Maryland Lawyer Blog

What do sewer sludge and Manor Care nursing homes have in common?

Washington, DC-based Carlyle Group owns Synagro Technologies, the company that processes municipal waste products, transports the resulting "sewer sludge" and distributes it for land application. Residents from around Pennsylvania have been calling for the expanded testing of Synagro sewer sludge and public reporting on its toxicity and disposal. Communities don't know everything that is in the sludge dumped on nearby lands. Without more information, there are possible health effects and diminished quality-of-life issues.

Concerns about the safety of Synagro sludge have intensified since the company's April 2007 buyout by The Carlyle Group. By taking Synagro private in a leveraged buyout last year, Carlyle is able to avoid requirements that Synagro provide federal agencies with certain information about its business practices and avoid publicly disclosing the existence of regulatory inquiries or legal complaints against the company resulting from health hazards caused by Synagro products and product distribution.

This has been happening with The Carlyle Group's take-over of Manor Care nursing homes earlier this year. Manor Care's restructure could obscure ownership and make it more difficult to regulate care. You can't see how they are wasting money, short-staffing, under-paying workers, or understand all the intricate inter-relations they have with supposedly outsourced services such as therapy.

All 46 Manor Care nursing homes in Pennsylvania staff below a standard recommend in a Centers for Medicare and Medicaid Services (CMS) study as putting residents at risk (Schnelle, et all. Appropriatness of Minimum Nurse Staffing Ratios in Nursing Homes: Phase II final report, December 2001).

The steady cash flows nursing home operators produce is a big attraction for private-equity firms that need the cash to pay down borrowed debt. Beverly, Extendicare, Genesis and Vencor/Kindred went private, and now Manor Care. Private firms keep all their dirty deeds from the public, especially consumers.

Ownership structures with multiple stakeholders have been used by other private-equity firms to minimize liabilities and shield them from regulator inquiries. They use these kinds of structures to avoid taking responsibility when taking control of businesses. Private-equity buyout firms such as the Carlyle Group are not required to publicly disclose information about the business practices of the companies they own.

The Carlyle Group, one of the world's largest private-equity funds with more than $75 billion under management, owns Manor Care, the largest nursing home chain, and Synagro, the largest sludge company in the United States. Perhaps they'll process all their municipal waste products, and distribute it to the lawns and gardens of all their nursing homes and add to the significant health complaints at the homes?

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