Don’t you feel like it is déjà vu all over again? Yet another report has come out criticizing the for-profit nursing home industry on its handling of the COVID crisis, with one publication stating the study “eviscerates” for-profit nursing homes. We don’t remember a study that didn’t eviscerate the sector, the punching bag for everyone it seems, especially The New York Times. But Congress has taken the lead from the Times recently.
The congressional subcommittee report found that, among other things, many nursing homes were understaffed during the first few months of the pandemic, leading to deficient care. Hellooo. The majority of nursing homes were understaffed because they could not find the needed staff and Medicaid reimbursement rates were not keeping up with wage inflation in order to attract the staff. If you are going to regulate, you have to pay for it. And nursing homes were not the only ones understaffed.
The report criticized nursing homes for not supplying their workers with the necessary personal protective equipment. Now, a valid criticism could be that the nursing home sector did not keep adequate supplies in stock “in case” a pandemic hit. But can you imagine asking CMS to reimburse them for the excess inventory of PPE, in 2019? Then, when the pandemic hit, shortages arose, prices sky-rocketed and everyone scrambled and competed for supplies. It was tough in the field.
But where the congressional committee gets it wrong is blaming the ownership structure for the problems. This disease was indiscriminate, not caring what your tax status was. In the little town where we are located, the local, 76-bed not-for-profit nursing home had nine deaths by mid-April, or 13% of its residents. That represented 50% of the town’s total deaths at that time. At one point, it had more deaths than several entire states. Were they adequately staffed? Maybe, but they also had a stable of 500 volunteers to fill in the gaps. Yet they had an outsized number of deaths for their size. And no one questioned their motives or why they had so many deaths. If it had been for-profit, it would have been “eviscerated.”
The report also complained about the industry’s use of “convoluted” corporate structures to avoid legal accountability. Our response to that is, reform the tort system. But with Congress controlled by lawyers, that will never happen.
We all know that there are bad apples in the nursing home industry, and most of us know who they are. But most operators try to do a good job with what they have, which is a convoluted reimbursement system and a burdensome regulatory environment. We would rather see the small minority of bad apples shut down and banned from the industry for life than blame an entire sector for poor care and deaths. But no one will stand up to them, and maybe it is about time we do.
Finally, this whole attack on private equity has to stop. We already proved that the government’s numbers were wrong on SNF PE ownership after President Biden’s State of the Union. If 5% of nursing homes are owned by PE firms, that does not equate to $100 billion of PE investments, which is what the government would like you to believe. Do the math.
