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More on nursing homes as an "investment"

        In an earlier blog entry, we documented the difficulties that governmental entities and elderly injury victims have encountered when nursing homes are purchased by private investment groups dedicated to extract the maximum profit from the investment.  Staffing is reduced, less care is provided, safety issues become secondary to profit, and care decisions are made by financial executives sheltered behind several layers of corporate cover to shield them from liability.

        The New York Times reported in its November 16 issue that Congress has held hearings in an attempt to force nursing homes to make public greater information regarding ownership and to enhance accountability.  One of the proposed solutions is to make public the "special focus facility list" which identifies homes that are considered the worst by government regulators.  Can anyone imagine why taxpayers, who pay to investigate homes and to compile the list, should not have access to it when deciding where a loved one should reside? 

          Pete Stark from California pointed out that this industry derives almost its entire income from government and that there should be both transparency and accountability in the industry.  Wealthy owners should not be able to avoid paying court verdicts and fines assessed after poor care by hiding behind shell corporations:  the NYT article in  September identified several "successful" examples of this  practice.

          A study of thousands of nursing homes purchaed by private equity firms reported in September of 2007 showed that after purchace, expenses and staffing were routinely cut, in many cases below safe and legal levels.  Despite this practice, on many occasions the decision makers cannot be held responsible, either civilly or criminally, because of a complicated corporate ownership shell-game utilized by the investors to evade identification and liability. 

          One of the nursing home executives who appeared before Congress to object to any new accountability rules was forced to acknowledge that his employer had five sites on the "special focus" list.  Perahps he and his employers ought to change their "focus" and direct their attention away from Congress and toward providing better care; it won't happen without the government twisting their arm, however.  There have now been about half a dozen studies published on this issue, and they have consistently shown that after a home is purchased by private investment groups, average staffing goes down and quality of care declines:  but profits improve.

Thompson O’Neil, P.C.
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