Approximately $173 billion annually of taxpayers’ money via Medicaid and Medicare is being spent on caring for residents in nursing homes. Yet, there is flimsy oversight as to how much of this money is going to actual resident care.
Residents who don’t qualify for government support pay the current average cost of about $93,000 per year out of pocket. The nursing home industry is calling for more money, claiming current reimbursement is not enough to attract and maintain good staffing and provide the quality of care that residents deserve. If that is the case, why is private equity increasingly buying nursing homes throughout the country? Do they like losing money? Why does the nursing home industry push back against regulations to require greater disclosure as to where the money is being spent? Why do they also fight against states’ regulating a minimum 70% of revenues being directed towards resident care, or capping profits at a reasonable amount like 5%? Whether we increase nursing home reimbursements or not, we must demand accountability or transparency into how our taxpayer funds, as well as our out-of-pocket dollars, are being spent.
This transparency must begin with ownership. Seventy percent of nursing homes are owned by for-profit entities while just 30% are owned by not-for-profit organizations (predominantly religious or social service agencies). In many instances, for-profit nursing homes have obfuscated corporate structures. According to Harvard University professor of health care policy, David Grabowski (AARP Bulletin Dec 2020), firms may buy a nursing home, place its buildings into separate holding companies, and have their other owned companies provide the management, laundry, food service, supplies, and other services at a tidy profit. Too often, they succeed at reducing the amount of money spent through inferior services and supplies at the expense of quality of care for the residents.
“The main reason these for-profit companies are in the nursing home business is to extract money through management contracts and lease agreements,” says University of California professor Charlene Harrington, who has studied nursing homes for decades, told the AARP in 2020.
An April 2021 study conducted by the National Bureau of Economic Research titled “How Patients Fare When Private Equity Funds Acquire Nursing Homes” revealed that Medicare residents in nursing homes had an increased mortality rate of 10%, fewer caregivers, and a decline in patient mobility.
Transparency must also include staffing levels. It has been demonstrated many times over that increasing the number and quality of nurse and personal aide staff to what experts recommend has direct benefit to residents’ health and well-being.
Not surprisingly, it also has a significant benefit to the staff as well. Current nursing home staff members are overworked and underpaid.
The PA Department of Health has upgraded regulations regarding staffing levels that began to take effect July 1 and finally phase in on July 1, 2024. Although staffing is complex and must take into account the acuity of residents and training levels of staff, one good measuring tool is the number of direct hours of nursing care per resident in a 24-hour period.
Currently, for PA this number is a woeful 2.7 hours. It moved to 2.87 hours on July 1 and would increase to 3.2 hours on July 1, 2024. The Centers for Medicare & Medicaid Services (CMS) released a landmark report which copied expert recommendations of 4.1 hours of total direct care per resident per day.
Unfortunately, Pennsylvania nursing homes that only meet the minimum will not be up to the task of providing good quality care for their residents.
The bottom-line challenges for our policymakers are:
1.) Set adequate requirements to allow the examination of how our federal and state taxpayer dollars are being spent in nursing homes.
2.) Ensure that at least 70% of nursing home revenue is going to direct resident care, and
3.) Establish the minimum staffing levels recommended by experts.
I don’t care if the states or federal government sets these requirements. Unfortunately, Pennsylvania is not up to the task.
In the meantime, it’s buyer beware. If you or a loved one are entering a nursing home, often times through a hospital’s patient discharge process, get answers from the hospital discharge planner or social worker, or ask the nursing home administrator the following questions:
1.) What are the number of direct hours of nursing care per resident in a 24-hour period?
2.) What percent of revenue is being spent on direct resident care?
3.) Who owns the nursing home?
4.) Are there related management and service companies that the ownership has financial stake in?
If the hospital discharge team or the nursing home administrator can’t answer these questions, look elsewhere. You can also check the Medicare quality rating for the nursing home on: https://www.medicare.gov/care-compare/?providerType=NursingHome.
Brian Kelly is a Volunteer Patient Advocate and Volunteer Pennsylvania Ombudsman. He lives in Warwick.
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