A Bill Aims for Nursing Home Reform

Proposed legislation considers the biggest reform of the industry in decades.

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Sen. Chuck Grassley (R-IA), speaks at a press conference.

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The byzantine world of the corporate nursing home industry may soon become a whole lot clearer. A controversial new proposal by Republican Sen. Chuck Grassley and Democratic Sen. Herb Kohl seeks to force nursing homes to provide more information about ownership and accountability. If it passes, the legislation will trigger the largest reform of nursing home care in 21 years. "More transparency, enforcement, and staff training are all needed," Grassley said in a statement. "That's what our bill addresses."

In a provision targeted primarily at for-profit homes, the Nursing Home Transparency and Improvement Act would force nursing homes to file paperwork clearly stating ownership—something that in recent years has become increasingly complicated for outsiders to figure out, as private investment groups have bought up nursing homes and enveloped them in labyrinthine legal structures. The opaque ownership makes it difficult for regulators to identify parties responsible for poor care and, more to the point, shields owners from potential lawsuits. The trend in corporate care was outlined in a September article in the the New York Times that concluded that care declined at many facilities operating under such structures.

The bill also seeks to standardize complaint forms, improve reporting on staffing information, and replace some self-reported information with that gathered by independent audits. The primary goal is to make it easier for the public to compare nursing homes, a growing concern as baby boomers age.

But the question of whether or not this bill would fix the problems has created a rift in the industry and launched a new round of debate over nursing home reform. The American Association of Homes and Services for the Aging, an industry group that primarily represents not-for-profit nursing homes, applauds the bill. That's for good reason. The nonprofit sector is already required to produce much of the information about finances and ownership to the IRS to qualify for its tax status. Not-for-profits also look askance at their corporate peers. "You've got vulnerable people involved...so the ownership ought to have more of a personal touch," says Larry Minnix, president of AAHSA. "You can do that through all kinds of ownership structures, but ownership has to be accountable for the actions of a nursing home." In a dig at the many equity firms now controlling long-term care, Minnix adds: "This is not a commodities business."

In particular, Minnix applauds the bill for requiring nursing homes to provide more cost reporting and nursing staff information. "Nursing staff is the best proxy for quality, and the public is entitled to that information because it's [funded by] mostly public dollars" via Medicare and Medicaid.

Meanwhile, the group representing for-profit homes, the American Health Care Association, is pledging to fight the bill. President Bruce Yarwood concedes that corporate structures are complex and argues that the AHCA's opposition is with good reason: Frivolous lawsuits, he says, are forcing nursing homes to close their doors. "We're trying to move away the low-hanging fruit for enterprising attorneys to sue us," Yarwood says. He recounts a visit to Florida, where billboards lined the highways encouraging people to call attorneys if they suspected wrongdoing at a nursing home. Owners began shielding themselves from liability, he says. "We got kind of forced into setting up different organizational structures." Many small owners saw an opportunity to get out when big investment groups came knocking.

AHCA says the real crisis is not in nursing home transparency but in a severe shortage of qualified workers. The need for more nurses is widely agreed upon in the healthcare community. AHCA also argues that a higher paperwork burden would take resources away from the primary mission of providing care. Overall, Yarwood argues, nursing home care is improving even in an environment that is shifting from an emphasis on long-term care to short-term post-acute care, such as recovery from surgery.