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Published: Thursday, 10/18/2007

Union protests takeover of city-based Manor Care

BY GARY T. PAKULSKI
BLADE BUSINESS WRITER

Shareholders approved a $6.3 billion takeover of Toledo s Manor Care Inc. yesterday against a backdrop of protest and criticism by union activists.

Ninety-nine percent of stock owners who voted to accept the $67-a-share offer from private equity behemoth Carlyle Group of Washington, Paul Ormond, Manor Care chairman and chief executive, announced during a special shareholders meeting at the nursing home operator s downtown headquarters.

The gathering, which attracted about 50 people, took place under heavy security, an atmosphere probably unseen at other Toledo-area stockholder gatherings.

Most entrances to the building were locked, a restaurant there was closed for repairs, and attendees were required to pass through a metal detector and even get a going-over by a hand-held metal-detecting wand. No recording equipment was permitted nor were cell phones.

Most shareholders voted by mail in advance, so the meeting was largely a formality.

Union official Dave Regan, left, had a heated exchange at the meeting with Manor Care Chairman Paul Ormond. Union official Dave Regan, left, had a heated exchange at the meeting with Manor Care Chairman Paul Ormond.
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Manor Care, the Toledo area s fourth-largest corporation, is the nation s largest nursing home operator with 550 facilities nationwide and annual sales of $3.6 billion.

The meeting attracted 150 protesters outside from the Service Employees International Union, which represents about 1,100 of 60,000 employees at Manor Care but would like to represent more.

Toledo police officers and command personnel lined the route on foot, horse, and bicycle as union activists marched from Government Center down Jackson Street to the Manor Care building. They carried signs that read, Put Ohio seniors above Carlyle profits at Manor Care, and chanted: Better staffing, better care, no more money for millionaires.

The union has criticized the sale of the nursing home chain, which is now publicly traded, to a private equity group with $76 billion in assets including stakes in Dunkin Donuts and Hertz Corp. Additionally, the union has objected to payments of up to $186 million that will be made to Manor Care s chairman for company shares he holds.

During the shareholders meeting, Mr. Ormond was drawn into a sharp exchange with David Regan, president of the 1.9 million-member union s District 1199 health care unit, over the payments.

Asked by the union official to state exactly how much he and other top executives would receive, Mr. Ormond said the figures were available in securities filings made by the corporations at the U.S. Securities and Exchange Commission.

I am asking a direct question and you haven t answered it, Mr. Regan said.

When the union official continued to press the issue, Mr. Ormond said: Excuse me, you haven t been recognized.

When no one else asked a question, the Manor Care leader adjourned the meeting and briskly departed.

Earlier, in response to other questions from the union official, Mr. Ormond defended the quality of care offered in Manor Care s facilities and denied that the corporation has any plans to move its headquarters out of Toledo or to eliminate any of the 700 jobs there. The firm is trying to renegotiate its office lease, which expires in 2009.

The company operates facilities under the name Heartland, ManorCare Health Services, and Arden Courts.

In a written statement, company spokesman Rick Rump denied the labor group s allegations about shoddy care and alleged the protest was part of a membership recruitment drive.

We stand with the vast majority of our employees who are offended by attacks on the level of care and caring they provide our patients and who oppose any smear campaign designed to destroy our reputation for the purpose of unionizing employees.

But criticism hasn t come just from the union. Betty Laubert, long-term care ombudsman for the Ohio Department of Aging, criticized the chain s quality record and expressed concern that a private-equity group would have little incentive to fix problems.

In response, the corporation yesterday distributed a fact sheet stating that 81 percent of patients and families in Ohio have rated Manor Care service as good or excellent and that its homes have a 97.8 percent compliance rating, which exceeds state and national averages.

Protesters included Patricia Murphy, a nursing home worker in Miami who is not employed by Manor Care.

They need to put that money into the nursing home instead of their pockets, she said of the funds that change hands as part of the sale.

However, the vote announced yesterday virtually assures that the deal will be completed by the end of the year as parties on both sides have previously predicted. Regulators in each state still must consider the license transfers for the facilities to Carlyle.

The firm s spokesman said in a written statement: We will remain dedicated to serving the more than 250,000 patients and residents we care for annually with the same quality standards that have become our hallmark in the health care field.

The union plans a caravan across Ohio and other states, ending next week with a protest in front of Carlyle s Washington headquarters.

Contact Gary Pakulski at:gpakulski@theblade.comor 419-724-6082.



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