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The many extracts on this page are from copyright material. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes. The material is selective and I have not included denials and explanations. I am not claiming that all of the allegations are true. The intention is to show the general thrust of corporate practices as well as the nature and extent of the allegations made.

David Banks, William Floyd and Corporate Culture

Beverly Healthcare


Beverly Enterprises was founded by a California accountant in the 1960's. It displayed the same corporate ineptitude as occurred in other chains in the 1990's. It made large profits then went on a wild buying spree which got it hopelessly into debt.

David Banks, a former typewriter salesman and Stephens Inc. executive took control of Beverly probably some time in the 1980's. This may have been at the time when Beverly was in trouble but I am only guessing. Beverly moved to Arkansas during this period.

Stephens, Inc. was an influential Arkansas brokerage house. It owned 10% of Beverly. Beverly was forced to sell off a large number of homes and there were few buyers. Vincent Foster Jr., who subsequently became deputy counsel to president Clinton represented Stephens Inc., when Beverly hired this firm to find a buyer for many of its nursing homes. A buyer was found and a deal was stitched up using a not for profit shelf company. The transactions that followed were described as profiteering. A judge called them "unconscionable".
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The reference web pages in the Beverly section on this site describe Beverly's practices in considerable detail. The allegations confirmed by studies of available data indicate widespread understaffing and substandard care. There is ample documentation of Beverly's aggressive behaviour to nurses and their representatives. - behaviour which caused authorities to serve it with a "cease and desist" order. Then there is the fraud, the largest in nursing home history. Providing further insight are Beverly's responses to the allegations of misbehaviour. I have placed a selection in one web page so that the pattern of responses is apparent. I have put an article that addresses contradictions in Beverly's public statements in a separate page.

Banks is undoubtedly the force behind Beverly, the man at the centre of its corporate culture, but he is not the front man. Dan Springer, vice president of public relations responds to most of the allegations. There can be little doubt that his responses are vetted and approved by Beverly's board and Banks himself.

I believe that there are only two interpretations of Beverly's behaviour. This company may be totally corrupt and dishonest - a criminal organisation. I have difficulty is positioning the largest nursing home chain in the USA, credible and influential in the same bracket with the drug lords. I am aware that drug cartels have moved into the more lucrative health fraud field but this goes much deeper. With few if any exceptions all of the health and aged care corporations have behaved similarly. It is just too much to swallow!

I have suggested that we are looking at a psychological and cultural phenomenon. I have borrowed the term successful sociopathy to describe it. These people display complete self-confidence. Their belief system is self evident and unchallengeable. A variety of strategies are used to deal with reason and evidence when it conflicts with their interests and their beliefs. Responses are tailored to the requirements of the situation. Contradictions are ignored. The logical outcomes of corporate policies (eg. staff cutting compromises care) are disregarded when they conflict with corporate policies.

Because these people have complete confidence in what they are saying they are most convincing. They are very difficult to contradict. Their followers are persuaded.

The material on this web site speaks for itself. I have placed only a few illustrative extracts on this page.


Profits can come at high costs
The Tampa Tribune November 15, 1998

Mary Johann died alone.
Her death came three days after the nursing home's corporate leaders delivered good news to shareholders.

Profits were up, they said, higher than in years because cost controls were so tight.
More than 10 years ago, Congress heralded its passage of new laws to ensure humane treatment of people in nursing homes. Another institution, however, has quietly imposed its own standards: Wall Street.
In 1995, Beverly Enterprises came under scrutiny after some high-priced purchases.

"We have been concerned for some time about the prices (the company) paid for the recent pharmacy acquisitions and the company's ability to cut costs quickly enough to achieve a reasonable and timely return on these investments," wrote two stock analysts in a 1995 news release.

Ten months later, Beverly boasted to business reporters it would bring in its highest nursing home profits in years, crediting an increase in high-cost treatments and "tight internal cost controls."

From 1995 to 1996, the number of Beverly homes cited for harming or endangering patients in Florida doubled from 13 to 27
Beverly has some of the best employees in the business, said Mary Tellis-Nayak, an expert on the aging process and former intensive-care nurse who works for Beverly as a clinical specialist.

"These people come from a culture of caring, and we have that culture in 95 percent of our homes," she said.

The company may not look good on paper, she said, because the inspection process is "subjective."

The human body shuts down near the end of life, ceasing to absorb food and no longer healing itself, she said. That can lead to bed sores and weight loss often cited in inspections.

"There are aspects of the aging process that no one can escape," added company spokesman Dan Springer.

(Note that not for profit homes, while not perfect perform much better. This explanation contains sufficient obvious truth to sound convincing but does not address the complaints and extensive documentation relating to Beverly's inferior performance. It makes strong claims in exactly those areas where it is most heavily criticised without addressing the allegations or the evidence.)

COMMENT:- The home in the next article was found to be an absolute pig sty on multiple occasions and regulators fell over backwards to give the place a chance to clean up the care in provided. I include here only the findings on one occasion. It took 15 months of repeated findings like this before the home was closed. Beverly is appealing the closure of this home.

Beverly shutdown long in coming; Nursing home deficiencies persisted in inspections from July 1997
The Arkansas Democrat-Gazette November 01, 1998

Untreated bedsores. Urine-soaked sheets. Feces in the showers. Flies. Roaches. Medication errors. An 80-year-old woman's death.

State officials now call the conditions found in a July 1997 inspection of the Beverly Health and Rehabilitation Center in Jacksonville "extremely troubling."
In their report, investigators also described:

  • 130-degree water coming from the bathroom taps in three rooms -- 20 degrees hotter than regulations allow;
  • a hallway left slippery for more than two hours despite repeated warnings by investigators;
  • a room with a full whirlpool bath left unlocked and unattended;
  • too few employees on duty for 70 percent of the days they examined, with staffing as low as 58 percent of required levels on one day;
  • a filthy kitchen with food served dangerously close to room temperature, risking spoilage and food-poisoning;
  • roaches, ants and other vermin throughout the facility, including flies on a feeding tube and on bedridden patients;
  • ragged and stained diapers and incontinent pads;
  • too few clean bed sheets to go around;
  • several patients reeking of perspiration or urine, some with unkempt hair and dirty fingernails;

generally unsanitary or dangerous conditions including a pervasive smell of urine, wads of gum stuck to handrails, chipped and gouged doors, dried feces in a storage room, moldy and mildewed showers, dirt and wax built up on floor tiles and baseboards, cracked and missing floor tiles, used mouth swabs and soiled incontinent pads littering the floor, water stains in the ceiling and an ice machine rigged to drain into a shower.
For their part, executives at Fort-Smith based Beverly Enterprises Inc. -- the facility's parent company and the world's largest nursing home operator -- say that the state erred in closing their facility. And they say that the Jacksonville home, however troubled, isn't typical of the rest of its facilities.

"I believe that our organization and our management team did everything it could within their power to address those issues," says Jerry Halley, a senior vice president at Beverly.

"If you look through those statements of deficiencies [in state inspection reports, you see] that we were able to develop plans, submit those to the agency and, with the agency's reviews, we were able to correct issues," Halley says. "Unfortunately, we couldn't sustain that activity all the time, I guess."

COMMENT:- This is the same Arkansas home.

Deficiencies in care at country's largest nursing home noted
The Associated Press November 15, 1998

Beverly Enterprises Inc., the country's largest nursing home company, says federal nursing regulations are nearly impossible to meet but the company does better than average in caring for its residents.
Beverly won't comment on the lawsuit. But company spokesman Dan Springer said Beverly's Arkansas homes receive an average of six deficiencies a year, less than the statewide average of 7.4 deficiencies per home.

"If you looked across the board, the norm would be that we are better than average," he said.

Beverly executives say the federally mandated nursing standards are a clumsy and subjective way to evaluate nursing home care.

Regulation often fails residents
The Tampa Tribune November 15, 1998
VICKIE CHACHERE; ; of The Tampa Tribune;

Beverly Enterprises Inc., the nation's largest nursing home chain, has accused the AHCA of being arbitrary and inconsistent in its inspections of company facilities.

Fines don't bite businesses hard;
The Tampa Tribune November 15, 1998

"A lot of people have a hard time accepting the fact that this is an

industry also," he (John Grout, an Orlando attorney who represents nursing homes ) said. "The nursing homes have to make money. If they aren't going to make money, they aren't going to do it, and how are the elderly going to be cared for?

"A nursing home has a right to the same profit that somebody else receives."

(Note the belief system. They are entitled to make money and by inference they can cut costs to make a profit. This is a market system. It sounds sensible and logical until you move out of the market paradigm. The correct question to ask is whether it is legitimate for self-serving groups in society to make profits out of the misery and suffering of their fellows? Is this the sort of society we are? Most of the company's profit is paid by society through taxes. This was intended for the care of the elderly and it is clear that they are not getting it. Surely society should find a more humane and ethical way of providing care)

Money or mercy?
The Tampa Tribune November 15, 1998

In the glossy pages of corporate literature from Florida's largest for-profit nursing home chains there is a repeated image: a frail person gazing with trust and gratitude at a health care worker holding their hand.

Beverly Enterprises hires railroad executive
The Arkansas Democrat-Gazette April 09, 2000, Sunday

Editorial Comment: According to a presentation made 4/11/00 at a Merrill Lynch Healthcare Investors Conference by Beverly's founder, David Banks, Beverly is actually very excited about the appointment of William Floyd. Floyd was chosen for his franchise experience (Taco Bell, Kentucky Fried Chicken, etc.) Banks sees franchising as the future of nursing homes. He believes that giving administrators a 25% share in profits will give them added "efficiency" incentives.

(Note:- Imagine the consequences of this! What are the logical consequences of providing large incentives to cut costs - which in nursing homes means nurses? This is April 2000. There is extensive information linking staffing and poor care. Beverly has been at the centre of these criticisms. All this information has not gone past the eyebrows. They are hiring an expert in selling chickens through franchises to sell aged care.)

Shareholder files lawsuit against Beverly officials
The Associated Press State & Local Wire December 1, 1999

Officers of Beverly Enterprises have received millions of dollars in bonuses and stock options while causing the nursing home giant's stockholders to lose money, according to a lawsuit filed Wednesday.

The suit was filed in U.S. District Court by Alfred Badger Jr., who identified himself as a Massachusetts stockholder.
"While Beverly has suffered hundreds of millions of dollars in damages and its public shareholders have suffered over $1 billion in lost market capitalization of the company, Beverly's executive officers have received millions in improper and wasteful annual incentive bonuses and other stock options and awards based on Beverly's falsified and artificially inflated financial results during 1990-97 as part of their scheme to illegally overcharge Medicare/Medicaid by hundreds of millions of dollars and violate the federal securities laws," the suit said.

Nursing home pleads guilty to defrauding federal Medicare program
San Jose Mercury News February 4, 2000, Friday

Federal prosecutors will not charge individuals under the terms of the plea agreement.

The Arkansas-based nursing-home chain, noting that it changed its Medicare-charging policies as of 1998, down played the settlement, defending its record in the nursing-home business. In court papers filed Thursday, the chain stressed that the charges were not connected to the conduct of "senior management," attributing the questionable conduct to renegade employees.

Washington, D.C., attorney Mark Biros said after the court hearing that Beverly Enterprises agreed to the plea deal to "avoid the cost of litigation."

"Obviously, something happened," Biros said. "But whatever did, it didn't warrant (individuals) being prosecuted criminally, and that says a great deal about the government's case."

COMMENT:- Here is a wonderful insight into Bank's mind. The "industry" is reeling amidst largely substantiated allegations of poor care and neglect due to understaffing. The largest expense is staff. Banks still sees further efficiencies which means cutting staff. He sees this as being accomplished by franchising hospitals and then offering them a large percentage of profits to encourage them to cut costs. He has brought in an expert in franchising to succeed him.

Longtime chief of largest nursing-home chain leaving post
The Associated Press State & Local Wire January 17, 2001

William R. Floyd, 56, who joined the company 10 months ago, will take over as CEO on Feb. 10.

"David made it clear he was grooming Mr. Floyd in potentially succeeding him in the CEO role," said Dan Springer, a spokesman for Beverly. "He is the one who recommended Mr. Floyd and is fully in support of the board's appointment."

Floyd will continue as president and chief operating officer, posts he assumed in April 2000. He had been chief executive of Choice Hotels International Inc., the nation's second-largest hotel franchiser, before joining Beverly.

William R. Floyd Appointed CEO of Beverly Enterprises; David R. Banks Continues as Chairman
Business Wire January 16, 2001, Tuesday

Beverly Enterprises, Inc. (NYSE: BEV) today announced that its Board of Directors has appointed William R. Floyd Chief Executive Officer, effective February 1.
Most recently, Floyd was Chief Executive Officer of Choice Hotels International, the second-largest hotel franchiser in the world. He earned B.A. and M.B.A. degrees from the University of Pennsylvania and its Wharton School of Business.

"When I recruited Bill Floyd last year as Beverly's President, I wanted a results-oriented leader who would bring us fresh ideas, a sharp focus on accountability and new business insights that extended beyond traditional thinking in the long-term care industry," Banks said. "Bill's performance has exceeded my expectations, and I was very pleased to recommend this succession plan to our Board. Bill has already helped Beverly focus on its 2000 operating objectives, and I'm confident he'll lead the company to new and higher levels of achievement in every facet of our business."

Floyd made the following comments on the planned transition:

Comment:- Beverly has a dreadful record for care. Lawyers have taken a massive toll. It has been forced to enter into agreements promising to improve care. It has been embarrassed by a massive fraud scam initiated by whistle blowers in which it paid US $175 million. It has an excellent reputation for screwing profit from its nursing homes and from Medicare. It rewards the senior staff responsible for all this very handsomely for successfully negotiating the public outcry without going under like its competitors. They want "to provide enhanced motivation". Contrast this with the human costs paid by the frail elderly without whom Beverly could not have performed so well. Beverly have no doubts about themselves.

Chairman sees his compensation triple at Beverly
The Arkansas Democrat-Gazette April 10, 2001

Beverly Enterprises Inc. Chairman David Banks received total compensation of about $ 2.6 million last year -- more than three times the amount he compiled a year earlier -- according to the company's proxy statement filed Monday with the Securities and Exchange Commission.
Beverly, the nation's largest nursing-home operator, said it authorized the exchange to certain executives and other employees "to provide enhanced motivation" to them and "to reduce the number of stock options outstanding." Banks, whose total compensation in 1999 was about $ 825,000, has spent 30 years at Beverly, including 12 as chief executive.
Each of Beverly's three other highest-paid officers -- executive vice presidents William Mathies, T. Jerald Moore and Scott Tabakin -- received about $ 1 million in total compensation last year. Each also received options to purchase 87,400 shares of Beverly stock. The company said last week that Tabakin has resigned as chief financial officer effective April 30 to accept a similar position at Amerigroup Corp., a managed health-care company.

Update August 2003:- Floyd, Beverly's new public face like Columbia/HCA believes that aged care is like a fast food chain - selling Taco's. He is also an advocate of franchising and incentives.

Bringing Discipline (and Scorecards) to Nursing Homes
New York Times July 7, 2002

Sitting in a conference room at the headquarters here of Beverly Enterprises, the nation's largest nursing home chain, William R. Floyd, its chairman and chief executive, is arguing that providing nursing care to the elderly is not all that different from selling tacos at a fast-food chain.

"There really are an enormous number of similarities between this and the world I came from," said Mr. Floyd, 57, an intense but self-effacing executive who spent seven years at PepsiCo, most of them at Taco Bell.
Mr. Floyd spent a week at a California facility when he first joined Beverly. He worked all three shifts at the home, working side by side with a nursing assistant, even helping to change residents' diapers.At Taco Bell, he had asked potential executives to work with a restaurant crew, and he is now asking every senior executive at Beverly to work for some time at a nursing home. "You gain so much respect," he said. "People will walk over broken glass for you."

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This page created Feb 2001 by Michael Wynne
Update Aug. 2001 and Aug. 2003