By

Dave Kingsley

Definition of Socialism and its Application to Medicare

Socialism is defined simply as “an economic system in which government owns the means of production.” The Medicare system produces no products and provides no services. The system does not manufacture pharmaceuticals or medical devices, it owns no hospitals or long term care facilities. It employees no nurses or physicians or other health care professionals for the purpose of providing services in a medical care facility. It is a program for underwriting health care risks for individuals who pay into it.

There is nothing socialistic about government management of a pool of funds provided by current and future beneficiaries for the purpose of paying for their medical care. In 2019, the program spent nearly $800 billion. In the current political and economic context, approximately 60% of all funds expended by Medicare is derived from the people receiving care. The other 40% is transferred to the program from the U.S. Treasury. This transfer would be unnecessary if a corrupt political process were not allowing excessive charges for services and products.

For instance, the Medicare Modernization Act in 2003 created a prescription drug benefit (Part D) and included a provision that prohibited negotiation of pharmaceutical prices by the Center for Medicare and Medicaid Services. Through enforcement of proper management of costs by providers, and reasonable charges for costs, the 40% transferred by the Treasury could be eliminated, thereby making the program fully funded by the beneficiaries.

By Dave Kingsley

Private Equity is One Model in an Array of Business Models Comprising the Long-term Care Provider Subsystem.

It is practically de rigueur these days to focus on private equity ownership of “nursing home chains” as the leading culprit in lowering the quality long-term care.  I am noticing this tendency on the part of progressive politicians, researchers, advocates, and activists.  No doubt, major private equity buyouts of long-term care chains have proven lucrative to PE firms and their investors while they have been disastrous for patients, families, employees, taxpayers and communities.

    Nevertheless, complex, dynamic social systems cannot be reduced to a few variables.  In science that is known as reductionism – a fallacy.  Far too many factors are overlooked when systems are reduced to a few variables or a single subsystem.  The system of long-term care facilities is complex and dynamic with a large number of interacting and reinforcing subsystems. 

    The corporate subsystem itself is comprised of a variety of ownership structures.  In addition to PE firms, long-term care corporations are organized as publicly listed holding companies, Real Estate Investment Trusts, family trusts, family offices, and limited liability corporations.  Most of the firms operating long-term care facilities are closely held and the public has no access to their financial statements.

    Approximately 25% of long-term care corporations are 501(c)(3) nonprofit entities.  A small number of nonprofit run facilities are high quality facilities.  Although the nonprofits have, on average, slightly higher scores on measures of quality, e.g., higher RN hours, lower number of complaints, and abuse and neglect cases.  However, many nonprofit operations are substandard.  For instance, the Evangelical Lutheran Good Samaritan chain runs on of the largest chains in the United States and has a poor track record and lower than average scores on measures of quality.

Major Subsystems of the Long-term Care System

    In addition to corporations reimbursed for providing care, federal and state legislatures, government agencies, trade associations, and advocacy organizations are major subsystems of the long-term care system. My research and observations have led me to hypothesize that these systems interact in a manner that reinforces the fundamental model of care that has been standard since inception of publicly funded long-term care, which is “the total institution.”

    Evidence for this hypothesis will be presented over time on this blog.  Also, I believe that too much focus on the PE subsystem distracts from the impact of macroeconomic trends since the 1970s. Economic and managerial philosophy has shifted finance from an auxiliary role in corporate governance to the dominant role.  The purpose of corporations has become finance rather than production of goods and services.  The long-term care system is part of the larger economic system which has become increasing characterized by management that values investors and treats stakeholders as resources to be exploited.

    Furthermore, the legal structures of trusts and corporations are designed for tax avoidance, debt, and asset protection and enhancement.  High net worth individuals can utilize these structures to pass more of their wealth to heirs and keep it out of the grasp of the IRS.  Not only does this system allow wealthy individuals and families to extract middle- and low-income assets for their own benefit, it allows them to avoid their obligations to the society that enriches them.

By Dave Kingsley

It is Overwhelmingly Clear that Key “Nursing Home” Institutions Should Have Known What Was Coming.

CNN is reporting 274,121 COVID deaths in the U.S. as I write this post. It is estimated that 40% of these victims are long-term care patients and employees; hence, approximately 109,648 patients and staff in long-term care facilities have died from COVID throughout the pandemic.  Had  responsible parties in the system been prepared and acted responsibly, these deaths could have been prevented.

Decent medical care includes identification of possible and probable infectious diseases.  But that has been pervasively lacking in the profit and nonprofit long-term care system.  That is despicable and inexcusable.  If corporations extracting wealth from long-term care didn’t know a disease was coming that could kill a high proportion of people in their care, they should have known. “In the United States, in 2013, the Bill & Melinda Gates Foundation conducted a comprehensive review of worldwide data and predicted that a pandemic would occur during the next decade, most likely due to coronavirus.”[1]

The word was out in December of 2019 that a novel virus was spreading in China and causing some drastic government action by the Chinese government.  U.S. intelligence services were well aware of the spreading virus by late 2019.  By January of 2020, anyone reading major newspapers should have been aware that a global pandemic was probable.  Asian countries were aware of the spread of a coronavirus and taking extraordinary action to shut it down – which they did.

What did the U.S. long-term care industry do while China, Singapore, Hong Kong, Taiwan, and South Korea were taking action to block the spread of COVID?  Corporations extracting an extraordinary amount of cash from facilities for their investors continued business as usual. They did not have sufficient personal protective equipment stocked when the pandemic hit; they had no protocol in place for protecting patients and staff; they failed to put a testing program in place; and, they had no plan for acquiring separate buildings for quarantining infected patients and staff.  This lack of preparation for preventing an infectious disease under any circumstances is inexcusable, but in the face of a deadly, rapidly spreading pandemic, it is an atrocity.

Based on the architecture of long-term care facilities and the fragility of patients forced to live in close proximity, a tragedy was waiting to happen. Furthermore, staff continued to pass between the community and facilities without testing, PPE, and a clear understanding of the dangers involved with the disease.  Long-term care corporations set their patients up as “sitting ducks” in the spread of a highly contagious and novel virus for which no vaccine was available.  This deadly medical malpractice occurred with the acquiescence of the CMS, state regulatory agencies, and local health departments. 

    It was gross negligence for responsible parties not to recognize as early as December 2019 that COVID-19 would be a threat to the million plus patients in U.S. long term care facilities and take action to protect them.  All responsible parties, including long-term care providers and government agencies at the federal, state, and municipal level should be investigated and held accountable by a commission independent of those corporations and agencies.

[1] Solano, J. et al. (2020), “Public Health Strategies Contain and Mitigate COVID-19:  A Tale of Two Democracies.” The American Journal of Medicine, Vol 133, No 12, 1366. Renowned infectious disease expert Laurie Garrett and most other scientists involved with novel diseases – especially the coronavirus family of virus – were warning about the likelihood of the emergence of a virus like COVID-19.  See Laurie Garrett and The Coming Plague at https://www.lauriegarrett.com/the-coming-plague.