Corporate Takeover of Nursing Home Industry Causing Bankruptcies, Closings, and Poor Care

The nursing home industry continues to reshape itself as small, independent nursing homes focused on providing high-quality care are rapidly replaced with corporate conglomerates seeking to maximize the profits. Predictably, the harmful effects of the profit-seeking model have only amplified in the last year. According to industry analysts, the ownership structure of nursing home conglomerates – where multiple nursing homes are owned and operated by the same owners – combined with riskier financial decisions are causing a slew of bankruptcies and closings across the country. In addition to removing America’s senior citizens from their nursing home, investigations into for-profit care providers have raised serious concerns about the quality of care provided to financially stable nursing homes.

Last November, The Washington Post reported on HRC ManorCare, a massive nursing home chain owned by Carlyle Group, reportedly one of the “richest private-equity firms in the world.” Despite an owner flush with cash, the nursing home chain struggled financially for five years and eventually filed for bankruptcy. The five years of financial instability exposed HRC ManorCare’s 25,000 nursing home residents to increased health risks, according to the newspaper. The number of health code violations at the nursing home chain rose by 26 percent, which includes serious health violations for failing to prevent bedsores, medical errors, and failing to provide proper nutrition and hygienic care for residents. Serious health code violations – violations that either caused “actual harm” or put patients in “immediate jeopardy” – rose 29 percent between 2013 and 2017, the year HRC ManorCare filed for bankruptcy.

The problems for HRC ManorCare’s nursing homes began in 2011 when Carlyle Group took $1.3 billion out of the company and burdened the company with “unrealistic debt obligations.” Predictably, hundreds of nursing home staff were laid off at the facilities as the company attempted to shore up its finances. When layoffs proved insufficient to meet the company’s debt obligations, a series of “cost-cutting measures” followed which further diminished the quality of care at the chain’s nursing homes. After filing for bankruptcy in 2017, Promedica Health, a nonprofit group, purchased the chain of nursing homes. Whether Promedica Health can fix HRC ManorCare finances while also improving the care for its senior citizens remain to be seen.

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