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Why For-Profit Nursing Homes Are A Bad Deal

               On February 18, 2021, a consumer group, The Center for Medicare Advocacy, published a report which looked at rates of COVID-19 infection in nursing homes. The study compared for-profit to nonprofit facilities and concluded the following: “For-profits were the worst performers across every CMS rating pool,” said lead-author Cinnamon St. John.

Among the findings in the report were:

  • Residents in For-Profit facilities had an 18% higher infection rate compared to Nonprofit facilities.
  • For-Profit facilities are the worst performers across every CMS rating pool.
  • Paying direct care workers a living wage would solve many issues, including staff shortages, turnover rates, low productivity, and low quality of care.

Dr. Haider Warraich, a cardiologist and researcher at the VA Boston Healthcare System, recently published an editorial in STAT News, an arm of the Boston Globe. He took the For-profit nursing home industry to task for its poor performance. According to Dr, Warraich, six studies have shown that the risk of infection or death from Covid-19 was significantly higher in for-profit nursing homes than nonprofit ones. Moreover, living in a private equity-owned nursing home increases the chance of death by 10%. These are significant enough differences that further analysis and investigation are warranted.

Why are for-profit nursing homes such a bad deal?

The reason why privately owned nursing homes fare so poorly compared to nonprofits is obvious. The incentive at for-profit facilities is to maximize profit at the expense of the unsuspecting residents. Costs are shaved in ways that residents might not even notice:

  • Facilities are short-staffed and/or understaffed
  • Facilities are motivated not to spend money on infection control equipment, such as masks and gloves, because the less money spent means, the higher the profits.
  • Owners have an incentive to spend less to maintain facilities because money not spent cleaning and repairing means more profits.
  • Less-well-trained nursing and support staff are hired because, well, it’s cheaper to employ under-skilled people who are willing to take a minimum wage.

The issue of performance based ownership of nursing homes is not new. A significant study was published in 2008, which looked at data from 1993 to 2004. That study found: “Nursing homes converting from nonprofit to for-profit status generally exhibit deterioration in their performance, while nursing homes converting from for-profit to nonprofit status generally exhibit improvement.

Given the facts, one wonders why the Federal Government allows for-profit, private-equity firm owners to manage sub-standard facilities. How many more people must die in for-profit nursing homes before we decide that enough is enough? It’s time to stop nursing homes from cutting corners; it’s time to put people before profits.

Attorney Wendy York of York Law Firm specializes in prosecuting nursing home abuse, elder abuse and wrongful death cases in California. For further information, please contact Wendy York today.