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Suffering an unhealthy business model

Marketplace Staff Oct 17, 2007

Suffering an unhealthy business model

Marketplace Staff Oct 17, 2007


Doug Krizner: Shareholders in nursing home provider Manor Care will make an important decision today. They’ll vote on the proposed sale of the company to private equity’s Carlyle Group. Among the critics of this $6 billion deal is a union of health care workers. From Ohio Public Radio, Karen Kasler reports.

Karen Kasler: HCR ManorCare operates more than 500 facilities in 30 states. That’s 43,000 resident beds. Some workers in those facilities belong to the Service Employees International Union.

Dave Regan is a union president in Ohio. He says when other private-equity firms have bought nursing homes, things have gone downhill quickly.

Dave Regan: The typical business model is that we cut staffing. We then cut corners on supplies and basic cares. And not unexpectedly, the quality of care deteriorates rapidly, and there are an untold number of human tragedies that result.

Union member Chandler Luke works at Oak Pavilion, a nursing home HCR ManorCare operates in Cincinnati. He complains that staffing levels are so low, he doesn’t have the time to properly care for the residents he’s assigned.

And, he says, as it is, he’s expected to handle more physical labor than female workers.

Chandler Luke: I feel like it’s not about the residents no more, it’s just about money. How many people you can put in a room. So you can put three or four wheelchairs, three or four beds in a room, you save money. It’s just hard, I’m just dealing with it. I wish it gets better, but who knows.

A spokesman for HCR ManorCare says each nursing center is well above required staffing levels. And, he says, the union has been spreading inaccurate and misleading information about them and the transaction.

Chris Ullman is a spokesman for the Carlyle Group. He says decimating HCR ManorCare wouldn’t make good business sense.

Chris Ullman: It’s in everyone’s best interest. It’s in our interest, it’s in our investors’ interest, and more importantly, it’s in the best interest of the patients and the residents of the nursing homes to provide quality care.

But the buyout includes a 20 percent premium paid to HCR ManorCare’s stockholders. And the union says the only way Carlyle will make that up is by cutting costs.

In Columbus, this is Karen Kasler for Marketplace.

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