The chairmen of the House of Representatives’ Energy and Commerce Committee and Financial Services Committee have joined Senators Chuck Grassley and Max Baucus of the Senate Finance Committee, in launching inquiries into patient care levels at private equity-owned nursing homes.
The New York Times reported that hearings on the matter are likely to be held by John Dingell, chairman of the Energy and Commerce Committee, and Barney Frank, the chairman of the House Financial Services Committee, which has already held several tax-related private equity hearings.
As PEO previously reported, Congressional concern stems from a September New York Times article which alleged substandard patient care was prevalent at private equity-owned US nursing home chains, such as those owned by Warburg Pincus. Warbug Pincus declined comment.
Meanwhile, the Service Employees International Union has used the Times story as part of its PR-campagin against The Carlyle Group, which is set to become the owner of nursing home chain HCR Manor Care. Carlyle has pointed out that Manor Care data was not included in the Times’ analysis, and as the buyout still needs regulatory approval, it is not presently an owner of nursing homes.
SEIU: protesting Carlyle
The union has persisted in protesting the buyout firm, however, via blogs, email blasts and demonstrations outside Carlyle’s Washington DC headquarters. “Coalitions in eight states are raising concerns that the biggest private equity takeover of a nursing home company in history – the Carlyle Group’s pending $6.3 billion buyout of HCR Manor Care – could come at the expense of nursing home residents, taxpayers, and workers,” the SEIU said in a press release.
Carlyle also pledged in a statement that post-buyout it would “continue to provide quality health care services for our patients and residents”, and outlined steps it would take, including continuing capital investments to help “ensure Manor Care’s facilities continue to be well-maintained, attractive structures, as well as state-of-the-art in their rehabilitation capabilities, clinical technology and record keeping”.
Congress’ increasing interest in private equity’s portfolio companies recalls the flurry of hearings and bills introduced this summer in both the House and Senate that focused on the taxation of carried interest and publicly traded financial partnerships. Charles Rangel, chairman of the House Ways and Means Committee, is expected to introduce a sweeping tax reform bill this week that will touch on private equity taxation.