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The corporate chains
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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.

Nursing Homes Update
June 2001 to August 2003



This page tells the story of nursing home care in the USA between June 2001 and August 2003. It provides the background to the brief update given on the aged care review page. I have told the story by using extensive extracts from some of the excellent reviews and studies written during this period. They describe what is happening well. This is copyright material but I believe that this is fair use.



Patient care and Staffing


Dramatic stories of the ongoing abuse, misuse and neglect of the elderly continue to appear in the press and many relatives have given evidence at government inquiries like that conducted by the US senate in March 2002.

"The biggest insult of the whole experience has been that had this happened in my own house, I would have been investigated. I would have been prosecuted, and I probably would have been put in prison," she told senators. "That's why I can't let it go." (Statement by Barbara Becker who became active against the corporate chains after her mother was a victim of an Extendicare nursing home) WITNESSES RECOUNT NURSING HOME ABUSE Pittsburgh Post-Gazette (Pennsylvania) March 5, 2002

They died painful, preventable deaths and left behind families tormented by their loss.

They are victims of poor care in nursing homes, a cross section cut from the fabric of America - mothers and fathers, war heroes and homemakers, black and white.
When Riley, a registered nurse, complained to the staff at a St. Clair County nursing home that her bedridden mother was dehydrated and malnourished, the response stunned her.

"All the Alzheimer's patients starve to death, what do you expect," Riley said they replied.
"The only time she ate is when I fed her," Riley said.
"When I read a copy of the autopsy
(another patient) I almost threw up," said her son-in-law, Dr. Marvin Sando, a retired physician. "I can't tell you the emotions that went screaming through my head. I was angry, shocked, disappointed, sick to my stomach. I was just morally shocked that a woman in this day and age could have this kind of death. It was horrific. It still bothers me that someone could die like that."
On her almost daily visits, his wife, Mary Burton, often found her husband lying in urine-soaked sheets while staff members sat in another room laughing and enjoying soft drinks, she said. Seven months after entering the home, he began developing bedsores. By the time he left the home to enter a wound care center, he had five infected bedsores.
"It's just sad that people have to die like that - from a lack of attention," Burton said. "I don't think I will ever put it behind me."
Survivors of lost loved ones tell stories of broken trust St. Louis Post-Dispatch October 12, 2002

These personal experiences are supported by the figures from formal studies by government and others.

In 1998 and 1999, 25-33% of nursing homes had serious or potentially life threatening problems in delivering care and were harming residents. In 1999, state inspectors found that 26% of the nation's nursing facilities had poor food hygiene; 21% provided care that was inadequate; 19% had environments that contributed to injuries in residents; and in 18% pressure sores were treated improperly. - - - - - - About 77% of facilities that were performing poorly had problems in subsequent surveys conducted by state licensing and certification agencies.
Two of the fundamental causes of problems with the quality of care in US nursing homes are inadequate
staffing and a poor mix of skills. Residential nursing facilities in the United States Charlene Harrington BMJ VOLUME 323 1 SEPTEMBER 2001

In Oklahoma in January the Tulsa World looked at death certificates and found that in the previous decade 1000 people had died in nursing homes from what are recognised as largely preventable causes resulting from neglect. Other studies have shown that death certificates on this group of patients are inaccurate and the most dying from these causes are reported as heart failure or pneumonia as the doctors had often not seen the patients recently or after death. The figure is therefore probably an underestimate.

Nearly 1,000 people died in Oklahoma nursing homes from malnutrition, bedsores and other largely preventable causes of death, a Tulsa World review of death certificates since 1990 shows.
For its review of death certificates, the Tulsa World selected causes of death that have been defined as preventable, according to medical experts and a government study. NEARLY 1,000 DEATHS WERE PREVENTABLE, REVIEW SHOWS  Tulsa World Jan 14,2001

Thousands of America's elderly mothers, fathers and grandparents are being killed each year in the nation's nursing homes - frail victims of premature and preventable deaths.
"Unlawful abuse and neglect is widespread, underreported, infrequently prosecuted and the cause of untold suffering, injury, illness and death," Marie-Therese Connolly, who heads the U.S. Department of Justice Nursing Home Initiative, says in a study published last month in the Journal of Health Care Law and Policy.
The latest national compilation of more than 500,000 nursing home deaths - for 1999 - lists starvation, dehydration or bedsores as the cause on 4,138 death certificates. The data, collected by the National Center on Health Statistics, include 138 such deaths in Missouri and 186 in Illinois.
"We know it's significant," said Breaux
(US senator), noting that investigations by his staff and other research show that 500,000 to 5 million cases of elderly neglect and abuse take place in institutions and private homes each year, although about 80 percent go unreported.
- - - - , in 1999, complaints from nursing home workers, family members and Arkansas long-term care inspectors who believed that poor nursing care was killing residents troubled Little Rock Coroner Mark Malcolm.
"The families were being told by the nursing homes that their loved ones died of heart attacks, strokes and other natural causes, but what we actually found was that about a third were wrongful and preventable deaths, either caused by or exacerbated by dehydration, malnutrition, including choking, or from sepsis from bedsores," said Malcolm, who was just appointed to the U.S. Department of Justice's newly formed forensic working group.
The Post-Dispatch examined the death certificates and the physicians' evaluations of 55 nursing home residents in Missouri and Illinois who died in the past two years and whose relatives decided to sue for neglect. In 42 of the cases, the newspaper found that the cause of death listed on the certificate differed from what physicians said the medical records actually showed. In 40 of these cases, the nursing homes involved agreed to a settlement with the family before trial or were found in civil proceedings to have committed neglect.
Nation's nursing homes are quietly killing thousands THIS IS THE FIRST IN A SERIES ON NURSING HOMES St. Louis Post-Dispatch October 12, 2002

You would expect these corporations to have rapidly learned from their experience in bankruptcy and from litigation in Florida but not a bit of it. Not only are they still promising shareholders growth but the reports of compromised care keep coming. 

Every day frail, helpless, elderly Virginians suffer substandard care and neglect in nursing homes. Wounds from falls, sores from poor hygiene, inattention, improper medication and diet, and verbal abuse leave patients physically ill and emotionally scarred. Sometimes, the result is premature death.
However, government reports, lawsuits and a review of state nursing-home inspection records by The Virginian-Pilot reveal that dozens of nursing homes throughout the region and the state have incurred stacks of safety and health-care violations.

A legislative study in 2000 found that more than half of Virginia's 275 nursing homes failed to meet federal quality standards. The problems were most severe in eastern Virginia, where three-quarters of the homes were found to be out of compliance.
Sentara Nursing Center in Norfolk has been cited for 62 violations of government health-care standards over the past three years, more than any other nursing home in South Hampton Roads. Three of those were cases of "actual harm" to patients - one of the most serious violations.

Several local nursing homes have been sued for patient neglect or abuse. Yet government regulators allow poorly performing nursing homes to continue operating- - - .
Some homes, like Sentara Nursing Center in Chesapeake, provide as little as 2.2 hours of care per patient per day, the data show.
The scarcity of accommodations and the trauma of moving elderly residents leaves regulatory agencies reluctant to close down nursing homes. No Virginia nursing home has ever been shuttered by regulators.
Nearly two-thirds of Virginia nursing homes are operated by for-profit companies. In South Hampton Roads, 23 of 35 homes are for-profit.

At least one study has found a correlation between profits and poor care. - - - - . There was also a size correlation: Larger homes were more likely to incur violations than smaller ones.
Kindred Healthcare, a Louisville, Ky.-based company that operates 305 nursing homes nationally and four in South Hampton Roads, earned an average $1 million profit per facility in 2001.

Yet, its Harbour Pointe Medical & Rehabilitation Center in Norfolk was cited for 35 violations of health-quality standards in one 12-month inspection period - more than any other nursing home in Virginia. The average for Virginia homes during that period was four violations.
In a lawsuit filed in 2001, Baheri described what happened as he sat with his wife in her room on Aug. 30, 1997.

"I witnessed the continuous seizure of my wife, which lasted approximately 1 1/2 hours," he is quoted as saying in a sworn statement filed in court. "My wife turned dark blue. Bubbles were coming from her mouth, and she was soaking wet. I pleaded with the nurses to do something to stop the seizure, screaming at them: 'Call 911 - this is an emergency.' "

Baheri said the nurses responded that they would call the facility's medical director and "everything would be okay." He alleged in his lawsuit that his wife suffered further serious, permanent brain damage and requires round-the-clock care.

Baheri, who was driven into bankruptcy by his wife's medical bills in 1999, now cares for her at home. Kindred settled the lawsuit for $110,000.

State inspections at the Harbour Pointe facility have turned up repeated instances of patient injuries, bedsores and medication errors. SAFETY, CARE VIOLATIONS WIDESPREAD IN REGION; STAFFING AND MONEY ARE CRITICAL, BUT TOO OFTEN FALL SHORT The Virginian-Pilot(Norfolk, Va.) April 27, 2003

The problem of course is that nursing is the largest cost in nursing homes and nursing homes are cutting costs to increase profits and compete.

The U.S. Department of Health and Human Services reported to Congress this year that nine out of 10 nursing homes have staffing levels too low to provide adequate care.
Constant corporate focus on the bottom line frequently requires managers to operate homes with skeleton staffing because the industry says it lacks enough government money to provide proper care.

Yet, some nursing homes find ways to provide adequate service with existing staff. Many nurses and aides are dedicated to their profession and provide excellent, compassionate care.
Nation's nursing homes are quietly killing thousands THIS IS THE FIRST IN A SERIES ON NURSING HOMES St. Louis Post-Dispatch October 12, 2002

Identifying the cause of thousands of preventable deaths each year in America's nursing homes is not difficult, but fixing the problem is far more complex.
A panel of academic researchers supported by the government recommended in 2000 that nursing home residents get 4.5 hours of direct nursing care daily. Last year, the Centers for Medicare & Medicaid Services, the division of the Department of Health and Human Services that provides two-thirds of the money to nursing homes, reported that facilities with staffing below 4.1 hours per resident per day may provide a level of care that results in harm and jeopardy to the residents.

But nationally, the average home provides about 3.5 hours, according to a study last year by Charlene Harrington, a professor of sociology and nursing at the University of California at San Francisco and a nationally recognized expert in evaluating nursing home care.
For-profit homes, on average, have almost 32 percent fewer nurses and 12 percent fewer aides than nonprofit homes, according to a study published last year in the American Journal of Public Health.
Woefully inadequate staffing is at the root of patient neglect St. Louis Post-Dispatch October 14, 2002

Low Medicaid payments translate into low pay and high turnover for the nurse aides who provide most of the patient care. Some nurse aides complain of having to care for as many as three dozen patients in one night shift. State inspectors have found up to 60 patients being cared for by a single nurse and an aide.
Yet, Virginia lawmakers continue to underfund nursing homes and refuse to pass legal reforms requiring better care.
"The root of evil is lack of staffing," added Carlton Bennett, a Virginia Beach lawyer who handles many similar cases. A study conducted by the U.S. Department of Health and Human Services in 2001 supports this view. It found "strong and compelling evidence of the relationship between staffing ratios and quality of nursing home care."
Virginia is one of the least generous states when it comes to Medicaid funding. It ranked 47th in per capita Medicaid nursing-home spending in 2001.
Some homes, like Sentara Nursing Center in Chesapeake, provide as little as 2.2 hours of care per patient per day, the data show.

Nursing homes have been involved in a form of slave trade in order to bring in underpaid overseas staff whom they can misuse and work to the bone. Micronesians are able to work in the USA. A collection of shifty operators have been enticing poor local Micronesians with the promise of training and jobs in the USA, and then selling their cheap labour to nursing homes.

If these economicly bonded labourers breached their contracts they were liable for large payments in compensation and still had to pay their air fares home which would take 5-6 years of work to save. These financial handcuffs enabled the nursing homes to exploit these young inexperienced foreigners and pay them a pittance. When it came time for the original contractors to pay the nurses air fares home they had conveniently entered bankruptcy.

One wonder what sort of care would be provided by these duped and angry foreigners and what sort of empathy they would bring to the care of the residents.

After traveling 8,000 miles from her impoverished Pacific Islands home to rural Ashburn, Ga., Gloria Likiche found herself working the graveyard shift at a nursing home, emptying bedpans for $5.50 an hour and so hungry that she felt as if she were starving.

This was neither the nurse-training program nor the well-paid job that, she said, recruiters had talked about so glowingly when they lured her to America from her impoverished island in the Federated States of Micronesia.
Likiche found herself living in a dilapidated, unheated trailer, where she and co-workers subsisted sometimes on a diet of rice boiled with vinegar and salt. Within months, she had lost 30 pounds.
INDENTURED IN AMERICA Hunt for good jobs leads only to poverty The Orlando Sentinel September 15, 2002

A yearlong investigation by the Orlando Sentinel and The Sun of Baltimore has found that Muller and DeMichele are key players in an international business of "body brokers" who ship thousands of Pacific Islanders to the United States on one-way tickets and consign them to one to two years of indentured servitude at nursing homes and theme parks.
DeMichele, 61, who through his firm DeMichele et al Inc. charges nursing homes up to $5,500 per worker, among the highest fees in the business.
After three workers they recruited to work at a Wisconsin nursing home died in a fire, she told the Micronesian Embassy that she wouldn't pay to ship the remains home. "It wasn't in the contract," she said.

Donald Finn, 66, who pioneered the importing of Micronesian health workers five years ago. When it came time for one of his companies, Medical Placement Services Inc. of Bonita Springs, to pay for workers' airfares home, the firm was legally dissolved, leaving workers stranded. A second Finn company, Guardian Solutions Inc., went bankrupt, stranding even more. In a sworn statement, Finn's former lawyer accused him of running "a pyramid scheme" that hoodwinked nursing homes.
That makes islanders valuable commodities to employers, especially nursing-home operators, who say it's hard to find American workers willing to groom, wash, feed and empty bedpans of elderly Americans for $6 to $8 an hour. It was especially hard before the 2001 recession hit.
That same year, Micronesian recruits barely out of high school, speaking tentative English and in some cases lacking diplomas, were being asked to sign two-year contracts that they said they thought would send them to nursing school for free. In fact, though, the contracts usually promised jobs as "nursing assistants." Nonetheless, their parents co-signed promissory notes agreeing to pay thousands of dollars if the recruits walked out on their contracts.
Once Finn's young workers traveled 8,000 miles to start new lives, they found they were not nursing students but menial workers on the lowest rung of the health-care ladder. And they couldn't afford to go home.
Finn recruits at West Ridge Nursing and Rehabilitation Center in Knoxville, Iowa, would owe even more if they left before the end of their contracts: $2,500 to Finn and an additional $3,750 to the home. That raised penalties to $6,250 -- more than six months' wages.
INDENTURED IN AMERICA : Recruiting cheap labor can bring in big money Orlando Sentinel and The (Baltimore) Sun September 16, 2002


Profit and Care


The evidence that care provided for the benefit of shareholders is vastly inferior to that provided for the benefit of patients has become overwhelming. It has even been shown that care and profit are inversely proportional. There are two issues. First the difference between for profit and not for profit.

Non-profit nursing homes are associated with better staffing and higher quality services as well as with residents having a lower probability of death and infecion. Facilities owned by investors have fewer nurses and higher rates of violations, or deficiencies, on annual surveys of nursing homes. Profit making facilities were found to have 30% more violations of standards assessing quality of care and more deficiencies in measures assessing quality of life than non-profit facilities.
Profit making facilities have 20% fewer staff than non-profit and government run facilities. Poor quality care in nursing homes is associated with low wages and few benefits, high rates of employee turnover, and heavy workloads. Residential nursing facilities in the United States Charlene Harrington BMJ VOLUME 323 1 SEPTEMBER 2001

The second issue is the difference between privately owned "for profit" facilities and those run by market listed corporate chains. An article in the Atlanta Journal and Constitution in July 2002 gives dramatic figures from Georgia. They compared the corporate chains with private companies. It has previously suggested that private companies comprise both highly dedicated individuals who make their living by serving the community and also some rogues who are in the business purely for personal gain. As a consequence some of these homes are among the best and others among the worst homes. The next article compares the two in Georgia.


Corporate Chain

2001 operating margin

deficiencies per home

Kindred Healthcare



SunBridge Healthcare



Mariner Health Care



Beverly Enterprises



Integrated Health Services



Other Georgia for--profit homes



Taken From THE BOTTOM LINE OF CARING: National chains earn poor inspection reports The Atlanta Journal and Constitution July 28, 2002

With the exception of Integrated Health Services the number of deficiencies is roughly proportional to the average profit generated by the facilities. Integrated Health Services was in disarray, struggling in bankruptcy, trying to generate profits in order to find a buyer for its nursing home business. It never emerged from bankruptcy. The information comparing the largest private for profit with the corporate market listed chains is as clear cut.

Privately held homes

PRUITT CORP. Homes in Georgia: 32
Pruitt facilities were cited for one--third fewer violations than the typical Georgia home.

CARE MORE MANAGEMENT CO. Homes in Georgia: owns or manages 25
Care More facilities had about half the violations of the typical Georgia home, the best
inspection record of the eight major chains.

GOLDEN AGE PROPERTIES Homes in Georgia: 18
Golden Age homes had the second--best inspection record of the eight largest chains in

Publiclt traded corporate chains

INTEGRATED HEALTH SERVICES Homes in Georgia: 23 Under Chapter 11 bankruptcy protection
Had 50 percent more violations than the average Georgia home. Federal regulators fined IHS $343,200 in the last two years for poor care at a Roswell home.

BEVERLY ENTERPRISES Homes in Georgia: 15
Homes had 42 percent more violations than the average home.

SUNBRIDGE HEALTHCARE CORP (Sun Healthcare). Homes in Georgia: 14 Emerged from Chapter 11 bankruptcy protection in February.
Had one--third more violations than the average home; repeatedly cited for failing to meet
staffing minimums.

MARINER HEALTH CARE Homes in Georgia: 10. Emerged from Chapter 11 bankruptcy protection in May
Had one--third more violations than the average Georgia home

KINDRED HEALTHCARE Homes in Georgia: 7. Emerged from bankruptcy protection in April 2001.
Cited for more violations per home than the seven other major chains in Georgia

"THE BOTTOM LINE OF CARING: National chains earn poor inspection reports The Atlanta Journal and Constitution July 28, 2002

Four of the nation's largest nursing home chains run many of the worst homes in Georgia, judging by state inspection reports. Their homes also appear to have the largest operating margins in Georgia ------ an average of $784,000 per home, compared with about $93,000 for other for--profit facilities, according to an analysis of Medicaid cost reports by the Journal--Constitution.

These national health care companies ------ Kindred, Beverly, SunBridge and Mariner ------ operate 46 nursing homes in Georgia. State records show a fifth chain, Integrated Health Services, also stands out for poor inspection results, but a third of its 23 Georgia homes report losing money.

State inspectors wrote up the five national chains' homes for substandard care 65 percent more often than they cited other for--profit homes over the last four years, according to an analysis of inspections. Many Georgia nursing homes run by smaller chains and independent operators earn high marks from inspectors for their care, provided in many cases on shoestring payments from government programs. But financial reports show these homes usually spend almost every dollar that comes in the door on care for their residents.
The frail and elderly suffer from incidents of neglect and abuse in many of the state's nursing homes. The nursing home industry frequently blames substandard care on a tax--supported system that pays too little to look after patients properly.

But the homes' financial reports, which were analyzed by The Atlanta Journal--Constitution, suggest many could afford to spend more on their residents.
These calculations show that four of the five national chains with significant operations in Georgia have operating margins far greater than other Georgia for--profit homes. According to the AJC analysis, the $1 million operating margin at the average Kindred facility dwarfs the $93,000 margin that is typical for the state's other for--profit providers.

The reports show that dozens of homes that report above--average gross profits save money by maintaining staffing levels described as dangerously low in a recent federal study. Some of these homes fall short of the minimal staffing standards required by Medicaid, but they have not been punished because Georgia does not enforce the requirement.
Publicly traded nursing home companies have bounced back this year, with the help of increased Medicare payments and elimination of some crushing debts through bankruptcy reorganization. The faltering economy has also helped the industry find more low--wage workers.
Georgia's private nursing home companies have been more stable. Many are still family--owned and do not have the demands for high returns that every public company faces.

But even as the industry has begun to stabilize, public documents that show relatively high operating margins and poor inspections raise questions about whether large chains are putting profits ahead of patients.

The top official overseeing Medicaid in Georgia acknowledged that the Journal--Constitution's findings were troubling. "If you couple high profits with poor outcomes, that's not a result we believe is appropriate," said Gary Redding, commissioner of the Georgia Department of Community Health.

Some advocates believe care suffers when nursing home owners are in remote corporate offices instead of down the hall from the nurses and the residents. "When you are dealing with a big corporation, their client . . . is going to just as likely be the shareholder as the resident," said Becky Kurtz, Georgia's long--term care ombudsman.

New York does not allow publicly traded health care companies to operate nursing homes in the state. "They are accountable only to shareholders and have no explicit commitment to residents or the community," said Scott Amrhein, executive director of the Center for Continuing Care at the Greater New York Hospital Association.
Quite a few Georgia nursing homes can point to sterling inspection records. Twenty percent have earned 11 or fewer violations during the last four years, far below the state average. Most of these homes are for--profits, but only one is operated by a national chain
But she's
(patient whose husband died at a for profit home) still bothered by the knowledge that his final weeks may have been unnecessarily difficult and painful. And she's saddened at the thought that nursing homes, once filled with compassionate people, could become so cold and uncaring.

"These people out there," she said, "are not angels anymore.
"THE BOTTOM LINE OF CARING: National chains earn poor inspection reports The Atlanta Journal and Constitution July 28, 2002

Problems are not isolated to for profit homes. Some not for profits maintain their sense of mission. Other not for profits have adopted corporate management practices and some have indulged in fraud. In spite of this staffing and care have generally been much better. There are however some exceptions and a few have used the not for profit umbrella as a means of funnelling money out of care into their other for profit activities. Some provide poor care.

The nonprofit nursing home at Presbyterian Village, a picturesque retirement community in Cobb County, lost more than $600,000 last year. But that was all part of the plan.

The home's governing board decides how much money it needs to hire enough qualified staff, to prepare good food and to offer a well--kept facility and activities. What the state doesn't pay, the facility makes up with income from investments and charitable donations. The nonprofit is welcomed into Presbyterian churches for its annual fund--raising programs and capital campaigns.
"We are privileged in a sense that we are charity--based and can do some things that others can't do," Armentrout said. Presbyterian Village spends two--thirds more on nursing care, per resident, than the SunBridge--Griffin facility, and nearly twice as much on meals. It also has one of the best inspection records in the state, earning only three minor citations in four years.
Smith said the facility's willingness to go beyond providing physical care, and to seeing each resident as an individual, has made it easier. Presbyterian Village has a full--time chaplain to support the spiritual life of residents and family members, she said.
"THE BOTTOM LINE OF CARING: National chains earn poor inspection reports The Atlanta Journal and Constitution July 28, 2002

Quality-of-care problems aren't confined to profit-making homes, however. Two of the six local homes with the most violations of government health-care standards in the past three years are operated by Sentara Life Care, a subsidiary of the Norfolk-based nonprofit health conglomerate Sentara Healthcare.

Sentara's Norfolk nursing center incurred 62 violations and its Chesapeake facility, 45.

Even though they are nonprofit, they are big business. Sentara Life Care's seven nursing homes and three assisted-living facilities produced revenues of $41.6 million in 2000. Blunt, the company's president, earned $231,796 in salary and benefits. David Bernd, CEO of the parent company, earned $1.2 million. SAFETY, CARE VIOLATIONS WIDESPREAD IN REGION; STAFFING AND MONEY ARE CRITICAL, BUT TOO OFTEN FALL SHORT The Virginian-Pilot(Norfolk, Va.) April 27, 2003

These kinds of financial transactions aren't limited to for-profit nursing homes. Near Baltimore, Oak Crest Village combines independent living and nursing home care in a nonprofit facility run, as it claims, "exclusively for educational, scientific, and charitable purposes." But Oak Crest distributes millions in management fees and other charges to affiliated for-profit ventures run, in part, by the same executives. The New Math of Old Age : Why the nursing home industry's cries of poverty don't add up US News : Health & Medicine September 30, 2002

That these findings reflect what is happening in corporate chains across the USA is reflected in other reports. The following report quotes the corporate and market view that the homes really are underfunded, something many analyses dispute.

One industry estimate places the gap between the cost of providing Medicaid services and what homes receive in government reimbursement at $3.5 billion a year - or $10 per Medicaid resident per day.
(In the past) The companies recognized an opportunity for new profits by cashing in on higher reimbursements paid for providing service that could be billed to Medicare.
Dazzled by the potential for unlimited profit, major chains took on large debt to gobble up mom and pop operations across the nation and open new homes.
The pot of gold seemed bottomless, constantly replenished by the federal government. Medicare expenditures soared an average of 25 percent a year. Congress, trying to balance the budget, pierced the bubble in 1997 by cracking down on what it determined to be abuses.
More than 65 percent of the nation's 17,000 nursing homes are investor-owned and are run as for-profit businesses.

Of the remaining homes, 28 percent are nonprofits run by churches and social and fraternal groups, and about 6.5 percent are operated by states
In a peer-review study published in September of last year by the American Journal of Public Health, Harrington and four other experts concluded: "Investor owned (for-profit) nursing homes provide worse care and less nursing care than do not-for-profit or public homes."

The study found that for-profit homes employ about one-third fewer licensed nurses than nonprofit homes. The authors also reported that government inspectors found 46.5 percent more care deficiencies at for-profit homes than nonprofit facilities.
"Reduce the staff. Increase the profits. If you're a corporation, it's good business sense. If you're a nursing home patient, it's obscene greed that could kill you," says Catherine Hawes, a professor at Texas A&M University's Department of Health Policy and Management and the senior investigator on several government research projects.

Her view is typical of many people who study the industry.

Some homes emphasize appearance

Industry critics and those who investigate the deaths say some homes spend a disproportionate amount trying to fill empty beds rather than treating the residents who lie in them.

"They claim poverty and say there's no money for patient care, but they pour it into marketing," said Randy Hey, a deputy district attorney from Santa Clara, Calif., who has prosecuted several nursing home chains for neglect. "The big chains fill their entrances with statues, spurting fountains and imported marble tiles to convince the families that this is a great place to leave Mom. You've got to get past the glitz and into the patient's rooms and see if the stench of urine burns your eyes.

"The really unimpressive-looking facilities can be spending their money on staff and be offering great care," Hey said.
Inadequate Medicaid payments squeeze homes' level of care St. Louis Post-Dispatch October 14, 2002

Angered by what is happening citizens have taken to the courts to bring the corporations to their knees. Juries and judges appalled by the exposures of deliberate understaffing have awarded massive punitive damages. The chains argue that they are being victimised by greedy lawyers and that many of the deaths are normal. They are being crippled and have successfully lobbied and pressured government into introducing legislation to curb the damages which can be awarded and imposed other restrictions. This is patently nonsense and the available data indicates that this is so.

It is equally clear that it is only these lawsuits which have had any impact on the care provided in corporate homes. They have also forced the worst chains out of some states leaving the "market" to the not for profits and more ethical providers.

The preoccupation with profits is detailed in hundreds of suits filed against nursing homes each year by the federal government and families who believe their loved ones were killed because of poor care. The court files are filled with documents and depositions that cite repeated orders from corporate headquarters or the home's owners to reduce staff.
Twelve of those suits centered on alleged negligence at Claywest, American Healthcare Management's nursing home in St. Charles. Ten of the cases involved alleged negligent deaths. Nine of these cases have been settled; one is pending.
A memo that Kaiser said he sent to all American Healthcare Management nursing home administrators read: "We have a policy that states payroll costs shall NEVER EXCEED 40 PERCENT OF REVENUE."

Kaiser said he capitalized the letters for emphasis.

The company's 40 percent figure is well below the industry average for staffing costs, which is between 55 percent and 60 percent, according to Credit Suisse First Boston, an international investment bank.

Claywest's director of nursing pleaded to headquarters for more staff, saying her nurses were "continuously" working back-to-back mandatory overtime and it had to stop, according to another deposition in the same case.

Thirty days after Kaiser's capitalized memo, American Healthcare's chief executive officer sent a memo specifically to Claywest demanding more patients and low payroll, the deposition said.

Soon after, the home's administrator was fired, Kaiser testified, because "she spent money (on staffing) above what she was authorized to spend."
The nursing home industry says that some operators are being sued out of business by what the trade association calls thousands of "frivolous nuisance suits" brought by personal injury lawyers on behalf of injured residents or, most likely, their survivors.
An examination by the Post-Dispatch of more than 500 of these suits - - - - - . But the vast majority of the suits were for deaths, injuries, amputations and brain damage allegedly caused by negligent care.
Inadequate Medicaid payments squeeze homes' level of care St. Louis Post-Dispatch October 14, 2002

Regulatory Failure

The stupidity of a system which exerts almost irresistible pressures for dysfunction on an ill-defined activity, and then expects to control this by regulation is apparent. The evidence that regulation and oversight is ineffective is now in. It has failed and it has failed miserably. Prosecutors are talking about bringing criminal charges of neglect but few are actually doing so. No one is seriously talking about changing the system.

Summary points
Monitoring and enforcement of quality standards, which has been devolved to the states, has been weak because standards are lax.

The US government has failed to hold the nursing home industry accountable for how government funds are spent and to protect residents from poor care
There is growing concern, however, that the Health Care Financing Administration will not increase the minimum levels to those that are necessary to ensure quality because of the high cost to government of setting higher standards, in terms of funding for Medicare and Medicaid.
The weakness of the standards on staffing is made worse by an ineffective system of survey and enforcement in which responsibility is devolved to the states. Those who do the surveys are responsible for visiting nursing facilities every 9 to 15 months to conduct surveys and investigate complaints. The General Accounting Office has found that those conducting surveys are unable to detect serious problems in the quality of care - - - - .
The lack of government control over public funds is a cause for concern. Currently, less than 36 cents in every dollar spent on nursing facilities is spent directly on care. No limits are set on the amount of returns that can be allocated to shareholders, on salaries for chief executive officers, or on spending on capital and administrative costs.
These corporations have wide discretion over the spending of large amounts of public funds, but at the same time there is little financial accountability. Fraud and financial mismanagement are widespread throughout the industry as is poor quality care.
The delayed implementation of enforcement and the weak sanctions available have yet to improve care because state survey systems are weak and government regulatory bodies are subject to lobbying by the industry. There is also a reluctance to use the enforcement penalties and sanctions available.
Regulating nursing homes: Residential nursing facilities in the United States Charlene Harrington BMJ VOLUME 323 1 SEPTEMBER 2001

Some Oklahoma nursing homes have had more than a dozen patients die in the past decade from malnutrition, bedsores, dehydration and other largely preventable causes of death, but the state has no comprehensive way to track such patterns, a review by the Tulsa World shows. Tough to trace; No system to link preventable deaths to homes Tulsa World July 1, 2001

The typical Georgian doesn't realize that a welfare system ------ Medicaid ------ pays the bills of most nursing home residents, even those who once were comfortably middle--class.

Nor does the average consumer understand that this system has built--in rewards for nursing homes that keep costs low. It's a system that pays some nursing homes less than others ------ sometimes much less ------ to take care of the same types of patients. And it tolerates nurse staffing levels that studies have found to be dangerously low. State inspectors are supposed to ensure minimum standards of care, but conditions in Georgia's nursing homes may well be getting worse rather than better.
Regulators' toughest weapon ------ cutting off Medicaid and Medicare payments, essentially forcing a home to close ------ is rarely used, in part because it is difficult to relocate the residents who would be displaced.
In fact, under a 1991 state law, Georgia may impose fines directly only on the handful of nursing homes that don't participate in Medicaid or Medicare. Otherwise, according to the 1991 law, inspectors may only recommend fines to federal regulators. The penalties then are subject to a sometimes lengthy federal appeal process In effect, that means that regardless of the standards Georgia may have set for nursing homes, most homes, so long as they participate in Medicaid or Medicare, cannot be fined for violating them.
THE BOTTOM LINE OF CARING / THIRD IN A SERIES: State pays some nursing homes more than others The Atlanta Journal and Constitution July 30, 2002

Many blame the political donations given to politicians for their unwillingness to back their departments in prosecuting offenders.

When four elderly women baked to death from soaring temperatures in a University City nursing home in April last year, public officials expressed outrage and vowed to take swift action against those responsible.
But more than 18 months later, the fines against the former owners and the operator of the nursing home have been slashed by four-fifths. No one stands charged in the deaths.

The case illustrates how neglect investigations can be undercut by weak laws and a lack of coordination among investigators, medical examiners and prosecutors.
The three senior lawmen all said the lack of laws addressing neglect prevented them from pursuing convictions in the Leland deaths.
Gruender said: "The federal laws that are available to us are very narrow. They really go more towards fraud than abuse or neglect."
"We are forbidden to prosecute any case without the permission of the county attorney," Nixon said. "We felt that what happened at Leland was tragic and too important not to be pursued. We told McCulloch's office that we were willing and eager to take the case, and we heard nothing back."

The attorney general said, "We sent them a great deal of information, and again we heard nothing."

McCulloch said the law that limits jurisdiction to his county office is "just fine and should not be changed."
The editorial page of this newspaper, radio talk shows and nursing home advocates who picketed McCulloch's office all strongly criticized the prosecutor for failing to get an indictment in the Leland deaths.
Missouri sought a total of $143,000 in fines against the home, but Leland paid nothing to the state.

The nursing home took advantage of a state law designed to give nursing homes an incentive to correct problems quickly. Under the law, the nursing homes can avoid fines by submitting a document that details how they plan to correct the problems that led to the citations.
Inadequate laws are blamed for lack of prosecution in 4 heat-related deaths ST. LOUIS DISPATCH October16, 2002

There is a veritable army of government regulators who are supposed to protect the elderly in America's nursing homes.

But scores of federal reports and academic studies make clear that these people are losing the war and, in some cases, not even fighting the battle.

The reports detail chronic problems: state investigators failing to ensure safe care; professionals required by law to report abuse not doing so; and the inability of federal regulators to do much, if anything, about it.
But often, the Post-Dispatch found, surveyors fail to prevent harm. In the worst cases, they fail to identify wrongful deaths from preventable causes such as malnutrition, dehydration and bedsores.

A lack of trained staff, ineffective regulations and fines, industry lobbying and tight budgets contribute to state enforcement problems.
But Missouri officials readily acknowledge vast failings in their ability to protect nursing home residents from neglect.
The heavy workload and high stress frequently contribute to burnout among inspectors. Recruitment is a challenge, with few people willing to accept a position that requires long hours at odd times of the day or night for an average salary of about $35,000 a year.
But some Illinois inspectors say they feel under assault by nursing home owners and their own bosses, according to thousands of pages of grievance documents reviewed by the Post-Dispatch.

Several accuse department supervisors of ordering them to ignore violations they find in some nursing homes.
Regulators are losing war against neglect, if they're fighting at all ST. LOUIS DISPATCH October 16, 2002

But it is the homes and workers that don't perform up to standard that concern most of the 700 professionals interviewed by the Post-Dispatch for this series. They include nurses, researchers, physicians, patient advocates, death investigators, nursing home operators, prosecutors and federal, local and congressional investigators.
They tell of state investigators failing to ensure safe care in homes; of government-mandated ombudsmen being prevented from intervening; and of federal regulators unable to do much about it.
The experts complain that law enforcement authorities are rarely notified of deaths by neglect and that coroners and medical examiners are seldom called.
"It's homicide. Don't sugarcoat it," says Dr. Vincent Di Maio, the medical examiner for San Antonio. He has extensively researched negligent deaths in nursing homes.

"Enormous numbers of patients are being killed in nursing homes throughout the country because the administrators or the corporate executives order the staffing reduced to the point where the staff cannot provide the promised care that's needed for their patients to survive," he said.

Some prosecutors agree.

Finding that regulatory fines and bureaucratic sanctions have had minimal impact on reducing dangerously poor care, a small but increasing number of prosecutors have brought homicide charges. They've targeted nurses and aides found to be responsible for the deadly care and nursing home operators and corporate officials who fail to employ enough nurses to prevent these deaths.
In Hawaii, Indiana, California and Tennessee, district attorneys, county prosecutors and state attorneys general have brought some charges of homicide for nursing home deaths by neglect over the past three years. But they number fewer than a dozen.
Nation's nursing homes are quietly killing thousands THIS IS THE FIRST IN A SERIES ON NURSING HOMES St. Louis Post-Dispatch October 12, 2002

Different Understandings

There are radically different understandings of the adequacy of funding. The corporations and market analysts claim that corporate viability and patient care are compromised by inadequate funding. Their marketing ensures that this point of view appears in most articles. Corporations will not run nursing homes homes unless they make a profit. This is why they own them. They use the threat of closures to apply pressure for increased funding. In their communications with shareholders they obviously take a different more positive view referring positively to changes which give them more money..

Government departments, economists and others who have carefully analysed what is happening claim that much of the problem lies with the corporations themselves. Much of the funding is squandered in marketing, profits, and other administrative activities.

The American Health Care Association recently announced results of a study that revealed a "growing crisis" for nursing homes.

They're not getting enough money from the government, the industry association declared.
This "new data," however, isn't very new. It's three years old. And a lot has happened in those years.
The Florida Legislature, for example, has approved at least three separate increases to nursing home Medicaid payments, amounting to more than $100 million.
The nursing home industry blamed 1997 Medicare cuts for driving companies into bankruptcy. It mounted such a persuasive campaign that Congress voted last year to give much of the money back; this year, about $1.5 billion.
For instance, Medicaid residents who enter a hospital switch to Medicare for several weeks after they return to the nursing home. Medicare also covers hospice care and therapy services for many residents on Medicaid.

Nursing homes don't want this information in a report about their plea for more money, but at the same time, corporate marketers have trumpeted the Medicare increases to stockholders.
Another study released this month raises questions about what nursing homes are doing with all that money.

In the American Journal of Public Health, researchers compared nonprofit nursing homes with those operated by companies trying to make a profit. They found investor-owned companies had nearly 50 percent more deficiencies than nonprofit homes.

They also found the for-profit places had fewer nurses and nursing aides per resident.

The conclusion of these researchers was blunt: "Investor-owned nursing homes provide worse care and less nursing care than do not-for-profit or public homes. ... We believe that it is unwise to entrust such vulnerable patients to profit-seeking firms."

Yet here are those homes calling for more funding. They might as well be honest about it. This is not a simple matter of protecting "seniors' access to quality nursing home care," as the association's news release said. It's a matter of making money. It's A "Crisis' That Lacks Credibility Tampa Tribune (Florida) September 11, 200

As lawmakers struggle to balance the state budget, Michaels fears the worst. He's terrified that Franklin Hills will have to close its doors, and he will be forced to place his wife in a distant city, where daily visits will be out of reach.

Across the state, many nursing homes are teetering on the verge of closure due to increasing labor and overhead costs coupled with low state reimbursements, industry officials say.

In the past three years, 27 nursing homes and residential care centers in the state have closed, while 43 others have filed for bankruptcy, according to the Washington Health Care Association.

The losses have been subsidized by Extendicare, Franklin Hill's parent corporation, with the hope that state reimbursement rates will improve, Hayes (administrator) said. If the losses continue, it will be just a matter of time before the 95-bed home closes, she said.

''If our facility closes, where do they go?" asked Hayes, who choked up discussing the subject. ''They have to leave town and their friends and families who love them."
The shortage of nursing staff has driven up wages, leaving nursing homes, in many instances, unable to compete with hospitals and doctors' offices that can pay more, said Mike Neeld, executive director of the Washington Health Care Association.

''The Medicaid shortfall drives wages that are too low to compete," Neeld said. ''Nursing homes are competing with Costco and fast food restaurants for workers" for nurses aides.
In 2000, Medicaid's reimbursements were about 13 percent below actual costs, the Health Care Association estimates.
But not everyone agrees that the state's nursing homes are underfunded. Washington Citizen Action, a consumer advocacy organization, published a report last month criticizing for-profit nursing homes that failed to spend all of their Medicaid reimbursements.

The report listed 45 facilities that underspent their direct-care rates by about $3 million, keeping some of the money as profit.
''I think there's a potential for quality care issues, and if we aren't careful, it could be a very real problem," said Hyatt, who's also vice president of the Health Care Association.
Long-term care funding lagging behind need; System needs money to ward off closures, officials say Spokesman Review (Spokane, WA) March 12, 2002

With the industry's emotion-tugging, multimillion-dollar lobbying campaign now in the home stretch, U.S. News conducted a home-by-home examination of the industry's finances. The magazine analyzed hundreds of thousands of pages of nursing home financial statements and shared the results with current and former regulators, patient advocates, congressional staffers, and others knowledgeable about the industry.

The findings:

The nursing home industry is profitable and growing, with operators spinning a far brighter tale for Wall Street than for Capitol Hill. Many nursing homes are earning exceptionally healthy profit margins, often 20 and 30 percent.

There is no strong evidence, as the industry claims, that inadequate federal payments for care of the elderly poor are dragging down profits. Likewise, there is no evidence that patients are markedly sicker today.
But in examining nursing homes' financial statements, U.S. News found no relationship between a home's profits, or the size of its losses, and the portion of its patients covered by Medicaid. Using officially certified financial data submitted to federal regulators, the magazine calculated profit or loss margins for thousands of homes, then matched those results against each home's Medicaid patient load. In statistical parlance, there was virtually no correlation between the two.
While nursing homes have been awarded more federal money in recent years, it hasn't gone to what is widely considered the best way to improve care: more staffing.
It's not entirely clear where the money has gone. However, in a recent study of how homes spend their funds, the GAO found that facilities spending more typically did so not on nursing care but on things like administration and financing. That mirrors another U.S. News finding: A fifth of the nursing homes examined in the magazine's survey spent 20 percent or more of patient revenue on administrative costs.
The idea, says Catherine Hawes, a Texas A&M University professor and former fraud investigator, is "you never have anything show up as a profit." Instead, she says, "it's a 'management expense,' or it's buying food from yourself. They show these really skinny operating margins, so they can always plead poverty." - - - .

Self-dealing is widespread; about 7 of every 10 homes engage in these kinds of transactions, the magazine found.
But in thousands of cases, U.S. News found, the calculations provided by nursing homes were incorrect or the amount of related-party dealing reported was inconsistent.
Since the introduction of the new system in 1998, nursing homes have increasingly been able to use estimates of the amount of therapy they expect to provide patients. This estimate is part of initial patient assessments on which reimbursements are based. But GAO investigators, in looking back at estimates of therapy versus how much was actually provided, recently found a quarter of patients never got the amount of therapy they were originally assessed as needing. "It's pretty appalling," says Toby Edelman, a Washington attorney for the Center for Medicare Advocacy, which helps Medicare beneficiaries. "If they're not giving the therapy they're being paid to provide, why should we keep giving them money?"
The New Math of Old Age : Why the nursing home industry's cries of poverty don't add up US News : Health & Medicine September 30, 2002

The U.S. should cut about $22 billion over five years from Medicare payments to hospitals, nursing homes and home-health care agencies, according to a commission that advises Congress on the program.

The recommendation by the Medicare Payment Advisory Commission would reduce billions in payments to hospital companies, such as HCA Inc. and Tenet Healthcare Corp., and nursing homes operated by Beverly Enterprises Inc.
Medicare Panel Suggests Cuts for Hospitals and Nursing Homes Bloomberg News January 15, 2003

"My view is this is not a company-specific situation. My view is this industry is getting hammered by the government over reimbursement issues and hammered by over-litigious attorneys," JP Morgan Chase analyst Matt Ripperger said Friday. Ripperger's observation was echoed by other analysts, American and Arkansas Health Care Association officials, the nursing home industry's trade association.
There is a wide schism between what is happening in the industry and the perception in Washington of what's happening, Ripperger said of the Centers for Medicare & Medicaid Services, which administers the government-funded health insurance programs.
A Sept. 9, 2002, memo from CMS Administrator Thomas A. Scully to GAO Health Care-Medicare Payment Issues Director Laura A. Dummit said the GAO findings were consistent with CMS' "position that the skilled nursing facility payment rates are more than adequate to compensate providers for the services provided to Medicare beneficiaries."
Beverly's troubles mirror industry's Ft. Smith Times Record February 10, 2003


Politics and care

Self interest is the driving force not only among the parties involved in the health care debate but also the politicians who represent them and receive campaign contributions.

In addition to this the conservative political establishment has a simplistic and rigid economic point of view and is strongly pro-market. The Bush administration's pro-business stance was immediately apparent in the appointment of health care corporatists to positions of power and suggestions that oversight be reduced and replaced with self reporting. The suggestion was rapidly abandoned when it was realised that it would not be entertained by congress, even by Bush's supporters. Health is not high on the presidential agenda and president Bush has left it to his henchmen.

The diversity of the list, culled from 160 candidates, may help to highlight one of the industry's most crucial challenges--a diffuse, splintered structure crowded with so many competing interest groups it's almost impossible to make any substantial headway toward change, said Paul Ginsburg, No. 51, president of the Center for Studying Health System Change, a not-for-profit research organization in Washington.

"There are so many voices, and each one is pushing its own specific agenda," Ginsburg said. "So far, (progress) hasn't evolved much. A lot of people are really concerned that the people with power aren't spending the time thinking creatively about what has to be done about dealing with our major problems." Nursing home industry wields clout in state capitals Modern Healthcare October16, 2002

Last November, the Centers for Medicare & Medicaid Services, formerly called the Health Care Financing Administration, released a plan that would comply with a desire by the Bush White House to cut regulation of the nursing home industry. It called for reducing annual government inspections of nursing homes from once a year to once every three years. CMS also proposed that the industry be allowed to "self-report" on traditional indicators of bad care, such as the number of residents with potentially life-threatening bedsores, dehydration and significant weight loss.

Almost immediately, Waxman and Grassley, a congressman and a senator from different parties, wrote CMS Administrator Thomas Scully, strongly denouncing the plan. Two days later, CMS said it was just a proposal and didn't mean anything. Congress renews an old battle for nursing home reform ST. LOUIS DISPATCH October 16, 2002

Days before calling a special session that would benefit nursing homes, Gov. Ronnie Musgrove received $92,400 in contributions from the homes. He wasn't the only one. Overall, Caregivers for Patients' Rights - a political action committee funded by the Arkansas-based Beverly Enterprises and dozens of Mississippi nursing homes - spent $289,812, nearly all of it in contributions to Musgrove and 73 lawmakers. Nursing homes' donations bought favor, critics allege The Clarion-Ledger (Jackson, MS) November 17, 2002

Instead of addressing the underlying problems in market medicine the administrative response is to regulate and penalise.

Last month, the Senate Special Committee on Aging proposed the first federal law to comprehensively address neglect, abuse and exploitation of America's elderly.

The 138-page bill, called the Elder Justice Act of 2002, was introduced by Louisiana Sen. John Breaux, a Democrat, Utah Sen. Orrin Hatch, a Republican, and 10 other senators of both parties.
In the battle for nursing home reform, the facts are provided by congressional investigators and lawyers who have documented life-threatening deficiencies.

These people and their counterparts in the General Accounting Office compiled hundreds of reports, surveys and investigations of nursing homes and their problems. The members of Congress they work for say their investigators' findings show the need for extensive reform.
Proposed legislation calls for the:

-- Creation of two Offices of Elder Justice in the departments of Justice and Health and Human Services.

-- Establishment of a national data repository to collect comprehensive information on elderly neglect and abuse and to provide the facts to law enforcement, regulators, consumers, researchers and others.

-- Increased prosecution of criminal neglect and abuse by providing training and technical and investigative coordination to law enforcement.

-- Development of a forensic program, which would use science and technology to investigate criminal elder neglect and abuse. Similar programs already exist for child abuse. The new program also would train health professionals in aspects of forensic pathology and geriatrics. Congress renews an old battle for nursing home reform ST. LOUIS DISPATCH October 16, 2002

As Robert Kuttner states when writing about economic ideology if the market is not working in an area then it is because it is not sufficiently market like and never because the market system itself is at fault. Thomas Scully ran the Federation Of American Health Care Systems, the lobbying group which acted for the large health care corporations like Columbia/HCA and Tenet Healthcare. President Bush has put this corporate advocate in charge of Medicare and Medicaid. He was the author of the proposal to decrease regulation and introduce self reporting.

The Bush administration released data today on the quality of care at more than 2,500 nursing homes in six states, and promised to publish similar information on those in all other states this fall, part of an ambitious project to help consumers evaluate the performance of health care providers.
Tommy G. Thompson, the secretary of health and human services, who has enthusiastically encouraged the initiative, said, "This is a huge step forward, probably the biggest step to improve the quality of nursing homes that this department has ever been involved in."
The new data will be available on the Web at and through a toll-free telephone number, 800-Medicare (800-633-4227).
Federal officials and economists have been saying for years that health care markets would operate like other markets if consumers had more information. The new initiative will test that hypothesis.
The statistics are based entirely on data that nursing homes report to the government as a condition of participating in Medicare and Medicaid. Homes that knowingly submit false information can be prosecuted for fraud.
U.S. Begins Issuing Data on Individual Nursing Homes' Quality of Care The New York Times, April 25, 2002

CMS's Scully, reflecting the Bush administration's antipathy toward direct regulation of business, is pushing a different idea. Facts and statistics about individual homes should be widely published, he says. If homes don't spend their money well, quality will suffer, the word will get out, and "people will vote with their feet," he says, although critics call that approach naive, simplistic, and passive. The New Math of Old Age : Why the nursing home industry's cries of poverty don't add up US News : Health & Medicine September 30, 2002

Ideological Blindness


The ideological blindness in the political corridors of power is reflected in the marketplace by the new leaders of the great empires. Instead of learning from the MacMedicine debacle of Columbia/HCA the new leader of Beverly promotes his fast food vision of health care. He sees things only from his own point of view and his own experience. Market analysts share his delusions. In spite of the outcry about care the analysts see room for more profits from "rationalisation", simply another word to make cost cutting legitimate.

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.
Beverly, which had revenue of $2.71 billion last year, operates multiple units, just as a chain of restaurants does, he said. The company also relies heavily on low-wage employees - nursing assistants - to provide care. "Taco Bell competes with Beverly for these people," Mr. Floyd said.
Mr. Floyd refuses to adopt what he calls the industry's tendency to view itself as a victim, but he still faces the daunting task of convincing regulators, investors, the public and his own employees that Beverly can escape its past. Over the years, regulators have persistently raised questions about the quality of care that Beverly provides, and the new management team must somehow take what is essentially a low-growth and low-margin business and create something dynamic.
"It's a turnaround company in an industry that is scarred," said Tom Price, who works for MFP Investors, which has invested in Beverly and hopes for more improvement. "There's another whole round of rationalization the business can do."
Bringing Discipline (and Scorecards) to Nursing Homes The New York Times July 7, 2002

One of our problems is our tendency to create unrealistic solutions to make a problem go away. In the 1980's we decided the problems of poor care for the mentally challenged should be solved by moving them into the community. Homes for them were closed. It did not work for large numbers of them.

Because it is desirable to keep the elderly in the community rather than warehouse them the 21st century political minds sitting around board tables decide that they should all go into the community to solve the problems of cost and poor care in nursing homes. The reasons are not their well being but economic. The changes will be made using economic criteria and economic methods and not by looking at the needs of residents in nursing homes.

And so the economic mind goes round and round in a little circle and others suffer the consequences. People and situations must be made to fit the theory.

The traditional nursing home -- where frail, but not necessarily seriously ill residents live for years under the watchful eyes of floor nurses and their assistants -- should be phased out, a state board has told Gov. Jim Doyle and state lawmakers.

"It would appear that the zenith of this form of residential long-term care has been reached," George Potaracke, executive director of the state's Board on Aging and Long Term Care, wrote to Doyle and legislators earlier this month in a letter accompanying a report containing a number of recommendations on long-term care reform.

"The traditional nursing home we've known for years will either change and become a true rehab center or it won't exist at all," Potaracke said Thursday.

That's because ever-tightening government budgets coupled with an array of market forces make it fiscally untenable to support the traditional nursing home, he and others say.

"Those that will need true long-term support will be living in smaller group homes, supportive apartment arrangements or at home," he said.
If the board's recommendations are adopted, Medicaid payments for long-term residential care at private nursing homes could be cut to encourage people to use in-home medical services and other alternatives.
"This is in response to market forces and government policies that have been moving for a long time," he said.
The state should "refocus nursing home care toward rehabilitation and subacute care in all but specified circumstances such as dementia, brain injury and terminal illness," he wrote.
Phase out nursing homes, state board says; Rehab, home care would replace traditional sites Milwaukee Journal Sentinel (Wisconsin) July 18, 2003

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