Carlyle co-founder David Rubenstein and CEO Lou Gertsner delivered slightly different lines from the same page. Lou said his firm currently faced a correction, while David noted Carlyle needs to correct some public misperceptions. Consider their statements:“We are in a welcome period for private equity. Capitalism is not a steady state but goes to extremes and…after excesses have built up…we needed to see a correction. The media and government might have converted this state to a ‘crisis’ but it is not that,” offered Lou Gertsner.
Mr. Rubenstein recently said the Golden Age of private equity had turned into the “Purgatory Age, where we’re going to have to atone for our sins a bit.”
Both statements could well apply to Carlyle's LifeCare affiliate which lost 24 patients in the aftermath of Hurricane Katrina. Lou's "what crisis?" perspective permeated their initial response. Carlyle sinned not only in the loss of two dozen patients, they blamed and continue to point the finger at everyone but themselves, Tenet Healthcare, Memorial clinicians, FEMA evacuation teams, and an unprecedented disaster. Admittedly, self rescue from dead, flooded hospitals is a difficult task, but HCA had medical evacuation helicopters at their facilities in no time. One might expect the premier private equity underwriter (PEU) in America, maybe even the world, to do as well.
Carlyle has much to atone for in its handling of LifeCare. It's good friend down Pennsylvania Avenue should join the PEU in making amends. Fran Townsend made no mention of LifeCare or its 24 deaths in her White House Lessons Learned report. The Bush Justice Department didn't ask the boys at Carlyle about their innovative defense of blaming the feds, claiming that LifeCare patients became "wards of the government" as soon as FEMA set up evacuation teams in New Orleans. Apparently one can fail patients in a time of crisis in one of twenty one LTAC's and still get the go ahead to buy 500 mostly nursing homes.
No crisis, time for atonement? The themes ring loud and clear, echoing for over two years now.
