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.
I didn't read that as saying anything about your character; it's an understandable way to react. It is an indictment of the system that people have to feel that way when it really shouldn't have to feel that way.
I think most of us read it the way you meant it. Sorry for your loss.
The concern you raise is front and center for me, because my mother is 87 and we’ve been looking for a place. All the options are terrible, without considering PE.
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.
That’s totally doable and encouraged, as it’s by far more cost effective.
But you really, really need a support system of willing people who care about you, and are savvy enough to effectively advocate for you when you lose that ability. Independent home care works well when you need help, not constant care.
Our family worked with this for 6 years with my bad post stroke and for about a year with my mom and cancer. My siblings were all on board and my mom was uniquely positioned - she was a regulator at the state level who was adept with the rules (and had in fact wrote many!).
Even so, as things progressed it was hard. My mom was devoted to my dad, and filled every gap. We depended on hired help for mom, and despite the financial resources it was difficult to get staff.
This is going to sound a bit wild, and only viable under 70 or so, but I've met a lot of 55-70 expats in walkable southeast asian cities. There's obviously varying circumstances so do the research, but you can almost get adopted by your landlord family, where you're getting home cooked meals, rides, doors held open, etc. This part of the world is so family oriented, it just comes naturally to many of them.
It's a nice idea, though I hope I'm humble enough to vacate my house for a younger family that will make the most use of it. By which time I hope to be in a manageable apartment, or perhaps a group home where I can pass the time with others at a similar stage in life.
For some (like one of my family members), circumstances are such that they need more social attention than the family/medical system can provide. That's one of the reasons we are considering.
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").
Also a former medic, the best care homes I ever went to were the Jewish Home for the Aged. They were so much nicer and the patients there never had decubitus ulcers or staph infection in skin folds from not being cleaned.
The worst place I ever saw was Atherton Long Care which supposedly is fancy and expensive but they had neglected an old lady so poorly I actually reported them to CDPH and the ombudsman. She had full on necrotized tissue under both her breasts and a rotted unchanged g-tube that you could smell all the way down the hallway to the nursing station it was so sad. John George Psych hospital and Cordilleras MHRC are both also very sad hellholes. Patients sleeping laying on the floor in the hallways with a blanket because the rooms are full etc. We had a lady who purposely stabbed herself in the eye so she could go to the ER to get out of Cordilleras because it was so awful.
What I found if you ever need to place your loved on in a care home is the sniff test is the best assessment of how well it's run and if the patients are cared for. If patients are cleaned regularly and not left to sit in their own diapers it really shows there is enough staff ratio and attention given to the patients. Go on a random evening or day and at different times. Food quality is also a good indicator - eat lunch with your parents there. Would you eat this yourself voluntarily? If yes, it's probably a good place not run on a shoestring budget.
Also - hn readers - if your mom is in a care home please always check under her breasts to ensure she is clean and dry there every time you visit. Far far too many old ladies get candida and bacterial infections under their breasts that are never cleaned or taken care of because it's embarrassing to check or clean and dry so then it just gets wet and rots and is painful, sad and gross and can lead to even worse things like cellulitis or an abscess.
> 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.
The people that perform these acts to the elderly should be tortured to death. You may think "wow thats some hyperbole right there!" but active torture is effectively what they're engaged in against the people in their care.
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.
> 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).
My dad unfortunately never made it to a retirement home (cancer onset when he just turned 70), but in his one week hospice stay, he couldn’t help but complain about the food.
I'm sorry about your parent's death, and sorry you guys were forced into this circumstance in the first place. Venture capital is one of the biggest stains on the concept of free market enterprise. I don't offer any solutions.
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.
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
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.
The (excellent) Megan Greenwell wrote Bad Company, all about private equity; I'd recommend it. It does a good job of telling the story through a few specific and illustrative examples of people/industries[1], while still explaining everything in detail. Greenwell has a perspective, to be sure, but she's not wrong.
1: IIRC, it's a Toys 'R Us employee, a nurse at a rural hospital, a journalist at local newspaper, and a resident in a PE-owned apartment.
Operational efficiency and care for the elderly will never have mutually beneficial outcomes. Nor will the expectations of the participants on either side of the transaction be compatible.
I fear the objectives of both will always be mutually exclusive.
> I’m reaching out to start a dialogue regarding a possible non-executive founding directorship role for a new senior care deal.
> We are doing a roll-up. Acquiring and consolidating various senior living revenue generating companies, eliminating redundant operations, improve and expand service offerings and ultimately exit via private sale or IPO.
It was so bonkers I forwarded it to my wife, who works in a research center on aging, and she was like, "how many red flags can you fit into one email?"
I have read that the big wealth transfer from boomers won't be as inheritance to their kids but most of it will go the the health and elderly care sectors. Hearing this stuff I totally believe it.
I am thinking about more and more about a plan to off myself once I need expensive care so I am not a burden to the next generation.
Someone needs to create a kind of JSON for care homes, if you will. Something like a super simple spec of what a goddamned care home object is for, and the minimum number of actually fairly-paid full-time staff one needs to achieve that in practice.
Then it doesn't matter how many baroque shell companies it takes represent the thing internally. Either the thing can output a response in Care Home Object Notation, or it's just a bunch of crafty bullshit disguised as a care home.
You'd just walk in with your one-page CHOM spec and read down the sheet: "Number 1: Can I speak to a full-time nurse, please?" If they respond, "No, but here's two high-school interns in a trench coat," you can just be like, "Not a care home. Got it," and move on to the next one.
>Private equity relies on a basic technique known as the leveraged buyout, which works like this: you, a dealmaker, buy a company using just a small portion of your own money. You borrow the rest, and transfer all this debt on to the company you just bought. In effect, the company goes into debt in order to pay for itself. If it all goes well, you sell the company for a profit and you reap the rewards. If not, it is the company, not you, that is on the hook for this debt.
——
Not how I've seen this work. These often require a personal guarantee, in some cases the homes of whoever is applying for the loan. So, whoever wrote this article has no idea of the real acquisition process.
Care sector in the UK is a dumpster fire. Corporations get paid often thousands per day per service user, hire incompetent staff at below minimum wage (if you count unpaid overtime) and pocket the massive margin. It desperately need proper regulation.
I read recently that companies are getting almost resentful that they have to go through yuo to get your money. I keep thinking about that because I think it's true.
I read some of comments here and on other threads about PE and I keep seeing some variation of "this particular PE crime is an outlier, we can fix it". No, no you can't. PE isn't an aberration. It's just the natural extension to capitalism. It's inevitable.
This can be understood easily in Marxist terms, as unpopular as that is. What we're talking about is the workers relationship to the means of production.
You have a nusing home. The people who work there should own it. There's no reason not to. Instead there's this intermediary, some capital owner, who demands to extract profits from that. We've simply replaced the feudal lords of old with investment bankers. It's the ultimate in rent-seeking behavior.
Years ago I remember hearing about PE firms buying up trailer parks. For many this is their last refuge from being homeless. When they are homeless, it's not only devastating to them but it's expensive for everyone. Health issues, going to the ER more often, violence, law enforcement making sure homeowners don't have to see homless encampments, people can't hold down drugs, self-medication with drugs and so on.
We absolutely shouldn't drive up the price of mobile home pricing so rent-seekers can extract profits but we as a society choose that over housing security for people. That's not just wrong. It's state-sanctioned violence.
This nursing home PE squeeze is also state-sanctioned violence. Make no mistake. Arguably, it's even social murder [1].
And once again, it's super easy to understand in terms of the workers relationship to the means of production. Yet everybody thinks they'll be Jeff Bezos one day so it's super-important now to vote in the interests of the billionaire class. Yo uwon't be. And even if you are, do you really want to become rich this way? Is that what you want your legacy to be? That you made the last years of elderly people who needed care miserable?
Why do people think this is good? Or fixable by the politicians who are bought and paid for by the people profiting off of this?
Every company turns people into ATMs, taking their money for a good or service. It is naive to think that companies do not want people unloading their money and consuming whatever it is the company is offering.
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?
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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.
Depressing to read. I'm not sure on which side.
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.
No one leaves this planet alive, and the best you can hope for is that the majority of your time is spent relatively healthy and independent.
> I didn't read that as saying anything about your character
I didn't take it that way, I just wanted to make sure there was no misunderstanding. This is an emotionally charged topic.
The concern you raise is front and center for me, because my mother is 87 and we’ve been looking for a place. All the options are terrible, without considering PE.
https://utswmed.org/medblog/geriatrics-cove-team-makes-house...
But you really, really need a support system of willing people who care about you, and are savvy enough to effectively advocate for you when you lose that ability. Independent home care works well when you need help, not constant care.
Our family worked with this for 6 years with my bad post stroke and for about a year with my mom and cancer. My siblings were all on board and my mom was uniquely positioned - she was a regulator at the state level who was adept with the rules (and had in fact wrote many!).
Even so, as things progressed it was hard. My mom was devoted to my dad, and filled every gap. We depended on hired help for mom, and despite the financial resources it was difficult to get staff.
Family and friends are key.
>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.
In NY State at least that's turned into a cashgrab too. One they are having trouble reforming.
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").
The worst place I ever saw was Atherton Long Care which supposedly is fancy and expensive but they had neglected an old lady so poorly I actually reported them to CDPH and the ombudsman. She had full on necrotized tissue under both her breasts and a rotted unchanged g-tube that you could smell all the way down the hallway to the nursing station it was so sad. John George Psych hospital and Cordilleras MHRC are both also very sad hellholes. Patients sleeping laying on the floor in the hallways with a blanket because the rooms are full etc. We had a lady who purposely stabbed herself in the eye so she could go to the ER to get out of Cordilleras because it was so awful.
What I found if you ever need to place your loved on in a care home is the sniff test is the best assessment of how well it's run and if the patients are cared for. If patients are cleaned regularly and not left to sit in their own diapers it really shows there is enough staff ratio and attention given to the patients. Go on a random evening or day and at different times. Food quality is also a good indicator - eat lunch with your parents there. Would you eat this yourself voluntarily? If yes, it's probably a good place not run on a shoestring budget.
Also - hn readers - if your mom is in a care home please always check under her breasts to ensure she is clean and dry there every time you visit. Far far too many old ladies get candida and bacterial infections under their breasts that are never cleaned or taken care of because it's embarrassing to check or clean and dry so then it just gets wet and rots and is painful, sad and gross and can lead to even worse things like cellulitis or an abscess.
> 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.
So let's give them an eye for an eye.
The last week has actually been pretty (ahem) interesting in a lot of ways. I should probably write a blog post about it.
> 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).
My dad unfortunately never made it to a retirement home (cancer onset when he just turned 70), but in his one week hospice stay, he couldn’t help but complain about the food.
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.
Obviously I’m kidding, and something is rotten
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.
1: IIRC, it's a Toys 'R Us employee, a nurse at a rural hospital, a journalist at local newspaper, and a resident in a PE-owned apartment.
I fear the objectives of both will always be mutually exclusive.
> I’m reaching out to start a dialogue regarding a possible non-executive founding directorship role for a new senior care deal.
> We are doing a roll-up. Acquiring and consolidating various senior living revenue generating companies, eliminating redundant operations, improve and expand service offerings and ultimately exit via private sale or IPO.
It was so bonkers I forwarded it to my wife, who works in a research center on aging, and she was like, "how many red flags can you fit into one email?"
This stuff is depressingly real.
Private equity is overall good for society
I am thinking about more and more about a plan to off myself once I need expensive care so I am not a burden to the next generation.
Then it doesn't matter how many baroque shell companies it takes represent the thing internally. Either the thing can output a response in Care Home Object Notation, or it's just a bunch of crafty bullshit disguised as a care home.
You'd just walk in with your one-page CHOM spec and read down the sheet: "Number 1: Can I speak to a full-time nurse, please?" If they respond, "No, but here's two high-school interns in a trench coat," you can just be like, "Not a care home. Got it," and move on to the next one.
Is there any benefit that I am missing? (Apart from the money it generates for the investors and the related politicians whose pockets get lined)
>Private equity relies on a basic technique known as the leveraged buyout, which works like this: you, a dealmaker, buy a company using just a small portion of your own money. You borrow the rest, and transfer all this debt on to the company you just bought. In effect, the company goes into debt in order to pay for itself. If it all goes well, you sell the company for a profit and you reap the rewards. If not, it is the company, not you, that is on the hook for this debt.
——
Not how I've seen this work. These often require a personal guarantee, in some cases the homes of whoever is applying for the loan. So, whoever wrote this article has no idea of the real acquisition process.
Not saying nonprofit hospitals are a panacea, but they sure are better than for-profit ones.
I read some of comments here and on other threads about PE and I keep seeing some variation of "this particular PE crime is an outlier, we can fix it". No, no you can't. PE isn't an aberration. It's just the natural extension to capitalism. It's inevitable.
This can be understood easily in Marxist terms, as unpopular as that is. What we're talking about is the workers relationship to the means of production.
You have a nusing home. The people who work there should own it. There's no reason not to. Instead there's this intermediary, some capital owner, who demands to extract profits from that. We've simply replaced the feudal lords of old with investment bankers. It's the ultimate in rent-seeking behavior.
Years ago I remember hearing about PE firms buying up trailer parks. For many this is their last refuge from being homeless. When they are homeless, it's not only devastating to them but it's expensive for everyone. Health issues, going to the ER more often, violence, law enforcement making sure homeowners don't have to see homless encampments, people can't hold down drugs, self-medication with drugs and so on.
We absolutely shouldn't drive up the price of mobile home pricing so rent-seekers can extract profits but we as a society choose that over housing security for people. That's not just wrong. It's state-sanctioned violence.
This nursing home PE squeeze is also state-sanctioned violence. Make no mistake. Arguably, it's even social murder [1].
And once again, it's super easy to understand in terms of the workers relationship to the means of production. Yet everybody thinks they'll be Jeff Bezos one day so it's super-important now to vote in the interests of the billionaire class. Yo uwon't be. And even if you are, do you really want to become rich this way? Is that what you want your legacy to be? That you made the last years of elderly people who needed care miserable?
Why do people think this is good? Or fixable by the politicians who are bought and paid for by the people profiting off of this?
[1]: https://en.wikipedia.org/wiki/Social_murder
And frankly moaning about this used to be right wing conspiracies a few years ago so yey for another pendulum swing...