[acb-hsp] How Vulture Capitalism Endangers Nation's Elderly

[peter altschul]

How Vulture Capitalism Endangers America's Elderly
  Ken Connor
  GOP presidential hopefuls -- most notably Newt Gingrich and 
Rick Perry -- have been attempting to derail Golden Boy Mitt 
Romney's campaign momentum by attacking his background as a 
venture capitalist, deriding as "vulture capitalism" the practice 
of acquiring businesses through leveraged buyouts and attempting 
to increase their value through cutting costs, laying off workers 
and stripping out assets.  For many staunch, laissez-faire loving 
Republicans these criticisms have been deemed an attack on 
capitalism itself.  The free market is all about competition, 
after all, and when a company ceases to be effectively 
competitive the choice is to either shut the doors and call it 
quits or do what needs to be done to right the ship.  For a 
self-professed economic conservative to smear a man's 
professional reputation by painting him as an unscrupulous 
"vulture" is at best a political cheap shot, at worse an act of 
ideological blasphemy.  Or is it?
  Though few people are aware of it, the nursing home industry is 
a classic example of a sector where "vulture capitalism" is 
destroying lives.  With the graying of America, Wall Street is 
finding the nursing home sector to be increasingly attractive.  
Private equity firms are displacing public corporations and 
mom-and-pop operators and moving into the ownership and operation 
of nursing homes.  This trend has proven disastrous for nursing 
home residents, resulting in poorer quality care and increased 
violations of health and safety regulations.
  These private equity investors cum "health care providers" seek 
to improve profitability by cutting costs, most notably labor 
costs.  And since nursing staff represents the biggest expense in 
a nursing home's budget, that's where most of the cuts come from.  
The obvious problem with this tactic is that the nursing home 
industry is a service intensive industry.  You can't turn and 
reposition immobile residents without staff, and if you don't 
turn and reposition these folks every two hours they develop 
festering bed sores.  You can't feed or provide fluids to 
dependent residents without adequate staff, and when you don't 
they become malnourished and dehydrated.  You can't provide 
incontinence care without staff, and when you don't residents 
develop painful and embarrassing infections.  The evidence shows 
an increase in all of these problems with the advent of private 
equity capital in the nursing home industry.
  There is nothing wrong with making a profit of course, and 
there's nothing inherently wrong about trying to make a profit in 
the eldercare industry.  But it is wrong to secure those profits 
at the expense of the clientele.  Part of being a responsible 
corporate citizen, after all, is following through on your 
professional commitments in a conscientious and ethical manner.  
This is particularly important when your "business" consists of 
providing an environment of care, comfort, and dignity for men 
and women in the twilight of life.
  The irony is that few people have been enablers of these 
practices more than Gingrich and Perry, who under the guise of 
"tort reform," have fostered policies that ensure that corporate 
predators are not required to fully account for their wrongdoing.  
Governor Perry's Texas is home to some of the nation's more 
draconian tort reform measures and Gingrich has long been a 
champion of similar policies, though recently he's attempted to 
distance himself from this position.
  But principle doesn't seem to stand in the way of these 
fellows.  That was then and this is now.  Given the bitter 
attitude that most Americans feel for Wall Street and Big 
Business in the wake of the financial meltdown and subsequent 
recession, their calculus seems to be that there is more 
political advantage to be gained by demonizing their former 
benefactors.  That Wall Street has clearly cast its lot with 
Romney at this point might also play a role in their decision to 
play the populist card despite their Blue Blood roots.
  As for those who are quick to label as heretics those 
conservatives with the nerve to question the ethics of "vulture 
capitalism" it is important to understand that merely calling 
into question unethical business practices does not equate to an 
attack on the merits of capitalism.  Business is no less subject 
to the rule of law and ethical scrutiny than any other aspect of 
life.  To suggest that capitalism is not subject to either law or 
ethics invites predatory and destructive practices.  Wasn't the 
Wall Street meltdown, fueled by the unscrupulous practices of 
enterprises like Fannie Mae, Freddie Mac, Lehman Brothers, and 
others all the evidence we need of the destruction wrought by 
practitioners of "vulture capitalism?" How quickly we forget.
  Meanwhile, the practices of predatory capitalists in the 
nursing home arena continue to harm our institutionalized 
elderly.  Who will speak up for them?
  Ken Connor is Chairman of the Center for a Just Society.