Nursing homes cloak ownership for good reason


California has more than its share of laws governing its 1,260 nursing homes and 1,400 other facilities that provide care for 300,000 individuals.

But as The Sacramento Bee’s Marjie Lundstrom and Phillip Reese reported over three days, people who enforce the rules fail on the most basic level – helping people understand which chains operate safe and humane facilities, and which aren’t acceptable

Regulators don’t seem to know who owns many homes, or if they do, they don’t make it easy for people to find well-run facilities as they decide where to place their loved ones.

Caring for old and infirm people is a growth industry, especially in the graying Golden State, which has one of the highest percentage of for-profit nursing homes among the states.

The Bee spent months poring over public information to construct a database showing nursing home ownership. The Bee learned that nine of California’s 10 largest chains fell below state averages in staffing measures such as turnover in 2012, the last year for which data are complete. Too many profit-seeking operators cut costs, and vulnerable people suffer.

Nursing home chains respond to government scrutiny and lawsuits by burrowing beneath layers of limited liability corporations.

“No responsible health care company will hold all of its assets in a single corporation,” Mark Reagan, a nursing home lawyer, told The Bee’s reporters. The multilayered ownership structure is “sound business practice.”

The business reason for complex ownership is clear: If one facility in a chain is the target of regulators’ scrutiny or is sued into bankruptcy for mistreating residents, the parent corporation will survive. Sound though it may be, the practice is hardly designed to aid consumers.

Nor is one of the more common trends among chains: establishing side businesses that provide everything from linen and laundry services to insurance for facilities in their chains.

The Connecticut Legislature came up with a solution that California policymakers ought to consider – a statute that requires nursing home owners to disclose their financial interests in their related businesses.

California lawmakers have tried many times to improve care in nursing homes. More than a decade ago, Gov. Gray Davis signed legislation that raised fines. It worked for a time.

In 2000, 2001 and 2002, regulators issued a combined 2,202 citations and levied $10.3 million in fines. In the three-year period ending in 2013, the state issued 1,575 citations and imposed $7.9 million in fines, according to the California Healthcare Foundation.

Maybe nursing homes are getting better. Perhaps inspectors are overworked. A recent California State Auditor report suggests the latter. The auditor found the Department of Public Health had 10,000 open complaints against various facilities.

The citation system needs help. Inspectors traditionally homed in on specific facilities. Given consolidation in the industry, perhaps they should focus on problem chains. Perhaps, too, they should more frequently inspect chains that have a history of violations.

If past is prologue, some legislator will react to The Bee’s series by suggesting legislation. That’d be great. Whoever seeks to impose the fix should not rush. The response ought to be measured.

There are 4.27 million Californians 65 and older now. There will be 6.05 million by 2020. We all have a stake in improving care provided by nursing homes, even the owners.