Monthly Archives: September 2020

DON’T WORRY ABOUT NURSING HOME CORPORATIONS: THEY ARE DOING FINE

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   By Dave Kingsley

Don’t worry about the financial impact of COVID-19 on the nursing home industry.  Corporations paid to provide long-term care appear to be doing well financially.  In this post, I want to begin a discussion of the industry’s and regulators’ failure to protect patients from a scourge they should have known was coming.  Unfortunately, nursing home owners are not being held accountable.  Quite to the contrary, they are being financially rewarded as victims of the pandemic.

    My purpose in this post is to highlight the subsidization of the industry through immediate cash infusions while nursing home personnel have been forced to work in the same low paid jobs without adequate personal protective equipment.  This is an initial post in a series of posts in which I will provide information gleaned from the 2nd quarterly reports of three different types of publicly listed nursing home corporations – privately held corporations’ financial information isn’t available because they are not required to file reports with the SEC.

    If the public thinks providers of nursing home corporations are financially strapped due to the COVID pandemic, they will be dissuaded from that perspective by the 2nd quarterly 10-Q reports filed by a sample of publicly listed corporations. Consider the financial reports of the following representative corporations:

The Ensign Group

    The Ensign Group, a holding company, owns the fifth largest nursing home chain in the United States.  The company was formed in 1999 and, based on SEC filings, has demonstrated a robust growth and strong financial performance.  According to its 2020 2nd Quarter report (10-Q)[1], its earnings of $.78 per share was a 100% increase over the prior year quarter.  Revenues for the quarter were $584.7 million and increase of 18.6% over the prior year quarter.  Net income for the quarter was $43.1 million, an increase of 99% over the prior year quarter.

   Apparently TEG was doing so well, the corporation decided to return $110 million it received from the federal government under the CARES Act[2], which was basically a handout to America’s corporations for keeping them solvent even though nursing home companies had a guaranteed price and ongoing revenue.  Furthermore, they benefitted from the Payroll Protection Program and the HEROES’ Act intended to help companies keep employees paid and enough capital to maintain solvency.  Although, the TEG balance sheet indicates that the company has $210 million in cash and $302 million in accounts receivables, it still took perhaps a 100 million dollars of PPP money and a host of other CMS supplemental payments.

Ventas Real Estate Investment Trust

    Ventas Real Estate Investment Trust (REIT) is illustrative of one of various types of corporations dependent on revenue from skilled nursing facilities.  REIT’s in the nursing home business are a special type of commercial real estate, but they are also a special type of skilled nursing home corporation.  Although they buy and lease facilities, they actually lease to contractors such as Brookdale from whom they often buy facilities and lease them back while also maintaining an interest in and control over operations. Furthermore, REITs have an operational interest in skilled nursing facilities.  Ventas describes its business this way: “We primarily invest in senior housing, research and innovation, and healthcare properties through acquisitions and lease our properties to unaffiliated tenants or operate them through independent third-party managers.”

    According to Ventas’s 10-Q[3], the COVID pandemic has not been financially disastrous due to the injection of funds from the CARES, PPP, and HERO’S acts.

    “In our healthcare triple-net leased properties portfolio, we collected substantially all rent due in the first and second quarters. This cohort of tenants has benefitted from significant government financial support to partially offset the direct financial impact of the COVID-19 pandemic on healthcare providers. Nationally, hospital inpatient admissions and surgeries have rebounded, although still below pre-COVID-19 levels, depending on the particular market.”

Brookdale Senior Living

Brookdale Senior living is the largest operator of senior living properties.  The company has sold most of its real estate. 

During months ended June 30, accepted $33.5 million of cash from CARES Act.  During July 2020 company applied for additional grants Emergency Funds based on 2% of portion of 2018 gross revenue from patient care

Under the CARES Act, the Company has elected to defer payment of the employer portion of social security payroll taxes incurred from March 27, 2020 to December 31, 2020. One-half of such deferral amount will become due on each of December 31, 2021 and December 31, 2022. As of June 30, 2020, the Company has deferred payment of $26.5 million of payroll taxes and presented such amount within other liabilities within the Company’s condensed consolidated balance sheet.[4]

As of June 30, 2020, total liquidity was $600.2 million, consisting of $452.4 million of unrestricted cash and cash equivalents, $109.9 million of marketable securities, and $37.9 million of additional availability on revolving credit facility.

Eric Carlson of Justice in Agency statement

    Eric Carlson, of Justice in Aging served on the so-called “Independent Nursing Home COVID-19 Commission,” and was the only member who refused to endorse the commission report resulting from a series of secret meetings between July and September.  I say good for him!  I say shame on those other members who either fully or partially endorsed a report that allowed the Trump Administration and nursing home corporations escape responsibility for dereliction of their duty to protect nursing home patients during the COVID-19 pandemic.

    Mr. Carlson gave the following reason for his refusal to endorse the report: “With limited exceptions, these recommendations … do not address accountability of nursing homes and their operators.” Having spent a considerable amount of time analyzing the report thus far, I would say that he is correct.

    Not only did CMS use the report to excuse its own inept and failed response to the COVID-19 pandemic, it also ignored failure of the industry and expectations from nursing home corporations in the future.  The Trump Administration failed to hold corporations accountable.  Furthermore, they have been providing generous subsidies through the CARES, PPP, and HEROES Acts passed by congress in March to keep employees paid and businesses from bankruptcy.

[1] https://investor.ensigngroup.net/sec-filings/sec-filing/10-q/0001125376-20-000134

[2] Two major pieces of legislation, the CARES Act, and the HEROES Act, which include cash grants, support for employees, and deferred payroll taxes are responsible for injecting hundreds of millions of dollars into the three corporations featured in this post alone.  The text of the acts can be found at:  https://www.congress.gov/bill/116th-congress/senate-bill/3548/text?q=product+actualizaci%C3%B3n; https://www.congress.gov/bill/116th-congress/house-bill/6800/text.  Detailed information from the income, balance sheet, and cash flow statements of major publicly listed nursing home corporations’ cash and equivalents, earnings, and liquidity indicate a rather strong financial position after several months of a nationwide pandemic.

[3] https://ventasreit.gcs-web.com/static-files/5ea1570e-14fd-45f6-8e31-15237eb49016

[4] https://brookdaleseniorlivinginc.gcs-web.com/static-files/0213cc1d-9228-4f8c-a7d4-273a1943197c

CMS REPORT PRODUCED BY ITS NURSING HOME “INDEPENDENT CORONAVIRUS COMMISSION” IS HORRIFYINGLY DEHUMANIZING AND PROPAGANDISTIC

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    By Dave Kingsley

The Center for Medicaid and Medicare Services released the report from its “independent”[1] “Coronavirus Commission for Safety and Quality in Nursing Homes”[2] yesterday (September 17th). The CMS press release announcing availability of the report[3] was a cynical, venal, propagandistic use of the commission’s work as cover for dereliction.

    Federal and state agencies charged with overseeing the nursing home system and the industry to which the care of our frail elders and disabled have been entrusted failed in their responsibilities.  The commission report is their exoneration.  In essence, the lives of our elderly and disabled brothers and sisters have been devalued and their future health and well-being placed in jeopardy.

    The title to the CMS press release was worded as follows: “Independent Nursing Home COVID-19 Commission Findings Validate Unprecedented Federal Response.”  The Trump Administration gave itself a pat on the back with unbelievable lies in its description of the contents of the report, which very few people will take the time to read.  For instance, Seema Verma was quoted as saying, “The Trump Administration’s effort to protect the uniquely vulnerable residents of nursing homes from COVID-19 is nothing short of unprecedented.”

    Does this sound like Donald Trump, who claims that he created the greatest economy in history and never tires of claiming that he has done more than any other president in practically every policy area?  By now everyone should understand that the current president is a cruel psychopathic narcissist and a pathological liar with no empathy?  Seema Verma is a quintessential toady who remains in her position by adhering to a dangerous autocrat’s demand for fealty.

    Verma made the obligatory “dear leader” praise of Trump by saying “President Trump sought to refine our approach still further as we continue to battle the virus in the months to come.”  How, I might ask, did he do that?  She went on to say this about the commission:  “Its findings represent both an invaluable action plan for the future and a resounding vindication of our overall approach to date.”  

    In fact, the report is page after page of technocratic proposals and pretentious jargon.  On their face, these proposals are innocuous.  My questions about this classic piece of “inside the beltway wankery” are:  “Why weren’t these things being done prior to the pandemic, or at least being done in January when the administration was warning the Senate Intelligence Committee about a coming pandemic that could rival the 1918 Flu?”

    In the days ahead, I’ll be blogging about the contents of the so-called independent commission report.  I want to encourage a conversation among advocates, scholars, and activists about the following issues:

  • The role of the nursing home industry (including the nonprofits) in the COVID-19 nursing home tragedy, which was excised from the commission’s report and perhaps altogether from its work.

  • The economic/financial context of the nursing home industry in 2020.  The evolution of capitalism to financialization and management theory to transaction and agency has had a major impact on the mission of real estate and other industries in the long-term care business.

  • The disturbing movement among major bioethicists to devalue the lives of elderly Americans and advocate for medical care rationing due to a misguided and erroneous belief that the 65+ population is a threat to the U.S. economic system. 

[1] It is important to note that the word “independent” was not in the official title for the commission, but CMS placed the adjective before the “Corona Virus Commission for Safety and Quality in Nursing Homes” in a press release for the purpose of capturing the cachet of members and the imprimatur of their organizations as a propaganda ploy.

[2] https://edit.cms.gov/files/document/covid-independent-nursing-home-covid-19-federal-response.pdf; see the full report here: https://edit.cms.gov/files/document/covid-final-nh-commission-report.pdf

[3] https://www.cms.gov/newsroom/press-releases/independent-nursing-home-covid-19-commission-findings-validate-unprecedented-federal-response

WILBUR MILLS, FOUNDING FATHER OF THE CURRENT NURSING HOME SYSTEM, WAS A WHITE SUPREMACIST AND SEGREGATIONIST

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By Dave Kingsley

     The late Congressman Wilbur Mills, Chairman of the Ways & Means Committee from 1958 to 1974, was arguably one of the most powerful congressmen in the history of the U.S. House of Representatives.  During the 1950s and 60s, Mills guided federal legislation out of which the nursing home system as we know it today was spawned. He was also an ardent segregationist and white supremacist.[i]

    The power of Southern Democrats in guiding the conceptualization and passage of Medicare and Medicaid determines to this very day how citizens will be treated in federal/state funded long-term care. This is too often overlooked in histories of welfare medicine in the United States.[ii]

    In their zeal to protect Jim Crow and plantation capitalism, the one thing that segregationist senators and congressmen fought most ardently against was federal power.  For the immensely powerful Mills and his Southern brethren, preservation of the racial hierarchy of the South was a cri de Coeur. “States’ rights” were synonymous with the right of Southern states to preserve strict apartheid and maintenance of African Americans in subservience and an inferior economic and social status.[iii]

    Sponsorship of the Kerr-Mills Act in 1960 with Senator Kerr of Oklahoma was an early foray for Mills into major long-term care legislation.  This act was also a precursor to Medicaid and, therefore, to welfare medicine in the United States. Several major facets of this initial “poor people’s medical care” was incorporated into Medicaid and have presented disturbing barriers to a fair and just medical system throughout the last six decades.

   The odious feature of “Means testing” in early nursing home related legislation is a significant characteristic of Kerr-Mills. This is a process through which people prove they are poor enough to qualify for government assistance.  Hence, those not poor enough to qualify would need to “spend down” their assets before qualifying for federal/state assistance.

    The concept of the “medically indigent” was introduced into U.S. medical care through Kerr-Mills.  The importance of a stigmatizing medical category – codified into health care law – cannot be underestimated.  Along with state power in and control over Medicaid, recipients are incessantly confronted by bureaucratic barriers and personal indignities that beneficiaries of all other government subsidized medical care avoid.  The United States is the only advanced, industrialized society that places poor people in an inferior medical care status.

    In addition to means testing, state funding with federal matching funds characterized financing of Kerr-Mills.  Southern Democrats could see the handwriting on the wall and maneuvered as much power to the states as possible. Because states do not have the same fiscal resources to fund Medicaid as the federal government, state legislators and bureaucrats treat Medicaid as lower tier medicine.  Funding is lower and medical care is typically inferior.

    The federal government has unlimited resources and the United States has the wealth to fund an alternative system that provides a truly home-like nursing home environment such as the Eden Alternative and Greenhouse models.  However, states’ rights as a philosophical position has not weakened appreciably among conservative states.  Huge federal programs such as Medicare and Social Security represent federal power, which is an anathema to conservatives.

    Furthermore, state power over regulation and state bureaucracies’ propensity for supporting industry opaqueness hampers the public’s perception of how operators and the investors owning them fulfill their obligation. It is much easier for the industry to capture government at the state level and direct the actions of legislators.  Hence, weak federal oversight and the power of trade associations in all 50 states must be attacked by advocates and activists. 

    It is important to include the impact of systemic racism into any plan and narrative for change. The nursing home system as it has evolved cannot be fixed because it’s not broken.  It is working like it was intended to work.[iv]  It is time to demand that all funding and regulation be the responsibility of the federal government.

[i] I have a more expansive discussion of Mill’s influence in the development of the U.S. nursing home system in my chapter, “Implementation of Medicaid-Funded Long-Term Care: The Impact of Prior History on the Development of the Nursing Home Industry,” in Max Skidmore & Biko Koenig (2019) Anti-Poverty Measures in America: Scientism & Other Obstacles.  Washington, D.C.: Westphalia Press.

[ii] Rare exceptions to the failure of social scientists to understand the impact of race on government medical care policy are Jill Quadagno (2005) One Nation: Why the U.S. Has No National Health Insurance. New York:  Oxford University Press; and Gerard Boychuk (2008), National Health Insurance in the United States & Canada.  Washington, D.C.:  Georgetown University Press.  Social science and history that overlooks the fundamental fact that had there been no slavery, no Jim Crow, and no ongoing systemic racism, the U.S. healthcare system would look far different.

[iii] In 1956, Congressman Mills was a signatory to the Southern Manifesto, which was signed by all senators and congressmen from the former states of the traitorous Confederacy.  In the document, the segregationist legislators argued that legally mandated school desegregation, as required by Brown v. Board of Education encroached on the rights of States and of the people.

[iv] I want to thank my colleague and fellow activist/advocate Ester Holzendorf for this conceptualization of systems adversely impacting poor people and racial minorities.