Brian Martin, a professor of social sciences at the University of Wollongong (bmartin.cc) brilliantly exposed the role of banks in funding management corporations that run nursing homes on a cost-cutting-is-God basis, ignoring the needs of the frail and vulnerable elderly who are thrown into their clutches.
The issue of who owns nursing homes, and the unsuitability of the profit motive in care, is crucially important in the UK, with large management corporations, such as Care UK and Terra Firma, abandoning state funded nursing homes in working class areas to concentrate on more lucrative, privately funded facilities in affluent areas. It is like vultures having sucked the marrow out of a carcass moving on to more juicy pickings.
Nothing wrong with that, we allowed this system to spawn, and can not complain when investors follow a logical path toward enhanced profits. The real question being, why did we allow the care-for-profit industry to establish itself in the UK, when it had so miserably failed the needs of many neglected and abused elderly Americans? The answer is depressingly obvious – politicians with fingers in the corporate pie spun a yarn to the gullible that ‘private is best’, when all they were doing is making their masters in the banking sector richer.
What I ask of Mr. Corbyn is to define his policy on who should operate nursing homes. The Labour Party have defined policy in the areas of transport and energy – nationalise rail and energy utility companies (little chance in the full sense of the concept of ‘nationalisation’) – and make the appropriate noises about defending the NHS; but, as every political party of the immediate past,are deafeningly silent about the fate of the neglected and abused elderly who are languishing in the sink holes of the care-for-profits system.
Do you intend to abandon the care-for-profits system in nursing homes? If not, why not?
Do you intend to nationalise all nursing homes that are predominantly state funded, integrating them into the NHS? If not, why not?
Who is your spokesperson on such matters? To whom specifically should enquiries be made as to your policies regarding nursing homes? Do we automatically assume that this person is your Shadow Health Minister? If not, why not? Surely, such issues as these are not beneath the remit of your spokesperson for the NHS?
Rail and energy nationalisation may have populist support. Is it because the forgotten area of understaffed and neglectful nursing homes has no vote winning potential that you are silent about them?
What is your stance on making audio-camera devices compulsory in nursing facilities?, giving the ongoing reporting of disgusting care and abuse being meted out in nursing homes.
Mr. Corbyn, we would like to know your policy on these matters. Those abandoned to the talons of care-for-profit have a right to know, don’t you think?
Brian Martin summarised the role of banks in ‘vulturising’ the elderly infirm in an Australian context, and his words are as pertinent today to the UK as ever:
‘Since then the banks have embraced the aged care bonanza with enthusiasm but have been careful to protect their funds. Several banks and some property developers have bought or funded aged care facilities of various sorts and formed vehicles for these investments.
As I understand it these development trusts buy or build, and own the retirement and nursing home facilities. The management and almost all the risks are vested in a management corporation which leases the facilities from the property trust. It does not own them. Most of the investment is in the expensive properties owned by the trust. If the company goes under the capital investment is not at risk.
In addition to this banks are experts in cutting costs and making profits. They give financial advice. They own enough of the service providers, whose survival depends on running the facilities owned by the banks, to insist that their market prescriptions are followed. They are there to make money for their mostly institutional shareholders and their prime responsibility is to these shareholders. They have little understanding of the consequences of their economic prescriptions for residents and patients. This is a recipe for problems.
One of the misconceptions revealed in their claims is that there are big economies in size. This is a person intensive one on one service. They consequently reduce staffing levels in the expectation that these economies and other “efficiencies” will make this work. The adverse consequences for care as the USA experience shows so well are only too obvious.
An article in the Sydney Morning Herald spells out the approach which the banks and financial institutions take to investing in services for the elderly. This is an industry which is people intensive where time for human contact is essential and where individualised care is critical. What will the impact of “productivity levels” be?
In this instance power and control lie with the bankers who are well removed from the coal face in the facilities. The methods of evaluation, lines of communication and command are commercial and financial. It is not difficult to predict the likely outcomes.
The article below gives the bankers and the markets view of it. A nurse working in the system compares it to battery farming and calls it “people farming”. Different worlds (starting points) and different words for the same thing lead to a divide in perceptions. Experience clearly indicates which are the more accurate words. Brave new world!
The further management is distanced from the coal face the greater the likelihood of inappropriate managerialism. The provision of sufficient diapers for incontinent residents in Macquarie Bandk owned nursing homes is a good illustration of a pervasive problem.
Good business managers must manage costs, structure them and be able to control them. The costs of diapers mount up. But the needs of patients vary enormously, some requiring large numbers, others very few. It is simply impossible to standardise this or predict what will be required from day to day. In addition some makers of diapers promote their absorptive capacity and claim that they can be left on the resident for long periods even when soiled. This is nonsense but managers in their ivory towers seize on this. Frail residents can be left sitting in their urine and faeces for long periods. Managers even persuade relatives that this is acceptable.
We know that managers in Australia are rationing the number of diapers for residents because the nurses are complaining that they have to hoard nappies and hide them to be sure that they are there when needed. The corporate response is to deny and to claim that extra diapers are always available on request. They don’t seem to realise that the overworked trained nurse responsible for giving out extras will be busy or absent resulting in unacceptable delays. Managers looking for bonuses will ensure that this is a big hurdle and will discourage the issue of more diapers. It is simply a disguised system of rationing.
It is not often that spokesmen for big companies are so blinded by their rationalisations that they openly admit what they are doing is company wide policy. Australia’s Macquarie bank owns Leisureworld, Canada’s largest for-profit nursing home operator. One of their Canadian managers did just that. The use of “professional third-party providers” to determine the needs of the residents instead of the actual experience of their own staff at the bedside is particularly revealing on the sort of out of touch managerialism that is so prevalent. Instead those at the bedside are seen to have some ulterior motive – never that their actions are a response to what is happening in those beds.
It tells us what is happening globally as well as in Australia and across health and aged care. What is so difficult to understand is that they really do believe what they are saying – but they really do. The more impressive and wealthy people that believe it, the more legitimate it sounds to others, the more credible it becomes, and the more they can persuade others that they are right.
Most of the big financial institutions, but particularly Macquarie Bank see aged care as a global cow from which to milk profits and they have bought aggressively.
In most instances the financiers also have a stake in the operators (and visa versa). They exert a powerful influence on them and act as business advisers. Although the financier could terminate the contract and employ another operator this is really a partnership and the trust is simply a strategy to protect the investment. Termination of contracts is far more likely to be for financial reasons than for issues about the quality of care. There are therefore strong pressures to compromise care in order to please financially. I do not know if the lease arrangements give the financiers any share in profits but would be surprised if this were not so. This is an area and a set of arrangements to be watched carefully.
The for-profit operators are at particular risk. Pressures are put on them by the investing financiers, by their own financial difficulties, or by their eagerness to perform profitably. This drives them to increase profits at the expense of care and then develop strategies and justifications to make this seem legitimate. The strongly profit focused rhetoric used by the big financial investors is not reassuring.
Part of the swing to private equity is a consequence of the increased scrutiny and oversight we now impose on our market listed companies. This increased oversight is a response to problems in the market sector. Private equity has obvious attractions for those wanting to make money and avoid scrutiny. It has been very profitable. There has been some shift away from the short term invest and sell strategy and more long term investments have occurred.
The profit focus is as strong or stronger than in shareholder companies, but management is further removed from the actual business and what happens there. The only aim is profitability. The threat to health and aged care is obvious.
Private equity has taken off during the 21st century first in the USA, which leads the world in this and then in Australia.
Health and aged care have become targets first in the USA and then Australia – both for short term gains and for longer term investments as illustrated for aged care on this page. Most of the investments described on this page are part of the private equity phenomenon.
The changes in the marketplace leading up to the private equity phenomenon are criticised by John Bogle in a 2007 article (pdf file) in Daedalus. Bogle is a very successful businessman who is critical of the direction taken by the marketplace. He is a strong supporter of the primacy of the interest of the shareholder. In this article he is not talking about health, and does not write about the conflict intrinsic to this when it is taken to its logical conclusion in a society increasingly fundamentalist in its beliefs. When Bogle was interviewed about the intrusion of private equity into aged care he quite clearly indicated that this was a sector from which the for-profit processes should be excluded
Within a month the New York Times published a study (link to aged care crisis centre page) which revealed that not only had standards of care deteriorated in the large numbers of US nursing homes acquired by private equity firms, but the private equity groups had set up complex structures which made it almost impossible for residents and their families to seek penalties and compensation when they suffered from neglect and abuse in these homes. This had previously been the only really effective means of controlling corporate excesses. Government agencies were experiencing the same difficulties in extracting fines from the substandard private equity owned homes.
This caused considerable community and political concern in the USA with senior members of both US parties pressing for it to be dealt with by congress’.
This is the situation now in the UK.
What is your policy, Mr. Corbyn?
Who is your spokesperson? To whom may we inform of our concerns?
Do you and the Labour Party give a damn about nursing home care?
Please do not reply that the CQC operate a robust system of quality control. Do not stoop to such a fobbing-off absurdity.
lenin nightingale 2015