Private equity firms and other private owners are buying increasing numbers of nursing facilities. The consequences for residents are significant and troubling.
In “Private-equity firm buys 29 Iowa nursing homes in massive $85 million deal,” Clark Kauffman reported in Iowa Capital Dispatch on October 21 that the private equity firm Cascade Capital Group and its nursing home affiliate Legacy Healthcare bought 29 nursing facilities in Iowa from ABCM Corporation. A state law enacted last year requires buyers to provide financial documentation to the state, but the information is confidential and not subject to public disclosure under Iowa’s Open Records Law.
The Centers for Medicare & Medicaid Services (CMS) provides information to the public at data.cms.gov about nursing facilities under common ownership – what CMS calls “affiliated entities.” The affiliated entity database combines the information on the Care Compare website for all nursing facilities under common ownership and reports the affiliated entity’s average for each category.
On October 22, the Center for Medicare Advocacy looked at the information on Data.cms.gov to see how the 29 facilities owned and operated by ABCM Corporation compared with the 57 facilities owned and operated by Legacy Healthcare.
Data.cms.gov shows that, on virtually all criteria, the facilities operated by Legacy Healthcare performed more poorly than ABCM facilities. Compared to the facilities operated by ABCM, Legacy Healthcare’s nursing facilities had, on average, considerably lower health inspection and overall ratings, lower nurse staffing ratings, more abuse citations, higher federal civil money penalties, and more denials of payment for new admissions.
The civil money penalties are striking. Each ABCM facility had, on average, $4,814.98 in federal fines for the most recent three-year period, while each Legacy Healthcare facility had, on average, $83,993.77 in federal fines for the most recent three-year period (more than 17 times the average ABCM fines and nearly five times the average federal civil money penalty of $18,056).
Recommendations
At present, sales and purchases of nursing homes (by private equity and others) are conducted in secret. Typically, as in Iowa, purchases are publicly disclosed only after they are completed and final.
John Hale, Terri Hale, and Dean Lerner, resident advocates in Iowa, denounce the sale of ABCM facilities to the private equity firm and the state’s role in permitting it. In an October 31 piece in the Des Moines Register, “Opinion: Iowans are concerned about large nursing home sale to private equity,” they call for multiple comprehensive reforms, including a pause on such sales, the adoption of minimum staffing levels in nursing facilities, more transparency in nursing home sales, provisional state licenses for all new owners, and more.
The Center supports these recommendations and adds a recommendation for provisional certification for Medicare and Medicaid following any change in ownership. At present, there are virtually no federal rules for certification; certification is essentially automatic for facilities that have state licenses. The Center for Medicare Advocacy has called for federal certification standards before and now proposes that federal certification rules create and address a classification for provisional certification. Such rules should require more comprehensive reporting by recently-acquired facilities, more frequent monitoring, and more immediate enforcement actions for noncompliance with federal standards of care.