South Carolina Nursing Home Blog : South Carolina Nursing Home Lawyer & Attorney : Poliakoff & Associates Law Firm : Elderly Care, Senior Care

Assisted Living Concepts Inc. (ALC), which operates a for profit chain of assisted living centers, reported significantly higher profit margins despite a drop in occupancy in its first quarter.  The company operates 211 assisted living centers in 20 states.  See full report here.  Revenue increased 1.4% to $57.9 million from $57.1 million.

The company reported net income of $3.6 million, or 31 cents a share, compared with a loss of $11.8 million, or 98 cents, a year ago. The year-ago quarter includes a non-cash write-off of $14.7 million in goodwill, an accounting entry that reflects the amount above book value paid for an acquisition. Excluding the write-off, the company earned $2.9 million in first quarter 2009.

An increase in private pay residents, who pay much higher rates than the Medicaid program, rate increase and lower labor and kitchen expenses contributed to the higher profits. It sounds like they stopped properly feeding the residents and provided less staff or less qualified employees.

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Many corporations provide insufficient staffing, training, and substandard care to pad their books and make outrageous profits.  Kindred Healthcare, Inc. recently announced its operating results for the first quarter ended March 31, 2010.

First Quarter Highlights:
• Consolidated revenues rose 2% to $1.1 billion
⎯ Each operating division reported revenue growth compared to last year
• Reported diluted earnings per share totaled $0.38, including $0.06 of certain charges
⎯ Excluding the charges, first quarter earnings were at the high end of the Company’s guidance
range of $0.35 to $0.45 per diluted share
• Hospital volumes continued to improve
⎯ Reported admissions grew 3% from last year
⎯ Same-facility aggregate admissions grew 3%; same-facility commercial admissions grew 12%
⎯ Volume growth in the quarter was partially offset by softer Medicare and commercial pricing
• Nursing and rehabilitation center admissions grew 5% in the first quarter compared to last year
⎯ Reimbursement rates were generally in line with expectations
• Peoplefirst Rehabilitation continued to demonstrate consistent operating results
⎯ Division signed 28 net additional unaffiliated contracts compared to a loss of three contracts in the first quarter last year

See report here.   But the nursing home industry will insist they can't make any money because of alleged cuts in Medicaid and Medicare reimbursements, and, of course, on "frivolous" lawsuits.  Ridiculous.

I hope all of our loved ones are safe on this Mother's Day.
 

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WLBT had an article about several Mississippi nursing home organizations that have filed suit against the state's division of Medicaid.  These organizations are lobbysits for the industry. The Mississippi Health Care Association, The Independent Nursing Home Association, and dozens of nursing homes are involved. They want to keep their profits by stopping regulations to prevent waste and corruption.

Medicaid recently proposed cuts of more than 14 million dollars in payments to health care provider services for April, May, and June of this year because of waste, overpayments, and double billng by the nursing home industry.  Only half of the proposed cuts being targeted to nursing homes.

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Despite paying a $98 million settlement for kickback schemes, Omnicare managed to pull in 4th qtr profits over $80 million. Omnicare is the nation's largest nursing home pharmacy.  See article here.   The financial results for its fourth quarter, reporting nearly tripled profits compared to the previous year after settling fraud allegations with the U.S. Justice Department as recently as last November.  See report here.

Omnicare paid a $98 million settlement in 2009 to end a Justice Department investigation that  the company engaged in kickback schemes with two Atlanta nursing homes involving pharmacy service contracts.

I guess fraud, kickbacks, and paying lobbyists is profitable.

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The Providence Journal had an article about the federal government seeking more than $12 million from former nursing home executive Antonio L. Giordano and his associates, claiming they enriched themselves by diverting millions of dollars from nursing homes as the homes slipped into debt, in violation of an agreement with the U.S. Department of Housing and Urban Development.

The government, on behalf of HUD, accuses Giordano; his longtime chief financial officer John J. Montecalvo; Pasquale V. Confreda, a general partner with Coventry Health Center Associates, and Coventry Health Center Associates itself of illegally channeling money from two nursing homes to themselves and businesses that included two consulting firms, one owned by Giordano’s daughter and the other by his son.

The nursing homes — Mount St. Francis Health Center, in Woonsocket, and the Coventry Health Center — were backed by HUD-insured financing and later went into receivership. Those named in the suit were barred from transferring money or property belonging to the nursing homes while the homes were not financially solvent under the terms of the HUD mortgage insurance.

Giordano and Montecalvo oversaw the management of both nursing homes. Confreda was a general partner of Coventry Health Associates, which owned the 344-bed Coventry Health Center.

The suit filed in September in U.S. District Court says Montecalvo and Giordano misused $4.2 million in Mount St. Francis funds in violation of the HUD agreement reached when the parties secured an $8.6-million HUD-insured mortgage. The government by law is allowed to seek double the amount that was allegedly misspent, or $8.5 million, including legal fees.

Giordano, Montecalvo, Confreda and CHC Associates are accused of diverting another $1.8 million from Coventry Health Center, equaling $3.6 million, with legal fees. In that case the parties secured a $15.3-million HUD-insured mortgage after refinancing.

The case grew from an audit done by the Office of the Inspector General of the nursing homes’ operations from Jan. 1, 2000, to Dec. 31, 2003, the suit says. According to the suit, $958,675 associated with the 194-bed Mount St. Francis was disbursed in violation of the HUD agreement.

The largest sums included $224,720 paid to a consulting firm run by Giordano’s son, Antonio A. Giordano, and $272,200 to a firm led by his daughter, Mary D. Gentili. Another $104,520 went to the now-closed Hillside Health Center that Montecalvo managed as well as $109,000 to the Sterling Health Care Management Co., where Montecalvo acted as general manager.

In addition, according to the suit, Giordano and Sterling, under Montecalvo, received $1.4 million each in management and partnership fees that violated the agreement.

The suit claims $1.4 million in funds related to the Coventry Health Center were diverted to eight entities in violation of the HUD agreement. The largest sums in that batch included $250,000 that went to Management Realty Service, a Rhode Island company where Giordano’s daughter served as president, and $267,000 that went to the consulting firm she led. Another $425,816 went to Sterling, the suit says.

Giordano and Montecalvo pleaded guilty in 2006 to federal charges that they misused money from the two homes and from the now-closed Hillside Health Center in Providence. Giordano was sentenced to 2½ years in prison and Montecalvo to 2 years.

They later admitted to embezzlement and conspiracy charges in state court, where they agreed to pay about $1.1 million in fines and restitution but avoided additional jail time.  Giordano and Confreda were also named as major delinquent borrowers in the state’s credit-union crisis of the early 1990s. In 2005, the state agreed to accept a $3-million payment to settle the debts left over from the banking crisis. The deal, approved by the DEPCO Asset Review Committee, cancels out more than $10 million in delinquent loans Giordano and his business partners owed Rhode Island taxpayers.

They be placed under the jail.

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McKnights ran an article about the increase in nursing home and assisted living costs which each rose by an average of 3.3% over the last year, according to the 2009 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs.

The average cost of a private room in a skilled nursing facility expanded to $219 per day from $212 a day in 2008.

Semi-private room costs increased by 3.7% to $191 per day.

The monthly cost of assisted living nationally rose to $3,131 from $3,031 in 2008.

The average hourly cost of an in-home caregiver climbed by 5% to $21 per hour, up from $20 the previous year.

Once again, Alaska topped the list of states for the most expensive nursing home care. The average daily rate in that state is $584. Louisiana received the opposite distinction. Its average nursing home rate totaled just $132 per day—the lowest in the country, according to the MetLife report.
 

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The American Association for Justice released an astounding statistic: medical malpractice insurance companies’ average profits are higher than those of 99 percent of Fortune 500 companies.

As the nation remains mired in a debate over health care reform and how to keep down the costs of expanding coverage, AAJ is trying to point out that Republicans claims that medical malpractice lawsuits are one of the big cost drivers is completely misleading. In fact, though malpractice claims and so-called “defensive medicine” does account for a small percentage of unnecessary costs, medical errors and the astronomical profits of malpractice insurers appear to be a bigger part of the problem.

AAJ’s report released today finds that the average profit of medical malpractice insurance companies is higher than 99 percent of all Fortune 500 companies and 35 times higher than the Fortune 500 average for the same time period; and malpractice insurers have seen their profit margins range from 5.9 percent to 74.8 percent, with an average of 31.2 percent.  The report also finds that malpractice insurers have publicly overestimated their losses and underestimated their profits in an attempt to suggest the insurance business and medical practice in general faces a crisis that must be resolved by so-called “tort reform” — i.e., making it harder for patients to sue and to collect damages for their injuries.

“Insurance companies are gouging doctors on their premiums to mislead lawmakers,” said American Association for Justice President Anthony Tarricone, managing partner at Kreindler & Kreindler LLP, in a statement released with the report. “And today, injured patients are often left with no avenue to pursue justice, while health care costs continue to skyrocket.”

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Ken Terry, a former senior editor at Medical Economics Magazine, is the author of the book Rx For Health Care Reform and wrote the below article about the profitability of the long term care industry. 

As healthcare reform starts to look probable, industry groups of all kinds are stepping up their lobbying. One of those groups is the nursing home industry, which is already facing a $16 billion cut in direct support from Medicare over the next 10 years, as well as Medicaid cuts in many states. Twenty-four states have reduced funding for nursing homes in the past year, and Medicaid everywhere pays less than it costs to house and care for elderly patients, say industry officials. So nursing homes depend on Medicare to stay in business, they point out.

The nursing home operators warn that further cutbacks in Medicare-which are part of the reform legislation–will drive many facilities out of business. Some homes are laying off employees now, and a few have recently closed. Meanwhile, the need for these institutions is increasing. The number of people in the nation’s 16,000 nursing homes rose to 1.85 million in 2008 from 1.79 million the previous year.

But all is not doom and gloom in the nursing home industry, says the Washington, DC-based Center for Medicare Advocacy. According to this group, reports from the Government Accountability Office (GAO) and the Medicare Payment Advisory Commission (MedPAC) show that Medicare overpays nursing homes billions of dollars a year. MedPAC found that that aggregate profit margins for freestanding nursing facilities exceeded 10 percent for seven years in a row. In 2007, their profit margin was 14.5 percent. Moreover, they didn’t add staff. So the Center for Medicare Advocacy believes that the nursing home operators are pocketing much of the profits, rather than reinvesting them.

The advocacy group also charges that nursing home owners are waging a campaign to derail healthcare reform by scaring their residents into thinking that it will reduce their Medicare benefits. The center specifically cites Genesis Healthcare, which owns more than 200 skilled nursing homes and assisted living communities in 13 eastern states. If this sounds familiar, it might be because some Medicare Advantage plans have been sounding the alarm on reform to their members.

So, whom should we believe? The nursing home industry, which depicts reform as a grim reaper that will turn elderly patients into the street, or the Medicare advocacy group, which relies on government data? As usual, the truth probably lies somewhere in between. Nursing home operators have been known to put their own profits before their residents’ well-being, but states are certainly cutting back on Medicaid, and some homes are undoubtedly in jeopardy.

The one thing that can be said with certainty is that it’s becoming increasingly likely that MedPAC will be transformed into an agency with sweeping powers over Medicare. If that happens, nursing homes better look out.
 

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The Oakland Tribune had an article about how many nursing homes refuse to carry insurance in an effort to limit their liability and fail to compensate residents who are injured or die as a result of their abuse or neglect.  The article discusses the case of Grover Brown.  Brown was 37 years old who developed pressure sores soon after arriving at the High Street Care Center in East Oakland.  One of the sores never healed properly. But once the wound did begin to fester, he wasn't moved, washed, monitored or medicated with antiseptic.  The wound got worse,  Surgeons had removed his tailbone because the wound had festered without treatment.  Even as the sore turned green and smelled foul indicating infection, the nurse in charge at the time told an aide that was the way "it was supposed to smell," according to Department of Public Health records.  The infection ate away at the bone through to the marrow despite repeated treatment orders from physicians to the staff of High Street Care Center.

Brown is suing High Street Care Center, which had a long list of citations from the Department of Public Health — 164 between 2004 and 2008. The facility was owned until December 2008 by Trinity Health Systems, whose president, Randal Kleis, has operated about a dozen facilities across the state under several corporate names.  But Brown likely won't see more than a token settlement from High Street Care Center because skilled-nursing facilities, nursing homes and assisted-living care facilities — charged with caring for the most vulnerable — are not required to carry liability insurance.   And Kleis' other assets are untouchable because they were legally registered as separate corporate entities — a common way operators shield themselves and their profits, said Kathryn Stebner, a lawyer who has been representing victims of nursing home abuse since 1987.   

The state Attorney General's Office, which is California's ultimate watchdog, has gone after fewer than a dozen problem nursing homes for elder abuse and neglect since 2000.  That leaves private attorneys to pursue the operators — almost always after the damage has been done.

Medi-Cal began reimbursing facilities for the cost of liability insurance in late 2004 with the expectation that care would improve. But the decision whether to carry insurance was left to nursing-home owners. There was nothing to mandate the improvement.

The incident was not an isolated mistake. Brown's lack of care was the consequence of an indifference to the health and safety of residents at the facility.  High Street Care Center had a record of poor care, according to records from the Department of Public Health:

On Dec. 7, 2004, an 82-year-old woman at High Street Care Center was suffering from a bed sore that had penetrated through her tendons and muscles to the bone. She was taken to a hospital, where doctors found she weighed 65 pounds and described her as "extremely emaciated." She went to a new nursing home and immediately began gaining weight.

In January 2005, inspectors discovered that the supervisor of dietary services was not certified.

Just two months after being admitted in March 2005, a 54-year-old breast cancer patient who had trouble swallowing lost 23 percent of her body weight. She dropped from 117 pounds to 90 pounds by May 2, 2005. But staff told her family she was gaining weight.

In December 2005, inspectors described finding a cockroach crawling around the base of trash cans full of dirty diapers in one of the rooms. A resident told inspectors that they were crawling around "all the time."

In 2006, a 59-year-old woman told staff at the Center for Elder Independence, a community day care program for elders she attended for treatment, that a certified nursing aide at High Street Care Center had used a washcloth to cover the woman's nose and mouth. When she cried out in pain for fear of being smothered, the aide hit her on the side of the head. A social worker alerted to the alleged abuse by High Street Care Center staff, also had reported the incident to the Public Health Department. The facility's administrator told inspectors that although the aide denied the allegations, he fired the aide and "believed something had happened to the resident."

Kleis has settled at least two previous wrongful-death lawsuits in the past six years, court records show. In each case, Kleis asserted he was losing money and could not afford insurance.

The MacArthur Care Center, run by Kleis under the company name Trinity Health Systems, had an extensive record of problems and lawsuits. The Department of Public Health cited the facility for 79 deficiencies between 2004 and 2009.

AARP spokesman Mark Beach said every responsible business should have liability insurance especially those like nursing homes and skilled nursing facilities that take care of the most vulnerable and dependent people. It fosters accountability and ensures people are compensated when something happens even if an owner declares bankruptcy, he said.

Having insurance, he added, "is the right thing to do."

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A friend of mine who is interested in nursing homes sent me a link to Money-Driven Medicine: Patients for Sale.  I have not seen the movie but the trailer looks interesting.

Money-Driven Medicine provides the essential introduction Americans need to become knowledgeable participants in healthcare reform.   Based on Maggie Mahar's acclaimed book, Money Driven Medicine: The Real Reason Health Care Costs So Much, the film offers a behind-the-scenes look at how our 2.6 trillion dollar a year healthcare system went so terribly wrong and what it will take to fix it.

The U.S. spends twice as much per person on healthcare as the average developed nation, fully one-sixth of our GDP - yet our outcomes, especially for chronic diseases, are very often worse.  The U.S. is the only industrialized nation that has chosen to turn medicine into a largely unregulated, for-profit business. 

In Money-Driven Medicine, Dr. Donald Berwick, president of the Institute for Health Care Improvement, explains: “We get more care, but not better care.” Our fee-for-service system channels resources into the high-tech, high-cost “rescue care” patients need after they become critically ill, while it skimps on the preventive primary care which could keep them out of the hospital in the first place. As a consequence, emergency rooms overflow while family practitioners are becoming an endangered species. Medical students explain that these perverse pay incentives drive them away from primary care into higher-paying specialties.

Medical ethicist Larry Churchill doesn’t mince words: “The current medical care system is not designed to meet the health needs of the population. It is designed to protect the interests of insurance companies, pharmaceutical firms, and to a certain extent organized medicine. It is designed to turn a profit. It is designed to meet the needs of the people in power.”

These businesses comprise the “medical-industrial complex” which has wrested power from physicians, turning healthcare into a commodity and patients into profit centers.   Although many uninsured and underinsured Americans receive too little care, the well-insured often get unnecessary, even risky care. More than two decades of studies by researchers at Dartmouth reveal that one-third of our healthcare dollars are squandered on useless tests and ineffective or unproven procedures no better than the less-costly ones they replace. The studies demonstrate that evidence-based, accountable care would be both more effective and less expensive. 

In Money-Driven Medicine frustrated doctors and outraged patients testify to the tragedies which can happen when profit trumps patients’ needs. Money-Driven Medicine will encourage health professionals and patients to work together to take control of American medicine back from the MBAs.

 

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