Hidden Owners, Hidden Profits, and Poor Nursing Home Care

Abstract

The study examined the ownership transparency, financial accountability, and quality indicators of a regional for-profit nursing home chain in California, using a case study methodology to analyze data on the chain's ownership and management structure, financial data, staffing levels, deficiencies and complaints, and litigation. Secondary data were obtained from regulatory and cost reports and litigation cases. Qualitative descriptions of ownership and management were presented and quantitative analyses were conducted by comparing financial and quality indicators with other California for-profit chains, for-profit non-chains, and nonprofit nursing home groups in 2011. The chain's complex, interlocking individual and corporate owners and property companies obscured its ownership structure and financial arrangements. Nursing and support services expenditures were lower than nonprofits and administrative costs were higher than for-profit non-chains. The chain's nurse staffing was lower than expected staffing levels; its deficiencies and citations were higher than in nonprofits; and a number of lawsuits resulted in bankruptcy. Profits were hidden in the chain's management fees, lease agreements, interest payments to owners, and purchases from related-party companies. Greater ownership transparency and financial accountability requirements are needed to ensure regulatory oversight and quality of care.