Companies might decide how much time a physician can spend with a patient, what tests the physician can administer and whether the patient needs to see a physician at all, with little focus on evidence-based medical practice or patient needs.

    For reasons that are impossible to justify, the federal government often continues to allow these companies to continue their businesses after they have been found guilty of fraud and other wrongs if they say they will commit to behaving appropriately down the line. Curious how we throw people in jail for the rest of their lives for far less serious crimes.

    Here’s more from Just Care:

  • Private equity-owned hospice and home health agencies drive up Medicare spending, jeopardize quality of care

    Private equity-owned hospice and home health agencies drive up Medicare spending, jeopardize quality of care

    Jake Johnson writes for Common Dreams about a new report from the Private Equity Stakeholder Project that focuses on private equity’s “disastrous” hold on home health care and hospice care. Vulnerable older adults and people with disabilities are paying a high price, as is the Medicare program. Congress is sitting back and watching.

    Non-profit agencies once provided most home health and hospice services. Today, for-profit companies have taken over the majority of these two industries. Two in three hospices are for-profit and two in five home health care agencies are for-profit. Private equity has invested heavily in the corporations that own these agencies.

    Medicare home health care and hospice care can be good money for corporations, so long as care is limited and low-cost. So, they are likely working to get more people to take advantage of these benefits. More Medicare investment in this care would be wonderful–many people who would benefit from this coverage are unaware they are eligible for it–if the money is being spent wisely and being directed towards more people with Medicare who want and need these benefits.

    But, if private equity investment in nursing homes and PACE programs is any indication, people are getting far lower quality hospice and home health care from companies with private equity backing, and Medicare is spending more than it should for their care. Private equity ownership of nursing homes is associated with poorer care and more deaths. The home health and hospice industries are even less regulated than nursing homes.

    With private equity, profits come first. The cost to vulnerable older adults and people with disabilities receiving care from private-equity backed companies is likely high but hard to measure. In a 2021 Congressional hearing on private-equity owned nursing homes, Congressman Bill Pascrell of New Jersey asked, “How many grandmothers and grandfathers died because profits were prized above lives, with our taxpayer dollars funding this?”

    So, are any private-equity owned hospice agencies delivering quality care and not driving up Medicare spending needlessly? As with Medicare Advantage plans, we do not have good agency-specific information. The Private Equity Stakeholder Project report concludes, more generally: “Unfortunately, for-profit home healthcare and hospice companies have been linked to lower standards of care compared to their non-profit counterparts, including, but not limited to, a lower number of visits to patients by healthcare professionals (registered nurses, physicians, or nurse practitioners) in their final days in hospice, higher rates of hospitalization in home healthcare, and poorly paid—yet highly stressed—employees in both sectors.” “This is additionally troubling, because such for-profit entities serve higher percentages of people of color and those with low incomes.”

    Congress needs to start paying attention. Already a number of home health and hospice agencies have been charged with overbilling Medicare, underpaying their workers and neglecting patient care needs. For example, there are allegations that Kohlberg Kravis-owned BrightSpring, a home health care agency, put patients at risk, and other private-equity backed agencies have been charged with fraudulent billing of Medicare and Medicaid.

    In October of last year, Senator Elizabeth Warren reintroduced the Stop Wall Street Looting Act to stop private equity’s  “predatory” and “abusive” practices, but that bill is going nowhere at the moment.

    Here’s more from Just Care:

  • Private equity succeeding at keeping Congress from ending surprise medical bills

    Private equity succeeding at keeping Congress from ending surprise medical bills

    People with Medicare are among the only Americans with health insurance who are spared surprise medical bills. Everyone else lives in fear of going to an in-network hospital and not being able to ensure that the doctors who treat them are also in-network. To date, private equity firms that own doctors’ groups are succeeding at keeping Congress from ending these surprise medical bills.

    It’s hard to understand why these moneyed interests have been able to get away with charging enormous sums for care they provide. But, then it’s hard to understand why hospitals and pharmaceutical companies have been able to get away with charging astronomical rates. 

    The overwhelming majority of Americans want Congress to make health care affordable. It’s a top priority for Republicans and Democrats alike. As it is, one in four Americans say that they skip or delay care because of the cost, even when they have insurance. One in six received a surprise medical bill in 2017. 

    The power behind surprise medical bills comes from investors in private equity and venture capital firms, according to Kaiser Health News. Particularly in the areas of anesthesia and emergency medicine, investors now own large physician groups. To maximize their profits, they stay out of health insurance networks. And, they charge patients very high prices.

    Instead of working for hospitals, these doctors’ groups work for companies owned by hedge funds. And, hospitals contract with these companies for their services, sometimes getting a share of the profits the companies earn. Members of Congress fear taking down these companies. If they act, they are likely to jeopardize their reelection, with these investor-owned companies supporting their opponents.

    The two biggest companies that own doctors’ groups are TeamHealth and EmCare, which are owned by Blackstone and KKR respectively, two large private equity firms. They are doing particularly well since, in most states, they have no reason to provide in-network services. They can stay out of network and charge patients with private insurance pretty much what they will on top of what the insurer pays.

    The only solution that will rein in health care costs and protect Americans is for the federal government to step in and regulate all provider rates. That is not on the table in Congress. The best solution on the table–proposed by employers and insurers–would have insurers pay out-of-network physicians the average of the rate in-network physicians are paid. That rate is already far higher than Medicare rates.

    But, the employers and insurers are being outspent by the private equity firms. Private equity is arguing for arbitration. New York has a state law that settles surprise billing disputes through arbitration and it has served the private equity firms well. Costs have gone up. Because private equity firms have deep pockets, so far, they are winning.

    Here’s more from Just Care: