Monday, October 29, 2007

Is the Carlyle Group Pulling an Exxon on LifeCare?

The Supreme Court agreed to hear Exxon's appeal regarding punitive damages. The company claims no responsibility for actions of a drunk sea captain, even though they hired him, were aware of his alcohol treatment and his later falling off the wagon. Exxon also provided a ship with broken radar, a violation of at least the spirit of their agreement with Native Americans who sold them the land for the oil terminal for $1.

The Exxon case prompted me to find parallels to The Carlyle Group's defense of wrongful patient deaths in their LifeCare Hospital in New Orleans post Hurricane Katrina. Carlyle blamed rogue providers, doctors and nurses that euthanized patients in the horrific aftermath. When none of the clinicians got convicted on criminal charges that defense weakened considerably.

LifeCare changed directions under the radar of most news outlets. They claim their patients became wards of the federal government when FEMA set up evacuation teams in the New Orleans area. Therefore, the federal government was responsible for their care even though those teams might be miles away from their flooded facility in Memorial Hospital.

Just as the Exxon story is deeper than a captain on a bender, so is LifeCare's. As a hospital within a hospital, LifeCare had separate clinical staff, its own credentialed doctors, and administrative leadership. The supposed Joseph Hazelwood of New Orleans is Dr. Ana Pou, an ENT doctor specializing in cancer treatment. While her skills are advanced, they don't match up with patients in a long term acute care environment. If she had privileges at all, they were likely consulting.

If Dr. Pou served as the primary caregiver for LifeCare patients, she was filling in. The question is for whom? What LifeCare physicians had hurricane duty and bolted? Which contracted providers abandoned their patients in the time of need? If any did so, they share responsibility with Carlyle for what eventually happened to their patients.

If LifeCare docs hung around for hurricane duty, then Carlyle has a different problem. Their administrator gave a Memorial doctor and non-LifeCare nurses access to their patients. The company already sued Tenet Healthcare as a result of the aftermath. The two for-profit firms settled the case, dividing up liability in a now sealed, thus secret agreement.

All this speaks to the ethics of The Carlyle Group and their affiliate as the huge private equity firms closes in on its purchase of Manor Care with 550 nursing homes. LifeCare had a duty to their patients in a time of disaster and from my experience failed. I endured in a 725 river flooded teaching hospital in Virginia and evacuated a 165 bed facility on the Texas Gulf Coast before then record Hurricane Gilbert. Fortunately Gilbert never made the predicted turn, but I know the challenges getting patients transferred with several days notice of a potential landfall. Much worse is trying to provide services in a powerless hospital with six dark intensive care units. In no time the best hospital becomes unsafe for all. Toilets are unflushable, supplies dwindle and staffs tire while patients suffer. Hope returns when they can be transferred.

After sharing my concerns with the only reporter to note LifeCare's relationship to The Carlyle Group, I received this:

The 24 deaths that occurred there, while tragic, were the decisions of the people that were put in charge by LifeCare's previous owners, GTCR Golder Rauner. Also, I think most people feel that the circumstances surrounding the Katrina tragedy were chaotic, unique, and atypical of how private equity firms will run care facilities on a regular basis.

It's much easier to run facilities on a regular basis. A firm's mettle is tested in times of difficulty, of disasters. The Carlyle Group's failure during Katrina might be blamed on the previous owner, GTCR Golder Rauner, as suggested by the Toledo Blade reporter. However, Carlyle's had full reign to manage the aftermath and that reeks greatly. This deserves the attention of the news media and Congressional hearings. A look at the huge, politically connected private equity underwriter's mission statement is most telling:

The Carlyle Group: Our mission is to be the premier global private equity firm, leveraging the insight of Carlyle's team of investment professionals to generate extraordinary returns across a range of investment choices, while maintaining our good name and the good name of our investors.

Apparently a good name is more important to this PEU than owning up to their mistakes, to treating patients and their families fairly. The Exxon story couldn't have resurfaced at a better time...