Nursing homes remained “highly profitable” despite Medicare reimbursement cuts, but they’re still providing inferior care, says citizen advocacy organization Families for Better Care—a claim that the American Health Care Association (AHCA) was quick to counter.
Despite “astonishing” recent nursing home earnings reports for publicly traded nursing homes, resident care remains “mediocre at best” with too many residents troubled by untreated pressure sores, falls, abuse, or other negligent medical practices, contends Brian Lee, executive director of Families for Better Care.
“The industry’s analysts framed the Medicare adjustment as an eventual doomsday for the nation’s nursing home market. But the industry’s own reports show quite the opposite, revealing surging revenues, strong profits, and expansion through acquisitions,” said Lee in a statement. “The industry is wallowing in strong profits while failing to consistently provide quality care.”
Even after the average 11.1% Medicare cuts to skilled nursing facility payments that went into effect last October, the industry remained a “thriving enterprise” with many companies reporting better than expected operating results, according to Lee. The resident advocacy organization cited one company’s annual revenues spiking nearly 200%, while another called 2011 an “exceptional year.”
“The reason care declines in nursing homes is that executives unnecessarily target labor costs to offset any reimbursement adjustments,” Lee said. “While this obviously maintains a robust bottom line for investors and cushy CEO salaries, the decline in frontline staff puts residents in jeopardy for harm while simultaneously creating dangerous working conditions for employees.”
A study released last November shows a steady decline in nursing hours for Medicare-licensed facilities and what Families for Better Care calls an unacceptably high level of deficiencies.
However, the quality of care in America’s nursing facilities has continued to improve over the years and is trending in the right direction, according to data from the Centers for Medicare and Medicaid Services (CMS) analyzed by researchers on behalf of the Alliance for Quality Nursing Home Care and the American Health Care Association.
“This is not a homogenous industry. This summary looks only at publicly traded companies, and there are only a few,” Greg Crist, vice president of public affairs at AHCA, told SHN. “This is an extremely diverse sector with all sorts of providers. The for-profit community is not an accurate reflection of the challenges facing our sector.”
Lee’s summary of seven for-profit companies’ earnings reports highlighted revenues, but increased revenue doesn’t necessarily reflect margins. About 78% of nursing home residents rely on Medicare and/or Medicaid to fund their care, Crist points out, going on to cite analysis by The Moran Company which shows skilled nursing margins hovering around one to two percent.
“It’s hard to concur with this finding of ‘astonishing’ profits,” Crist says. “It’s a little disingenuous and unfortunate to say we were claiming [Medicare cuts meant] doomsday, and lo and behold, [the industry] is doing great. It’s not a linear conclusion, and it’s unfortunate they would draw that conclusion.”
Families for Better Care calls for lawmakers to demand greater transparency and disclosure for nursing home companies and their affiliates to allow payment systems to be restructured and geared toward ensuring better outcomes. Until that happens, the organization says, “operators will continue to draw down massive profits while elderly and disabled residents are shortchanged.”
But Crist says that to show revenues in the for-profit sector doesn’t accurately capture the skilled nursing industry’s broad range, from small, mom-and-pop operators to large national chains.
View a summary of publicly traded nursing homes’ year-end and fourth quarter reports.
Written by Alyssa Gerace