A rarity only a few decades ago, nursing homes operating for profit have exploded across the country. According to NPQ, for-profit nursing homes account for over 70 percent of all facilities across the country. According to elder care advocates, the rapid takeover of the nursing home system has harmed America’s vulnerable senior citizens. Instead of focusing on providing the best quality care for a reasonable price, for-profit nursing homes choose to maximize their income while limiting their costs and the resulting legal liability from their cost-cutting measures.
In general, the rise of for-profit nursing homes has coincided with the consolidation of the nursing home industry which means a senior citizen is more likely to choose a corporate nursing home chain than the once-ubiquitous retirement communities that operated solely for the best interest of their residents. Considering the deep pockets of a corporate chain, it would be reasonable to assume the potential for large settlements in the cases of mistreatment or elder abuse would incentivize these corporations to treat their residents with the utmost respect.
Unfortunately, this is not the case. Instead of exposing themselves to the responsibility and liability of their nursing homes, these corporations create elaborate and complex legal structures. The nursing homes are all legally separate companies and their usual services – from pharmacy services to dining services – are typically also independent companies. Nursing homes seeking to avoid legal liability often create a labyrinth of corporations and limited liability companies since patients are rarely able to recover damages from any legal entity other than the single entity responsible for their harm.
With a focus on maximizing profits and a legal structure that avoids being held responsible for harming their residents, it’s unsurprising that the quality of care at many for-profit nursing homes is significantly worse than their non-profit counterparts. According to federal inspectors, nursing homes with elaborate corporate structures typically employ eight fewer nurses, receive 22 percent more fines for mistreating their residents, and receive 65 percent more complaints each year.
The precipitous decline in the quality of care has been a financial boom for the profit-oriented nursing home sector. One nursing home chain described in the article brought in over $145 million in just eight years – and $40 million was pure profit for the owners. With America’s population quickly aging and living even longer, investors are eyeing what has become a very lucrative market. As the Trump administration rolls back regulations on nursing homes, it’s likely the corporatization of the nursing home industry will not slow down soon.
Gallivan & Gallivan is a law firm dedicated to protecting the rights of nursing home residents. Please contact us with any concerns.