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How Bad Off Is the Nursing Home Industry?

  • April 16th, 2012

While the nursing home industry is reporting “astonishing” profits, according to an advocacy group, a recent survey of facilities across the U.S. shows that most are cutting workers, wages or benefits.

“Nursing homes remain highly profitable despite last year’s announcement by the United States’ Department of Health and Human Services to adjust the Medicare reimbursement rate by 11.1 percent,” the nursing home advocacy group Families for Better Care says in a press release

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“The industry’s analysts framed the Medicare adjustment as an eventual doomsday for the nation’s nursing home market. But the industry’s own reports show quite the opposite, revealing surging revenues, strong profits, and expansion through acquisitions,” said Brian Lee, Executive Director of Families for Better Care. “The industry is wallowing in strong profits while failing to consistently provide quality care.”

Lee, who was Florida’s top nursing home watchdog until forced to resign by a governor with close ties to the long-term care industry, charged that executives target labor costs to offset any reimbursement adjustments.  “While this obviously maintains a robust bottom line for investors and cushy CEO salaries,” Lee said, “the decline in frontline staff puts residents in jeopardy for harm while simultaneously creating dangerous working conditions for employees.”

Evidence of these workforce reductions is found in a study recently released by Avalere Health LLC.  The study surveyed 292 respondents representing nearly 3,000 facilities across the U.S. and found that 37 percent were laying off direct care workers, 74 percent were changing wage rates, including reducing or freezing wages, and 48 percent plan to cut benefits.

Boston, Massachusetts nursing home abuse attorney Bernard J. Hamill, who reported the study, says “families need know that there is a correlation between staffing levels and the adequacy of elder care in nursing homes.”

Industry Says For-Profit Homes Aren’t Whole Story

The American Health Care Association (AHCA), which represents the nursing home industry, disputed Families for Better Care’s finding of great profits across the nursing home industry, saying the advocacy group focused only on the industry’s for-profit and publicly traded sectors.

“This is not a homogenous industry. This summary looks only at publicly traded companies, and there are only a few,” Greg Crist, vice president of public affairs at AHCA, told Senior Housing News. “This is an extremely diverse sector with all sorts of providers. The for-profit community is not an accurate reflection of the challenges facing our sector.” 

A previous study reported by ElderLawAnswers found that the largest for-profit facilities typically maintain staffing levels nearly one-third lower than non-profit and government-owned nursing homes, resulting in a significantly lower quality of care.

Campaign Dollars Continue to Flow

Meanwhile, a nursing home trade group, The Alliance for Quality Nursing Home Care, has given the Utah Republican Party $175,000, apparently in an effort to help Sen. Orrin Hatch stave off a Tea Party challenge and win re-election to a seventh term, the Associated Press has reported. If Hatch wins and if Republicans take over the Senate, Hatch would chair the Senate committee that oversees Medicare and Medicaid, which disburses tens of billions to nursing homes each year.

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In a related development, a judge recently refused to dismiss Brian Lee’s lawsuit against the state of Florida,  Lee claims the state violated its own "whistle-blower" law by forcing him to resign in retaliation for his advocacy on behalf of long-term care residents.


Last Modified: 04/16/2012
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