May 19, 2022

Warren, Wyden, Sanders, Murray Blast Private Equity Giant KKR for Grossly Substandard Care and Unsafe Living Conditions in Group Homes for People with Intellectual and Developmental Disabilities

BuzzFeed Investigation Showed KKR Put Profits before Patients, Resulting in Abuse and Neglect and Putting the Lives of Patients at Risk

Text of Letter (PDF)

Washington, D.C. – United States Senators Elizabeth Warren (D-Mass.), a member of the Senate Finance and Banking, Housing, and Urban Affairs Committees; Ron Wyden (D-Ore.), Chair of the Senate Finance Committee; Bernie Sanders (I-Vt.), Chair 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 the private equity firm KKR, blasting the company after a BuzzFeed News investigation revealed that following KKR’s acquisition of BrightSpring Health in 2019, the company provided grossly substandard care and unsafe living conditions in its intermediate care facilities (ICFs) – group homes for people with intellectual and developmental disabilities. Executives at KKR and BrightSpring are poised to cash out while patient safety and care quality is declining. The senators are seeking answers from KKR about its troubling business practices, which put the safety of patients at risk. 

“The BuzzFeed News investigation revealed that, after KKR’s acquisition, care at BrightSpring ICFs deteriorated, with regulators finding 118 instances of ‘dangerously low staffing’ in seven states – double the rate found in non-KKR owned facilities. During that same period, KKR boasted that the company increased BrightSpring’s revenue from $2.5 billion in 2018 to $5.6 billion in 2022. But there is no indication that these revenues were used to improve quality of care in ICFs: ‘conditions [at BrightSpring ICFs] grew so dire that nurses and caretakers quit in droves, a state prohibited the company from accepting new residents, and some of the most vulnerable people in its care suffered and died,’” wrote the senators. 

The senators called out the long-standing problem of private equity’s role in health care – which places short-term profit maximization above considerations for quality of care and patients. While KKR’s BrightSpring-owned small-scale ICFs in California, Indiana, Louisiana, North Carolina, Ohio, Texas, and West Virginia made up just 16% of ICFs, they accounted for a striking 40% of serious citations in these states. The BuzzFeed investigation revealed that nurses and other care workers had alarmingly high turnover rates, uncompetitive salaries, and inadequate training. 

BrightSpring and KKR’s failure to protect ICF patients and efforts to maximize profits also resulted in preventable injuries and deaths. In West Virginia, state officials accused BrightSpring of ignoring several warnings that led to at least one preventable death, and ordered BrightSpring to stop accepting new patients, eventually closing down 20% of the organization’s homes in the state. Managers at facilities reported facing pressure to keep homes full, even with patients they were unable to care for, to maximize profits. 

The senators called out KKR for choosing to pocket their profits instead of improving conditions for patients. BrightSpring’s KKR-controlled board loaded up the company with $1.1 billion in debt, and BrightSpring has paid out 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 following the acquisition are poised for yet another payday. In October 2021, the company filed to go public in a $100 million initial public offering, citing its access to a “$1.5 trillion combined market opportunity.”

“We have long been worried about the deleterious impact of private equity on health care and patient care. Your company illustrates how private equity firms exploit the health care industry to squeeze out profits at every stage. Private equity has moved into health care services from rural hospitals to nursing homes and hospice centers to health care billing management and debt collection systems, exacerbating existing problems like surprise medical billing, inadequate training, and a lack of oversight and due process,” the senators continued. 

The senators called on KKR to answer a set of questions about how its acquisition of BrightSpring Health has impacted patients by June 2, 2022. 

Senator Warren has called out private equity firms’ broken model and has been a leader in fundamentally reshaping private equity’s grip over the economy:

  • At a hearing in February, Senator Warren called out private equity firms and other big investors for exacerbating inflation and locking families out of affordable housing opportunities. 
  • In October 2021, Senator Warren introduced the Stop Wall Street Looting Act, which would fix the broken private equity model and protect the pay, benefits, and safety that 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 companies and subsequent reductions in the quality of care, focusing on Kindred at Home and the period where the company was purchased and owned by Humana and two private equity firms, TPG Capital and Welsh, Carson, Anderson and Stowe.
  • In August 2021, at a Senate Banking, Housing, and Urban Affairs Committee nomination hearing and during an exchange with Senator Warren, a Department of Housing and Urban Development (HUD) nominee committed to consider changes that facilitate sales of distressed homes to homeowners, not private equity firms.
  • In July 2021, Senator Warren called on large corporate landlords to avoid needless evictions as the CDC eviction moratorium neared expiration. 
  • Senators Warren, Sherrod Brown (D-Ohio), and Bernie Sanders (I-Vt.) applauded the Government Accountability Office (GAO) for agreeing to their request to investigate the operations of commercial Institutional Review Boards (IRBs), the private - and often private equity-owned - entities that approve drug research and other studies involving human subjects.
  • In March 2021, Senator Warren called out Genesis’, a for-profit nursing home chain which "restructured" and handed over much of its control to private equity, for its failed response to the COVID-19 pandemic and corporate greed. Genesis gave its then-CEO -- who left the company in near bankruptcy in January 2021 -- $8 million in salary and bonuses since the start of the pandemic while leaving its workers and residents without adequate PPE and COVID-19 safety supplies.
  • Senator Warren secured commitment from then SEC Nominee Gary Gensler, now Chair, to look at all of the authorities to make the markets more honest and more transparent, including through greater transparency around private equity business practices.
  • In February, Senator Warren urged Wally Adeyemo, then-nominee for Deputy Secretary of the Treasury, to commit to using the Financial Stability Oversight Council (FSOC) as a tool to address risks that financial activities impose on low-income and underserved communities authorities to address economic inequality - including by recommending more regulatory scrutiny of private equity funds.
  • In November 2019, Senators Warren, Brown, and Representative Pocan wrote to four private equity firms that invested in companies providing nursing home care and other long-term care services, citing reports that show private equity investment has played a role in the declining quality of care in nursing homes and requesting information about each firms' management of this sector.
  • In October 2019, Senator Warren and Representatives Pocan and Ocasio-Cortez wrote to five private equity firms that own companies providing support services to prisons highlighting how private equity firms deliver poor quality food and services at exorbitant prices, making huge profits off of 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 staffing and emergency transport companies, questioning the role these companies play in patients receiving exorbitant surprise bills for out-of-network medical treatment.
  • In September 2019, Senator Warren and Representative Pocan wrote to six private equity firms with holdings in for-profit colleges requesting information about the firm’s management of colleges and universities and the problems plaguing for-profit colleges.
  • In May 2019, Senator Warren and Representative Dave Loebsack (D-Iowa) wrote to the private equity firms behind some of the country's largest manufactured housing communities to request information about their use of predatory practices to boost profits in the communities they own.
  • In October 2018, she demanded answers from Vornado Realty Trust and five hedge funds on their role in the liquidation of Toys "R" Us, which resulted in 30,000 workers losing their jobs without severance pay-after it was revealed that the company's bankruptcy was the result of the leveraged buyout of the company in 2005 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 bank deregulation bill that would benefit a handful of big private-equity firms while putting ordinary investors at greater risk.  
  • In June 2015, she was an original co-sponsor of the Carried Interest Fairness Act, legislation that would close the carried interest loophole that allowed private equity fund managers to pay lower taxes. The legislation was reintroduced in March 2019 and is included in the Stop Wall Street Looting Act.

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