Haven Healthcare Auction Today

May 22, 2008

May 22, 2008
Starting at 10:00 am today, the bidding was to begin for the assets of Haven Healthcare, the Connecticut-based nursing facility chain that filed for bankruptcy protection late last year. The stalking horse bid had been for about $105 million, but we are not sure that was still on the table by bidding time. We actually tried to go to the site of the auction, but we were not successful in finding out the address in Hartford. So much for our contacts getting back to me, but perhaps we weren't wanted as it may be a very loud auction process. Direct quotes are usually not favored in those situations.

Meanwhile, the skilled nursing industry received a bashing, again, in Congressional testimonies last week, at least the concept of corporate chains. Connecticut's Attorney General, Richard Blumenthal, with higher political aspirations, apparently stated that "Haven Healthcare is really a poster child for the perils of concentrated ownership" and called the company a "house of horrors" for the families of many residents. He argued that the states should be able to direct the takeover of nursing homes that demonstrate gross financial mismanagement. But he didn't define what he meant by "gross financial mismanagement," and he didn't say what would happen to the ownership of the license, business and real estate after the state came to the rescue to save the facility from itself.

We will certainly not defend what the owners did at Haven Healthcare, and we will never defend poor quality of care, but sometimes you have to step back and ask, Is it the corporate ownership structure that is at fault, or is it some bad employees, or both? No one wants to attack the underpaid, downtrodden nursing facility employee, but sometimes there is only so much an employer can do. I am willing to take the heat on this one, because with all the union attacks on the industry going on, no one has been willing to come out and say, yes, there are some employees who do not provide quality care, or who make mistakes, or who ignore a patient, or who go on break when they shouldn't. It is the minority of employees, but they exist, and it is not always so easy to identify them, let alone replace them, especially when there is a union involved. When something bad happens, does the union stick up for patient care, or the employee? Take a guess.

Let me provide an example. When a friend of mine's mother was in a local, community-based skilled nursing facility, and one with a very strong local reputation as well as a national reputation for design and innovation, dying of stomach cancer, something happened which, while shouldn't happen anywhere, could happen anywhere. Her mother's feeding tube had popped out of her stomach, and my friend asked the nurse if she would put it back in. The response? "I'm going on break, it will have to wait." And she left. I would call that poor quality of care, but is it the fault of management, or the employee? My answer is the employee, and at a minimum, she should have been reprimanded, if not fired, for that kind of "care-giving."

Could it have happened at a corporate chain facilitiy? Yes. Did it happen at a community not-for-profit stand-alone facility with a stellar reputation? Yes. The point is, management can't control every aspect of an employee's behavior eight hours a day, every day, and every reaction of an employee when a patient throws her food at her, or hits her, or screams profanities at her. I know, if you can't take the heat, get out of the kitchen. But that's a lame response, especially when there is a shortage of staffing for nursing facilities, and since Medicaid reimbursement is not going to be increased substantially to raise the wages, what is management supposed to do? The best it can. Sure, there are some bad apples out there, but to turn around and say that all corporate chains should be reigned in, or criticize the "concentration of ownership" as the real problem, as Mr. Blumenthal has done, well, that's a lame response as well, and one that is not very well thought out. And what is an employer to do, blame all employees for the actions of one bad apple? Of course not.

So by the end of today, we may know who will be the new owner of Haven Healthcare's 25 nursing facilities in New England. Because of the cost, it will be a corporate buyer, and the state will be all over them to provide quality care. And they should be watched, but if anyone expects a complete turnaround in the first week, we would like to know what hole their head has been stuck in for a few years.


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