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We know that the people who work in nursing homes, especially the Certified Nurse’s Assistants who provide most of the care, are woefully underpaid. So where is all that money going?

Nursing Homes: A Unique Blend of Business Models

We know that those nursing homes which are publicly owned have an average profit ratio of 14%. (Grocery stores, by contrast, average 1%). But what about those nursing homes which are privately owned? And what about all the affiliates which own the land and building, provide pharmacy services, provide administrative services or clinical consulting? Nursing homes seem to be structured as a combination of a hotel (one entity owns the land and building; another provides services) and a film production company (with so many “above the line” deductions and payments to affiliates and others that there is no taxable net income).

Private Nursing Homes: Quality Concerns

At the same time there is increasing concern about the quality of care provided, particularly by privately owned nursing homes. According to a study published on November 19, 2021 in the Journal of the American Medical Association Health Forum, those which have been acquired by private equity firms were 11% more likely than residents of other for-profit nursing homes to have an emergency department visit which could have been avoided. Another study, published in January 2023 in Health Affairs, found that registered nursing staffing levels declined by as much as 6% in the two to three years after a REIT invested in a nursing home.

Transparency Initiatives for Better Care

As Health and Human Services Secretary Xavier Becerra noted, “[Q]uality seems to be going down in some nursing homes and the cost seems to be going up.”

The Biden administration has proposed requiring greater transparency when nursing homes receive Medicare or Medicaid, as 97% of Texas nursing homes do. Watch this space….

 

Elder law attorney, Terry Garrett, CELA, is a member of the National Academy of Elder Law Attorneys and is an Approved Guardianship Attorney. She assists people in elder law, estate and special needs planning, guardianship and settling estates. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.

 

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