My parents ended up being forced by circumstances to move into a retirement home about five years ago. Fortunately, the place turned out to be run by people who mostly cared about their clients and so my parents' lives were basically OK, except that the food sucked (which AFAICT is par for the course at retirement homes). But a few months ago the place was acquired by a different company, which is trying to squeeze out higher profits. Staffing and services are being cut, and prices are going up. Even the food got worse, which I didn't think was even possible. The response when someone complains is, "If you don't like it you are free to leave."
Yeah, right. My barely mobile 90-year-old parents, one of whom has Parkinson's, are just going to pack up and go. They know perfectly well that they have a captive audience.
Thankfully, my mother died before the acquisition, and my father died last week, only a few months after the acquisition, so I don't have to deal with this any more. But caveat emptor: if you ever go into a retirement home, think about what will happen if they change ownership. Even if it looks great, or even acceptable, now, there is no guarantee that it will still be great, or even acceptable, tomorrow, unless you somehow manage to negotiate such a guarantee. I have no idea what a contract provision like that would even look like. But I am going to be facing this problem myself some day, so I'd love to hear ideas.
The biggest sign something is broken is when someone writes: "Thankfully, my mother died before the acquisition, and my father died last week, only a few months after the acquisition, so I don't have to deal with this any more."
To be fair, my mother had cancer and my father had Parkinson's, and that was a much bigger factor in their ultimate quality of life than any deficiencies in the retirement home they found themselves in. So I don't mean "thankfully" in the sense that "thankfully they died prematurely so they didn't have to suffer under their home's new management", I mean it, "Thankfully the natural course of their lives timed their deaths so that they were minimally affected by the new management."
But yeah, it kinda sucks, and not just for the residents who are still there. It sucks for the rank-and-file staff as well, most of whom still really care about their clients, but who now have to answer to people who absolutely do not care about anything other than money.
Where I live Medicare and Medicaid want people to live (and die) in their own homes. They send out nurses and nurse practitioners to you. That is what I want. After some research I realized the provider that I want which is UTSW in Dallas has a geographical radius that they serve. I am planning to eventually move to be within that radius.
That was my parents' original plan. But they were in denial about how much preparation would be needed to make that happen. They lived in a split-level house and my father had severe osteoarthritis in his knees. It's actually a miracle that he didn't fall and break his neck going up and down the stairs. But one day he fell in the shower and could not get back up, and that was the beginning of the end.
Thank you. But he was two months shy of his 90th birthday and, except for struggles with osteoarthritis and Parkinson's, he had a good run. I'm sad that he's gone, but it's not like it took anyone by surprise. And I'm glad that his suffering, which towards the end was not insignificant (though he was very stoic about it), is over.
The last week has actually been pretty (ahem) interesting in a lot of ways. I should probably write a blog post about it.
I’m sure the new owners are scummy, but the fundamental problem isn’t scummy people. There’s lots of markets that are okay-ish notwithstanding scummy people. Even those with natural lock in effects.
The fundamental problem is it is at the intersection of two out of the three areas of the economy that have had insane cost growth over the last 30 years—-housing and healthcare (the third is education.) For the first one we know roughly what we need to do but won’t. For the second we don’t even have that.
> housing and healthcare (the third is education.) For the first one we know roughly what we need to do but won’t. For the second we don’t even have that.
Healthcare costs increasing is of very little concern to nursing facility ownership. Almost none of that is borne by the facility itself. They'll often hire skeletal crews of CNAs and LPNs (I was a paramedic, rare was it to see a facility in our area that even had an RN, and if they were, they were the DON, Director of Nursing, and had no direct hand in patient care). The facilities would contract with a physician service who oftentimes would not even speak to the patient, let alone -see- them.
And every, every single interaction with actual care provision was fully billed to the patient/resident's insurance. Anything that is not a profit making center for facility ownership is ruthlessly subcontracted out. A solid portion of the SNFs in my county will openly call 911 for anything beyond the most absolute basic first aid, even when their employees are ostensibly better educated/trained than the EMTs who might be responding.
Healthcare costs in the US are an abomination, but that's not the issue here, or not directly.
> There’s lots of markets that are okay-ish notwithstanding scummy people.
It is not at all clear to me that there are "lots" of such markets, but that is neither here nor there. A prerequisite for an okay-ish market is that buyers need to be able to choose not to buy, and when you have literal limited mobility it becomes very difficult to walk away from your housing and care provider, either literally or figuratively.
The fundamental problem is that we have ceased demanding that our government produce reasonable outcomes.
The reasons for that are many, but it's a core sign of how far we've fallen that there's even a discussion or argument about this obvious fact. We are in charge. We can just ban private equity companies from doing this you know.
There didn't used to be ambiguity about the point of having a society and having that society governed by the people and having those people's representatives solve problems like this.
That ambiguity was created on purpose, for money, by specific people. Not coincidentally, they're the same people making the profits in this story.
As a (former) paramedic, PE-run SNFs (skilled nursing facilities) are an absolute evil that absolutely kills people. I do want to be clear before any of the following that while there is a truth that many of the nursing staff at these facilities are often the lower quality tier of nursing care, they often care greatly for their patients/residents.
Staffing/flooring ratios? Laughable correlation to reality. Many a time? A single LPN "supervising" a floor of CNAs. Doctor consultation? The CNA oftentimes leaves a voicemail for the physician to review and care decisions are made without the physician talking to either the patient or a nurse (I'm not sure how this isn't malpractice, and I'm not convinced it's not). Facility "policy", often hidden behind "insurance requirements" have the facility overburdening the local EMS system because "we are required to call 911 for anything larger than a bandaid", and we can find ourselves doing anything from the most basic wound care to pointing out to a sleep-deprived CNA "you know your patient appears to have had a stroke sometime recently, right?". EMS arrives and often gets woefully incomplete or inaccurate history information (often for patients who are unable to be reliable historians themselves).
There is, however, ALWAYS money for the colorful glossy brochures/books at the front desk, or the big shiny billboard or TV ad that talks about "mom being in good hands with round the clock nursing care!" (and of course, a facility fee per month that would make you feel like she has her own personal RN and on-call MD 24/7").
> There is, however, ALWAYS money for the colorful glossy brochures
OMG, so much this! One of the things that happened after the acquisition is that they changed the phones to play a marketing pitch whenever you were on hold. (They even did this on the resident's phones!) One of the things the pitch said was that the place featured "chef-inspired meals" which was about as disconnected as you could possibly get from what I knew first-hand to be reality. It was one of the most bald-faced lies I have ever heard in my life, and it really steamed my clams because I knew there was nothing I could do about it.
I don't understand how PE manages to get debt financing for LBOs? Seems like a big risk for the creditors?
If I buy a corp at 10% net margin for 5x ebidta on 80% leverage, i’ve really paid 1x ebidta. then lets say 20% of revenue was going to R/D and stuff that would only pay off in a few years. I cut all R/D so now its at 30% net margin.
So I can triple my money every year because it’s now generating profits of 3x my original downpayment every year (minus interest payments). After a few years of zero R/D the company has no good products to sell, demand falls, and it’s declared insolvent. Well, I dont care about my 20% equity downpayment because I already got like a 3-9x return. But the debt financers are screwed.
I worked for a while selling fractional nurses into for-profit nursing/retirement homes at the end of Covid, got to interview some industry experts, who told me that these for-profit homes are the 21st century equivalent of 19th century insane asylums. If you or your loved ones have to enter one, seek at all costs a home that is not for profit (Catholic orders run some, Jewish organizations others, the VA also offers these homes to vets). Every single one will uphold higher values than the for-profit entities sucking resources from people who are no longer in a position to advocate for themselves.
The market is perfectly efficient, value is well attributed, lobbying is a social good, being rich means you’re smart and should have special privileges, optimizing for returns on investment is equivalent to optimizing for a better society
People created limited liability and private equity. Fiction is not something you get rid off. Its something you live with. It is a permanent side effect of how the over rated Humam Brain works. The brain makes predictions over multiple time horizons. When there are contradictions between these predictions how is the 3 inch chimp brain supposed to handle it while not splitting? Make up a story for the sake of coherence. Everyone is doing it everyday. They are all making up fictions to handle unpredictability.
There are a finite number of legislative girders underpinning the judicial capacity to support these fictions. When they're removed, it will not be legally possible to maintain them. They are not a product of nature, they are a product of real humans, and as such are subject to human change and intervention. They are among the least durable constructs we interact with.
Don’t require states to uniformly respect limited liability granted in other states. Allow them to add limits, requirements, etc. let the different states explore the trade off.
It could happen this year; legislatures just need to pass laws. The hardest part is people posting comments like yours as a diversion from doing real work (though there are other hard parts too).
Revoke corporate charters. Prevent and break up consolidation.
All corporate entities require a registration to operate in a state if they have a physical presence.
In this instance, you can also pass a law along the lines of "After setup, all care homes are required to spend 90/95/99% of their income on direct care of the residents or your charter gets revoked." This would prevent the incentives to buy them in the first place.
It isn’t the fault of private equity that banks make excessive loans against assets in a leveraged buyout. Banks (such as per the article, The Royal Bank of Scotland) have a duty to ensure that their loans are of properly assessed risk, and if the PE firm that wants to or has bought an asset does not look qualified to run it, then the banks should not be making the loans. Articles that keep casually dropping triggers like “[t]hey rubbed their hands together and said, 'Sooner or later, as the demand increases, the prices must go up'” are not seeking workable solutions but capitalizing on their ability to raise ire. It’s much more yet another article that does its best to paint a profit motive as an evil, completely ignoring that any endeavor that is not profitable is going to die sooner rather than later, and when it’s a government run endeavor then the taxpayers, who were completely uninvolved in the deicsions of where their money should be spent, are the ones left on the hook - HTF is that better?
My parents ended up being forced by circumstances to move into a retirement home about five years ago. Fortunately, the place turned out to be run by people who mostly cared about their clients and so my parents' lives were basically OK, except that the food sucked (which AFAICT is par for the course at retirement homes). But a few months ago the place was acquired by a different company, which is trying to squeeze out higher profits. Staffing and services are being cut, and prices are going up. Even the food got worse, which I didn't think was even possible. The response when someone complains is, "If you don't like it you are free to leave."
Yeah, right. My barely mobile 90-year-old parents, one of whom has Parkinson's, are just going to pack up and go. They know perfectly well that they have a captive audience.
Thankfully, my mother died before the acquisition, and my father died last week, only a few months after the acquisition, so I don't have to deal with this any more. But caveat emptor: if you ever go into a retirement home, think about what will happen if they change ownership. Even if it looks great, or even acceptable, now, there is no guarantee that it will still be great, or even acceptable, tomorrow, unless you somehow manage to negotiate such a guarantee. I have no idea what a contract provision like that would even look like. But I am going to be facing this problem myself some day, so I'd love to hear ideas.
The biggest sign something is broken is when someone writes: "Thankfully, my mother died before the acquisition, and my father died last week, only a few months after the acquisition, so I don't have to deal with this any more."
Depressing to read. I'm not sure on which side.
To be fair, my mother had cancer and my father had Parkinson's, and that was a much bigger factor in their ultimate quality of life than any deficiencies in the retirement home they found themselves in. So I don't mean "thankfully" in the sense that "thankfully they died prematurely so they didn't have to suffer under their home's new management", I mean it, "Thankfully the natural course of their lives timed their deaths so that they were minimally affected by the new management."
But yeah, it kinda sucks, and not just for the residents who are still there. It sucks for the rank-and-file staff as well, most of whom still really care about their clients, but who now have to answer to people who absolutely do not care about anything other than money.
Where I live Medicare and Medicaid want people to live (and die) in their own homes. They send out nurses and nurse practitioners to you. That is what I want. After some research I realized the provider that I want which is UTSW in Dallas has a geographical radius that they serve. I am planning to eventually move to be within that radius.
https://utswmed.org/medblog/geriatrics-cove-team-makes-house...
That was my parents' original plan. But they were in denial about how much preparation would be needed to make that happen. They lived in a split-level house and my father had severe osteoarthritis in his knees. It's actually a miracle that he didn't fall and break his neck going up and down the stairs. But one day he fell in the shower and could not get back up, and that was the beginning of the end.
The way you nonchalantly mentioned your dad died last week caught me off guard -- my condolences!
Thank you. But he was two months shy of his 90th birthday and, except for struggles with osteoarthritis and Parkinson's, he had a good run. I'm sad that he's gone, but it's not like it took anyone by surprise. And I'm glad that his suffering, which towards the end was not insignificant (though he was very stoic about it), is over.
The last week has actually been pretty (ahem) interesting in a lot of ways. I should probably write a blog post about it.
I’m sure the new owners are scummy, but the fundamental problem isn’t scummy people. There’s lots of markets that are okay-ish notwithstanding scummy people. Even those with natural lock in effects.
The fundamental problem is it is at the intersection of two out of the three areas of the economy that have had insane cost growth over the last 30 years—-housing and healthcare (the third is education.) For the first one we know roughly what we need to do but won’t. For the second we don’t even have that.
> housing and healthcare (the third is education.) For the first one we know roughly what we need to do but won’t. For the second we don’t even have that.
Healthcare costs increasing is of very little concern to nursing facility ownership. Almost none of that is borne by the facility itself. They'll often hire skeletal crews of CNAs and LPNs (I was a paramedic, rare was it to see a facility in our area that even had an RN, and if they were, they were the DON, Director of Nursing, and had no direct hand in patient care). The facilities would contract with a physician service who oftentimes would not even speak to the patient, let alone -see- them.
And every, every single interaction with actual care provision was fully billed to the patient/resident's insurance. Anything that is not a profit making center for facility ownership is ruthlessly subcontracted out. A solid portion of the SNFs in my county will openly call 911 for anything beyond the most absolute basic first aid, even when their employees are ostensibly better educated/trained than the EMTs who might be responding.
Healthcare costs in the US are an abomination, but that's not the issue here, or not directly.
> There’s lots of markets that are okay-ish notwithstanding scummy people.
It is not at all clear to me that there are "lots" of such markets, but that is neither here nor there. A prerequisite for an okay-ish market is that buyers need to be able to choose not to buy, and when you have literal limited mobility it becomes very difficult to walk away from your housing and care provider, either literally or figuratively.
That's not the fundamental problem.
The fundamental problem is that we have ceased demanding that our government produce reasonable outcomes.
The reasons for that are many, but it's a core sign of how far we've fallen that there's even a discussion or argument about this obvious fact. We are in charge. We can just ban private equity companies from doing this you know.
There didn't used to be ambiguity about the point of having a society and having that society governed by the people and having those people's representatives solve problems like this.
That ambiguity was created on purpose, for money, by specific people. Not coincidentally, they're the same people making the profits in this story.
As a (former) paramedic, PE-run SNFs (skilled nursing facilities) are an absolute evil that absolutely kills people. I do want to be clear before any of the following that while there is a truth that many of the nursing staff at these facilities are often the lower quality tier of nursing care, they often care greatly for their patients/residents.
Staffing/flooring ratios? Laughable correlation to reality. Many a time? A single LPN "supervising" a floor of CNAs. Doctor consultation? The CNA oftentimes leaves a voicemail for the physician to review and care decisions are made without the physician talking to either the patient or a nurse (I'm not sure how this isn't malpractice, and I'm not convinced it's not). Facility "policy", often hidden behind "insurance requirements" have the facility overburdening the local EMS system because "we are required to call 911 for anything larger than a bandaid", and we can find ourselves doing anything from the most basic wound care to pointing out to a sleep-deprived CNA "you know your patient appears to have had a stroke sometime recently, right?". EMS arrives and often gets woefully incomplete or inaccurate history information (often for patients who are unable to be reliable historians themselves).
There is, however, ALWAYS money for the colorful glossy brochures/books at the front desk, or the big shiny billboard or TV ad that talks about "mom being in good hands with round the clock nursing care!" (and of course, a facility fee per month that would make you feel like she has her own personal RN and on-call MD 24/7").
> There is, however, ALWAYS money for the colorful glossy brochures
OMG, so much this! One of the things that happened after the acquisition is that they changed the phones to play a marketing pitch whenever you were on hold. (They even did this on the resident's phones!) One of the things the pitch said was that the place featured "chef-inspired meals" which was about as disconnected as you could possibly get from what I knew first-hand to be reality. It was one of the most bald-faced lies I have ever heard in my life, and it really steamed my clams because I knew there was nothing I could do about it.
I don't understand how PE manages to get debt financing for LBOs? Seems like a big risk for the creditors?
If I buy a corp at 10% net margin for 5x ebidta on 80% leverage, i’ve really paid 1x ebidta. then lets say 20% of revenue was going to R/D and stuff that would only pay off in a few years. I cut all R/D so now its at 30% net margin.
So I can triple my money every year because it’s now generating profits of 3x my original downpayment every year (minus interest payments). After a few years of zero R/D the company has no good products to sell, demand falls, and it’s declared insolvent. Well, I dont care about my 20% equity downpayment because I already got like a 3-9x return. But the debt financers are screwed.
> don't understand how PE manages to get debt financing for LBOs? Seems like a big risk for the creditors?
Hype aside they tend to pay it back. When they don’t, recovery is streamlined.
I worked for a while selling fractional nurses into for-profit nursing/retirement homes at the end of Covid, got to interview some industry experts, who told me that these for-profit homes are the 21st century equivalent of 19th century insane asylums. If you or your loved ones have to enter one, seek at all costs a home that is not for profit (Catholic orders run some, Jewish organizations others, the VA also offers these homes to vets). Every single one will uphold higher values than the for-profit entities sucking resources from people who are no longer in a position to advocate for themselves.
The market is perfectly efficient, value is well attributed, lobbying is a social good, being rich means you’re smart and should have special privileges, optimizing for returns on investment is equivalent to optimizing for a better society
Obviously I’m kidding, and something is rotten
Could someone (please not an LLM) attempt to steel man the following position for me:
Private equity is overall good for society
A human ATM is just a teller.
A teller would be paid for doing the job.
Private equity didn't. People did. We really need to get rid of limited liability and corporate fictions.
People created limited liability and private equity. Fiction is not something you get rid off. Its something you live with. It is a permanent side effect of how the over rated Humam Brain works. The brain makes predictions over multiple time horizons. When there are contradictions between these predictions how is the 3 inch chimp brain supposed to handle it while not splitting? Make up a story for the sake of coherence. Everyone is doing it everyday. They are all making up fictions to handle unpredictability.
There are a finite number of legislative girders underpinning the judicial capacity to support these fictions. When they're removed, it will not be legally possible to maintain them. They are not a product of nature, they are a product of real humans, and as such are subject to human change and intervention. They are among the least durable constructs we interact with.
The intentions may be good but that's unlikely to happen in our lifetime.
What might be a more feasible solution?
Don’t require states to uniformly respect limited liability granted in other states. Allow them to add limits, requirements, etc. let the different states explore the trade off.
Oof, talk about making compliance difficult and expensive if a company has 50 different sets of regulations to comply with to do business in the US.
It could happen this year; legislatures just need to pass laws. The hardest part is people posting comments like yours as a diversion from doing real work (though there are other hard parts too).
multi-generational households
I would rather have access to a suicide pod.
careful dont let private equity hear you say that
Revoke corporate charters. Prevent and break up consolidation.
All corporate entities require a registration to operate in a state if they have a physical presence.
In this instance, you can also pass a law along the lines of "After setup, all care homes are required to spend 90/95/99% of their income on direct care of the residents or your charter gets revoked." This would prevent the incentives to buy them in the first place.
Get private equity out of healthcare.
Frankly given the sorry mid/long-term state of the UK economy, yes, this is the absolute essential thing to be moaning about...
And frankly moaning about this used to be right wing conspiracies a few years ago so yey for another pendulum swing...
It isn’t the fault of private equity that banks make excessive loans against assets in a leveraged buyout. Banks (such as per the article, The Royal Bank of Scotland) have a duty to ensure that their loans are of properly assessed risk, and if the PE firm that wants to or has bought an asset does not look qualified to run it, then the banks should not be making the loans. Articles that keep casually dropping triggers like “[t]hey rubbed their hands together and said, 'Sooner or later, as the demand increases, the prices must go up'” are not seeking workable solutions but capitalizing on their ability to raise ire. It’s much more yet another article that does its best to paint a profit motive as an evil, completely ignoring that any endeavor that is not profitable is going to die sooner rather than later, and when it’s a government run endeavor then the taxpayers, who were completely uninvolved in the deicsions of where their money should be spent, are the ones left on the hook - HTF is that better?