By John Reichard, CQ HealthBeat Editor
May 15, 2008 -- A House panel began reviewing Thursday how the increasingly veiled nature of nursing home ownership is affecting the quality of care for frail elderly and disabled Americans and whether current federal quality standards have become outmoded.
"Our regulatory system—mired in the past when nursing homes were owned by small companies—is inadequate to address the problems and challenged posed by mammoth multi-state corporations, LLCs and private equity firms that dominate the industry," said Connecticut Attorney General Richard Blumenthal during a hearing by the House Energy and Commerce Oversight Subcommittee.
Blumenthal and other patient advocates testified that multi-layered ownership has made it much harder to find accountable executives to correct deficiencies in care and that quality-of-care problems abound in the industry despite minimal federal standards set by the Omnibus Budget Reconciliation Act of 1987 (PL 100-203).
One of every five nursing homes in the United States has deficiencies that cause actual harm to residents or that put them at risk of harm, said Lewis Morris, chief counsel to the Inspector General for the Department of Health and Human Services, citing 2006 data.
Problems with the inspection system allow poor conditions to fester, witnesses said.
In many cases nursing home inspectors miss serious quality-of-care problems such as poor nutrition, dehydration and bedsores, according to a Government Accountability Office report also released Thursday. In about 15 percent of federal inspections following up on previous state nursing home inspections, at least one of the most serious type of deficiency was found. In nine states, 25 percent of the federal follow-up inspections detected serious deficiencies missed by state inspectors.
Inconsistent inspection methods are too subjective to yield evidence that leads to effective enforcement action, said Andrew Kramer, a health policy professor at the University of Denver in Colorado.
An industry trend toward nursing home acquisitions by private equity firms also threatens to undermine care by piling on debt that creates dangerous cost-cutting pressures, advocates said.
Tom DeBruin, president of a regional branch of the Service Employees International Union in Pennsylvania, said that private equity firms seek to make "extreme profit," putting patients at risk. "The industry has moved towards increasingly complex corporate structures and highly leveraged buyouts," he said.
"For example last winter, the Carlyle Group, one of the world's largest private equity buyout firms, completed a $6.6 billion leveraged buyout of HCR Manor Care, the nation's largest nursing home care provider." DeBruin said that "plain common sense suggests that there is reason to be worried about cost-cutting pressure at a company that has just taken on up to $5.5 billion in new debt." DeBruin suggested that the company will cut staff and imperil care as a result.
Blumenthal called the case of New England nursing home chain Haven Health "a poster child for the perils of concentrated ownership and power." Blumenthal said the owner of the company drained its assets away from patient care. Funds went toward a $9 million record company in Nashville and a half-million dollar lake front property, while patient care suffered and the chain owed its vendors close to $13 million, Blumenthal said.
The subcommittee heard from a woman who said her husband, an Alzheimer's patient, was allowed to leave a Haven facility in Greenwich, Connecticut, 10 times in his first four days there. The woman, Susana Aceituno, said she decided to move her husband but was then asked by a Haven administrator to give the facility another opportunity. He subsequently escaped again and fell down an embankment, causing an injury that led to quadriplegia, Aceituno testified.
The Connecticut Department of Health fined the facility $615 for not looking after her husband but "because Haven Health Care said that would be a financial hardship for them, they sent the state a check for $1," Aceituno said.
"I really hope you can be a little more tough," she told the lawmakers.
Luis Navas-Migueloa, a nursing home ombudsman for the city of Baltimore, said he sees differences between facilities owned by smaller concerns and those whose ownership is unclear because of the complexity of their management structures.
"When dealing with the less transparent nursing home, there usually is an obvious lack of personal contact which turns into a lack of personal care and concern," he said. "When there is a problem in a nursing home with an absent owner it is difficult, and sometimes impossible to bring a resolution to problems. The administration becomes the buffer between the owners and the problems which occur in the facility. Residents, families, and advocates in general, are limited to speaking with an individual who is either hiding problems from the ownership of the nursing home, or hiding the ownership from the people who end up suffering due to these problems."
Morris of the HHS Inspector General's office said that the Centers for Medicare and Medicaid Services operates a system called "Pecos" that includes ownership information but that it is not a comprehensive solution. The database has enrollment information on 70 percent of the nursing homes operating in the Medicare program, said Acting CMS Administrator Kerry Weems.
Subcommittee Chairman Bart Stupak, D-Mich., and other lawmakers emphasized the importance of access by the public and by regulators to information on which entity in a nursing home management structure has the resources to fix quality of care problems when they occur.
Stupak pressed Weems on why Pecos doesn't have ownership information on all nursing home operators and why that information isn't a part of the Nursing Home Compare Web site that compares the quality of nursing homes. We need to link the ownership database to the quality database, Stupak said.
"It is our goal to populate Pecos 100 percent," Weems said, and to link ownership data to quality data, but he added that the ownership data needs to be "usable." Stupak also asked why, with one in five homes providing seriously substandard care, CMS doesn't expand its "Special Focus Facility Program" focusing on facilities with chronic quality of care programs. "It is a program that is resource intensive ... within the resources we have it is a program we would look to expand," Weems said.
Stupak also pushed Weems on why the agency isn't doing more to implement a nursing home inspection system developed by university professor Kramer called the Quality Indicator Survey. Kramer said that method creates more consistent inspections that involves larger samples of facilities and much more interviewing of facility residents. "You ask them all sorts of questions" that cast a wider net to discover quality problems, Kramer said.
"We've moved QIS at a pace consistent with the budgetary resources that we have," Weems said. Stupak noted that the cost of wider expansion would be some $20 million.
Democrats and Republicans alike at the hearing called for increased "transparency" to determine ownership of nursing homes and quality of care problems. Reps. Pete Stark, D-Calif., and Jan Schakowsky, D-Ill., are expected to introduce legislation within the next few weeks increasing transparency. Stupak said he plans to develop a separate "discussion draft" requiring the linking of information on ownership and quality.
In the Senate, Republican Charles E. Grassley of Iowa and Democrat Herb Kohl of Wisconsin have introduced legislation (S 2641) to give consumers standardized information on care in nursing homes, including inspection results, the size of a facility's staff, and ownership information. The measure also would stiffen penalties for poor quality care. The pair hope to attach the measure to Medicare legislation blocking a scheduled July 1 Medicare payment cut to doctors. The SEIU's DeBruin noted the measure is opposed by for-profit nursing homes, but advocates hope they can get it passed anyway, saying it wouldn't add to federal spending.
