Nursing Home Chains and Big Business

Posted on Friday, May 21st, 2021 at 3:12 pm    

More people than ever are aware of the potential for nursing home abuse and a rapidly aging U.S. population in need of quality long-term care options. Yet, how do you know your money is going towards quality care for your loved one and not a yacht in the Pacific? Unfortunately, you don’t.

Today nursing homes are considered big business. There have always been examples of for-profit health care, but it wasn’t until Medicare and the 1960s and 70s that investors realized the profit potential of privatizing nursing home facilities. A study on the changing structure of nursing homes found that by 1969 about 64.5 percent of all nursing home beds were in proprietary facilities. By 1980 that number skyrocketed to 81 percent of all facilities and 69 percent of beds that had been made proprietary.

While changes in government regulations, as well as changes in reimbursement policy through Medicare and Medicaid, were instrumental in helping to usher in the privatization era, more business moguls were realizing that there were profits to be made in the eldercare system. Bullish investors called it “gray gold.”

In today’s market, there has been an increase in what is known as complex nursing home ownership arrangements. While the percentage of for-profit nursing homes is still high, the latest trend has been nursing homes owned by corporate chains. One estimate suggests that at least 58 percent of nursing homes are operated by investor-owned national chains. Many of these chains attempt to separate their operating organizations from their other assets and properties. This is done in an effort to shield their parent company from liabilities and lawsuits and also protect them from government oversight.

Conglomerates also use their national chain and diversified status to contract with other related organizations for nursing services, therapy services, and lease agreements. Why does this matter? Because these companies can then legally take money out of the nursing home itself as an expense and hide their profits through the third-party contractor.

The media has already uncovered an example of this happening in California. Nursing home owners can siphon money from public funds to overpay their own companies and reap the windfall of profit. More than 70 percent of nursing homes in the U.S. use operating funds to ultimately pay themselves. Seventy-five percent of Kentucky nursing homes are for-profit, and many of those are, in fact, corporate-owned.

Study after study has found a correlation between for-profit nursing homes and some degree of substandard levels of care. These studies and in-depth media stories have also found that for-profit entities have problems related to elder abuse and neglect and are the subject of twice as many complaints as independent homes. This is the price that the elderly pays when profit is placed above patient care. The result can be poor policies, poor care, understaffing, and ultimately abuse and neglect.

It seems that the only thing that can pierce the corporate veil is more government oversight and more transparency when it comes to how money is flowing in and out of these national chain nursing home facilities. In the meantime, nursing home residents could be made to suffer as their care, comfort, and safety are cast aside so someone at the top can receive a windfall. That means that you may be your family member’s only lifeline when it comes to recognizing abuse and helping them out of a poor situation.

If you suspect that your loved one is suffering from abuse or neglect at the hands of a caregiver or nursing home facility, do not hesitate to share your concerns with the legal team at Hare, Wynn, Newell & Newton, LLP. We want to help you protect your family member and hold negligent facilities and caregivers responsible for their actions. Give us a call at (859) 550-2900, and let’s discuss your concerns and what we may be able to do to help.

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