The American long term care system has changed dramatically over the last several years as the need for care has increased steadily with the aging of the boomer generation. Arguably the most important change has occurred in the Medicaid funded part of the system as several states, with strong federal support, have moved toward contracting with large for profit insurance companies to provide overall administration of Medicaid Long-Term Care (LTC) services, largely displacing non-profit organizations from the administration of home and community based services. Private equity firms have also become increasingly active in the LTC space with investments in a wide range of LTC related industries. We have many concerns about the impact of these trends on both Medicaid beneficiaries and taxpayers. We are concerned that the displacement of the ethic of care, mission oriented model of aging network administered LTC by a more proprietary model will negatively affect access, quality, and cost in the Medicaid LTC programs. We are also concerned that the increasing participation of private equity firms in Medicaid funded LTC programs will threaten program quality and drive up costs.
The following sites provide an overall view of some of the information that has led to our concerns about these trends, including reports prepared and materials organized by Pepper Center staff. We intend to update this information at regular intervals.
This powerpoint summarizes some of the most salient information now available on the performance of managed long term care programs over the past several years. The public and policy makers need far more information than is currently available on these programs, especially more rigorous and comprehensive evaluation information. Given the amount of tax dollars now spent on these programs and the number of vulnerable persons served by them, the lack of evaluative information is a serious barrier to achieving effective program accountability.
The U.S. is the only other country that has outsourced as much of its publicly supported LTC system as the U.K. has. Private health insurance companies now administer many state Medicaid LTC programs through managed care organizations and investment firms, mainly private equity companies, now own very substantial portions of the nursing home industry.
Nursing homes are increasingly owned by private investment groups who manage them through complex administrative structures that make the assignment of responsibility for deficiencies in care provided to the residents very difficult.
Overdoses, Bedsores, Broken Bones: What Happened When a Private-equity Firm Sought to Care for Society’s Most Vulnerable
Public Long-term care programs, including Medicaid funded programs, are increasingly being administered by for profit corporate health firms and funded through financial companies, especially private equity firm. This very revealing report from The Washington Post shows the connection between a private equity firm’s efforts to save costs and increase profits, mainly by cutting staff, which led to declining quality of care in nursing homes owned by ManorCare, the nation’s second largest nursing home chain.
After years of improvements in their LTC services, the U.K. began to privatize these services several years ago and allow private equity investment in LTC programs. These privatization initiatives have created growing instability in the Unite Kingdom’s LTC system and a growing crisis in access to care and concerns about its quality.