May 10, 2018

Self-dealing and Lack of Oversight

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The L.A. Times reported on a state audit that shows that California health regulators allow poor care at nursing homes around the state, and the number of incidents that could cause serious injury or death has increased significantly in recent years.  The state auditor singled out the California Department of Public Health for specific criticism, saying it had not performed necessary inspections or issued timely citations for substandard care. The audit also found that the department’s nursing home licensing decisions were inconsistent and lacking in transparency.  We have the same problems in South Carolina.

In California, confirmed cases of substandard care at nursing homes statewide increased by 31% from 2006 to 2015, according to the audit. And incidents of nursing home noncompliance that caused or could have caused serious injuries or fatalities rose by 35% in the same period.  Safety and accountability problems at nursing homes across the United States are rampant. Federal inspection reports, for example, show that infection control is routinely ignored. At the same time, the Trump administration has scaled back the use of penalties to punish nursing homes that put residents at risk of injury.

The audit showed that in the vast majority of cases where investigators found problems that could severely harm patients, the public health department failed to cite or fine the facility involved.  The quality of care at nursing homes will be critical as baby boomers age and demand for these services grows.

The state audit also investigated three large private nursing home operators whose net incomes have skyrocketed over the past decade — from less than $10 million each in 2006 to between about $35 million and $54 million in 2015. The report confirmed that the owners of the three companies are increasing their profits by doing business with companies they own or in which they have a financial interest, and siphoning money away from patient care to these “related entities”.  The three companies, Brius Healthcare Services, Plum Healthcare Group and Longwood Management Corp., paid between $37 million and $66 million to related companies from 2007 to 2015, according to the audit.

Kaiser Health News found last year that about three-quarters of nursing facilities in the country outsource services to companies that they control or in which they have an interest.  The obvious and inherent risks of such arrangements are that owners will inflate their prices to increase cross-company profits, and that it is easier for commonly owned companies to engage in fraud and conceal it.

Michael Connors, with California Advocates for Nursing Home Reform, expressed alarm that nursing home operators are making such big profits by doing business with their own companies. Nursing home chains are using these deals to “siphon off money intended for care in order to pad and hide profits” — and that hurts residents, he said.

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