Out of the spot­light

Pres­sure eases on pri­vate, for-profit nurs­ing homes

Modern Healthcare - - LONG-TERM CARE -

Pri­vate, for-profit own­ers of nurs­ing homes are off the hot seat for now, af­ter years of be­ing a tar­get of in­flu­en­tial mem­bers of Congress who had con­cerns they may pro­vide lower qual­ity of care. Af­ter a se­ries of in­quiries dat­ing to 2007, some re­cent find­ings of the Govern­ment Ac­count­abil­ity Of­fice com­bined with the start of pro­vi­sions of last year’s Pa­tient Pro­tec­tion and Af­ford­able Care Act are work­ing to quiet much of the chat­ter sur­round­ing the is­sue.

The likely lack of ac­tion by Congress on the is­sue may come as a re­lief to in­dus­try providers, who are op­er­at­ing un­der a Medi­care re­im­burse­ment cut of 11% that took ef­fect Oct. 1 (Aug. 8, p. 14).

The own­er­ship is­sue had been raised ini­tially in part be­cause more com­pli­cated own­er­ship, which is typ­i­cal of nurs­ing homes bought by com­pa­nies who spe­cial­ize in pri­vate eq­uity, was thought to make it harder for res­i­dents to take le­gal ac­tion and col­lect le­gal judg­ments, in­dus­try ex­perts say.

But the lat­est GAO re­port on pri­vate in­vest­ment firm own­er­ship of nurs­ing homes, re­leased pub­licly in Au­gust, in­cluded re­sults that in gen­eral iden­ti­fied few dif­fer­ences in qual­ity, staffing and prof­its at nurs­ing homes owned by pri­vate-in­vest­ment firms com­pared with those owned by other for-profit com­pa­nies. The pri­vate in­vest­ment firm-owned and other for-profit-owned fa­cil­i­ties re­ported a larger num­ber of to­tal av­er­age de­fi­cien­cies and a greater pro­por­tion of homes with a se­ri­ous de­fi­ciency when com­pared with not-for-prof­its.

Pri­vate in­vest­ment firm-owned nurs­ing homes had the high­est reg­is­tered-nurse ra­tio out of the three cat­e­gories: pri­vate-in­vest­ment firm owned for-profit, other for-profit and not-for-profit. The re­port is based on data from the CMS’ Online Sur­vey, Cer­ti­fi­ca­tion and Reporting sys­tem, or OS­CAR, and Medi­care skilled nurs­ing fa­cil­ity cost re­ports.

“I don’t see any­thing that cries out for con­gres­sional ac­tion,” says Martha Sweter­l­itsch, a health­care at­tor­ney for the law firm Be­nesch in Colum­bus, Ohio, who gen­er­ally works with not-for-profit providers. Af­ter a cer­tain de­gree of an­tic­i­pa­tion that the GAO would pro­duce re­sults show­ing fa­cil­i­ties owned by pri­vate-in­vest­ment firms were dif­fer­ent, “the re­port is kind of bor­ing,” Sweter­l­itsch says.

The re­port, ti­tled Nurs­ing Homes: Pri­vate In­vest­ment Homes Some­times Dif­fered from Oth­ers in De­fi­cien­cies, Staffing and Fi­nan­cial Per­for­mance, noted in a summary that “although the ac­qui­si­tion of nurs­ing homes by (pri­vate in­vest­ment) firms raised ques­tions about the po­ten­tial ef­fects on qual­ity of care, GAO’S anal­y­sis of data from be­fore and af­ter ac­qui­si­tion did not in­di­cate an in­crease in the like­li­hood of se­ri­ous de­fi­cien­cies or a de­crease in av­er­age re­ported to­tal nurse staffing.”

The GAO’S find­ings fol­low a pre­vi­ous re­port pub­lished in Septem­ber 2010 that out­lined the large num­ber of nurs­ing homes pur­chased by pri­vate in­vest­ment firms. That re­port found 10 pri­vate in­vest­ment firms were the buy­ers of 89% of the 1,876 nurs­ing homes chang­ing hands be­tween 1998 and 2008, among other things.

Sweter­l­itsch says the newer study’s re­sults are not sur­pris­ing, as they re­flect a com­mon­sense strat­egy for the in­vest­ment firms. They look for trou­bled or in­ef­fi­cient nurs­ing home com­pa­nies, buy them, in­vest cap­i­tal to of­fer higher acu­ity care, hire pro­fes­sion­als who can han­dle those kind of pa­tients, and then go af­ter pa­tients with a bet­ter payer source, she says.

The GAO re­searchers did find that the pri­vate in­vest­ment firm-owned homes tended to try to re­work op­er­a­tions to make them more at­trac­tive to higher-pay­ing res­i­dents, a point that was not lost on one of the con­gress­men who re­quested the re­port. “The sys­tem should not over­pay for cer­tain pa­tients, which cre­ates in­cen­tives for nurs­ing homes to spiff up their build­ings and set staffing lev­els to en­tice prof­itable pa­tients. I en­cour­age CMS to con­tinue tak­ing steps to ad­dress these is­sues,” Rep. Pete Stark (DCalif.) says in a news re­lease. Stark re­quested the GAO re­port with Sens. Max Bau­cus (DMont.) and Chuck Grass­ley (R-iowa).

But the re­port’s find­ings along with fu­ture own­er­ship reporting re­quire­ments that are part of the ACA may be marred by poor-qual­ity data. The ex­ist­ing reporting re­quire­ments are viewed to be in­ad­e­quate, and some ar­gue that adding to the re­quire­ments will make things worse in terms of get­ting us­able in­for­ma­tion. The OS­CAR data used by the GAO is too vari­able to be re­lied on, says Dr. Ch­eryl Phillips, se­nior vice pres­i­dent for ad­vo­cacy at Leadin­gage, Washington, which rep­re­sents not-for-profit nurs­ing home op­er­a­tors.

The GAO did not re­lease spe­cific numbers re­gard­ing its find­ings be­cause the numbers would ei­ther be slightly in­ac­cu­rate or mis­lead­ing de­pend­ing on which of two sets of data it re­leased, non-ad­justed or ad­justed, says John Dicken, di­rec­tor of health­care at the GAO. The GAO’S ad­justed re­sults took into ac­count such things as payer mix, whether a nurs­ing home was part of a chain, com­pe­ti­tion, oc­cu­pancy and size, ac­cord­ing to the re­port. The re­searchers are con­fi­dent in the gen­eral con­clu­sions the GAO did re­lease based on the data, Dicken says.

The GAO in 2010 rec­om­mended that HHS and the CMS re­quire reporting of in­for­ma­tion that would make own­er­ship struc­ture more un­der­stand­able as new own­er­ship reporting re­quire­ments of the ACA are im­ple­mented.

Oth­ers agree that changes in how data is col­lected and used are needed for the ACA’S trans­parency re­quire­ments to be ef­fec­tive. The law’s re­quire­ments could make mat­ters more com­pli­cated for providers, but not yield much use­ful data, says Cory Mac­don­ald, an at­tor­ney who heads the long-term-care and se­nior hous­ing group at the law firm Davis & Wilk­er­son, Austin, Texas. That’s be­cause the Medi­care con­trac­tors that com­pile the own­er­ship data al­ready have a tough time us­ing the cur­rent data ac­cu­rately, and giv­ing the con­trac­tors more in­for­ma­tion to work with could make the data less use­ful, Mac­don­ald says. Medi­care con­trac­tors aren’t equipped to deal with the data, he says.

It’s a prob­lem with all nurs­ing homes—and busi­ness struc­tures in gen­eral—that own­er­ship struc­tures can get com­pli­cated and dif­fi­cult to de­fine and sum­ma­rize ac­cu­rately, he says. Texas al­ready has own­er­ship reporting re­quire­ments that ask for more in­for­ma­tion than re­quired by the fed­eral govern­ment, and Medi­care con­trac­tors strug­gle to in­ter­pret it, he says.

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