The Nursing Home Industry-Brown University Collaboration:  Science or a Sign of Growing Corporate Abuse of Power?


    Dave Kingsley

The Growing Importance of Data

      The time has come for citizens to recognize the corrupting influence of university-industrial relationships and to organize efforts to call them out.  In a democracy, data generated in taxpayer funded healthcare systems should be controlled by the public through a democratic process. If corporate wealth and power are determining factors in who has access to healthcare data and/or who is recognized as legitimate analysts and interpreters of government information, the American people will be sitting ducks for manipulation, and exploitation.

    Growing problems resulting from big data and A.I. call for pushback by concerned scientists and citizens in general. Computing power and speed, massive collections of data, and technologically sophisticated data analytics will increasingly play a major role in the fairness, quality, and control of the U.S. healthcare system.  Control over these processes by industrial interests through manipulation of government agencies, universities, and political actors will result in inefficient, costly, corrupt, and inequitable healthcare.

An Example of Industry-University Collaboration in Real Time

     An insidious collaboration between the American Health Care Association (AHCA) and the Brown University Center for Gerontology & Healthcare Research (BU CGHR) serves as an example of how a university and industry can team up to thwart efforts by advocates to improve the quality of nursing home care.

 I have written about the Brown University-AHCA relationship in a previous blog post (here). However, a colleague recently sent me an article jointly authored by AHCA representatives and employees of BU CGHR which greatly increased my concern over the blatantly self-serving and corrupted nature of industry influenced research.

    The article[1], published in the Journal of the American Geriatrics Society, included six authors, four of whom are employees of the AHCA.  Ostensibly, the purpose of the article was to address the need for and cost of legislation requiring an increase in minimum staffing.  The authors concluded (based on their statistical analyses which I consider questionable at best) that the legislation would cost an additional $7.25 billion.  On page 7, they advance the usual deceptive AHCA hardship narrative that “SNFs operate under tight operating margins (median 0.7% in 2019), and margins have declined since 2013.”  They conveniently ignore cash flowing to investors through home office allocations and networks of related parties such as real estate, labor contracting, and a host of other subsidiaries.

    Even the lead author of the article is an AHCA employee.  Nevertheless, the article conflict of interest statement noted that “The authors report no financial conflicts of interest.” Saying that there is no conflict of interest in this publication is about as Orwellian as saying “War is Peace” (see: Brown University policy on conflicts of interest in university affiliated research (here).

    The conflict-of-interest statement included in the article describes the AHCA, as “the largest national trade association representing skilled nursing ….facilities.”  This is a clever filtering of reality through the most positive lens possible.  In fact, the AHCA represents not “facilities,” but chains of facilities owned by investment banks, private equity firms, real estate investment trusts, publicly listed C corporations, and other legal/financial corporate types..  Most of these corporations have multi-billion or multi-million-dollar revenues.  Furthermore, the AHCA has a large political PAC for influencing legislation on behalf of corporations funding them.

Science, Statistics, & Research Integrity

    When an industry can leverage the cachet of a venerable academic institution and produce dubious statistical models and write articles favorable to entities with a financial interest in the outcome of research, human rights and adequate healthcare will inevitably become secondary to cash flow.  Money takes precedence over healthcare, suffering is increased, and lives are shortened.

    Advocates and scholars must speak out about the Brown University collaboration with AHCE and other such industry-university relationships.  The role of government, think tanks, and philanthropic foundations in these relationships should not be overlooked either.  We cannot be passive. The problem of data control and manipulation by industrial interests will only deepen and become more serious and destructive as A.I. becomes available.  

    Let’s have a much-needed discussion about science and research integrity.  Let’s separate science from scientism.  Observational studies of complex, dynamic, social systems based on data dumps are beset with fallacies and they are easily manipulated.  Therefore, poor research with the imprimatur of a leading university unjustifiably undermines efforts to improve the quality of nursing home care.  When the nursing home industry chooses to withhold corporate financial information from the public, we cannot accept studies regarding staffing as scientific.  By providing only partial information, the industry and its lackies in Universities cannot claim to be basing their claims on scientific evidence.

[1] Hawk T., White EM, Bishnoi C. Schwartz LB, Baier RR, Gifford DR. Facility characteristics and costs associated with meeting  proposed minimum staffing levels in skilled nursing facilities. J. Am Geriatr Soc. 2022; 1-10. Doi: 10.1111/jgs. 17678.

The Nursing Home Industry’s Accounting Firm is Providing Propaganda for Low Staffing Standards


Dave Kingsley

    What’s in a Number?

    The major accounting firm of Clifton, Larson, & Allen (CLA) has concluded that CMS proposed nursing home staffing standards will cost the industry $6.8 billion in additional labor costs.[1]  Without the proper context, a big number like $6.8 billion has a big impact on legislators, the media, and the public in general. In the proper context, this is not a big number.  It is in fact a de minimus increase in overall costs to the industry – mere noise in the data.

    By the time the standards are implemented, total spending on Medicaid will have reached $1 trillion.  Approximately 20% or $200 billion of total Medicaid dollars will be allocated to long-term care. Medicare will expend an additional $100 billion for skilled nursing care.[2] These are conservative estimates, but even low-ball statistics reduce the impact of $6.8 billion to insignificance.   Based on CLA’s estimate, nursing home operating expenses will increase by around 2% of revenue derived from taxpayers.  Given waste from overpayment, widespread mismanagement, and weak government oversight in the taxpayer funded nursing home system, there will be little to no impact on providers’ bottom line because of CMS weak standards.

    Furthermore, overall industry revenue from reimbursement for direct care is enhanced by a host of tax subsidies for depreciation, interest, and other write downs on taxable income.  Money owed and not paid to the government is cash flow – it is money that can be used to make more money or to pass along to investors and executives. 

Guns for Hire:  How A Major Accounting Firm Serves as a Propaganda Arm of the Nursing Home Industry

   One would expect  ethical, competent accountants to provide an objective report on returns to nursing home investors. But that is not what CLA is doing for the nursing home industry. Typically, they base their claims about industry hardships on facility cost reports – specifically on net operating income.  This is laughable for several reasons. 

    The practice of separating facility specific net income from parent corporation financial reports, i.e., income statements, cash flow statements, and balance sheets, suggests that CLA is intentionally distorting the financial picture of the industry. Expenses at the facility level include related parties and home office allocations.  I suggested to a legislative committee a couple of weeks ago that they look at transfer pricing rather than the usually low or negative net operating income reported by facilities, which lease their property from another subsidiary of their parent corporation.  Triple net leases are standard in the industry.  Hence, facilities pay maintenance, taxes, and insurance on property they don’t own.  This makes the net operating income for the property subsidiary quite robust.

    As corporate finance has evolved with tax policy, net income is not a measure of “profitability” or return on investment.  This is especially the case in asset intensive industries.  The nursing home industry is not merely a healthcare industry.  Rather it is primarily a real estate and finance business.  With large amounts of write downs for, among other things, depreciation and interest, direct care revenue is greatly enhanced by tax subsidies.

    Real estate alone results in huge federal and state tax expenditures. For instance, in 2014, Amazon’s net profit was -$241 million –note: that is negative $241 million.  It would appear to nonfinanciers that Amazon was losing a lot of money.  Harvard finance professor Mihir Desai pointed out that “Amazon’s EBIT, however, was $178 million, and the difference of $419 million represents taxes, interest, and currency adjustments.”  Professor Desai asked, “What about EBITDA?”  Amazon had $4.746 billion in depreciation and amortization.  Consequently, their EBITDA of $4.924 billion was “a far cry from the net loss of $278 million. So Amazon generated lots of cash, as measured by EBITDA, but had losses according to profitability measures.”[3]

    Of course, Amazon is not in the nursing home business.  But the same principles apply.  Perhaps Amazon is more asset intensive than we find in the LTC/SKN industry, but real property is a major factor in providers’ cash flow. 

    With the entry a couple of decades ago of limited liability corporations (LLC), real estate investment trusts (REITs) and private equity firms (PE) the ground shifted under the feet of regulators and advocates.  The industry has become financialized through ancillary subsidiaries providing labor, insurance, therapy, and other goods and services, which has resulted in increasing extraction of cash without a correlative increase in quality of care.  None of this enters the CLA picture of the industry.  There appears to be no focus on what facilities are paying related parties for goods and services.  Nor do we know how to evaluate the quality of care based on pricing.  This is astounding but is nevertheless overlooked by legislatures, government agencies, and many of the largest advocacy organizations such as the AARP, NCOA, NIH, the so-called Moving Forward Coalition. 

    It is time that advocates step up and demand that we get a thorough, objective, financial analysis of the industry rather than a continued reliance on the AHCA/NCAL and their paid accounting firm. The nursing home lobby has no compunction about putting out ridiculous financial information because they know they can get away with it. That is a shameful, disgraceful situation.  It will do us no good to argue about the minutia of reimbursement (think RUGs versus PDPM) and ignore the bigger issue of nonfeasance, misfeasance on the part of CMS, state agencies, and legislatures.

CLA Propaganda Serves as a Barrier to Quality of Care

    CLA is paid to support the nursing industry’s hardship claims and to help further a very effective narrative of low net income, financially struggling owners/investors, and stifling over regulation. Legislative hearings attended by industry lobbyists, government representatives, and advocates often seem like a gathering for singing kumbaya and exuding effusive niceness.  Legislators and most other speakers and attendees are willing to sit through hours of mind-numbing rate setting minutia, e.g., complex incentives paid to facilities willing to provide a minimal amount of care.  Hours pass without anyone addressing highly questionable financial practices and faulty cost report data.

    Furthermore, legislators don’t understand that the nursing home industry has been transformed in a mere two decades.  The mom-and-pop nursing home is far gone.  A few nonprofit facilities that are not part of a chain still exist, but we are uncovering serious grifting in even some of those places.  In the for-profit sector, sophisticated financiers are leveraging a variety of legal and financial innovations such as the limited liability corporation (LLC) Umbrella Partnership Real Estate Investment Trust (UPREIT), private equity, and other legal, financial structures  to extract optimal cash flow with minimal expenses for care.

    The nursing home system is about money.  It has become fully financialized.  Real estate and finance override healthcare.  The only way that the industry can maintain such a disgusting and pathetic system is to hide the truth from “we the people,” and create a propagandistic narrative for protecting the interests of financiers and realtors.  The AHCA is very good at deception.  But one of their most effective tactics is to hire a large accounting firm to do their dirty work for them.

[1] CLA (2023) “CMS Proposed Staffing Mandate:  In-Depth Analysis on Minimum Nurse Staffing Standards.


[3] Mihir A. Desai (2019) How Finance Works: The HBR Guide to Thinking Smart about the Numbers.

Kansas City Public Television & the Damaging Consequences of Nursing Home Misinformation


Dave Kingsley

Cavalier Distribution of Unsupportable Financial Information Causes Physical Harm and Shorter Lives

     Kansas City Public Television (KCPT) is presenting an upcoming program entitled “The State of Aging in Kansas City.”  The program as advertised includes a panel discussion and a documentary film. I was shocked to see false claims by the American Health Care Association –  the industry lobby – included in the promotional material for the program.  For instance, the promo repeats AHCA falsehoods that “nearly 60% of nursing homes are operating at a financial loss” and that “Nearly three of every four facilities are concerned about closure due to staffing shortages.” 

    This is blatantly false information and serves to shield the industry from responsibility for widespread neglectful care of patients while investors are earning robust returns. It is obvious that KCPT has given the for-profit nursing home industry a major amount of influence in the development of their promotional material without fact checking the industry’s financial claims or consulting with credible scholars and advocates engaged in nursing home research. 

    Any widespread distribution of nursing home financial misinformation is a devastating blow to efforts at significant reform of the Medicaid and Medicare funded skilled nursing business. Therefore, patients in poorly run nursing homes continue to experience unnecessary pain, discomfort, and shortened lives because of lobbyists’ propaganda.

    The industry’s bogus hardship claim is a primary barrier to changing the despicable way elderly and disabled patients are treated in so many long-term care facilities.  The AHCA has immense resources to spread a false narrative –– with $128 million in 2021 revenue ( and affiliates in all 50 states.  Hence, the “we can’t afford to do better” defense serves to undermine serious demands by advocates for stricter regulation and an increase in the quality of care.

    Public television has unwittingly placed its imprimatur on industry propaganda.  There is scant evidence that the nursing home industry is experiencing widespread loss.  Conversely, an abundance of available evidence suggests that historically and during COVID, the nursing home business has been and remains highly lucrative.

Responsible Journalism and Integrity Requires a Correction by KCPT

    Apparently, “The State of Aging in Kansas City” will kick off with a town hall & panel discussion on September 5th.  The town hall and a documentary will be shown on KCPT on September 14th.  Although I was consulted by the independent filmmaker about a year ago who asked that I meet with him to discuss nursing home finance.  I did that on a couple of occasions, but I did not know exactly what his project was about.  He did say that he was working on a documentary for public television.  I didn’t think much about it until I saw the promo and his name attached to the documentary.

       The filmmaker told me he had nothing to do with the promotional material and directed me to the person who was responsible for it.  I sent that person – who will also MC the townhall meeting –  a lengthy email explaining the problems with the information in his promo to which I attached couple of articles that I had authored with my colleague Charlene Harrington, Professor Emeritus at the University of California, San Francisco.  His response was, in my view, terse and dismissive.

    I have not seen the documentary and cannot speak to its contents.  Hopefully, it will help the public with an understanding of the issues facing patients, families, advocates, scholars, and legislators in understanding how we can arrive at a fair return to investors for an acceptable level of care.  At this time, we cannot do that because of the raw, rank, political power of the nursing home, hospital, real estate, and finance industries (i.e., medical industrial complex) inside the Washington, D.C. beltway and the 50 state capitols.

    For those of us who spend a good proportion of our waking hours in an attempt to counter industry propaganda and provide objective, scientific information, public television misinformation, dispensed to its widespread viewing audience, is like a kick in the solar plexus. It is very difficult to overcome corporate falsehoods in this post-truth era, but it is psychologically devastating when the hard work in attempting to do that is undermined by local public television.

Labor Conditions in the Nursing Home Industry:  An American Disgrace


Dave Kingsley

What is U.S. Policy Regarding a Living Wage for Healthcare Workers

   It is difficult to establish exactly what CMS and state agencies are doing these days to audit, investigate, and regulate the nursing home industry.  But I think we can safely say that it is very little.  One thing we know is that the long-term care business is labor intensive.  Hands on, direct care is the sine qua non of nursing home operations.  Without the workers who risked their lives during COVID (approximately 2000 died because of the pandemic), corporations could not have continued to earn robust returns for their investors.

    Labor issues in the nursing home industry are escaping notice of legislatures, the media, scholars, and reform commissions.  Consequently, the public in general is unaware of the injustices perpetrated on workers in the form of poverty wages and poor working conditions – including violation of labor rights under the National Labor Relations Act.  Although operators were provided with lavish amounts of COVID relief, it appears that workers did not share in these allocations even when large amounts of revenue were extracted on behalf of investors.

High Poverty Areas of the U.S. and Poverty Wages:  The Injustice of Place and Internal Colonization

    Large regions within the United States such as the Mississippi and Arkansas Deltas, South Texas, and Appalachia, and large ghettos and barrios are beset with high levels of poverty, low economic development, and a dearth of opportunities through education and upward mobility.  These areas lack cultural amenities and healthcare access.  The poor whites residing in the poorest areas of the U.S. have been losing ground in their overall health and life expectancy.  In some places, people of color are in the majority and have historically had poor health care access and shorter lives.

    One would think that an injection of government funds through long-term care services and other healthcare programs e.g., Medicare and Medicaid would significantly contribute to a rise in the standard of living in these impoverished, economically underdeveloped places.  In other words, the trillions of dollars in federal and state budgets dedicated to healthcare should provide an economic boost to economically disadvantaged areas. However, rather than contributing to development of impoverished counties and regions, the long term care industry is exploiting them through excessively low wages.

Magnolia, Arkansas and the Greenhouse Cottages of Wentworth Place

    Greenhouse Cottages of Wentworth, Magnolia, Arkansas

In my last blog post, I wrote about the shockingly low wages paid to CNAs doing 80% of the work in Alta Vista Nursing & Rehab –  an Ensign Group facility (see “NAFTA and Working Home Wages in the Rio Grande Valley”).  Most nursing home corporations along the corridor consisting of cities such as Brownsville, Harlingen, McAllen, and other cities with sister cities across a bridge to Mexico are paying poverty wages while extracting robust amounts of earnings and COVID relief money (more about them in a later post).

    I am hypothesizing that pricing and reimbursement of industry for services are uniform across states without regard for the price of labor and yet set a floor under returns to the industry that advantages investors. Conversely, labor costs are allowed to float in local labor markets.  This is an injustice.  Labor in poor areas is suppressed while rich areas benefit from wages at the high end.  As I collect data on wages, hours, and working conditions in the nursing home industry, I’m seeing this pattern.  Let’s take Greenhouse Cottages of Wentworth Place in Magnolia, Arkansas as an example.

    Magnolia is a community of 10,000 people located in Columbus County, Arkansas, which is one of the poorest counties in Arkansas with poverty level nearing 25%.  The county is not far from the Louisiana border in South Central Arkansas.  Greenhouse Cottages of Wentworth Place is a large facility with 135 beds and 2022 revenue of $11,648,420.  Based on its income statement, the facility had operating income (operating net) of $719,547.

    In addition to operating income, $522,998 in nonpatient revenue from COVID relief was noted on the facility’s income statement.  Hence, with a net income of $1,242,998, the company had a 10.7% net income in 2022.  However, the company claimed $7,198,189 in expenses to its real estate entity, therapy services company, home office allocations, and employee leasing (i.e., outsourcing labor to its labor contracting service).  $6,163,519 of claimed related parties expenditures were allowed by the state.

Wages at the Greenhouse Cottages of Wentworth

    An examination of wages for the Greenhouse Cottages of Wentworth reveals exceeding low nursing wages for a company with an impressive net income and huge payouts to subsidiaries of the parent corporation.  In 2022, the average RN wage was $34.48.  Looking at RN wages at the facility for years 2016 through 2022, the average hourly wage for RNs increased from $31.62 to the 2022 wage of $34.48.  If $31.62 in 2016 kept pace with inflation, it would be equivalent to $39.61 in 2022.

    In 2016, CNAs were paid $10.57 at the facility.  That low base amount rose slightly above inflation over the years ($13.93 versus $12.49 in 2021).  In 2022, CNA pay averaged $15.71 due to President Biden’s Executive Order raising the minimum wage for federal contractors to $15.00 per hour. 

    Over the three years that COVID was raging, the facility received $3,548,321 in COVID relief.  There is no evidence that this was shared with the workers.  I suspect that we will find that to be a standard practice throughout the nursing home industry.

Is a Huge Increase in Reimbursement Justified without Consideration of Workers

    As lobbyists and propagandists for the industry with negligeable pricing research and  evidence continue to claim that reimbursement is too low, CMS proposes that operators be rewarded with a $2.2 billion increase due to a 6.4% “net market basket update to the payment rates” (see “CMS SNF Final Rule Seen as Insufficient for Payment Rates While Advancing Unfair Measures, Skilled Nursing News, July 31,2023).  Given massive amounts of COVID relief funneled into the industry and ongoing subpar pay for the direct care workforce, we need clear and decipherable data and rationale for this increase.

NAFTA & Nursing Home Wages in the Rio Grande Valley


Dave Kingsley

The Ensign Group’s $10.82 per Hour CNA Labor in Brownsville, Texas

The Alta Vista Rehabilitation & Healthcare Center pictured above is owned and operated by The Ensign Group – the largest (and rapidly expanding) American nursing home chain. This facility came to the attention of those of us working on a study of The Ensign Group (hereinafter referred to as Ensign) by The Center for Healthcare Information and Policy – a recently incorporated 501(C)(3) nonprofit dedicated to healthcare research.

In collecting data on Ensign’s 2021 cost reports, we noticed that base CNA wages for this facility were excessively low at $10.82 per hour. Typically, 2021 CNA base wages (hourly wage excluding fringe benefits) average approximately $17.00 per hour with $13.00 at the very low end of the distribution.

Brownsville is in the Rio Grande Valley of Texas, connected by a bridge across the Rio Grande River to Matamoros, Mexico. The North American Free Trade Agreement liberalized the process of obtaining a work permit in the U.S. for Mexican citizens. Therefore, residents of Matamoros cross the bridge every day to work in Brownsville, Harlingen, and other Texas cities on the border. The minimum wage in Mexico is approximately 50 cents (U.S.) per hour.

Workers earn about $2.00 U.S. in the auto Maquiladora plants on the Mexican side of the border. Therefore, a wage of nearly $11 per hour is very attractive to Mexican citizens attempting to care for themselves and their families. It is in the best interests of the Mexican workers and the nursing home industry to garner CNA training and work permits for the border workforce. My interviews with workers in the U.S. nursing home system suggest that the Mexican culture and respect for elders lend themselves to a very capable and excellent immigrant workforce from Mexico.

However, the abject poverty of Mexico is an opportunity for exploitation of workers by the nursing home industry. It is important for U.S. legislators and regulators to take a serious look at this problem.

Why is Ensign Paying their Brownsville Workers Excessively Low Wages?

Why is Ensign Paying their workers less than a living U.S. wage? Because they can. Because the nursing home industry is financialized, protection and enhancement of shareholder value is the industry’s moral and ethical summum bonum – the highest and guiding ethical value of the corporate culture.

Although the Brownsville facility netted $2,298,733 operating income on net patient revenue of $8,847,305 (26% net after expenses for interest, taxes, and depreciation), employees did not share in that financial success. The company expended $1,573,153 on nursing care. If they had increased that by 50%, their net would have been reduced to 17% – which would thrill the owners of any enterprise. The facility also reported nearly a million dollar allocation to the Ensign home office and related parties. Furthermore, we usually note that CNA hours comprise around 60% of total nursing hours. At Alta Vista, 91,889 hours of the total 112,566 nursing hours were allocated to CNAs – 82%.

The labor mark up on the more than impressive earnings from this facility by a $3+ billion C corporation benefits investors but is not shared with workers. In other words, the labor market is determinative of wage rates while a price for the service is set by state governments at a level guaranteeing a robust return to shareholders and high executive pay.

The financial structures of corporations operating in the nursing home space are not a major factor in wages, hours, working conditions and staffing. Corporate type, e.g., REITs, private equity firms, C corporations, limited partnerships, LLCs, or any other type of corporation will not drive wages and staffing in this industry. Rather, an attitude toward labor and the perception of the value and worth of people doing the hands on work with patients needing skillful and empathetic care are the deciding factors in how we pay our care givers in nursing homes.

As long as the industry can use its political power to exploit workers, it will. It is ironic that nursing home reform commissions and congressional hearings have ignored the plight of workers while extensively noodling with the industry over ever more complicated billing systems. The industry will find plenty of techniques for leveraging billing systems to their advantage. What they won’t do is invest in a loyal, experienced, and trained workforce.

Government Oversight of Medicaid: The Shift of Power from Federal Agencies to State Agencies has Been a Disaster for Poor Americans’ Health


Dave Kingsley

Dismantling of the Federal Administrative State

    President Ronald Reagan said this at a press conference in 1986: “The nine most terrifying words in the English language are ‘I’m from the government and I’m here to help.’” This might have seemed funny at the time but by 2008 when lax federal governmental oversight of the financial services industry led to economic collapse or when in 2020 a deteriorated public health system led to a raging COVID epidemic, the people of America were screaming back to the government these five desperate words: “For God’s sake help us!”

    President Reagan’s quip was a continuation and acceleration of devolution of power from the federal government to the states that began during the Nixon administration. Consequently, the far-right dream of dismantling the federal administrative state has led to funneling federal grants to states as block grants rather than grants-in-aid, which meant less federal control over how states regulated federal-state funded programs such as Medicaid and welfare in general.   

    Some states are more enlightened than other states in how they administer welfare programs.  But during the Clinton Administration, the mistaken notion that people needing assistance for their daily needs – including medical care – would benefit from some tough love like denial of any services after a few years of receiving it.  Aid to Families with Dependent Children (AFDC a grant-in-aid program) became Temporary Aid for Needy Families (TANF – a block granted program with a much more stigmatizing moniker).  By the late 1990s, President Clinton was declaring that “the era of big government is over” – seven very unfortunate words.

    The idea that poor people down on their luck needed some federal assistance for survival was warped into a philosophy that help from the government would induce dependency and that administrative barriers to assistance and forcing people off of aid would somehow be character building.  As has happened since the era of industrialization began, poor people were more intently looked at as irresponsible and the cause of their own plight.  By the turn of the Century, this philosophy had become de rigueur – even in states given to a more empathetic and compassionate approach to the less fortunate (which could be any of us).

How Have States Handled their Increasing Power?

    So, how have states done with the power devolved to them?  Not well.  As an example, consider the prior authorization of Medicaid that I wrote about in my last blog post.  The HHS, OIG had this to say in their recently released report:  “most State Medicaid agencies reported that they did not routinely review the appropriateness of a sample of MCO denials of prior authorization requests, and many did not collect and monitor data on these decisions.”  This seems like very familiar state regulatory behavior to me.  Having reviewed thousands of nursing home cost reports, I have yet to see one properly filled out (in accordance with GAAP/FSAB accounting principles and federal regulations).  Indeed, they are loaded with deceit, misinformation, and what is either profound ignorance or fraud.  And yet auditing at the state level appears to be practically nonexistent.

    There is no point in using nursing home cost reports for research except to raise issues of state incompetence, lack of oversight capacity, and corporate ability to game the system. The same can be said about the giant insurance corporations contracting with states as MCOs.  Indeed, Anthem’s highest MCO denial rate was 34%.  Molina, one of the largest providers had denial rates that ranged from 17% to 41%.  Aetna, Centene, and UnitedHealth denial rates were 5% to 29%, 3% to 23%,  and 7% to 27% respectively.

    The States with the highest rates of denial are Georgia (34%), Michigan (32%), California (29%), Mississippi (27%), New Jersey (27%), Virginia (26%), and Wisconsin (25%).  One can only imagine how difficult and frustrating it is for physicians and Medicaid patients in these states to obtain needed medical care.  None of these states used denial data for oversight.

There is Nothing Funny about Government Help:  We Need it Badly!

    My colleagues and I spend our working hours attempting to ferret out information from states regarding Medicaid outcomes data.  To quote Warren Buffet, “It’s like getting red meat out of a tiger cage.”  But we have been communicating with staff – including auditors – in the OIG’s office and will continue that communication.  Our mission is to fight the state/federal barriers to public information.

    The Medicaid program is nominally a $900 billion federal/state expenditure.  But with tax expenditures (i.e., tax subsidies) for corporations in the business, it is a much larger expenditure in federal and state budgets combined than that. Furthermore, nursing home corporations and the giant insurance corporations contracting as MCOs are extracting immense amount of tax dollars without a correlative investment in a loyal, career-oriented work force, and a medical services infrastructure that welcomes and benefits the people eligible to receive it. 

    Centene, UnitedHealth, and the other large providers are lavishing obscene compensation packages on executives and board members (CEOs are usually receiving about $20 to $24 million per year); they have billions of dollars sitting on their balance sheets, they are paying robust dividends to their shareholders (most of which are asset managers such as Vanguard, BlackRock, and State Street, handling pension, insurance, and sovereign wealth funds); and they have devoted billions to capturing government through lax lobbying and election financing.

    No matter how objective and scientific researchers like to be, this is all about politics.  It’s about what goes on inside the D.C. beltway and in state capitols.  Anyone who thinks they can be politically neutral, purely professional, and outside of politics is sadly mistaken.  Making CMS do its job is a political task and will take political organizing.  The same can be said about making state agencies do their job.  You cannot work within the system and change it that way. 

Managed Care & Privatization was Supposed to Save Taxpayers Money & Work Better than Government Administered Medical Care, but That’s Not What is Happening.

By:  Dave Kingsley

Managed Care for Poor Peoples’ Medicine is a Chimera

    According to a report released by the HHS OIG’s Office last week[1], the massive Medicaid program intended for poor Americans is beset with denial of authorization for care and weak state oversight.  What that means is this:  poor people who are hard scrabble poor enough to qualify for Medicaid and have the moxie and luck in navigating the bureaucracy to the point of approval for the program, are far too often denied the treatment physicians think they need.  The gigantic insurance companies contracting with states to run their Medicaid programs are denying care at double the rate of Medicare denials under managed care (i.e., Medicare Advantage).

    It is not difficult to understand why an undue administrative burden is placed on poor people for both qualifying for government health care in the first instance and then for receiving needed care once they are admitted to the program.  Powerful insurance companies have a financial incentive to deny a large proportion of care medical professionals think Medicaid recipients need. Furthermore, a lobby for poor people is nonexistent; they are powerless; and they can be pushed around and/or ignored by state bureaucrats.  Nevertheless, a puzzling and mistaken conventional wisdom proclaims that a corporatized and privatized system is a far more efficient and effective way to deliver taxpayer funded medical services.  It is past time that the conventional wisdom undergoes strong pushback from medical professionals, academics, and the media.


    During the 2000 aughts (starting about 2010), states relying on the concept of “managed care” in which insurance companies (known as MCOs) are paid a “capitation rate,” i.e., a specific amount per enrollee, turned over their Medicaid programs to insurance corporations.  If the insurers keep their costs below the total dollars committed for enrollees, they make money.  Patients are, however, required to utilize medical services within “network.”  They must use a medical practice or hospital that is part of the contracting MCOs network of physicians and other medical providers.  Furthermore, care must be authorized by the MCO.

    The size of federal expenditures for Medicaid has resulted in mushrooming revenue for major healthcare insurers such as UnitedHealth, Elevance, Cigna, Centene, and Aetna.  In the early 2000s, no health insurers were in the top 30 corporations listed on the Fortune 500.  By 2022, nearly one-third of the top 30 Fortune 500 companies were related to healthcare insurance and managed care contracting.

    The idea of managed care began with the concept of health maintenance organizations (HMO) such as Kaiser Permanente and Ross Loos.  Individuals can join an HMO, pay the premium and expect low deductibles and co-pays.  However, the HMO or MCO in the case of Medicaid managed care have a network of physicians and other providers.  Enrollees must “stay within network” and receive authorization from an insurer (MCO) for a host of medical services their primary physician thinks they need.  This opens the door to tremendous power of insurance behemoths over Americans’ healthcare needs.

Has Privatization & Corporatization Through the Managed Care Concept Been Beneficial to the Health of Americans?

    As I mentioned, it is conventional wisdom that private, for-profit corporations can do a better job of administering taxpayer funded healthcare than government agencies.  But managed care is not working out in accordance with the widespread belief the government will pay less for healthcare if the profit motive incentivizes better care at a lower price.  Medicare Advantage costs fifteen percent more per enrollee than traditional Medicare.  Medicaid MCOs are paying robust dividends, buying back billions of dollars worth of their stock, and rewarding executives with exorbitant compensation packages while well baby care, infant mortality, heart disease, diabetes, and access to addiction treatment are not significantly improving across the Medicaid eligible population.

    Aetna, UnitedHealth, Centene, and other major insurance companies are reaping huge financial rewards by keeping per capita costs low. That would not in itself be a bad thing if outcomes were improving.  Perhaps having some healthcare is better than nothing.  No doubt, people receiving Medicaid benefits have better health outcomes than people with nothing.  But that is not the point.  Comparing poor people with no health insurance to poor people with Medicaid is illogical.

    Medicaid is lower tier medicine.  So those individuals lucky enough to qualify for it and actually receive it are treated as second class citizens.  So, by virtue of carving out a form of medical care for poor people – which is seen as welfare or a “handout” – the system can exploit them for financial gain while denying them the quality of care every other citizen deserves even though every form of healthcare received by Americans is heavily subsidized in some way or other by government.

Follow Us at the Center for Health Care Information & Policy (a newly formed nonprofit at and on this Blog as We Expose the Illogic and Folly of Privatizing U.S. Healthcare

[1] HHS OIG Report: “High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concern About Access to Care in Medicaid Managed Care.”,rates%20greater%20than%2025%20percent-twice%20the%20overall%20rate.



Dave Kingsley

Thanks to Susie and Ivanka Talveski, Seven Supreme Court Justices, and Individuals and Organizations Filing Amicus Briefs, the Federal Nursing Home Rights Act Has Been Strongly Reinforced.

    In a decision written by Justice Ketanji Brown Jackson and reported on Thursday, the U.S. Supreme Court held that unambiguous provisions of the Federal Nursing Home Rights Act (FNHRA) are enforceable by private individuals under Section 1983 of the Civil Rights Act of 1871 (H.H.C. of Marion County v. Talveski[1]). This is a big deal because it means that practices such as use of chemical restraints and arbitrary transfer are illegal and a cause for action in federal courts.  Patients and their families cannot be restricted only to medical malpractice suits in state courts and/or to state administrative remedies.

    Susie Talevski, an attorney, initially filed a suit in Federal District Court on behalf of her mother Ivanka after her father Gorgi Talveski was arbitrarily transferred to a facility an hour and a half from their home.  The transfer occurred after the Talveski family consulted with outside physicians and hired a neurologist to evaluate the regimen of drugs administered to Mr. Talveski.  It appeared that his health deteriorated after the drug regimen was initiated and improved after six powerful psychotropic medications were terminated from the regimen.

    In conversations with Susie and her colleagues in Indiana, I’ve learned that it is very difficult to navigate the Indiana tort liability laws and even make it into state courts with a suit against a nursing home.  As in most states, awards for victims of medical malpractice are capped and not more than a hand slap in Indiana.

    Furthermore, as most of us who advocate for nursing home patients know, there is no real remedy at the state level in most states for any type of redress when abuse and neglect occur. Administrative remedies through state agencies tend to end up in the “nothing to see here” file.

    In the final analysis, patients and families have the best chance for redress in federal courts when nursing homes illegally violate rights granted by FNHRA.  I applaud Susie’s courage in fighting this case all the way to Supreme Court.  In agreement with H.H.C. of Marion County’s claim that she didn’t have standing to sue in federal court, the district court threw out her case.  She appealed to the 7th Circuit, which overturned the decision of the district court. H.H.C. of Marion County appealed, and the Supreme Court granted certiorari.

H.H.C. of Marion County v. Taleveski Should not be Below the Radar, but it is.

    On Thursday, the Supreme Court voting rights decision and the indictment of former President Donald Trump grabbed all of the headlines and H.H.C. of Marion County v. Talveski seems to have escaped media notice. I hope this case is discussed widely and in depth by advocates and scholars.  The back story and the legal implications of the case are far more extensive and complicated than I want to deal with in this brief blog post. Protection of the right to be free from chemical restraints and capricious behavior of nursing home providers should not be left to state tort law and/or the whim of state agencies, many of which have a propensity to protect the interests of the industry at the expense of patients and families.  Certainly, Indiana has one of the most anti-consumer torts laws in the U.S. 

    It was shocking to read the argument of the U.S. Solicitor General on behalf of the provider (H.H.C. of Marion County) before the Supreme Court.  She claimed that administrative channels at the state level were sufficient to insure FNHRA rights. This naivete on his part is one more example of how out of touch federal administrative agencies are in assuming that individuals are not in serious jeopardy of having their rights violated or ignored within individual states.

The ”Medicaid Unwinding:” An Orwellian Euphemism for Abject Cruelty & Profound Ignorance

    Fortunately, the Talveski family, the 7th Circuit, and seven Supreme Court justices could see that individual civil rights granted to all U.S. citizens by Congress should be protected in the federal courts under the Civil Rights Act of 1871, Section 1983.  The precedents for this case have pertained mostly to Medicaid rights in general. 

    During COVID, the Federal Matching Percentage (FMAP) for state Medicaid programs was increased by a hefty percentage for the purpose of preventing the administrative burden on Medicaid beneficiaries who are required to reapply each year and prove their eligibility for the program.  As a condition for receiving the FMAP uplift, states could not disenroll individuals from the Medicaid program.  The number of people receiving Medicaid benefits, i.e., had access to medical care, grew at a vast rate.  That program ended on May 1st, and now the so-called unwinding, i.e., kicking people off, has resulted in a precipitous drop in enrollees. 

  With weak state regulation of healthcare providers, it is likely that states will regularly violate the rights of U.S. residents to medical care.  Especially in states with far-right wing legislatures, harassment of poor individuals and families needing medical care and other assistance is ordinary and ongoing.  In Arkansas, a state that tried for a waiver from CMS to force Medicaid enrollees to undergo drug tests, the current governor, Sara Huckabee Sanders, has come up with “Arkansas Renew” as the Orwellian label for her disenrollment program.

    All realms of human rights and civil rights are critically important if we are to retain a semblance of Democracy.  Drugging and disappearing people into out of the way institutions is one of the most chilling and horrifying practices imaginable in any society.  Certainly, it is characteristic of fascist, authoritarian governments.  That it happens on behest of corporations attempting to optimize return for shareholders, executives, and other special interests, doesn’t make it any less odious.


Gray Panthers’ Statement on the American Nursing Home System: “Restructure the Industry and Defund the Existing System.”


Dave Kingsley

Reissuing an Important & Elegantly Written Document by the National Council of Gray Panthers Networks.

    A couple of years ago, the Gray Panthers issued a statement on the nursing home industry in the United States.  Entitled “Restructure the Industry and Defund the Existing System,” it was elegantly written and to the point of what we need in public discourse regarding the suffering of institutionalized disabled and elderly Americans in long-term care – suffering due to the precedence of shareholder value over humane care.  Hence, the document is well worth reading today since recognized reform movements in Washington, D.C. over the past couple of years have been sympathetic to the industry and unwilling to confront the truth.

    The authors were too modest to take credit and list their names on the statement.  I assume that Jan Bendor, Art Persyko, Lydia Nunez, and Clint Smith had a hand in writing it.  But perhaps it involved more members or perhaps all of the GP Senior Housing Committee.

    The following are excerpts from the summary:

    “The ‘enemy’ is a monster created by federal policy, allowing for-profit corporations to own chains of long-term care facilities, and lavishing on the owners the incentives and benefits in our tax laws regardless of their performance in caregiving.”

    “These corporations are engaged in buying and selling of real estate with very favorable tax rewards.  The corporations can practice medicine and also profit from Medicare, Medicaid, and other programs that can be hijacked for the corporation’s benefit rather than for the benefit of those in their care.”

Problems & Recommendations

    In stating the problems on page 2, focus of the statement was on lack of accountability for the massive loss of life due to COVID, weak regulation by government agencies, underpaid staff in understaffed facilities, and the political clout of the industry through lobbying.  Recommendation appropriately included accounting of Medicare length of stay fraud, wrongful discharges that occur, accountability for misreporting of data regarding harm and finances, overuse of antipsychotics.

   Download the Gray Panther Statement on Nursing Homes Here:

If the U.S. Moved in the Direction the Gray Panthers are Suggesting, Americans May Not Hate the Thought of Needing Long-Term Care in a “Nursing Home.”

Inside the Washington, D.C. beltway reform efforts are beset with influence from the powerful forces that have a vested interest in keep the nursing home system the way it is. It is time for some honest discussion about why the status quo is only gaining strength with a small tweak here and there that serve as appearances and nothing more.



Dave Kingsley

American Tolerance of Corporate Deceit & Predatory Economics is Perplexing

    Misinformation can be harmful and even deadly. We have seen evidence of this maxim during the COVID crisis. We have seen it in the debate over climate change and in so many other critical issues confronting society. In post-truth America, it has become acceptable to put forth any mistruth or unverified and unverifiable claim and escape embarrassing denunciation, excoriation and censure. In no case is this more apparent than in the mistruths spread by for profit corporations in the nursing home business.

    It isn’t difficult to compile objective evidence that nursing home industry hardship pleas of low profits, thin margins, and other such claims are false and misleading.  The American Health Care Association/National Center for Independent Living, the industry’s lavishly funded propaganda organ, consistently spreads the narrative that corporations in the Medicaid and Medicare funded long-term care business are struggling financially and need a significant increase in reimbursements.

    A highly qualified financial sleuth isn’t needed for debunking the industry’s financial narrative of low profits and struggling investors.  Therefore, it may be difficult to understand how nursing home reform commissions and politicians escape public opprobrium for ignoring the patently obvious. However, it should be understandable that the finer points of nursing home finance isn’t on most peoples’ radar. We need to put it on everyone’s radar.

The Nursing Home Industry is Lying to the American People and Getting by with It

    The truth is that the federal and state governments allow for a charade in which facility-specific costs are submitted without any clarity about cash flowing to holding companies and parent corporations. We don’t really know how much Medicaid and Medicare revenue in the privatized nursing home system is extracted for dividends, and executive pay. ONE BIG EXCEPTION, HOWEVER, IS THE ENSIGN GROUP.

    With an annual revenue in 2022 of over $3 billion, the Ensign Group is the largest single provider of nursing home care in the United States.  It is also the only publicly listed company that earns revenue solely from Medicaid and Medicare funded long-term care.  More importantly for understanding the financial realities of the nursing home business, it is a publicly listed corporation and therefore must file financial reports with the Securities & Exchange Commission (SEC).

    The Ensign Group annual 2021 10-K report submitted to SEC notes a net income of 8.5 percent and earnings before interest, taxes, depreciation, and amortization (EBITDA) of 13.7 percent.  However, an examination of their six facilities in Kansas reveal a combined net revenue of $55,567,680 and a combined operating negative net of -3,201,123 (-5.7%).  Five of the six facilities reported a negative net income.

Facility-Specific Cost Reports:  How the Big Lie Works.

     A review of Ensign Group cost reports in one state, i.e., Kansas, provides insight into how the misleading state-specific and facility-specific financial  system works.  Ensign operates six facilities in the state of Kansas.  Comparing the facility-specific cost reports to the consolidated financial report submitted by Ensign to the SEC is instructive in demonstrating the inadequacy of the cost reports as a measure of financial performance.

    For instance, Table 1 contains cost report data from an Ensign owned facility known as Riverbend Nursing Home in Kansas City, Kansas (incorporated and licensed as Big Blue, LLC). The data indicates that the facility, with a slight negative net operating income, lost money (this is 2021 data). It is typical for facility cost reports to show a very low or negative income but that doesn’t reflect what parent corporations are earning from the operations.

Table 1:  Net Operating Margin

Form CMS 2540-10:  Home Office Allocation & Related Parties

    Parent Corporations with a chain of facilities incorporated as LLCs can claim an allocation to their home office based on corporate expenses for operating each facility.  The “home office allocation” appears to be a large allowance for expenditures that are not fully clarified, not decipherable by the public, and, I believe, not understood by state auditors.  For instance, Table 2, includes claims for Ensign home office allocation and payments to their subsidiaries paid for insurance and real estate.

Table 2: Part I, Riverbend Form CMS 2540-10

Corporate Hubris:  They Don’t Need to Answer Questions Required by Law

    A state auditor with whom I had a conversation recently asked me if I had any insight into the home office allocation that might be helpful for auditing purposes.  This person knew that I had been looking at cost reports across the U.S. and thought practices in other states might be something of a guide.  That the auditor wasn’t sure about how to evaluate funds extracted from revenue and sent up the chain of LLCs (often shell companies) to home offices tells us much.

    The auditor is in fact not the problem.  Statutes governing Part I of Form CMS-2540-10 (42 CFR 413.17) states that “such cost must not exceed the amount a prudent and cost conscious buyer would pay for comparable services, facilities, or supplies that could be purchased elsewhere.”  Commonsense suggests that pricing goods and services sold to related parties requires some sophisticated and extensive analyses. Do states have the regulatory capacity to do that?  Advocates and scholars need to raise that issue with legislators and demand to see any evidence supporting decisions to approve claimed expenditures to related parties.

Part II of Form CMS 2540-10:  How Vague Can They Be?

    Part II of Form CMS 2540-10 requires far more detail than shown in Table 2, which reflects the exact data submitted by the Ensign Group for its facilities. For instance, the statute requires that an entity listed in Column 4 “enter a percent of ownership in the provider.”  That may not be a logical question because Ensign corporate owns everything.  Gateway Healthcare is a shell company that merely hides the flow of capital, avoids taxes, and protects the facility from liability.  Theoretically, Gateway owns 100% of Riverbend, but Ensign owns 100% of Gateway (an LLC incorporated in Nevada).

Therefore, Ensign’s facility-specific cost reports merely ignore statutory reporting requirements. That appears to be acceptable to state auditors. This kind of “catch us if you can” hubris is typical when an industry has an extraordinary amount of money to spread around in Washington and the 50 state legislatures.

Table 3: Part II, Riverbend Form CMS 2540-10

Summary:  CMS Allows States to Regulate Nursing Homes & Looks the Other Way

    CMS is not likely to fix the corrupt and inadequate nursing home financial reporting system. They will noodle with advocates and mull over all sorts of well-founded and sensible proposals but without pressure from legislators to counter the industry’s power in Washington and in the 50 states, the status quo will prevail. 

The political will just isn’t there at the national level. We need to change that.  Advocates are likely to make more progress at the state level by compiling cost reports in their respective states and take their analyses to the media and state representatives.     The critical – life and death – nature of this problem should lead the public to revolt if they understand it and have the evidence to clearly see that the industry narrative is false.

  Lack of staff and poor quality of care leads to shortened lives and considerable suffering.  That could be fixed by stopping the excessive extraction of cash sent up the line to investors and executives. That will only be stopped by a narrative based on verifiable fact and a coordinated effort to spread that narrative in the media and among state legislators. Financial data may not seem interesting on the evening television news or in the print media.  But we are obligated to make it understandable, interesting.