Congress to investigate investor-owned nursing homes

As we reported yesterday [1] in FierceHealthcare, giant investment firm The Carlyle Group is taking steps to head off critics of its $6.3 billion acquisition of long-term care player Manor Care. Responding to pressure from unions representing Manor Care's workers, Carlyle sent letters to state regulators pledging that it would hire enough staff, train them well and make proper infrastructure investments in its homes. This gesture, however, apparently wasn't enough to impress some Congressmen, who have begun an inquiry into not only Carlyle, but business practices at investor-owned nursing homes generally. They're investigating widespread allegations that private equity firms cut staff to the bone while remaking corporate structures to avoid getting sued when patients are harmed.

Reps. John Dingell (D-MI) and Barney Frank (D-MA) are planning hearings on the topic, and most likely legislation as well. This follows action by Sens. Max Baucus (D-MT) and Charles Grassley (R-IA), who have sent letters to five private investment firms asking for information on their ownership structure and management practices. Baucus and Grassley also asked CMS for information on its oversight of nursing homes.

The concern on the The Hill isn't unique. Earlier this month, officials in Florida, Illinois, Pennsylvania, Michigan and Washington asked regulators to investigate the Carlyle acquisition--and to withhold approval of the deal until they did so.

To learn more about this investigation:
- read this piece [2] from The New York Times

Related Articles:
Manor Care buyer puts staffing promises in writing. Report [1]
Manor Care goes private in $6.3 billion deal. Report [3]
Genesis HealthCare to go private. Report [4]