Rafael Henrique/SOPA Images/Sipa USA via AP
Private equity giants have spent the past ten years rapidly consolidating companies that provide critical care to the intellectually and developmentally disabled (IDD), according to a new report from the Private Equity Stakeholder Project. According to the report, private equity firms, many of which have been investigated for malpractice, are swooping in to purchase more and more companies providing critical care. And while private equity ownership is often concealed through layers of incorporation, the recent report details companies with combined revenue of over a billion dollars.
What were once small local nonprofits or religious organizations taking care of disabled adults have transformed into cash cows for PE firms that see endless profits in the combination of government funding (Medicaid paid for more than half of the $415 billion spent on long-term care services and supports in 2022), a recession-proof industry (the demand for care is not market-dependent), and a pliable customer base that is often ignored and marginalized by political and social forces.
As state-run facilities continue to shut down, PE firms have acquired more than 1,000 care companies over the last decade, with the top ten PE firms currently employing over 300,000 employees in the IDD care sector alone. But the small army of care workers, who themselves are often paid rock-bottom wages, are often in too short supply inside care facilities to ensure adequate care and attention to the people paying for their services.
One PE-owned provider, Sevita, was investigated after the family of a nonverbal adult raised concerns about mistreatment at her facility. State inspectors found “conditions posing a threat to the health and safety” of residents, failure to comply with regulations around staff qualifications and training, and inadequate staffing levels. Workers reported that chronic understaffing forced employees to work 16- and even 24-hour shifts. After the state investigations, Sevita gave up ownership of the facility while continuing to operate “24 other types of residential facilities in California.”
In addition to forced closures, PE-owned facilities have also paid millions in fines and settlements over compliance issues and gross violations of resident care. Among the report’s dozens of findings, three of the most egregious include:
“A NeuroRestorative home in Iowa City was fined $10,500 in 2022 for failing to ensure its staff was adequately trained and aware of residents’ supervision needs after a resident who was left unattended in a liquor store drank three-quarters of a bottle of vodka.”
“In 2022 Broadstep lost its license to operate a facility in Georgetown, SC after police requested that the city decline to approve its license renewal, claiming that they had received around 150 calls for service and 70 incident reports related to the facility between 2020 and 2022. The same year, Broadstep paid $275,000 to settle a lawsuit claiming that staff members broke a resident’s arm. Broadstep did not admit liability.”
“A NeuroRestorative facility in Riverton, UT has a two-star quality rating and has been fined by CMS four times in the last three years, totaling over $86,800. In a February 2024 inspection report, CMS reported that ‘the facility failed to prevent abuse, neglect, misappropriation of resident property, and exploitation’ and ‘did not ensure that all alleged violations involving abuse, neglect, exploitation or mistreatment, including injuries of unknown source and misappropriation of resident property were reported immediately.’”
But despite the payouts over allegations of violence, intoxication, abuse, and an obscene lack of compassion, private equity firms have found a way to ensure their revenue far exceeds the returns levied from cost-cutting measures alone. The report details how two firms, Centerbridge Partners and Vistria Group, have clawed away almost half a billion dollars from Sevita and Help at Home to pay themselves through dividend recapitalization transactions.
These deals entail PE firms directing the care provider to take on hundreds of millions of dollars of debt to pay off the PE owner’s cash dividends. “In September 2024, Centerbridge and Vistria took out $1.5 billion in new debt at Help at Home, in part to finance a $262.6 million payout to themselves and minority owner Wellspring Capital Partners,” the report found. At the same time that the debt deals were signed, both Sevita and Help at Home were investigated for understaffing, inadequate training, documentation errors, and medication mismanagement.
In 2022, BuzzFeed reported on private equity leviathan KKR’s group home division. In the sprawling investigation, the report discovered that “conditions 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.” They discovered wages lower than Walmart, group homes completely devoid of caretakers, and three deaths that might have been avoided if the repeated warnings of state regulators had been followed.
KKR still owns BrightSpring, which according to the Private Equity Stakeholder Project report oversees some 37,000 employees across subsidiaries ResCare, EduCare, Normal Life, and VOCA. Its mission, according to an investor pitch, is to “deliver optimal patient outcomes in lower-cost settings and help people live their best lives.”
In order to force private equity–owned care facilities to actually make good on their sales pitch, the report concludes that state penalties must be large enough that investment firms actually suffer serious financial pain every time one of their care facilities is cited for wrongdoing.
Revoking a provider’s license can eliminate a group home altogether, whereas significant penalties across multiple locations may actually force a company to reconsider some of its worst practices inside adult care facilities. As the report puts it, the “risk of penalty” must be higher than “profit made from extractive and harmful business practices.”
Meanwhile, as President Trump threatens to slash Medicaid payments that support millions of disabled adults, private equity is laughing all the way to the bank, debt dividends in hand.
