Starting 2021 with Looking at Operation of SNFs

Happy 2021. Several articles have been published examining the pandemic's longer-term impact on SNFs. I wanted to point out two.  First, consider the Washington Post article about how SNFs are structured, Profit and pain: How California’s largest nursing home chain amassed millions as scrutiny mounted.

Instead of relying upon outside vendors, Brius pursued a business practice long used by a majority of for-profit nursing homes nationwide: paying related companies for goods, services and rent.

More than 70 percent of the country’s nursing home providers use operating funds to pay themselves through so-called related parties — companies they or their family members partially or wholly own. In 2018, Brius nursing homes paid related parties $13 million for supplies, $10 million for administrative services and financial consulting, and $16 million for workers’ compensation insurance, state records show. The homes also sent a total of $64 million in rent to dozens of related land companies.

The practice is legal and widely supported by the industry, which argues that related parties help control costs and limit financial liability. Watchdog groups counter that nursing home owners can reap excessive profits from public funds by overpaying their own companies. Related parties generally do not have to disclose profits, leaving regulators with little way to assess the financial gains of owners.

Covid has changed the "business as usual" model, it would seem, as the article notes that "scrutiny has mounted in recent months as the federal government delivered about $54 million to Brius homes in coronavirus relief aid, meant as a lifeline for providers struggling to protect residents amid an unprecedented health crisis that has killed more than 92,000 nursing home residents nationwide."  The Washington Post did an in-depth look at this SNF chain. The article details what the reporters discovered regarding finances and taxes. There are California groups that have called for the California legislature to revise the oversight of SNFs.  The article indicates that efforts may also be made at a federal level. This detailed article is well worth reading and I plan to assign it to my students, so they can have a better understanding of the structure of SNFs.

Next consider this opinion from the New York Times,, This Is Why Nursing Homes Failed So Badly.

The first coronavirus outbreak in the United States occurred in a nursing home near Seattle, in late February. Since then, the country has endlessly revised its hot spot map. Yet the situation in nursing homes and assisted-living facilities has only gotten worse: More than 120,000 workers and residents have died, and residents are now dying at three times the rate they did in July.

Long-term care continues to be understaffed, poorly regulated and vulnerable to predation by for-profit conglomerates and private-equity firms. The nursing aides who provide the bulk of bedside assistance still earn poverty wages, and lockdown policies have forced patients into dangerous solitude.

Fortunately... and maybe hopefully...., with the COVID vaccine and priority given to those who work and reside in SNFs, this won't be a story that continues in the same vein. But the author of this piece aren't telling us we will return to the prior way of things. "When the pandemic is finally history, we’ll need to deal with all of this: the staffing shortages, low pay and lack of accountability — the many ways we have failed residents, family members and staffers. The awful truth is that long-term care was designed to fail years before Covid-19."  Why is this? Various stressors combined push the need for change in how long term care is provided.  "Over the past few decades, the popularity of “aging in place,” combined with new medical technologies and longer life spans, has changed the nature of care for seniors and people with disabilities. Residents of the nation’s 15,400 C.M.S.-certified nursing homes are much older, sicker and poorer than they used to be."  The article mentions the health of the residents, low pay for employees, employees working jobs at different facilities as contributing to the crisis.

The author makes a number of suggestions for changing long-term care in the U.S.  and concludes with a call for action from the incoming administration

Most important, we must transform the way we think about long-term care — treating it not as human warehousing or the duty of underpaid women, but as an integral part of our medical system.

All of these changes are possible — and modest, really, given the magnitude of the emergency. By 2050, 19 million people will be 85 or older, and many will require help to live with comfort and a modicum of dignity. What we really need, for all Americans, is single-payer health insurance that covers quality long-term care. But short of that, Mr. Biden and Kamala Harris have a chance to make amends for the deadly failures of the current administration.