"Washington Scrutinizes Nursing Homes"
New York Times
By Charles Duhigg
November 16, 2007
WASHINGTON, Nov. 15 - Lawmakers in two hearings on Thursday proposed ways to force nursing homes to provide more details about ownership and to hold those owners more accountable when problems emerge.
The hearings were prompted in part by concerns that quality at nursing homes was declining as large chains were acquired by private investment groups.
Members of the House Ways and Means Health Subcommittee and the Senate Special Committee on Aging proposed measures to require nursing homes to disclose ownership and to require regulators to release information about poorly managed homes.
"Something is out of whack in this country when it's a lot easier to find information about a washing machine than to find information about long-term-care facilities," said Senator Ron Wyden, Democrat of Oregon. "The issue with these chains is hidden ownership."
Kerry N. Weems, the acting administrator of the Centers for Medicare and Medicaid Services, which regulates nursing homes, offered several initiatives to improve oversight. His suggestions included releasing the so-called special focus facility list, which identifies homes that regulators consider among the nation's worst. That list, which will be released Dec. 1, has not been public.
Mr. Weems also announced that his agency was developing a system to identify any person or company that owned more than 5 percent of a nursing home. But similar systems in some state have been easily sidestepped by investment companies hoping to obscure ownership through complicated corporate structures.
"The C.E.O. of Carlyle ought to be at risk for what happens at the lowest, smallest subsidiary," Representative Pete Stark, Democrat of California, said in referring to the Carlyle Group, a private equity group that is acquiring one of the nation's largest nursing home chains.
"This industry operates largely on the government's dime," he said. "Nursing home chains should be striving to improve care, not increasing profits by cutting corners at the expense of seniors and people with disabilities."
In September, a report in The New York Times said that private equity firms had bought thousands of nursing homes and used complicated corporate structures to avoid liability when residents suffered from neglect. The homes often cut expenses and staff, sometimes below minimum legal requirements, to increase profit.
Both House and Senate lawmakers indicated that they expect further hearings and bills. These are the first major hearings on nursing homes since the late 1980s; those led to the Nursing Home Reform Act of 1987.
Two other Congressional committees - the House Energy and Commerce Committee and the House Financial Services Committee - have announced plans for hearings. Last month, Senator Max Baucus, Democrat of Montana, and Senator Charles E. Grassley, Republican of Iowa, sent letters to five investment firms seeking information on their ownership and management of nursing home chains.
Lawmakers also discussed requiring nursing homes to have insurance or bonds to pay fines or court verdicts. Some owners have escaped such payments by leaving homes undercapitalized or by removing profit through complex transactions.
In defending the industry, a nursing home executive said that some information should remain confidential and that companies were committed to providing quality care.
"Nursing home providers are transparent in the disclosure of quality data, but there are those who take the information and use it against us," said Steve Biondi, speaking on behalf of the American Health Care Association, a nursing home trade group. "We concur with all here today that there is far more to accomplish. But we must do so together."
Mr. Biondi said the company he works for, Extendicare, has about five sites on the "special focus facility" list.
The hearings also provided a forum for competing studies that evaluate nursing homes owned by private investment groups.
The Florida Agency for Health Care Administration, which oversees the state's nursing homes, has released a study concluding that "there is no evidence to support that the quality of nursing home care suffers when a facility is owned by a private equity firm or an investment company."
However, the study was limited to Florida facilities covered only the last three years. The study also noted that the agency was unable to determine which of the state's nursing homes "were connected with any known private equity firms," raising questions over how the agency reached its conclusions.
A representative of the agency said that the report was based on examining homes where equity ownership could be identified and that more study was needed.
Two other studies, which examined chains analyzed by The Times, indicate that care has declined at some homes owned by private equity firms.
Charlene Harrington, a professor at the University of California, San Francisco, examined 105 homes bought by a private investment firm last year. She found that after an acquisition, the average staffing fell and the average number of quality-of-care deficiencies rose.
A study by the Service Employees International Union indicated similar trends at two other nursing home chains after they were purchased by private investment groups. The union is campaigning for scrutiny of Carlyle's acquisition of the Manor Care chain, expected to close this year.