Friday, October 12, 2007

Elder Abuse for Profit

In a chilling article that ran on September 23, The New York Times analyzed trends in patient care in nursing homes purchased by private investment groups. Using Centers for Medicare and Medicaid Services (CMS) data, The Times looked at more than 1,200 nursing homes purchased by large private investment groups since 2000 and more than 14,000 other homes; they compared the investor-owned homes against national averages in multiple categories, including complaints received by regulators, health and safety violations cited by regulators, fines levied by state and federal authorities, and the performance of homes as reported in the Minimum Data Set Repository and the Online Survey, Certification and Reporting database.

Not surprisingly, they found that investors' profits came at the expense of patient care.

The article focused on Habana Health Care Center, a 150-bed nursing home in Tampa, Florida, which was struggling when a group of large private investment firms purchased it and 48 other homes in 2002. According to the article:

The facility’s managers quickly cut costs. Within months, the number of clinical registered nurses at the home was half what it had been a year earlier, records collected by the Centers for Medicare and Medicaid Services, indicate. Budgets for nursing supplies, resident activities and other services also fell, according to Florida’s Agency for Health Care Administration. The investors and operators were soon earning millions of dollars a year from their 49 homes.

Residents fared less well. Over three years, 15 at Habana died from what their families contend was negligent care in lawsuits filed in state court. Regulators repeatedly warned the home that staff levels were below mandatory minimums. When regulators visited, they found malfunctioning fire doors, unhygienic kitchens and a resident using a leg brace that was broken.

The article also focuses on how private investment companies have made it nearly impossible for families to sue them or for regulators to levy fines by creating complicated corporate structures that obscure who controls the homes. For example, when Vivian Hewitt sued Habana in 2002 after her mother died from a large bedsore that became infected by feces, she found that its owners and managers had spread control of the home among 15 companies and five layers of firms. As a result, Mrs. Hewitt’s lawyer has been unable to establish definitively who was responsible for her mother’s care.

Investors claim that the corporate structures are common in other businesses and have helped them revive an industry that was on the brink of widespread bankruptcy. According to Arnold M. Whitman, a principal with Formation Properties I, the fund that bought Habana in 2002, "Lawyers were convincing nursing home residents to sue over almost anything…Homes were closing because of ballooning litigation costs…We should be recognized for supporting this industry when almost everyone else was running away.”

Other excerpts:
At facilities owned by private investment firms, residents on average have fared more poorly than occupants of other homes in common problems like depression, loss of mobility and loss of ability to dress and bathe themselves, according to data collected by the Centers for Medicare and Medicaid Services.

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. Those ailments include bedsores and easily preventable infections, as well as the need to be restrained. Before they were acquired by private investors, many of those homes scored at or above national averages in similar measurements.

The Byzantine structures established at homes owned by private investment firms also make it harder for regulators to know if one company is responsible for multiple centers. And the structures help managers bypass rules that require them to report when they, in effect, pay themselves from programs like Medicare and Medicaid.

The Times’s analysis of records collected by the Centers for Medicare and Medicaid Services reveals that at 60 percent of homes bought by large private equity groups from 2000 to 2006, managers have cut the number of clinical registered nurses, sometimes far below levels required by law. (At 19 percent of those homes, staffing has remained relatively constant, though often below national averages. At 21 percent, staffing rose significantly, though even those homes were typically below national averages.) During that period, staffing at many of the nation’s other homes has fallen much less or grown.

To see the full article, see At Many Homes, More Profit and Less Nursing.

BTW, Charles Duhigg, the reporter who wrote the piece, is now working on an article on dynamics within families that may lead to, or be perceived as, financial abuse. His request came to Sharon Merriman-Nai, Project Director of the National Center on Elder Abuse (NCEA) Co-Management, who posted it on NCEA's list serve. Mr. Duhigg is also asking for suggestions for related topics. He can be reached at

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