Buzzfeed News: The Private Equity Giant KKR Bought Hundreds Of Homes For People With Disabilities. Some Vulnerable Residents Suffered Abuse And Neglect.

In 2019, KKR bought BrightSpring Health Services, one of the nation’s largest group home operators, “consisting of more than 600 residential facilities serving thousands of people with severe intellectual or developmental disabilities, some of whom cannot speak, wash, or feed themselves. Many residents have no family to look out for them. Almost all need round-the-clock care. They all depend on the company to keep them safe.”

BuzzFeed News conducted a yearlong investigation that found “KKR focused on expanding the business even as a crisis mounted in its group home division, where 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.”

Buzzfeed News, April 25, 2022: The Private Equity Giant KKR Bought Hundreds Of Homes For People With Disabilities. Some Vulnerable Residents Suffered Abuse And Neglect.

“From the time KKR took over BrightSpring in March 2019 through the end of 2021, its homes were cited for dangerous conditions at a rate well above the average for such facilities,” according to a first-of-its-kind analysis by BuzzFeed News.

Despite these serious issues, the KKR-controlled board approved a plan for BrightSpring to take on more than a billion dollars in debt, secured by the company’s assets, to buy more companies. BrightSpring was left to pay more than $135 million a year in interest on the loans, and millions more to KKR itself for “transaction” and “advisory” fees, money that might otherwise have helped improve conditions in the homes. It now operates in 50 states serving over 350,000 people daily across its different healthcare divisions, according to Buzzfeed.

Buzzfeed reporters analyzed “hundreds of state inspection reports, internal company records, photographs, and videos, and conducted more than 170 interviews with regulators, clients’ families, and current and former workers. Again and again, they found residents consigned to live in squalor, denied basic medical care, or all but abandoned.”

Buzzfeed observed that “KKR’s handpicked board of directors, BrightSpring executives in many cases kept wages lower than those at competing facilities or Walmarts, despite pleas from local managers that they were unable to safely staff the homes. Some managers resorted to making employees work three days straight or threatening to have them arrested if they tried to leave. In several cases, state inspectors arrived at homes and found no staff at all.”

See PESP’s reports:

• “The Kids Are Not Alright: How Private Equity Profits Off of Behavioral Health Services for Vulnerable and At-Risk Youth” (2022)
• “Understaffed, Unlicensed, and Untrained: Behavioral Health Under Private Equity” (2020)

In fact, four former managers told Buzzfeed that supervisors kept the pressure on despite being warned about safety concerns in the homes.

Meanwhile, as a reward for hitting the company’s financial goals, the CEO Jon Rousseau doubled his salary, to $1.6 million in 2020.

Buzzfeed reported that KKR filed paperwork last October with the Securities and Exchange Commission announcing its intention to go public after owning BrightSpring for just three years. The documents paint a rosy picture of BrightSpring’s financial status and its “essential” role in American healthcare.

With about 243,000 stock options, Rousseau could make millions.

As Buzzfeed reporters wrote, “KKR’s ownership of group homes…offers a cautionary tale about what can happen when a private equity firm’s playbook is brought to bear on people whose lives hang in the balance.”