The COVID-19 pandemic forced public attention somewhere it doesn’t often go: nursing homes. Since March 2020 more than 200,000 deathsResidents and staff at long-term care facilities across America have reported COVID-19. While congregate living spaces are inherently dangerous in a pemic — especially ones full of medically vulnerable people — COVID’s spread through these homes was intensified by preexisting problems like understaffed facilities and overworked, underpaid employees.
This led to some action. Linking poor patient care to facilities’ spending priorities, New York State passed April 2021 legislation requiring nursing homes to spend at least 70 percent of their revenue on direct patient care (including 40 percent on patient-facing staffing), and banning them from paying out more than 5 percent in profits to owners and shareholders. Instead, the state will require that the facilities turn over any excess above 5 percent to the state. redistributed back to high-performing nursing homes. The law also addresses the issue of understaffing, requiring that facilities provide at most 3.5 hours of direct nursing care each day to residents.
“The goal is here to not only protect people in nursing homes but to dissuade bad actors from coming into this business,” Sen. Gustavo Rivera, New York Senate health committee chair, said in a statement.
Just before the law went into effect on January 1, 2022 a collection 239 nursing homes were filed. federal lawsuit aiming to block the law, calling it unconstitutional for New York to “confiscate” their excess profits. Notably, much of the complaint outlines how the law — if it had been in effect in 2019 — would have diminished the plaintiffs’ profits by a total of $824 million.
After the lawsuit had been filed, Gov. Kathy Hochul repeatedly delayed the law’s implementation, citing the pandemic and nursing homes’ ongoing staffing problems. In April, however, she approved the law’s entry into force.
Now it is up to the state of New York to enforce the law — and the court to decide whether it is constitutional.
You’re strapped for cash, but you can still make huge profits
It is obvious that many nursing home do not provide the quality of care their patients deserve. However, there is some disagreement about the root cause of the problem. Nursing homes often claim that they can barely survive and cannot afford enough staff. A 2020 survey found that 80% of nursing homes are struggling to make ends meet. 55 percent of nursing homes claimed they are operating at a loss72 percent stated that they couldn’t make the next year at their current pace, and 72 percent said so.
One of the main goals of the powerful nursing home lobbyIt is to increase federal Medicaid payments and Medicare payments, which account for the bulk of revenue from nursing homes. (In a recent quarter, 68 percent of nursing home revenueMedicaid pays a per diem to long-term residents. Another 10.9 percent was paid by Medicare. This is a higher rate for patients who receive shorter-term, higher-quality care after a hospital stay.
However, advocates claim that nursing homes are not suitable for everyone. skimpinginvestors and owners of critical services to generate huge profits. The recent lawsuit has given them new ammunition.
The lawsuit claims that the profit cap would eliminate hundreds of millions of profits, in a departure from the usual claim of barely scraping by. Advocates like the LongTerm Care Community Coalition claim that these claims are false. only prove these facilities have been making money all along — the funds just haven’t been reinvested into patient care.
“It was shocking,” said LTCCC Executive Director Richard Mollot. “To actually divulge how much money they’re making, above a fairly nominal requirement, was really shocking to me.”
LTCCC calculated, using the 2019 profits reported in lawsuit, that the facilities could have used these profits to pay annual salaries or benefits. additional 5,600 full-time registered nurses.
Nursing homes are making profits or providing basic care. This discrepancy is rooted in their financial structures. Many nursing homes across the country have over the past 20 years restructured their business by creating separate LLCs that manage their real estate and operations. This allows them to shield their valuable real estate assetsFrom financial threats such as patient lawsuits.
Many go a step further and spin off into multiple sub-companies, called “related parties,” that bill each other for services, often at high rates. Nearly every state has a similar system. three-quarters of nursing homesDo business with related parties. Many nursing homes are owned by publicly traded companies (although this is against New York law) or private equity funds. Private equity investments in nursing home have risen from $5 billion to more than 100 billion in 2018, to the current level. 5 percentPrivate equity firms are the owners of a large number of nursing homes. However, “Roughly 70 percent of the nation’s 15,400 nursing homes are for-profit,” as Maureen Tkacik points outIn The American Prospect.
“Sometimes, investors would buy a nursing home from an operator only to lease back the building and charge the operator hefty management and consulting fees,” The New York Times found in a 2020 investigationPrivate equity-owned nursing homes. “Investors also pushed nursing homes to buy ambulance transports, drugs, ventilators and other products or services at above-market rates from other companies they owned.”
For example, 2018 Kaiser Health News investigationThe Memphis-based Allenbrooke Nursing and Rehabilitation Center reported a $2million deficit and was often short on basic supplies like sheets and diapers. The facility was simultaneously paying out millions to 32 other companies owned and managed by the two Long Island men who own Allenbrooke Nursing and Rehabilitation Center.
Skyline Healthcare, Joseph Schwartz’s nursing home empire, was founded in Brooklyn. from six facilities to more than 100Between 2015 and 2017, He continued to purchase new homes while he was not subject to oversight. Despite receiving complaints of neglect and mismanagement, he still received fines and lost Medicare and Medicaid certification. He is now facing a variety of lawsuits and charges. Arkansas Attorney-General Leslie Rutledge alleges Schwartz lied on Medicaid reportsTo siphon $3 Million to other companies he owned.
A 2020 analysisPrivate equity firms bought nursing homes that had a 10 per cent higher short-term mortality rate. This, according to the authors, equated with 21,000 deaths in a 10-year time span. These facilities also had 19 percent more spending than comparable nursing homes.
An attorney who specializes in finances for nursing homes. California Sunday This financial structure allows nursing homes to make plenty of profits, but then “to go to the state legislature, to Senate sub-hearings, and say, ‘I have all these nursing homes, and they barely break even. We need more Medicare money. More Medicaid. We need larger reimbursements. You guys are killing us!”
The American ProspectWe looked into the facilities that were part of the New York lawsuit and found that 8 of the 40 most profitable ones on the list are co-owned by members of a single family, and that 25 others are owned by their “business partners or closest associates.” Many of the most profitable facilities in the lawsuit are similarly owned by extremely wealthy, often interconnected individuals.
A relatively small number of people and families have large nursing home empires in the United States. “In New York, it’s almost like, frankly, like a mafioso, with these family groups that are somehow related,” said Mollot.
Some of the facilities that are part of the lawsuit were identified by the stateAs Special Focus FacilitiesThey have a history with serious quality issues. Seven of the 11 were sued by U.S. attorneys for the Southern District of New York for allegedly overbilling Medicare in the period 2010 through 2019. According to that lawsuit, the nursing homes “systematically kept patients at the facilities longer than necessary” and “systematically put patients on higher levels of rehabilitation therapy than necessary based on their actual clinical needs.”
The Pandemic Shines Light on Long-standing Problems
The New York law that recently went into effect was included as part of last year’s state budget, amid outrage over the Cuomo administration’s mishandling of COVID-19 in nursing homes.
As New York became the epicenter in the pandemic, the state was created in March 2020 required nursing homesTo admit sick patients from hospitals. Soon thereafter, the then-Gov. Andrew Cuomo caved to industry lobbyists. inserted a special protectionProtecting nursing homes, hospitals, health care providers and other facilities from COVID-related lawsuits is a priority in the 2020 state budget
What’s more, multiple audits show that Cuomo’s Department of Health undercounted the state’s total nursing home COVID death toll, by not counting 4,100 nursing home residents who died outside their facilities in hospitals.
“Instead of providing accurate and reliable information during a public health emergency, the Department conformed its presentation to the Executive’s narrative, often presenting data in a manner that misled the public,” State Comptroller Thomas DiNapoli said in a March 2022 audit.
Over the two years that followed, the pandemic forced a closer inspection of New York’s nursing homes. March 2021 saw the repeal by lawmakers of the special liability protections. This unleashed a flood. dozens of lawsuits from families seeking to hold nursing homes accountable for their loved ones’ COVID-19 deaths before the two-year statute of limitations expires. A Supreme Court judge in Buffalo recently clarified that the liability repeal would not be retroactive. allowed a suit to move forwardOn behalf of a woman who was taken to a nursing home and died in April 2020.
There is also renewed concern about the nursing home staffing crisis. Washington, D.C. currently requires nursing homes to provide 4.1 hour of direct nursing care daily, in line with the Nursing Home Act. minimum standards recommended in a 2001 report by the Centers of Medicare & Medicaid Services (CMS). Recently, the Biden administration proposed a series of reforms to nursing homes, including the establishment of a federal minimum staffing requirement for all nursing home that receive federal funding (CMS would set this requirement after a new research study).
The nursing home industry is pushing back against Biden’s proposal, just as it pushed back against New York’s newly mandated 3.5 hours of direct nursing care a day. The industry claims that staffing requirements are impossible to meet due to a lack of workers. “New York does not have enough qualified workers to meet the mandate and it fails to provide enough funding to pay for the costs of the mandate,” the New York State Health Facilities Association said in a statement regarding New York’s bill.
But advocates say, if anything, New York’s law does not go far enoughLow salaries, poor working conditions, burnout, and a lack in dignity on the job are all reasons for understaffing. The national turnover rates for staff in nursing homes are around 100 percentThis means that approximately as many people leave a facility each year as are employed there.
“If you’re not meeting 3.5 hours, I don’t see how you’re not neglecting your residents,” said Mollot, noting that the originally introduced version of the legislation required 4.1 direct care hours per day. “Essentially, if you’re not providing 4.1 hours of direct care time, to me, that’s fraud in one of two ways: Either you’re not providing the care that residents need, or you’re retaining residents who don’t need to be in a nursing home. Because if they need to be in a nursing home, they need 4.1 hours… It’s not a warehouse.”
Meanwhile, two other statesNew York recently joined the list of states that have taken steps to improve the quality of nursing homes by banning owners from siphoning profits. A new rule in Massachusetts requires that nursing homes spend 75 percent on resident care. A New Jersey law requires that 90 percent.
“If they’re not able to pull so much money away from care and spend it on staffing and actual services, it should make a big difference,” Charlene Harrington, an expert in nursing home reimbursement and regulation, told Fortunereferring to the state rules that cap profits. “I would expect the quality of care would improve substantially.”
“I think that people really saw what was going on, and how much of it wasn’t a standalone issue, because of the pandemic,” said Mollot, of the bills seeking to limit profits and improve care. “The residents are dying. I don’t care if you’re 90 or 100 or older. You don’t deserve to suffocate to death, in pain, because no one’s caring for you, because they were sloppy in their care.”
