Federal Government Backs $20 Billion in Loans to Nursing Home Industry

The federal government is currently backing $20 billion in mortgages to the nursing home industry, including over $2 billion just in New York State. According to elder care advocates, the federal program originally meant to ensure a sufficient number of nursing homes is now widely abused and lacks sufficient oversight. According to The New York Times, the majority of these loans, which banks deem too risky without the federal government guarantee, are taken out by private, for-profit nursing homes. Unsurprisingly, this program has left the federal government on the hook for failing nursing homes and their missed mortgage payments. Last year, nursing home businesses defaulted on $146 million in government-backed mortgages.

Given the inadequate supervision of the nursing home industry, the problems will likely get worse before they get better. Problems with the federal loan program began in 1995 when the program only supported 800 nursing homes. At the time, a Government Accountability report found that nursing homes “generally do not focus attention on nursing home loans unless financial trouble appears imminent or a default occurs.” The report went on to excoriate the lack of adequate oversight and the potential for widespread abuse going forward. Since that time, the federal program has almost tripled in size – to 2,300 nursing homes comprising 15 percent of the country’s total.

With the increase in for-profit nursing homes, the problems with the program have become even worse. In some circumstances, nursing homes have continued to pay lavish salaries to executives while missing their mortgage payments at the same time. One nursing home quit paying its mortgage within several months of assuming ownership and then used federal money meant to prop up the nursing for other purposes. When the nursing home finally collapsed, the federal government took over and currently pumps almost $1 million each month into the grossly-mismanaged facilities.

According to The New York Times, the nursing home did not file any of the financial reports required for nursing homes taking part in the government program. Apparently, this is fairly common and rarely punished. A 2018 report by the Government Accountability Office found that the government routinely failed to “penalize operators that did not submit accurate and complete data in a timely manner.” The report concluded that the program “could benefit from more transparency and public awareness.” With a long record of poor care at nursing homes and $146 million taxpayer dollars on the line, the conclusion seems to overstate the obvious.

The attorneys at the Law Offices of Thomas L. Gallivan, PLLC work diligently to protect the rights of nursing home residents.  Please contact us to discuss in the event you have a potential case involving neglect or abuse.

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