Two Nursing Homes Put on Watch List

Congress is turning up the heat on nursing homes, or so it seems. The House Energy and Commerce subcommittee on oversight and investigations held a hearing that focused on problems with regulation and full disclosure of ownership.

Surprisingly, this subcommittee had not held an oversight hearing about nursing home care since 1977. This indicates a rather lackadaisical attitude on the part of Congress in regards to our senior population. The last significant change in nursing home regulations was the Nursing Home Reform Act of 1987.

Now it seems Congress maybe serious enough in examining whether standards continue to provide an appropriate level of care and protection for residents of nursing homes.

The subcommittee released a report commissioned by the Centers for Medicare and Medicaid (CMS) that suggested that the regulatory enforcement system for nursing homes has a lot of problems.

All 46 Manor Care nursing homes in Pennsylvania staff below a standard recommended in a Centers for Medicare and Medicaid Services (CMS) study as putting residents at risk.

CMS contracts out the oversight of each nursing home to each state's health department. Not only is the each state's health department the problem, CMS may be part of the problem too!

CMS uses stealth moves like putting out the word that surveyors shouldn't cite anything they don't absolutely have to, cutting or under-funding oversight budgets, and looking at self-reported and unaudited data (data reported by the facilities themselves and no oversight agency verifies audits to ensure that it is even true).

Nursing home inspections depend on the paperwork to verify the residents are getting good care. Manor Care pays nurses to make sure the paperwork is perfect, thereby ensuring a good inspection.

In the past few years, a wave of new owners and investors has begun purchasing nursing home chains. These private-equity firms are unregulated and new to the nursing home market.

Many worry that the top priority for these new owners will be profits, rather than providing the staffing and resources necessary to ensure top quality care for our loved ones.

Frequently, they use complex corporate structures, separating the nursing home real estate from the operating companies and putting multiple layers of limited liability partnerships between themselves and the day-to-day operations of the nursing home.

The Carlyle Group already planned to restructure its take-over of Manor Care, which will comprise about 300 corporate entities that could obscure ownership and make it more difficult to regulate care. It split the company's real estate holdings from the rest of the business so the properties could be used as collateral to raise funds in credit markets.

Ownership structures with multiple stakeholders have been used by other private-equity firms to minimize liabilities and shield them from regulator inquiries like when cutting staff is made to improve profit margins. They use these kinds of structures to avoid taking responsibility when taking control of nursing homes.

Private equity is buying up this industry and then hiding the assets, and when residents are dying from lack of proper care, there is little the courts or regulators can do, while they skim off the profits to line the pockets of investors or plow the money into separate ventures that have nothing to do with nursing home care.

CMS and the states lack the tools to keep up with the rapid changes in the industry, to know who actually owns the country's nursing homes and who should be held accountable for the residents in their care. There is a crisis in our nation's nursing homes. The residents their need help!

A report commissioned by the Centers for Medicare and Medicaid (CMS) suggested that the regulatory enforcement system for nursing homes has a lot of problems. Though it’s dated March 22, 2007, CMS apparently hadn’t gotten around to making it public until recently. The agency said it had been developing an action plan to respond to the report, and wanted to release them together.

http://blogs.wsj.com/health/files/2008/05/fin...

U.S. Senators Charles Grassley, Iowa Republican, and Herb Kohl, Wisconsin Democrat, released a report from the Government Accountability Office that flagged a lot of the same concerns – which the GAO has been hammering on for a decade now. They are trying to get provisions from nursing-home disclosure legislation into a Medicare-related bill that’s expected to pass Congress by July 1.

http://blogs.wsj.com/health/files/2008/05/d08...

How Much Do We Spend on Nursing Homes?

The nursing home sector accounts for roughly 6 percent, or $124.9 billion of the more than $2 trillion that we invest annually in healthcare. As always, the question is “Are we getting good value for our money?”

Given how vulnerable nursing home patients are, questions about quality deserve special attention. Maggie Mahar does the basics, how much do we spend on nursing homes?

http://www.healthbeatblog.org/2008/06/health-...

Nursing Home Transparency and Improvement Act of 2008

Summary of Major Provisions of the Act

Improve transparency and accountability in the ownership and operations of nursing homes

Corporations would be required to disclose their owners, operators, financers, and other related parties. Facilities that were part of chains would be required to submit annual audits. Purchasers would have to demonstrate that they were financially able to run facilities.

Require disclosure of how Medicare and Medicaid funds are spent

Providers would have to report wage and benefit expenditures for nursing staff on cost reports. Cost reports would be revised to categorize spending for direct care, such as nursing and therapies; indirect care, such as housekeeping and dietary services; capital costs, including buildings and land; and administrative costs, which often include the company’s profits.

Establish independent monitoring of chains

The federal government would develop a protocol for an independent monitor of chains to analyze their financial performance, management, expenditures, and nurse staffing levels. It would provide for corrective action and collection of civil monetary penalties.

Collect accurate information about nurse staffing

The government would collect data electronically from nursing homes on the number of RNs, LPNs, and nursing assistants, using payroll records and contracts with temporary agencies as the source. Data would include turnover and retention rates and hours of care per resident provided by each category of worker.

Provide better public information about nursing homes

Nursing Home Compare would be updated with more timely reporting of surveys; ownership information; accurate nurse staffing data, including turnover and retention rates; links to survey reports (Form 2567) when states put them online; enforcement actions; and all Special Focus Facilities identified for three years. The government would undertake a study on how to improve the website to make it more useful and understandable.

Implement new consumer complaint processes

The government would develop a standardized form consumers could use in filing complaints with the state regulatory agency or ombudsman. States would be required to establish a complaint resolution process for residents’ representatives who were retaliated against, including denied access to residents, if they complained about quality of care or other issues.

Provide for higher civil monetary penalties and other CMP reforms

Federal civil monetary penalties would be increased for the first time since the 1987 Nursing Home Reform Act – up to $100,000 in the case of a resident’s death. Fines would be held in escrow during appeals of deficiencies, no longer delayed until appeals were resolved. Federal CMP funds, which are now returned to the U.S. Treasury, are encouraged to be used for the benefit of residents.

Provide for reporting of closures and continuation of federal payments

Nursing homes would be required to give 60 days notice of closure, including a relocation plan and assurances that residents would be transferred to the most appropriate facility or other setting. No new residents could be admitted after the notice was given, and the federal government could continue Medicare and Medicaid funding for residents until relocation was completed.

Authorize studies of temporary management; special focus facilities; culture change; and nurse aide training

The bill provides for studies of temporary management; the characteristics of Special Focus Facilities, including ownership; best practices in culture change; and training of nurse aides and supervisors. Dementia management would be added to the initial 75-hour nurse aide.

What do sewer sludge and nursing homes have in common?

Washington, DC-based Carlyle Group owns Synagro Technologies, the company that processes municipal waste products, transports the resulting "sewer sludge" and distributes it for land application. Residents from around Pennsylvania have been calling for the expanded testing of Synagro sewer sludge and public reporting on its toxicity and disposal. Communities don't know everything that is in the sludge dumped on nearby lands. Without more information, there are possible health effects and diminished quality-of-life issues.

Concerns about the safety of Synagro sludge have intensified since the company's April 2007 buyout by The Carlyle Group. By taking Synagro private in a leveraged buyout last year, Carlyle is able to avoid requirements that Synagro provide federal agencies with certain information about its business practices and avoid publicly disclosing the existence of regulatory inquiries or legal complaints against the company resulting from health hazards caused by Synagro products and product distribution.

This has been happening with The Carlyle Group's take-over of Manor Care nursing homes earlier this year. Manor Care's restructure could obscure ownership and make it more difficult to regulate care. You can't see how they are wasting money, short-staffing, under-paying workers, or understand all the intricate inter-relations they have with supposedly outsourced services such as therapy.

All 46 Manor Care nursing homes in Pennsylvania staff below a standard recommend in a Centers for Medicare and Medicaid Services (CMS) study as putting residents at risk (Schnelle, et all. Appropriatness of Minimum Nurse Staffing Ratios in Nursing Homes: Phase II final report, December 2001).

The steady cash flows nursing home operators produce is a big attraction for private-equity firms that need the cash to pay down borrowed debt. Beverly, Extendicare, Genesis and Vencor/Kindred went private, and now Manor Care. Private firms keep all their dirty deeds from the public, especially consumers.

Ownership structures with multiple stakeholders have been used by other private-equity firms to minimize liabilities and shield them from regulator inquiries. They use these kinds of structures to avoid taking responsibility when taking control of businesses. Private-equity buyout firms such as the Carlyle Group are not required to publicly disclose information about the business practices of the companies they own.

The Carlyle Group, one of the world's largest private-equity funds with more than $75 billion under management, owns Manor Care, the largest nursing home chain, and Synagro, the largest sludge company in the United States. Perhaps they'll process all their municipal waste products, and distribute it to the lawns and gardens of all their nursing homes and add to the significant health complaints at the homes?

Legislate Federal Mandatory Staffing Levels

Many states fought twenty world-wars to get mandatory staffing levels, even then, it was constantly being attacked. In one state, when there was a possibility of cutting Medicaid funding, the industry jumped at the chance to use that funding cut as an excuse to abandon the staffing level requirements.

Federal law only requires nursing homes to provide sufficient staff and services to attain or maintain the highest possible level of physical, mental, and psychosocial well-being of each resident, and we know this is insufficient.

There have been numerous federal bills requiring various mandatory staffing levels, only to be defeated or die on the vine. Now is the time for those mandatory staffing levels!

While the Nursing Home Transparency and Improvement Act of 2008, passed under the umbrella of the recent Medicare bill, proposed collecting accurate information about nurse staffing by comparing it with payroll records, mandatory staffing levels wasn't in the nursing home bill.

Write or call your federal congressional delegation to be on the ground floor at getting this much needed legislation passed.

Carlyle's Public Dilemma with Manor Care

Everyone knows Carlyle Group eventually wants to go public, but it may have an added hurdle. Karen H. Bechtel, a Carlyle Group managing director who heads its health-care practice, and a veteran in the health-care investing field (Morgan Stanley), says "Carlyle is likely to hold on to Manor Care for at least five years."

Steven R. Howard, a New York lawyer who specializes in private equity says "if the company performs well, you sell it to the guys in Dubai, who will pay a fortune for it."

One of Blackstone and KKR’s major arguments was that they needed public currency to better expand their asset management platform beyond private equity (hedge funds, etc.). Blackstone and KKR both bought-out major nursing homes. Carlyle would likely make that case also, but investors may be a bit concerned about such expansion into public securities given the collapse of Carlyle Capital and pending liquidation of Blue Wave.

In other words: Carlyle has already demonstrated difficulty in straying from its private knitting, but would be asking for new capital to do that very thing. Could be tough for public investors to swallow.

This certainly isn’t to say that Carlyle couldn’t make a persuasive case, and would certainly argue that their problems were more a cause of timing that competence. Moreover, the firm would claim that its private securities knitting has been regularly marked with public security stitches, so such expansion isn’t actually that much of a stretch.

But it’s a case Carlyle will have to make. Blackstone didn’t have to because it didn’t have the blowups, and KKR didn’t have to because it’s not actually selling any new shares. If only Carlyle Capital still existed, so that Carlyle could just go public without anyone of import asking questions.

"The possibility of Carlyle Group following in the footsteps of rivals Blackstone and KKR in going public could face some challenges, according to Private Equity HUB. Carlyle could be stymied by the collapse of its mortgage-backed security investors Carlyle Capital and the upcoming liquidation of its Blue Wave hedge fund, writes Private Equity Hub."

This is a step we expect at some point with other nursing home chains that privatized in the last several years. It's a cycle: begins as a public company; they save up, sell out as private company (obscenely enriching the top dogs in the process); they suck all the assets dry; then they put it back into the public market. However, it's usually years before that happens, though, unlike Carlyle's apparent quick consideration of this move because of their bad investments.

Staffing Cuts and Mounting Patient Care Problems at ManorCare’s Pennsylvania Facilities under Carlyle’s Ownership

A new analysis of federal government data reveals staffing cuts and a surge in violations at ManorCare’s Pennsylvania nursing homes while under Carlyle’s ownership. Average nurse and CNA staffing has actually decreased to just 3.29 hours per resident per day (HPPD) at the 20 Pennsylvania Manor Care nursing homes that have undergone annual surveys since Carlyle acquired the company on December 21, 2007.[i] Nurse staffing was cut by 21.4% to just 3.05 HPPD at Manor Care Health Services – Lansdale, a 170 bed facility in Montgomeryville.[ii] In addition, none of the 20 facilities provided the 4.07 hours of care identified by experts in a 2001 study as the threshold below which quality of care is compromised.[iii] This staffing data may help to explain a surge in violations of federal health and fire safety standards at these facilities, which increased 31% overall to 202 violations in their post-buyout surveys.[iv]

Government survey records describe the tragic stories behind these violations:

ManorCare Health Services - York South was cited in January 2008 and again in May for two separate incidents involving a failure to timely notify a physician of a resident’s change in condition. The residents involved in both incidents died. In January, a resident with a history of fainting and at a known risk for falls fell and died several days later as a result of blunt force head trauma sustained in the fall. Incomplete information was faxed to a physician’s closed office, but a physician was not actually called for more than 17 hours after the fall occurred, during which time the resident exhibited symptoms of increased confusion and vomiting.[v] In May, the facility again failed to timely notify a physician after a resident, whose medication carried a known risk of side effects including heart attacks, complained of head and chest pain and had elevated blood pressure. The resident went into fatal cardiac arrest late that night.[vi]

ManorCare Health Services at Mercy Fitzgerald was cited by government inspectors for failing to provide timely assistance to a resident who had amputations of both legs, whose repeated requests for assistance in using the bathroom went unanswered over the course of half an hour.[vii]

Donahoe Manor was cited for failure to follow state law and its own policies requiring an FBI criminal background check for an employee who had been hired more than 9 months earlier, and for hiring a dietary aide who worked on the tray line and delivering carts before his tuberculosis skin test was completed.[viii]

----------

[i] This average is weighted to reflect different homes census level. The staffing data is based on information from “About the Nursing Home–Inspection Results,” Centers for Medicare and Medicaid Services Nursing Home Compare data, downloaded 7/22/2008 and 11/09/2007. Under federal law, nursing homes must be inspected every nine to 15 months.

[ii] Ibid.

[iii] Ibid..

[iv] Ibid.

[v] MANORCARE HEALTH SERVICES-YORK SOUTH, Incident investigation and a State monitoring visit, 01/09/2008, F-0309.

[vi] MANORCARE HEALTH SERVICES-YORK SOUTH, Medicare/Medicaid Recertification,

State Licensure, Civil Rights Compliance and Incident investigation survey, 05/22/2008, F-0309.

[vii] MANORCARE HEALTH SERVICES AT MERCY FITZGERALD, M edicare/Medicaid Recertification, State Licensure and Civil Rights Compliance Survey, 01/08/2008, F-0309.

[viii] DONAHOE MANOR, Medicare/Medicaid Recertification Survey and State Licensure Survey, 01/07/08, F-0226, F-0630.

Violations Reported at 94% of Nursing Homes

By ROBERT PEAR
New York Times

WASHINGTON — More than 90 percent of nursing homes were cited for violations of federal health and safety standards last year, and for-profit homes were more likely to have problems than other types of nursing homes, federal investigators say in a report issued on Monday.

http://www.nytimes.com/2008/09/30/us/30nursin...

Inspector General's Report Finds 92 Percent of Nursing Homes Cited for Deficiencies

By SHARYN ALFONSI and DIANE MENDEZ
Sept. 30, 2008
ABC News

A government report released this week found extensive problems in America's nursing homes. According to the study, nearly one in five of the nearly 15,000 nursing homes examined were cited for violations that put patients in immediate harm in 2007. A total of 92 percent were cited for some type of deficiencies during each of the last three years.

From treating bed sores to preventing urinary tract infections, the quality of care in nursing homes was usually the focus of those deficiencies, the report found. Experts also found that on a typical day, far too many residents waited too long to get the help they needed.

http://abcnews.go.com/print...

Full report with individual state data:

http://oig.hhs.gov/oei/reports/oei-02-08-0014...

Nursing Home Transparency and Quality of Care Improvement Act of 2008

On Friday, September 26, 2008, Reps. Pete Stark and Jan Schakowsky introduced the "Nursing Home Transparency and Quality of Care Improvement Act of 2008."

The bill increases the transparency of nursing home ownership, ensures that residents and their families have information about the quality of care at these facilities, and strengthens enforcement of nursing home compliance with quality of care standards. It is a companion to S. 2641, introduced by Senators Charles Grassley and Herb Kohl.

The Nursing Home Transparency and Quality of Care Improvement Act enables nursing home residents and government regulators to better know who actually owns the nursing home and who controls the decision-making that impacts the quality of care provided. In addition, the bill improves the reporting of information on staffing levels and direct patient care expenditures.

In addition to increasing transparency, the bill takes additional steps to improve the quality of care. The bill puts patients first, by requiring advance notice of home closures, standardizing the nursing home complaint process, and establishing specific processes and consumer protections for complaint resolution.

The bill also improves staff training to include dementia management and abuse training as part of pre-employment training. The bill improves accountability and enforcement by mandating that homes establish compulsory ethics and compliance programs, making civil monetary penalties more meaningful, and studying the feasibility of new independent monitoring requirements.

While the bill proposes collecting accurate information about nurse staffing by comparing it with payroll records, mandatory staffing levels is not in the nursing home bill.

Many states fought twenty world-wars to get mandatory staffing levels, even then, it was constantly being attacked. In one state, when there was a possibility of cutting Medicaid funding, the industry jumped at the chance to use that funding cut as an excuse to abandon the staffing level requirements.

Federal law only requires nursing homes to provide sufficient staff and services to attain or maintain the highest possible level of physical, mental, and psychosocial well-being of each resident, and we know this is insufficient.

There have been numerous federal bills requiring various mandatory staffing levels, only to be defeated or die on the vine. Now is the time for those mandatory staffing levels!

Write or call your federal congressional delegation to be on the ground floor at getting this much needed legislation passed.