BuzzFeed Investigation Showed KKR Puts Profits Before Patients, Leading to Abuse and Neglect and Putting Patients’ Lives at Risk
Text of the letter (PDF)
May 23, 2022 – Washington, DC – United States Senators Elizabeth Warren (D-Mass.), Senate Member for Finance and Banking, Housing and Urban Affairs Committees; Ron Wyden (D-Ore.), Chairman of the Senate Finance Committee; Bernie Sanders (I-Vt.), Chairman of the Senate Budget Committee; and Patty Murray (D-Wash.), chair of the Senate Health, Education, Labor and Pensions Committee, sent a letter to the co-CEOs of private equity firm KKR, lambasting the company after one BuzzFeed News An investigation found that following KKR’s acquisition of BrightSpring Health in 2019, the company provided significantly substandard care and unsafe living conditions in its intermediate care facilities (ICFs) – nursing homes. group for people with intellectual and developmental disabilities. KKR and BrightSpring executives are poised to cash in as patient safety and quality of care decline. Senators are demanding answers from KKR over its troubling business practices, which put patient safety at risk.
Sen. Elizabeth Warren (D-Mass.)
“The BuzzFeed News The investigation found that after the KKR acquisition, care at BrightSpring’s ICFs deteriorated, with regulators finding 118 cases of “dangerously understaffed” across seven states, double the rate seen at facilities. not belonging to KKR. During that same period, KKR boasted of growing BrightSpring’s revenue from $2.5 billion in 2018 to $5.6 billion in 2022. But there’s no indication that that revenue was used. to improve the quality of care in ICFs: “conditions [at BrightSpring ICFs] became so bad that nurses and caregivers quit en masse, a state banned the company from accepting new residents, and some of the most vulnerable people it cared for suffered and died,” write the senators.
The senators denounced the long-standing problem of the role of private equity in health care – which places short-term profit maximization above considerations of quality of care and patients. While KKR’s BrightSpring-owned small-scale ICFs in California, Indiana, Louisiana, North Carolina, Ohio, Texas, and West Virginia accounted for only 16% of ICFs, they accounted for 40% of serious citations in those states. the BuzzFeed investigation revealed that nurses and other social workers had alarming turnover rates, uncompetitive salaries and inadequate training.
BrightSpring and KKR’s failure to protect ICF patients and efforts to maximize profits have also resulted in preventable injuries and deaths. In West Virginia, state officials accused BrightSpring of ignoring multiple warnings that led to at least one preventable death and ordered BrightSpring to stop accepting new patients, ultimately closing 20% of homes in West Virginia. organization in the state. Facility managers said they faced pressure to keep homes full, even with patients they could not care for, to maximize profits.
The senators criticized KKR for choosing to pocket their profits instead of improving conditions for patients. BrightSpring’s board of directors, controlled by KKR, has burdened the company with $1.1 billion in debt, and BrightSpring has paid more than $135 million a year in interest on its loans. Meanwhile, BrightSpring CEO Jon Rousseau doubled his salary to $1.6 million in 2020. Now KKR and BrightSpring executives who oversaw the company’s operations after the acquisition are ready for another payday. In October 2021, the company filed for IPO in a $100 million initial public offering, citing its access to a “combined $1.5 trillion market opportunity”.
“We have long been concerned about the deleterious impact of private equity on healthcare and patient care. Your company exemplifies how private equity firms exploit the healthcare industry to make profits at every step. Private equity has moved into healthcare services, from rural hospitals to nursing homes and hospices, to healthcare bill management and debt collection systems. , exacerbating existing issues such as surprise medical billing, inadequate training, and lack of oversight and due process,” say the senators.
The senators asked KKR to answer a series of questions about the impact of its acquisition of BrightSpring Health on patients by June 2, 2022.
Senator Warren exposed the broken model of private equity firms and was a leader in fundamentally reshaping private equity’s grip on the economy:
- At a hearing in February, Senator Warren called out private equity firms and other big investors for exacerbating inflation and preventing families from accessing affordable housing.
- In October 2021, Senator Warren introduced the Stop the Wall Street Looting Act, which would fix the broken private equity model and protect the pay, benefits and security workers deserve.
- In August 2021, Senators Warren, Ron Wyden (D-Ore), and Sherrod Brown (D-Ohio) launched an investigation into private equity ownership of for-profit hospice care companies and subsequent reductions in the quality of care, focusing on Kindred at Home and the period when the company was purchased and owned by Humana and two private equity firms, TPG Capital and Welsh, Carson, Anderson and Stowe.
- In August 2021, during a nomination hearing for the Senate Banking, Housing, and Urban Affairs Committee and during an exchange with Senator Warren, a candidate for the Department of Housing and Urban Development (HUD) committed to considering changes that make it easier to sell distressed homes to homeowners, not private equity firms.
- In July 2021, Senator Warren called on large business owners to avoid unnecessary evictions as the CDC’s eviction moratorium neared expiration.
- Senators Warren, Sherrod Brown (D-Ohio) and Bernie Sanders (I-Vt.) applauded the Government Accountability Office (GAO) for accepting their request to investigate the operations of commercial Institutional Review Boards (IRBs) , the private – and often privately owned – entities that approve drug research and other studies involving human subjects.
- In March 2021, Senator Warren called out Genesis’, a for-profit retirement home chain that “restructured” itself and ceded much of its control to private equity, for its failure to respond to the COVID-19 pandemic and corporate greed. Genesis gave its then-CEO — who left the company on the brink of bankruptcy in January 2021 — $8 million in salary and bonuses since the start of the pandemic while leaving its workers and residents without PPE and adequate COVID-19 safety supplies.
- Senator Warren secured a commitment from SEC nominee Gary Gensler, now chairman, to review all authorities to make the markets more honest and transparent, including through greater transparency around private equity business practices .
- In February, Senator Warren urged Wally Adeyemo, then a candidate for Assistant Secretary of the Treasury, to commit to using the Financial Stability Oversight Council (FSOC) as a tool to address the risks that financial activities require authorities in low-income and underserved communities to address economic inequality – including recommending greater regulatory scrutiny of private equity funds.
- In November 2019, Senators Warren, Brown and Rep. Pocan wrote to four private equity firms that have invested in businesses providing home nursing and other long-term care services, citing reports that show that investment in private equity has played a role in the decline in the quality of care in nursing homes and in asking for information on the management of this sector by each company.
- In October 2019, Senator Warren and Reps. Pocan and Ocasio-Cortez wrote to five private equity firms that own companies providing prison support services, highlighting how the private equity firms provide food and services. of poor quality at exorbitant prices, making huge profits on incarcerated people, their families and taxpayers.
- In October 2019, Senator Warren, Representatives Pocan and Doggett (D-Texas) wrote to five private equity firms with investments and physician recruitment and emergency transportation companies, questioning the role that these companies play into the fact that patients receive exorbitant surprise bills for out-of-network medical treatment.
- In September 2019, Senator Warren and Rep. Pocan wrote to six private equity firms with stakes in for-profit colleges requesting information about the company’s management of colleges and universities and the issues plaguing for-profit colleges.
- In May 2019, Sen. Warren and Rep. Dave Loebsack (D-Iowa) wrote to the private equity firms behind some of the nation’s largest prefab housing communities requesting information about their use of predatory practices to increase profits. in the communities they own.
- In October 2018, she demanded answers from Vornado Realty Trust and five hedge funds over their role in the liquidation of Toys ‘R’ Us, which resulted in the loss of 30,000 workers without severance pay – after he It was revealed that the company’s bankruptcy was the result of the company’s 2005 leveraged buyout by two private equity firms.
- In April 2018, she published an op-ed in which she spoke out against the House’s attempts to include a provision in its banking deregulation bill that would benefit a handful of large private equity firms while posing an increased risk to ordinary investors.
- In June 2015, she was one of the original co-sponsors of the Carried Interest Fairness Act, legislation that would end the carried interest loophole that allowed private equity fund managers to pay less tax. . The legislation was reintroduced in March 2019 and is included in the Stop Wall Street Looting Act.
Source: Senator Elizabeth Warren