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    September 06, 2024

    Upholding Dignity: Stronger Nursing Home Reform Is Needed

    Richard Mollot and Charlene Harrington
    The PDF, which includes endnotes and footnotes, in which this article appears can be found in Bifocal, Vol. 45 Issue 6.

    As the devastating toll of the COVID-19 pandemic reverberated through our nation's nursing homes, promises to reform this vital sector offered a glimmer of hope. Residents, families, and advocates welcomed renewed commitments to ensuring humane and dignified care for our most vulnerable citizens. However, the recent unveiling of the final rule falls short of the mark,  failing to underscore the urgency and depth of change needed.

    The New Nursing Home Staffing Requirement

    The new rule mandates a minimum of 3.48 hours of care staff time per resident per day (referred to as HPRD), a figure lower than the current average staffing level in nursing homes, which stands at 3.68 HPRD.  Moreover, this falls significantly short of the 4.1 HPRD identified in a landmark 2001 federal study as necessary to address the basic clinical needs of residents.

    Nevertheless, as is always the case when faced with increased expectations or accountability for resident safety and dignity, the nursing home industry has been in an uproar since the aforementioned promises and recommendations were made two years ago. From the industry’s perspective, the new rule is “an unfunded mandate” and “unreasonable standard.”  Shortly after publication of the final rule, industry lobbyists sued to prevent it from going into effect.

    However, from our perspectives as a resident advocate and researcher, the new federal standard not only falls short of what residents need, unless steps are taken to strengthen the rule and other accountability mechanisms, it is likely to have significant unintended consequences that will put residents at greater risk of abuse and neglect.

    It may be tempting to view the final rule as a middle ground between opposing sides and, thus, a successful compromise. However, this is not a typical business situation, in which a buyer and seller have an even playing field in which to negotiate a price. In the world of nursing home care, operators essentially hold all of the cards. Prospective residents and their families typically have limited choices when they need skilled nursing care. And once someone has been admitted to a facility, their agency evaporates. Residents are dependent on their nursing home to provide all oftheir meals, all of their activities, the cleanliness and comfortableness of their environment, and, of course, health care and personal assistance. About half of the resident population has Alzheimer’s Disease or other dementia. Approximately three-quarters have hypertension and a third have diabetes.  The cards are stacked against them.

    Digging Beneath the Surface: Nursing Home Financing, Corporate Structure, and Profits

    Nursing homes, on the other hand, are increasingly owned by sophisticated corporate entities. Over the last 20 years especially, we have witnessed significant investment in the sector by Real Estate Investment Trusts, Private Equity, and Limited Liability Companies whose mission is to maximize profits.  Long gone are the days when a family, church, or mission-driven nonprofit opened a nursing home because they wanted to serve their community. As a result, billions of dollars in nursing home equity have been transferred out of nursing homes into the pockets of investors. A recent study, “Tunneling and Hidden Profits in Health Care,”  found evidence of widespread tunneling – covertly extracting profits by making inflated payments for goods and services to commonly-owned related parties – in the nursing home sector.  Those researchers found that 63% of nursing home industry profits flowed through related parties, meaning that reported profits only accounted for 37% of what the industry made overall. If these funds were spent on staffing, RN staffing HPRD would increase by about 29% and CNA staffing HPRD by 21%.

    Another recent study, which we co-authored, reviewed over 11,000 nursing home cost reports (information on income and expenditures that facilities report to the federal government annually). We found that nursing homes overall reported a small profit margin to the government – less than 1%. However, when disallowed expenses and depreciation were factored in, average nursing home profits were revealed to be close to 9%. This represents billions of dollars a year that could be spent on care staff. Hiding profits in the way that these two studies have revealed enables nursing homes to reduce their tax liability and their exposure when sued for gross negligence or abuse. It also supports their multi-million dollar lobbying efforts to increase reimbursement rates and fight regulatory reforms, such as the new staffing standard.

    Reform is Essential and Achievable

    While the march to corporatize the nursing home sector may seem insurmountable, there are in fact meaningful opportunities to redirect the course of the industry away from the predatory investor model that has become so pervasive.

    Fundamentally, the crisis in nursing home care reflects a systemic failure in our nation's quality assurance and oversight mechanisms, which have not evolved to match the complexities of the industry. Safeguarding financial integrity and implementing robust enforcement mechanisms are imperative. Making a profit is one thing. Profiteering at the expense of basic resident dignity and safety is another. Strong oversight, transparency, and accountability are vital to ensure that every dollar invested translates into dignified, quality care.

    First and foremost, we must vigorously enforce longstanding standards for quality care and life with dignity. Too many nursing homes operate under the presumption that they will not be held accountable for breaking their promises to residents, families, and the taxpayers who foot the bill for most nursing home care. Protecting current residents and ensuring quality care must be non-negotiable priorities.

    Practically speaking, this begins with increasing funding for oversight, which has stagnated for ten years. However, funding alone is insufficient unless the surveyor (inspection) function is empowered to operate independently and effectively. As William Scanlon, Director of Health Care Financing and Public Health Issues for the Government Accountability Office told Congress over two decades ago, it is “hard to understand the idea that the nursing homes would need the consultative help of government surveyors in order to avoid deficiencies. The types of deficiencies we have been talking about involve practices so egregious, so lacking, that one does not have to be a health professional to instantly understand their inadequacy.”

    Improving financial integrity is also key. We can no longer allow the pursuit of high profits to undermine the fundamental rights of nursing home residents. As the federal government has done with health insurance and home care, nursing homes must be required to spend the majority of the money they receive on care. Several states have already enacted such policies. CMS should adopt a requirement that nursing homes spend at least 85% of revenues on direct care services. A meaningful percentage of those revenues should be mandated to be allocated towards nursing staff. In addition, nursing homes must be required to return all disallowed expenses, including those from related parties, to the federal government. And improvements to financial reporting requirements, including meaningful penalties for fraudulent reporting, are necessary to ensure that the billions of taxpayer dollars paid to nursing homes every year are used for dignified, quality care.

    Last, but certainly not least, steps must be taken to improve the new staffing standard and ameliorate its negative consequences. CMS must commission an evidence-based study to identify the staff necessary to truly meet residents' needs and develop a concrete plan to implement the findings of that study. This speaks to the core of  promises to American families. A sound evidentiary base would also strengthen the rule’s ability to withstand the industry’s lawsuit and public campaign to squash the rule, which has already coopted far too many members of Congress and the news media.

    In addition to the need to align the rule with the actual clinical and psycho-social needs of residents, the rule’s disparate treatment of rural facilities and waiver provisions must end. Every individual, regardless of geography, deserves access to adequate care. Nursing homes are not supposed to operate like factory farms for vulnerable individuals, accepting and retaining residents for whom they cannot provide basic care, dignity, and services.

    In conclusion, promises, commitments  and dedication to nursing home reform is commendable and must not be undermined by industry influence or weak government agencies. It's imperative to translate words into meaningful actions, honoring the dignity and humanity of current and future nursing home residents.