Thursday, October 25, 2007

Karen Bechtel Needs to Testify Under Oath on Carlyle's Purchase of Manor Care

Disturbing questions remain regarding The Carlyle Group's planned purchase of huge nursing home operator Manor Care. The head of Carlyle's health care team highlighted her firm's pledge to put "Patients First". Unfortunately, the private equity firm has one glaring failure in this regard with its 24 patient deaths in a LifeCare unit post Hurricane Katrina. This negates Karen's statement to the media:

"We are confident, because we have been doing this for 20 years, that we can provide quality products and services to people that is completely compatible with providing a return to investors."

Karen should answer a few questions under oath before the Justice Department approves the acquisition.

1) Why did the White House Lessons Learned report make not one mention of LifeCare Hospitals and their 24 patients deaths? Did Carlyle request that information be left out?

2) Why is Carlyle blaming the federal government for those same deaths? Why is LifeCare claiming patients became wards of the federal government as soon as FEMA set up evacuation teams in the New Orleans area?

3) Why did HCA charter helicopters to fly patients out of their dead hospitals in New Orleans and LifeCare not?

Karen said the following, which doesn't quite jive with the firm's plans:

"Our business plan categorically does not call for us to lay off people. It would not be in our interest in any way to have patient care suffer. It is fundamental to our investment thesis that we continue to improve and enhance patient care because that will attract even more patients and make this a better investment. This is logical and simple. If we didn't provide good care, we wouldn't have good patients."

4) If Manor Care plans on providing the highest quality nursing home care to patients why go to the trouble and expense of incorporating each facility separately and taking the additional step of having operations and real estate in different companies? With 550 sites, that translates into a potential 1,100 corporate subs. It's main purpose seems to be to isolate assets from lawsuits. If Carlyle plans on providing outstanding care, why the machinations to reduce liability exposure?

5) If Carlyle failed patients in one of twenty one long term acute care facilities and later blamed others, why shouldn't people be worried about their ability to do so again in 550 new sites?

Carlyle failed long term acute care hospital patients in the not so distant past. This got very little press and continues to stay below the radar, which enables them to make their ridiculous statements. Someone needs to shine the light on behalf of the vulnerable. Carlyle failed them before and could well do so again, this time on a much larger scale.