They literally left nursing home patients out in snow and cold. This must end. | Opinion

Just before Christmas, Politico published an article featuring truly shocking and heartbreaking stories from nursing homes in Wisconsin. Nursing home residents being roused from their sleep and told to wait in the snowy cold to be relocated without warning. Seniors with urinary tract infections left unchecked and untreated. Facilities closing left and right. The root of the problem, in this case? MidCap Financial, an affiliate of the private equity firm Apollo Global Management, lent money to the nursing home owner Atrium and recommended unsustainable expansion, leading to the complete mismanagement of these senior care facilities to the detriment of vulnerable residents.

This case is, unfortunately, hardly unique in our healthcare system. Across America, private equity firms are buying up crucial, life-saving healthcare services with little oversight or accountability, leading to calamities like what took place in Wisconsin.

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Private equity firms are financial institutions that exist for the purpose of investing in or entirely buying up businesses and revamping them to turn bigger profits. In many cases, private equity investments can help a business thrive. However, the industry at large lacks the kind of accountability required of other financial institutions, creating a disturbing pattern of cost-cutting, mismanagement, and nightmares for unsuspecting Americans.

The Politico story is a case in point. After a nursing home organization was purchased by private equity firms, costs of essential services were slashed, quality of care diminished, and all the while the financial bigwigs as the top raked in huge returns.

Hospitals and nursing homes victims of predatory investment

Nursing homes and their residents aren’t the only victims of this type of predatory investment. A recent study found that hospitals owned by private equity firms - an increasingly common phenomenon - reported higher rates of patients suffering falls, infections, and other avoidable harms while in their care. Private equity-owned dental practices feel pressured to drill into healthy teeth for more profit. And during the pandemic, private equity-owned emergency rooms were the first to slash benefits for essential workers.

Over the past decade, private equity firms spent more than $1 trillion on healthcare acquisitions, and they likely aren’t slowing down. And it’s not just healthcare, as private equity has bought up large swaths of the economy - and in some cases, driven them into the ground.

A firm called Paine Schwartz Partners drove the nation’s largest peach farm Prima Wawona into bankruptcy and will likely cause more than 5,400 Californians to lose their jobs. Blum Capital and Golden Gate Capital killed Payless ShoeSource. Vice Media also plunged into bankruptcy after private equity firm TPG tightened its grip and destroyed the company. The list goes on.

Congress needs to act to provide transparency and accountability

With private equity firms wiping out many important companies and industries, it’s clear that we must practice caution when dealing with them - especially concerning something as important to our lives as healthcare. Families should make sure to do their due diligence before investing with a fund or institution backed by private equity. If you have a financial adviser, consider asking them if private equity firms are involved in any of your investments, and if so, research the performance history of those firms.

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While not all private equity firms act in bad faith, and not every private equity deal ends in disaster, it is clear that transparency and accountability are needed. Congress should strongly consider reforms that require transparency with investors and the public when private equity firms drive companies into bankruptcy. With some added oversight of private equity deals and management, we can ensure that our healthcare facilities aren’t run into the ground and America’s patients aren’t left to fend for themselves.

Scott McCallum was governor of Wisconsin from 2001 to 2023 after serving as Lt. Governor for 14 years and in the State Senate for 10 years. From 2005 to 2015, he was President & CEO of the Aidmatrix Foundation, responsible for turning the foundation into one of the world’s largest technology providers to the humanitarian sector, working with over 32,000 clients on 5 continents.  

This article originally appeared on Milwaukee Journal Sentinel: Nursing home patients in Wisconsin suffer when facilities mismanaged