A recent report released by Kaiser Health News shines a light on the diminished quality of care received by many senior citizens at for-profit nursing homes. The Kaiser Health study found that the average for-profit nursing home receives twice as many complaints by its residents and their families. Further, the research group also found that:
For-profit nursing home chains had an average of 8 percent fewer nurses per residents when compared to independent nursing homes. Nursing homes that operated for a profit received almost twice as many validated complaints. For-profit nursing homes received 22 percent more fines, and the fines levied against them were 7 percent higher.
The entire nursing home industry spends approximately $110 billion dollars in America each year. Because an independent nursing home will only squeeze out a 3 or 4 percent profit each year, investors have become bullish about developing complex webs of corporate entities – and then owning and controlling different parts of the supply chain. This allows the for-profit nursing homes to keep the profit for itself, instead of paying another company or medical association to provide the service.
For example, an independent nursing home may outsource their medical staffing. This medical staffing company will then provide a number of nurses necessary to provide care to the residents of the nursing home. A for-profit nursing home chain may choose to outsource to a medical staffing company owned by chain itself. Then, the nursing home may lose the expertise necessary and the incentive to offer the best care for the residents.
In addition to maximizing profits through offering lower-quality care and less staff, structuring a group of related nursing homes as separate corporations can allow for nursing homes to avoid liability, or legal responsibility for their actions. While exceptions do apply, a nursing home resident who has been injured will have difficulty suing one corporation for the harm caused by another. This can be especially problematic when another corporation is being used to siphon all of the profits from the nursing home. Because setting up businesses and nursing homes in this manner is legal, many elder care advocates are becoming increasingly concerned about the level of care at nursing homes throughout the country.
Kaiser Health News detailed one for-profit nursing home, Ellenbrook Nursing and Rehabilitation Center in Memphis, Tennessee. This nursing home, along with 32 other nursing homes, are owned by two Long Island investors. These investors also own a group of related companies which offer services in physical therapy, management, and drugs, among other dealings. In total, the two investors reaped $40 million in profits, a sizeable profit margin of 28 percent. During that time Allenbrooke was going broke and when one of the residents sued the home for negligence, it was already operating with a $2 million deficit. This meant that even if the resident prevailed in a negligence lawsuit against the nursing home, they would be unlikely to actually collect from the nursing home.