Jonathan Rosenfeld's Nursing Homes Abuse Blog : Jonathan Rosenfeld's Nursing Homes Abuse Blog | Lawyer & Attorney : Strellis & Field Law Firm | Bed Sores, Senior Neglect, Elder Abuse, Sexual Abuse: Chicago, Illinois

Criminal charges have been filed against Barbara Currin, the owner of Ometta Vent Care Services. The criminal charges come after a patient Currin was responsible for caring for, tipped off state officials she was not receiving the medical care that the state was paying for.  

The tip initiated an investigation by the Minnesota Department of Health and the Minnesota Attorney General.  Both agencies concluded that Ometta was not keeping up its end of the bargain in proving skilled nursing services for vent patients.

According to Attorney General Lori Swanson said, "The nursing facility deprived patients who are very in need of health care of which they were entitled and then number two bilked tax payer of the a lot of money."

State investigators further determined that Ometta was proving poor care to their patients.  A June, 2008 investigation revealed 9 licensing violations relating to inadequate training and supervision.

Related:

Staff Must Be Diligent In Order To Avoid Clogged Breathing Tubes Amongst Nursing Home Patients

Nursing Home Fined For Negligent Care Of Resident On Ventilator

Sputum Color As Indicator Of The Quality Of Nursing Care

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Many families of nursing home patients have been lead to believe that 'non-profit' facilities provide better care that their 'for profit' peers.  As we recently discussed, studies do generally confirm that non-profit facilities provide superior levels of care.

Nonetheless, if you ever need a reminder that every facility-- regardless of its tax status, must be evaluated on an individual basis, take a look at this article from the Palm Beach Post.

The Post article chronicles how Maxcine Darville, managed benefit herself and her family to the detriment of the patients at her facilities.

As the CEO of the Okeechobee Council on Aging, Darville managed to reel in an annual salary of $404,000-- more than two times the state and federal average for CEO pay at non-profit nursing homes.  Ms. Darville's company operates Glades Health Care Center and The Riverfront Nursing and Rehabilitation Center-- two nursing homes with a poor records for providing quality care to their patients.

Despite obvious safety violations at Darville's facilities, the Post's investigation clearly determined that she has little interest in investing money for facility improvements.  Among the Post's findings:

• Assistant CEO, Joanne 'Jody' Watson (Darville's daughter) was paid $200,000 plus $23,000 in expenses from two councils in 2007.  In 2008 she received $160,000 for her work.
• The director of maintenance, Gary Watson (Darville's son) was paid $118,000 in 2007.
• Darville spent more that $30,000 in personal expenses.  She receives $1,200 per month from her company to board an unnamed 'visiting executive' in her residence.
• The Okeechobee Council on Aging proudly lists a woman who has been deceased for more than two years.

Medicare's Rating:

Riverfront Nursing and Rehabilitation Center

Glades Health Care Center

Related:

Caring For The Elderly Pays... Especially If You Own The Nursing Home

Does Pulling Medicare Funding From Underperforming Nursing Homes Help Residents?

Nursing Home Rating System Reveals Inferior Care Provided At For-Profit Facilities

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Effective July 1, Golden Living is out of the nursing home business in Arkansas.  The 14 nursing homes and independent living facilities have been sold to Capital Senior Care Ventures, a subsidiary of health-care behemoth Capital Funding Group.

The sale marks a growing trend in the nursing home business of bringing mega-companies to manage and operate individual nursing homes.  Frequently, the parent companies have no experience providing healthcare to seniors.

In the case of Capital Senior Care, by the companies own admission, they "acquire and construct skilled nursing facilities in order to lease and ultimately sell them to high-quality operators.  Capital Senior Care Ventures provides its operators with the opportunity to own the facilities they operate much faster than most traditional REIT or similar financing by allowing the operators to purchase the facilities on a 'flip' within two to five year time frame.  This structure has been a popular option to many operators who are looking for ownership without a large capital investment."

Sounds to me like an investment--- and there's nothing wrong with making money-- so long as it doesn't come at the expense of patient care.  Let's monitor these facilities as they make the transition to a new owner.

Read more about the sale of these Arkansas nursing homes here.

Nursing Homes & REIT's

A real estate investment trust (REIT) is a legal entity that may only invest in real estate.  REIT's have become a popular investment tool due to its favorable tax status.  Under the REIT umbrella, a company must be in the business of holding real estate, derive the majority of its income from real estate and pay its shareholders at least 90% of its taxable income.  In the area of nursing home litigation, REIT are increasingly used as an attempt to sheild nursing home owners from responsibility. 

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Ask me about sports, wine, politics or the law and I feel fairly confident I can at least have a lively conversation about any of them.  But please don't ask me about finance.  The past year has eroded any hint of confidence I had when it comes to companies for investment.

Wait a second. Maybe, I am onto something.  In looking over the recent financials of the following national nursing home companies it looks as though some of the companies mentioned below are holding up fairly well in the current economic climate. As quarterly earnings are reported by many large nursing home chains--- caring for the elderly apparently pays well-- sometimes very well.

Five Star Quality Care

Five Star Quality Care, Inc. (Ticker: FVE) first quarter 2009 results reveal revenues increased 14% to 295.2 million from $258.9 million from a year earlier. New income for the company was $25.4 million for the quarter compared with $1.6 million in the first quarter of 2008.

Five Star Quality Care owns and operates 210 senior living communities in 30 states.  The companies facilities include: independent living centers and skilled nursing communities (nursing homes).  Five Star also operates five institutional pharmacies and two rehabilitation hospitals.

Kindred Health Care

Kindred Healthcare's (ticker: KND) profits rose 55% in the first quarter to $22.8 million or 58 cents per share.  Despite the fact that Kindred provided care to fewer patients, it was able to exceed Wall Street expectations by managing labor costs. 

According to chief financial officer, Richard Lechleiter, the recession may have actually helped the company's bottom line.  The shortage of jobs in other industries may have actually encouraged current employees to remain at Kindred longer.  Turnover among the company's hospital employees fell to 21% from a 25% turnover rate from a year earlier.

Kindred Healthcare, Inc. is a healthcare services company that operates: hospitals, nursing centers and a contract rehabilitation services business across the United States.  The hospital division operates 82 long-term acute care ("LTAC") hospitals (6,482 licensed beds) in 24 states. The health services division operates 228 nursing centers (28,525 licensed beds) in 27 states.  Kindred also operates a contract rehabilitation services business which provides rehabilitative services primarily in long-term care settings.

Sunrise Senior Living

Sunrise Senior Living (ticker: SRZ) will report quarterly earning on May 8th.  Will earnings be in line with the other long-term care providers?  Obviously, I have no idea-- if I did would likely retire from the law.  However, Sunrise did recently announce an 'Overhead Downsizing Plan' to save the company more than $20 million annually by cutting employees--further adding to the companies profitability. 

"The decision to reduce the number of people at Sunrise is never easy, but it was essential given  today's economic environment and our need to further reduce spending.  We want to be completely clear that none of these changes will effect the extraordinary care and services we provide in our communities," said Mark Ordan, Sunrise's Chief Executive Officer. 

No need to worry about the work levels for employees?

Sunrise Senior Living, Inc. provides senior living services in the United States, Canada, the United Kingdom, and Germany. It offers independent living services, which include housing, meals, transportation, activities, and housekeeping, as well as licensed skilled nursing services for residents who require 24-hour skilled nursing care; and determination of the appropriate level of care and service for such resident. The company’s assisted living communities also offer a reminiscence neighborhood that provides specially designed accommodations, service, and care to support cognitively impaired residents, including residents with Alzheimer’s disease and other forms of memory loss. 

Next time a large nursing home chain claims that a jury award is too large considering the nature of the injury, take a look at the company's financials and see who is really the one benefiting.

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As if there wasn't enough depressing economic news already bombarding you on a daily basis, a new report in Crain's shows the cost of long-term care in Chicago has been increasing 6% annually since 2005-- more than three times the rate of inflation.  According to a study completed by Genworth Financial Inc., the average cost of a private nursing home in Chicago will cost you $77,198, while a year admission to an assisted living facility in Chicago will cost you $46,398.

The nursing home costs in Chicago are sharply higher than the Illinois average rate of $62,974 and the national average for nursing home care of $74,208 per year.

Despite its expense, the Genworth study predicts that two-thirds of seniors will need some form of long-term care.  Paying for the care will be the hard part according to Buck Stinson, president of insurance products at Genworth. "Many Illinois residents who had planned to tap their hard-earned nest egg to cover future long-term care costs are finding this may no longer be a viable option given the economic downturn."

Now for $211.50 per night, wouldn't it be great to get some decent food?

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Mark this post.  Look at this news story from New Jersey.  A year from now this will be a common theme amongst nursing homes and long-term care facilities throughout the country... we are seeing just the beginning of this trend to make nursing homes and long-term care facilities as profitable as possible in the face of slimming budgets and corporate ownership.

Its no secret that Medicare and private-pay residents are far more lucrative for facilities that Medicaid recipients.  As budgets for nursing homes and long-term care facilities begin to tighten and people live longer than ever, it only a matter of time before facilities evict those less lucrative residents. 

Now facilities can not order you out of the facility on a whim.  Strict removal protocols must be followed.  If you believe that the facility evicting you based on your economic situation, you should contact your state ombudsman immediately.

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According to federal data, large, for-profit nursing home chains have lower staffing levels and higher rates of serious patient-care violations than independently owned facilities.  A Connecticut newspaper analyzed two years of inspection and ownership data from the Centers for Medicare and Medicaid services, comparing corporate owned nursing homes to their privately owned counterparts, the results are striking:

• 16% fewer registered and licensed nurses at corporate owned facilities
• 30% higher rate of patient harm at corporate owned facilities
• The five largest chains had a 42% higher incidence of serious deficiencies which could result in serious patient harm
• 70% of all nursing homes are owned by chains (2 or more facilities with the same owner)

Unlike nursing home homes with owners who actually run their nursing homes on a day to day basis, corporately owned nursing home owners are unlikely to be anywhere near the facility they own.  Further, many 'chain nursing homes' are run by parent companies by managers who have no previous health care experience and who may have entered the nursing home industry solely as a business venture.

Toby Edelman, a senior policy attorney with the nonprofit Center for Medicare Advocacy sums it up best, "Ownership is certainly a factor" [in quality of care.]  Ownership is one more criteria to look at when selecting a nursing home.

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In the middle of Elder Abuse Awareness Month in Illinois, Governor Blagojevich has indicated cuts are coming to community-based services for the elderly.  According to AARP Illinois, the Governor's decision to reduce the Fiscal Year 2009 Budget will eliminate or reduce services essential to health and safety of older Illinois residents.

The cuts to home based health care and community based services could force many elderly in Illinois to lose their independence and move into nursing homes.  Home care for elderly allows residents to remain in their own homes for longer.  Home based health care is also cost effective as the cost per resident is substantially less than nursing homes.

Read more about community based health care for Illinois residents here.

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Demand for health care real estate is primarily driven by people getting older and sicker, not by the state of the economy.  Consequently, the weakened economy should have a more muted impact on the health care sector than on other property types.

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Taking Note, a financial blogging group, provides further evidence that big business is putting its desires for quick profits over the care of nursing home residents.  The nursing home population is exploding.  Big business is recognizing the opportunity to profit off this fact and is jumping in the nursing home industry.  There are no laws controlling ownership of nursing homes in the United States making transition of ownership from an experienced owner to a large corporation easy.

Maggie Mahar, the articles author, skillfully calculates that roughly 6% of the 2 trillion dollar United States annual health care budget is spent on nursing homes.  The percentage of the health care budget is likely to increase.  Citing a Genworth Financial survey, the average annual cost for a private room in a nursing home hit  $76,460, or $209 per day this year—a 17 percent increase over the $65,185 cost in 2004.

The Center for Disease Control notes that more than two-thirds of the nation’s nearly 16,000 nursing homes were in the hands of private investors. The new owners include prominent private equity firms like Warburg Pincus and the Carlyle Group. The remaining one-third were owned either by the government or by non-profit organizations.

Ms. Mahar cites to a New York Times story that examined more than 1,200 nursing homes purchased by large private investment groups since 2000—plus more than 14,000 other homes—reporters compared investor-owned homes against national averages in multiple categories.

As corporations enter the 'nursing home industry', there are indications that patient care is deteriorating. The New York Times article showed the ratio of RNs to nursing home residents was significantly higher at the investor-owned homes (20:1) than the national average (13:1), as was the share of long-term residents who suffered from health deficiencies, anxiety and depression, or  needed more help with daily activities such as simply moving around their rooms.  In the investor-owned homes, patients were deteriorating.

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Failure to account for the cost of nursing facility care is the main cause of impoverishment among the elderly.  An American Health Care Association report recently reported that the average American man is expected to spend $56,895 in long-term care expenses.  The  average long term care cost for American women is $124,370.  Private health insurance generally does not cover extend stays at nursing facilities.  Therefore, even for people with means, an admission to a nursing home or skilled care facility means a rapid drain of personal funds.

Most residents at nursing homes are forced to rely on Medicaid because of a staggering drain on personal funds.  Unfortunately, people who rely exclusively on Medicaid have a limited number of facilities available to them.  Often, facilities which rely exclusively on Medicaid for funding are inferior to those who are predominately privately funded.

What is the consequence of all these financial problems with long term care for the elderly? I came across this article describing how the financial crisis trickles down to home how doctors and other medical professional make career choices.  Not surprisingly, the current  financial shortfalls involving nursing homes and long term care are discouraging many skilled medical professionals from treating the people who desperately need them.

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