Corporate Nursing Homes
Resident Care Suffers at For-Profit Corporate Nursing Homes
Publication Date: February 2013
Author: Roger J. Leslie
Categories: Nursing Homes, Consumer Protection, Corporate Abuse
Two thirds of nursing homes in the United States are investor-owned corporations that operate for profit.1 Research data that link corporate policies to poor care raises a conflict in Washington State. In a recent mandatory arbitration petition, Golden Living, LLC (formerly Beverly Enterprises, Inc.), the largest corporate nursing home chain in the country, listed the Washington State Investment Board (WSIB) as having an ownership interest. This means that the pension fund for state employees is an owner of a corporate nursing home with numerous complaints for neglect of vulnerable residents.
Common sense leads one to believe that care for residents of nursing homes will suffer from the corporate for-profit structure that favors shareholder value over residents and employees. This presumption is more than an attorney’s bias. Research shows that corporate nursing homes that operate for-profit score lower on Medicare quality measures and have worse resident outcomes than nursing homes operated by not-for-profit organizations. The quality of care at a nursing home improves dramatically when it converts from for-profit to not-for-profit operation.
The poor performance of for-profit nursing homes comes primarily from understaffing for cost containment purposes. This is the characteristic that most distinguishes non-profit from for-profit nursing homes. Researchers estimate that if all nursing homes in the United States were non-profit, residents would receive an additional 500,000 hours of nursing care per day. For-profit corporations are working for shareholders and executive compensation while non-profit nursing homes are run for the residents. For-profits strive for the floor (lowest cost of operation) and non-profits strive for the ceiling (high quality).
However, staffing is not all that suffers under for-profit corporate governance. The corporate model often views sanctions and lawsuits for fraud and poor quality as a cost of doing business. The focus is not on improving quality by hiring more staff members, which would cut into profits, but on suppressing lawsuits and covering up injury-causing incidents.
Violations of Medicare quality measures have been shown to correlate with poor outcomes for residents. Examples of quality measures include percentage of residents with moderate to severe pain, pressure ulcers, loss of bladder or bowel control, or need for help with the activities of daily living. In the period of 1998 to 2002, nursing homes in Washington State had the worst record in the United States with 16.5 complaints per 100 residents per year. By comparison, South Dakota had only 0.6 complaints per 100 patients per year. For-profit nursing homes had twice the rate of complaints of non-profit nursing homes.
The quality of care improves with increased staffing of nursing assistants (CNAs).2 Florida imposed higher staffing requirements on nursing homes and progressively increased those requirements over a period beginning in 2001 and ending in 2005. Data from Florida show that increases in nursing assistant hours caused a proportionate improvement in the quality of care for residents. For every 6 minute increase in nursing assistant hours per resident per day (HPRD), the deficiency score was decreased (improved) by 3%.3
With our ever-increasing budget cuts, the state will have an increasingly difficult time protecting vulnerable adults by aggressive enforcement of nursing home regulations. It is then left to the trial lawyers to represent neglected nursing home residents and to pressure all nursing homes to act responsibly. The state could help by divesting itself of investments in the bad actors. If the Washington State Investment Board does not want to get out of the nursing home business, they could put pressure on Golden Living to increase staffing in its nursing homes. The State Legislature could help by enacting legislation to give violation of nursing home regulations the legal status of negligence per se so that plaintiff’s attorneys would have more leverage against nursing homes that neglect vulnerable adults. The Legislature currently sanctions driving under the influence of alcohol or drugs by designating it in statute as negligence per se.4 The Legislature should add violation of nursing home regulations to the statute to prevent the abuse of frail and elderly residents.
1. Comondore et al. BMJ, 2009:339: b2732.
2. Alexander Qual Manag Health Care, 2008: 17(3) 242-251.
3. Hyer, et al. 2011: The Gerontologist, 51(5): 610-616.
4. RCW 5.40.050 (2009).
Roger J. Leslie is an EAGLE member of WSAJ and Chair of the WSAJ Nursing Home Litigation Group.