By:
Dave Kingsley
Corporate Neglect and Abuse of Nursing Home Patients: A Low Risk-High Reward Practice
Why do nursing home corporations provide suboptimal and neglectful care while earning robust profits?[i] Because they can. Although the “law” is merely the codification of our morals, values, and ethics, it is of little consequence when it is not respected and enforced. Joe Sopcich’s article that accompanies this post indicates how laws and regulations designed to protect patients in nursing homes are pervasively ignored by providers while agencies of government fail to pursue remedies and hold culprits accountable.
Joe writes about what desperate family members experience when they seek help from agencies charged with enforcing the rights of nursing home patients and families. This happens to poor and affluent families alike.[ii] His late mother was a patient in the skilled nursing facility of a continuing care residential community (CCRC) – one of those retirement places where people can live through and receive services from independent and assisted living to skilled-long-term nursing home care. The experience described in the article is quintessential. Neglect of this type is pervasive while agency enforcement of codified patient rights is weak and ineffective.
The industry benefits financially from lack of oversight and accountability. Understaffing and low pay results in lower costs and increased cash flow – that is, unjustifiable cost cutting enhances and protects shareholder value. Furthermore, the industry has successfully disseminated and sold a false narrative constructed on a “financial hardship” theme that has no relationship to reality. Their message is that nursing homes are “running on a thin net,” or earning skimpy amounts for shareholders. This is nonsense but has not been adequately confronted by advocates and the media.
The Larger Context of Industry Neglect and Government Nonfeasance
Agencies can fail to hold tax-funded nursing home businesses accountable because the elderly have been devalued by media misinformation/disinformation, junk science, and even by the most prominent scholars and influencers in the field of bioethics. Furthermore, medical technology and science have increased life expectancy while social attitudes toward the elderly have evolved in a rather disturbing way. Older Americans are now seen as a problem for and even a threat to younger age cohorts.
According to many highly influential economists and bioethicists, the United States simply can’t afford to provide all the healthcare needed by the growing elderly and disabled cohorts in a population of 330 million residents (approximately, based on 2020 Census). Medicare has been demonized as a budget busting monster robbing young people of needed healthcare. This is not true. Medicare expenditures are not an economic burden and threat to the U.S. economy.
More disturbing than the harmful misinformation generated by the economists and bioethicists is the lack of interest in and discourse concerning the morals and values of care of such low quality that it amounts to euthanasia by neglect. This post is the first in a series of posts that will call attention to the nature of a cruel, inhumane, institutional care system for frail patients needing skilled nursing care in the context of current medical and societal values and ethics. It is the entire money-driven system and the absence of discourse regarding morality that is harming patients and shortening their lives unnecessarily. It is to that issue we want to call attention and about which we want to stimulate discourse.
Our point of departure in this discussion is the necessity of dehumanizing groups of people before they can be scapegoated and harmed by government policy with the approval of the broader society.
[i] Apart from The Ensign Group, which owns and/or operates approximately 300 facilities, nursing home corporations are closely held. Therefore, it is not possible to obtain the exact net operating revenue from facility cash flow. Based on my analysis of cost reports, I would estimate that “free cash flow” or “owners’ earnings” ranges from 10 to 15 percent. For instance, In 2023, the Ensign Group had net operating revenue of $376.7 million on $3.7 billion in revenue or 10% in free cash flow. The distribution of earning to investors are increased through avoidance of capital gains taxes. Furthermore, the operations side of the industry is separate from the lucrative commercial real estate side. The Ensign Group is sheltering the corporation from capital gains taxes due to property appreciation by forming a captive REIT or by transferring property to an UPREIT. A large number of executives and investors have individual or family trust for sheltering their compensation and assets. Black Rock, Vanguard, State Street and other major asset managers are the dominant investors in the Ensign Group, REITs, and private equity groups. See: 0001125376-24-000018 (d18rn0p25nwr6d.cloudfront.net, page 96.
[ii] Joe is the former president of one of the best community colleges in the United States.