The nursing home industry in America is run by smart, very smart business people. They know that if they pay minimum salaries they can keep their costs down and profits up. They know that if they ask 3 nurses to do what 5 nurses are needed to do…they can keep their costs down and their profits up. They know that if Mrs. Smith is agitated and demanding as a result of her advanced Alzheimer’s disease, they can give her antipsychotics and sedatives which will make her less demanding and less in need of constant nursing care and attention….again fewer nurses, lower costs, higher profits!
A new and worrisome trend in health care in the last few years has been the swift pace at which private investment firms have been buying up nursing homes. The latest example of this trend has been the $6.6 billion purchase by the Carlyle Group of a group of nursing homes in 30 states. Private equity firms are not interested in making average profits from investments in stocks, bonds, or mutual funds which would be acceptable to you and me. They are looking for unique opportunities, offering high returns that will enable them to attract big money and at the same time handsomely reward their managers.
If you didn’t think nursing homes could get worse…just wait!