As strange as it sounds, it can be difficult for families to know exactly who is actually in charge at a nursing home and who is responsible for providing care. A nursing home can have owners who simply own the real estate and/or outsource some or all of the nursing home services to other companies. Some nursing homes appear to be independent facilities, when in reality they are owned or controlled by nursing home franchise corporations or private equity investment firms, and it is these entities that are calling the shots.
Nursing homes will find it harder to hide their ownership information from consumers if new policies take effect.
The Department of Health & Human Services (HHS) is working to require nursing homes to disclose ownership information to the Centers for Medicare & Medicaid Services (CMS). This would give consumers the transparency necessary to research a nursing home’s track record for quality and safety. As stated in the Wall Street Journal, the proposal would give families “a clearer sense of who is owning, managing and operating nursing homes.”
Transparency in Nursing Home Ownership
Some information regarding ownership is already required by nursing homes that receive government funding from CMS. However, the various relationships of investors, owners, property managers, and service providers is so complex and secretive, that even CMS does not yet fully know who is in charge. According to a press release from the Department of Health & Human Services:
“Nursing homes frequently use other companies to provide major services or support, but families currently have no way of knowing which different companies or firms provide care to their loved ones and how they might be connected to the owners of a nursing home. The proposed rule would also require additional information about entities that lease or sublease property to nursing homes, since the facilities and property owners may be set up as different corporate entities even though the entities work hand-in-hand.”
Private Equity & the Decline of the U.S. Nursing Home
Nursing homes were once run largely by religious groups, other nonprofits, and independently owned businesses. Since the late 1990s, private equity investors have swooped in and began buying up hundreds of existing nursing homes. These investment groups are attracted by the rock-solid revenue base (government funding of nursing homes through CMS programs) and a spiking customer base as the Baby Boomer generation reaches nursing home age.
With this trend of private equity ownership there has been a drastic shift in nursing home priorities. Instead of a focus on providing quality care to vulnerable elderly residents, the private equity-owned nursing home exists to siphon off every penny possible for the benefit of ownership and investors. The key strategy to increasing profits at nursing homes is to cut staffing levels to the bone, a measure that studies have proven to increase injury, death, and misery for residents. There are simply too few staff members at the vast majority of these nursing homes and not enough hours in the day for them to attend to the needs of residents. The inevitable result is rampant nursing home abuse and neglect.
Nursing home facilities owned by private equity groups have a notorious reputation for lowering the standards of safety and quality of life at nursing homes. According to the New York Times, “The typical nursing home acquired by a large investment company before 2006 scored worse than national rates in 12 of 14 indicators that regulators use to track ailments of long-term residents.”
Hopefully, policies aimed at shedding light on ownership at nursing homes will empower consumers to identify the nursing homes with best and worst track records of service, so they can provide quality care for their loved ones.