Author Archives: dave

Predatory Economics 101: Extremist Money Behind Supreme Court Nominations Affects Nursing Home Care, Medicare, & Other Programs for the Elderly

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By Dave Kingsley

Dark Money Behind Court Nominations & Amicus Briefs Are Aimed at Deregulation

Senator Sheldon Whitehouse gave a brilliant presentation at the Senate hearing for Supreme Court nominee Amy Barrett that is must viewing for advocates concerned about regulation of the nursing home industry and protection of programs for the elderly. I’m uploading the video of his seminar on the flow of dark money into nominations and amicus briefs.

No one knows for certain where all the money flowing into nonprofits presenting amici briefs is originating, but there is considerable evidence that the Koch organization, and other wealthy pro-corporate organizations are providing much of it. Why? The majority on the court has a theocratic, radical free market and pro-corporation ideology. I would define them as a theocratic corporatocracy. They derogate the 1st Amendment separation of church and state while catering to conservative business organizations such as the Chamber of Commerce and a large number of other such organizations seeking deregulation.

The nursing home lobby fits comfortably into this mélange of business interests seeking restraints on the government’s power to protect customers, patients, communities, and the environment from profiteering predators – the way I would describe most nursing home corporations. Make no mistake about it, liability of operators will be greatly limited when employees and patients suffer due to their neglect. Cases before a theocratic-corporacratic 6 to 3 majority which involve damage to stakeholders will more often than not be decided in favor of corporations.

If you carefully listen to and watch this video, you will hear and see Senator Whitehouse explain that out of eighty cases involving corporate interests, eighty were decided by a 5 to 4 majority in favor corporations rather than in the best interests of citizens. When Barrett joins the court, it will become a 6 to 3 supermajority.

What We Can Expect: Looking Back, The Pattern is Clear

As stated above, the eighty cases analyzed by Senator Whitehouse were all decided in favor of the corporate-religious network by five to four. He has dubbed the five member majority as the “Roberts Five.” These cases fall within four categories: 1. Unlimited dark money in politics, 2. Denigration of the civil jury, which has an obligation to apply the law and not cater to monied interests, 3. Weakening of regulatory agencies, and 4. Voting rights.

No doubt, looking forward, Barrett will be expected to decide in favor of overturning Roe v. Wade, National Federation of Independent Business v. Sibelius ( ACA) and Obergefell v. Hodges (gay marriage). However, looking back at the pattern of the Roberts Five decisions, all four categories of cases impinge on the ability of advocates and activists to protect patients. Regulatory actions and laws designed to protect vulnerable elderly and disabled patients are likely to be found unconstitutional by the court as it has been reconstituted during the Trump administration. Suppression of voting rights will make it more difficult to elect state legislatures sympathetic to the cause of patients rather than investors.

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.

How’s Your Retirement Account? Paul Ormond’s is Doing Just Fine!

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Paul Ormond: Carlyle Group‘s HCR ManorCare CEO

Paul Ormond Managed HCR-ManorCare Into Bankruptcy & Walked Away With $116.7 Million

These days, one of the major problems facing retirees is adequate savings and retirement funds for survival throughout their later years of life. Not a problem for former HCR-ManorCare CEO Paul Ormond. After he managed the third largest nursing home chain into bankruptcy, he was awarded with an astounding golden parachute – ostensibly for retirement benefits.

According to Skilled Nursing News Mr. Ormond, who left ManorCare in September 2017 was, “…owed $116.7 million under the prepackaged bankruptcy plan by which Quality Care Properties, Inc. (NYSE: QCP) will take over the Toledo, Ohio-based skilled nursing provider.” (https://skillednursingnews.com/2018/03/manorcares-former-ceo-owed-millions-bankruptcy/.) 

The Carlyle Group is one of the biggest and most predatory private equity firms on the planet. It engineered a takeover of HCR-ManorCare in 2007 and the looting began. Property was sold off and leased back by operations. Like all PE takeovers, most of the deal was leveraged with debt loaded on the victim company, i.e, HCR ManorCare.

The CG – HCR-ManorCare saga is a story yet to be fully explicated. It is a project on which we are currently working. It is important that the damage done to skilled nursing by financiers be compiled systematically, organized, and made available to the public.

Workers’ Doing The Backbreaking Work Have No Retirement

One salient feature of American free enterprise after the Reagan Revolution was the demise of company provided defined benefits pension programs, i.e. after a set number of years of employment, employees were vested and could count on an annuity from retirement until death. As the economic paradigm shifted toward a radical free market form of capitalism (I use the term capitalism quite loosely here), the responsibility for funding retirement fell on the shoulders of employees through defined contribution programs such as the Roth IRA and 401(k).

The frontline nursing home workers without whose hard work economic rewards for the financiers at the top of the ownership hierarchy would not be possible generally have no retirement benefits. The shift to defined contributions was an excuse for corporations to end defined benefits programs. Consequently, affluent Americans have most of the defined contribution accounts with sufficient funds for a satisfying retirement.

As Monique Morrissey of the Economic Policy Institute stated in her comprehensive report, “The State of American Retirement: How 401(k)s have failed most American workers:” “For many groups—lower-income, black, Hispanic, non-college-educated, and unmarried Americans—the typical working-age family or individual has no savings at all in retirement accounts, and for those that do have savings, the median balances in retirement accounts are very low” (https://www.epi.org/publication/retirement-in-america/).

DID YOU KNOW?

From 1997 to 2005, Federal Reserve Chairman Jerome Powell was a partner at The Carlyle Group, where he founded and led the Industrial Group within the Carlyle U.S. Buyout Fund. From 2005 until he was appointed Chair in 2017, Chairman Powell was involved in finance and service on Bipartisan Policy Committee and the Federal Reserve Board.

Federal Reserve Chairman Jerome Powell

The Stock Market Is Going Up & Nursing Home Owners Are Doing Fine: Are You Perplexed?

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Monetary Policy & The Rising Stock Market

    Most Americans are perplexed about rising stock markets during the current economic collapse.  As someone with an avid interest in the history of economics, I can say with a high degree of confidence, this is a first.  But when you consider the evolution of the U.S. economic system over the past 50 years, monetary and fiscal policy have been incrementally arranged to support investors and reduce protection for workers and consumers.

    Indeed, the history of the “nursing home” industry reflects these macroeconomic changes.  Advocates and activists should consider the trend toward financialization of corporations in all businesses and prepare a legislative agenda accordingly.  I will return to the nursing home industry later in this post.  First, I want to explain the phenomenon of a roaring stock market in an economic collapse.

    As I’ve been pointing out for months, the Federal Reserve can create an unlimited amount of money and make it available to lenders and corporations.  The Fed can do that in several ways.  One way is to buy debt from banks and corporations.  Where do they find the money to do that? They create it with keystrokes (that’s a metaphor for an accounting gimmick).  It can lower interest rates to practically zero and invite banks to borrow. It can lower bank reserve requirements and allow for increased lending at very favorable interest rates for borrowers.

    In a front page article yesterday (8/19/2020) entitled “The Market Is Nuts: Stocks Defy a Recession,” the New York Times finally decided to provide a partial explanation of the realities of contemporary government policy, which amounts to nurturing of concentrated wealth at the expense of most Americans.  If you read the article to the end, you will find this coming from Michael Hartnett, chief investment strategist at Bank of America Global Research:

“The performance of the market in the face of such dire expectations for growth, he wrote, is just the latest example of investors betting that low growth will prompt the Fed to continue to pushing (sic) money into the financial system, ultimately bolstering stocks.  In other words, stocks are going up not because of economic optimism, but the future looks fairly grim.  Mr. Hartnett titled his report, ‘I’m so bearish, I’m bullish.’”

https://www.nytimes.com/search?query=%22This+Market+is+nuts%3A+Stocks+Defy+a+Recession%22

Nursing Home Corporations Will Come Out Just Fine

    Publicly listed nursing home companies are enjoying the current bull market.  I checked The Ensign Group’s stock on the Nasdaq yesterday (ESNG). It closed at $56.50 per share – near its all-time high. In March, it was trading as low as $29. 

Furthermore, The Ensign Group second quarterly report indicates strong earnings:

“We are pleased to report that despite continued unique challenges presented during the current global pandemic, the operational momentum we experienced in the first quarter continued into the second quarter where we again achieved record-breaking results. While there were many things that contributed to our strong results, we announced today that we returned all of the CARES Act Provider Relief Funds, which are meant to cover lost revenue and increased expenses tied to the COVID-19 pandemic. Therefore, our results do not include any benefit related to those distributions,” said Ensign’s Chief Executive Officer Barry Port. The Company indicated that, like other well-capitalized healthcare providers, they returned these unneeded provider grant funds. He continued, “As we said last quarter, this pandemic arrived at our doorsteps at a time when our organization had never been stronger clinically and financially

https://finance.yahoo.com/quote/ENSG/history?p=ENSG

    Some of the big corporations in the business such as Genesis Health Care don’t appear to be faring so well, but that’s simply because they have been looted.  A number of years ago, for example, Genesis was the victim of takeover artist Arnold Whitman’s Formation Capital.  I’ll be writing much more about that in future blog posts.

    In addition to government largess, companies like the Ensign Group can enhance free cash flow through low interest loans from their lending facilities.  Available liquidity, plus the CARES Act, and Paycheck Protection Program will ensure that the skilled nursing business will land on its feet coming out of the pandemic.

No Better Place to Invest Your Money

    An article by Alex Spanko in Skilled Nursing News yesterday (8/19/2020) with the headline “Skilled Nursing M&A Remains Active: Investors Don’t ‘Have a Better Place to Put Their Money’” indicates that the infusion of cash from Federal and state governments plus ongoing price supports makes it difficult to value real estate.  This simply means that unlike the rest of the commercial real estate market, nursing home real estate is maintaining value due to factors unrelated to market forces (e.g. such as retail and office space).

    Although bed occupancy has dropped during the COVID pandemic, unlike other commercial real estate, lessee revenue remains steady. Operators will be able to meet most or all of their lease payments.  In most cases, real estate corporations are owned by the same holding company as the operator.  Leases are favorable to lessors; hence, a partial modification of lease arrangements combined with the amount of cash infused into the business by governments will hardly lower overall revenue.  As stated in Spanko’s article:

The question of valuations has become complicated by the vast influx of federal stimulus cash for skilled nursing operators. The Department of Health and Human Services (HHS) so far has earmarked nearly $10 billion exclusively for nursing home operators, on top of billions in Medicare- and Medicaid-based CARES Act relief tranches that providers can also access. Providers have also seen state-level bumps in Medicaid rates, and have been able to take advantage of the Paycheck Protection Program (PPP) and advance Medicare payment programs.

https://skillednursingnews.com/2020/08/skilled-nursing-ma-remains-active-investors-don’t-a-better-place-to-put-their-money/

Summary

    The American economy has evolved increasingly toward financialization, which means that finance has morphed from a supportive ancillary function to a dominant business.  No doubt, the primary business of the nursing home industry is finance rather than real estate and skilled nursing as has been the case historically.  The difference between the thousands of corporations involved in skilled nursing and other financialized corporations is the maintenance of a price floor and generous supplemental payments without any relationship to quality of care or competitive performance in a market.

    Due to a powerful, well-funded, and well-organized lobby, the industry has been able to capture government – both elected officials and agencies with an original mission of oversight.  Agencies such the Center for Medicare & Medicaid Services and correlative state agencies protect the industry from public scrutiny while providing a veneer of oversight.  State legislatures have propped up corporations in the skilled nursing business in spite of their low quality and neglectful care for patients.

PREDATORY ECONOMICS 101: THE “NURSING HOME” INDUSTRY IS EXTRACTIVE & EXPLOITATIVE BUT POLITICIANS, AND STATE/FEDERAL AGENCIES HAVE ITS BACK

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    The nursing home system is predatory. It is designed for optimum extraction and exploitation without reinvestment for innovation and improvement in the quality of care.  Although federal and state regulators promote a veneer of protection for patients and the public, their primary mission is maintenance of government support for massive real estate and financial services industries.

    Here are some recent examples of how the system of profit and nonprofit corporations, elected official and regulators is designed to protect providers at the expense of patients, the public, and communities in which they operate:

The power of money in politics

    The New York Times reported on August 16, 2020[1] that large nursing home chains are hiring high powered lobbyists to scrounge around Washington and push for favors such as tax breaks, immunity, and cash infusions through COVID relief bills.  Genesis, the biggest operator of nursing homes is on the brink of bankruptcy due to mismanagement and sees the COVID crisis as a path to rescue – it has hired two former top White House aids to lobby on its behalf. 

    Life Care Centers, the third largest owner and operator of skilled nursing facilities has hired former top-level congressional staffers to lobby on its behalf.  This company – owned solely by billionaire Forrest Preston – has a record of not just poor care but horrible care.[2]

    Aside from nursing homes corporations hiring their own lobbyists, they are represented by two powerful trade associations: the American Hospital Association and the American Health Care Association. OpenSecrets.org indicates that the AHA disburses about $100 million per year for political campaigns, lobbying, and maintaining a lobbying army in Washington and the 50 states.[3]  These appear to be a productive expenditure.  According to the NYT article:

The industry has received about $7.6 billion in federal grants through the federal economic stimulus package, according to the American Health Care Association, an industry group, and will soon get another $5 billion. Nursing homes have also received an estimated $11 billion more in government loans and advance Medicare payments, according to an analysis of federal data by Good Jobs First, a progressive research group. Executives at Genesis, which has reported 1,500 deaths at its homes nationwide, told investors last week that the company had received nearly $190 million in federal grants and was looking for more.

The Industry is well protected, but patients and employees are neglected by regulators

    Regulators, whether they be CMS, state agencies such as the Kansas Department of Aging & Disability Services, or local health departments have circled their wagons around the industry and provide it with a veil of secrecy.  I began calling agencies and checking on websites for information about cases of COVID and deaths. 

    Nothing on websites. Using the ruse of finding a nursing home for a friend, I inquired about information regarding COVID cases and deaths in the facilities in the area.  Generally, I was referred to other agencies such as – believe it or not – an Area Agency on Agency, which has nothing to do with COVID or regulating nursing homes.

    Eventually, I was directed to public health departments such as the Kansas City, Missouri health department.  Amazingly, one public health director told me he did have that information but wouldn’t share it with the public.  One epidemiologist told me that her agency had the information but wouldn’t give me the phone number of the person I would need to talk to because that person was just too busy to talk to me.

    Seventy or one hundred thousand (who knows?) nursing home patients and workers who have died from COVID is an unnecessary, preventable tragedy of major proportions.  But due to deregulation and capture of government agencies and their employees, the tragedy continues.  The Wall Street Journal reported that 26 states are not bothering to even test inspectors entering skilled nursing facilities.[4]

In the final analysis:  A protective shield and largess for the industry.

    Government agencies and legislatures are enmeshed with the skilled nursing business in exploitation of private pay patients, workers, and taxpayers. Behind a veneer of state and federal regulatory activity is a mutually protective relationship between government and providers.

    The claim of a competitive market in which competition will improve service is mythical.  Prices are controlled – advantageously for the industry – through reimbursement rates while wages are allowed to float in an imaginary “labor market.” Huge amounts of largesse is funneled to the industry through tax expenditures, price controls, supplemental payments, and bailouts.

[1] https://www.nytimes.com/2020/08/16/business/nursing-home-safety-trump.html?searchResultPosition=1

[2] Having checked Nursing Home Compare ratings for Life Care Centers, I was struck by its extraordinary number of low ratings in Kansas and Missouri.  Also, I have noticed that this company appears frequently on the CMS “special focus facilities” list.  Its Wichita facility has been on the SFF list throughout the pandemic.  This means that the facility is so poorly operated that CMS won’t even rate it at the lowest level of 1.  Preston was caught because of whistleblower employees for overbilling Medicare for rehabilitation services.  He settled by returning $140 million to Medicare.  Who knows how much he got away with?

[3] https://www.opensecrets.org/orgs/summary?id=D000000116

[4] Anna Wilde Mathews, “Many Nursing-Home Inspectors Aren’t Tested,” Wall Street Journal, Saturday/Sunday, August 15-16, 2020, p. A3.

Predatory Economics 101: “A Place for Mom” Nursing Home Referral Scam

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    PREDATORY ECONOMICS 101:  SUPPLEMENTS & NURSING HOME REFERRAL SERVICES

    Nursing home referral scam A Place for Mom is the topic of this second post in a series with the theme:  Predatory Economics (the other one calls out purveyors of the snake oil Prevagen, see last post August 11, 2020).  In this series we will be calling out businesses preying on the public – especially the elderly.  As a plutocracy has become more entrenched in the United States, predatory marketing and manipulation have become increasingly open and shameless. 

    Among other for-profit corporations that have been integrated into the assisted living and nursing home system, referral services now exist to guide prospective tenants and patients to assisted living and skilled nursing facilities.  We do not really need these services, the Center for Medicaid & Medicare Services rates nursing homes based on regular state inspections.[1]

    A Place for Mom, is the biggest and best known of these so-called services.  No doubt, many readers of this post remember Joan Lunden’s soothing assurances about how this service intends to be a guide to the best place for mom (her conscience must have bothered her, she’s gone).  The truth is that mom will be referred to whichever facility is willing to pay for the referral.

   It is important to note this:  A Place for Mom is owned mostly by predatory, private equity firms Warburg-Pincus.  There is no evidence that I’ve ever seen which suggests that this outfit is in the nursing home business for any other reason than to extract value for investors at the expense of care.

  A Place for Mom advertises itself as a “free service,” but the ads don’t tell the whole story. Indeed, mawkish, maudlin, phony-baloney television ads featuring Ms. Lunden and others would lead viewers to believe that the company is not even a company but rather just a free service that does nice things for moms (and dads or anyone else supposedly).

    Because a Place for Mom is a for-profit company, its revenue must come from somewhere.  In fact, nursing home and assisted living operations using the service pay a fee for referrals equivalent to one month of their monthly charge. This information is not present on the company’s website homepage. [2] However, it raises profound ethical issues that must be explored in some depth.

    Empirical evidence suggests that a Place for Mom revenue is driven more by the facilities willing to pay than by an objective evaluation of quality of care in those facilities.  For instance, exactly which skilled nursing facilities with which the company has a referral agreement in the Kansas City area is difficult to discern from its website.[3]  However, I did find Indian Creek Health Center of Overland Park listed as a Place for Mom’s referral. The CMS website on which the five-star rating for each facility can be found indicates a 1 – the lowest rating – for Indian Creek. 

  I called the company’s 1-800 number to see if they would disclose which facilities were customers. However, the salesperson was brand new and knew nothing about the nursing homes in the area. I could sense that her job was to capture me as a customer.  It was clear that if I didn’t tell them exactly for whom I wanted to find a facility I would not receive any information.

    These services exemplify the irrational nature of deregulated government funded systems. Neoliberals, conservative Democrats and Republicans, and libertarians promote the mistaken notion that government is inept and private businesses can provide services much more efficiently and effectively.  Contrary to the belief in the advantages of the free market over government in health care these privatized services tend to be opaque, predatory, and manipulate unsuspecting citizens into care that is far more costly than if it were provided by the government.

    It is important to consider the ethical concerns raised by operations like a Place for Mom:

  • Individuals are lured into these services under the guise that quality of care is the main consideration in guiding customers to assisted living and nursing home facilities.

  • Funds that could be dedicated to care are siphoned off into an unnecessary for-profit entity. 

  • Evaluation of the service by social scientists is not possible due to a veil of secrecy.

[1] If you want to find out about a nursing home, go to this site and enter the city of the nursing home you are interested in and the name of the nursing home: https://www.medicare.gov/nursinghomecompare/search.html?  The facility to which A Place for Mom refers your mother/dad/friend/child/relative will pay for that referral.  This is money that comes out of care.  The people in the company’s boiler room operation will not have near as much information about the place as what you will find on the CMS website.

[2] https://aplaceformom.com

[3] https://www.aplaceformom.com/nursing-homes/kansas/kansas-city

PREDATORY ECONOMICS 101

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EXPOSING SHAMS, SCAMS, AND PREDATORS

    This is the first in a series of blog posts with the theme:  Predatory Economics.  In this series we will be calling out businesses preying on the public – especially the elderly.  As a plutocracy has grown more powerful in the United States, predatory marketing and manipulation have become increasingly open and shameless. 

The Federal Trade Commission (FTC) and Food & Drug Administration (FDA) increasingly bend to the will of industry.  Because of saturation advertising on television, many people are suckered into believing that medical shams and phony products are legitimate.  We intend to expose them.  But we also believe that many aspects of Medicare, and Medicaid have been rigged to the advantage of providers and disadvantage of beneficiaries. So, those need to be exposed also.

    In the first posts, fraudulent sales pitches to the elderly and their families will be highlighted – “called out” if you will for these two scams:  (1) “Prevagen,” a snake oil which is sold as product for improving memory, and (2) “A Place for Mom,” a cubicle sales program (boiler room operation) for directing people to nursing homes by making victims think the company really cares about the quality of care they will receive.

    WE ARE NOT ANTI-CAPITALISTS.  We believe in a real, well-functioning capitalistic system in which both buyers and sellers have accurate and complete information.  However, we also believe that government must regulate business in the interest of the public good and provide the resources to people for full participation in a democratic society.

PREVAGEN, A PRODUCT FOR SAVING YOUR MEMORY. YOU MAY HAVE SEEN THE ADS.

    A supplement with the brand name “Prevagen” is sold nationwide and is marketed through a massive television advertising campaign. The claim is that this supplement will improve memory.  No evidence has ever been presented that it will do that – none, nada, zip, zero.  However, plenty of data exists that it will do nothing for brain health.[1]

    You might ask, “Why does the Federal Trade Commission or the Food & Drug Administration allow the purveyors making huge amounts from selling this phony, baloney product continue to blanket TV programming with false claims?” Although these agencies are unduly differential to industry (in my view), in the case of the Prevagen, they have attempted to stop false ads.  Both agencies have been attempting through litigation to end the fraud perpetrated by the manufacturers of the product but have been hung up through appeals.[2]

    Ads Preying on The Elderly

    You might have seen the ads.  An elderly lady is pondering over products at the pharmacy that could help her memory.  A kind pharmacist walks up and tells her that Prevagen is the best. Or you see 60+ people telling the viewing audience how much it has done for their minds.  One man even proclaims that all his friends say, “man you have a memory like an elephant.”   The content of the ads is clearly directed toward the elderly and preys on fears of memory loss – even dementia – during the later years of life.

Quackery Is Nothing New

    Medical quackery including worthless medicinals and the sales of snake oil have been part of U.S. history for centuries.  Prevagen is the latest iteration of a pill that will cost you a pretty penny but do absolutely nothing for you – unless you consider a placebo effect as doing something for you (much like Lydia E. Pinkham’s Little Pink Pills of yore).  The makers of this memory pill will charge you $70 on Amazon per bottle of 30 pills for which they have provided no scientific evidence that their curative will effective (check it out yourself on Amazon).

    What is in this magic pill?  The manufacturers are giving you ground up jelly fish. Robert H. Shmerling, MD Senior Faculty Editor, Harvard Health Publishing, had the following to say about Prevagen:

    “The bottle promises it “improves memory” and “supports healthy brain function, sharper mind, clearer thinking.” Never mind that the main ingredient in jellyfish (apoaequorin) has no known role in human memory, or that many experts believe supplements like this would most likely be digested in the stomach and never wind up anywhere near the brain.”[3]

    I asked the head pharmacist at the CVS pharmacy a few blocks from my home if her store sold Prevagen.  She said yes.  I asked her why they would sell a product that is obviously fraudulent.  She said that she didn’t have any choice in the matter, but stated that it was kept behind the counter because people were stealing it. “Why,” I asked. This pharmacist didn’t seem to know and didn’t seem to care about why people were stealing it. When you think about it, many people who are desperate about perceived loss of memory (or perhaps real loss of memory), but can’t afford the $70 bottle of 30 pills.

What Should We As Citizens Do?

    Elderly Americans remain deceived by the ubiquitous ads and waste of money on a memory pill that simply doesn’t work.  Leading retail outlets such as Amazon, CVS, Walgreen’s, and others peddling these over-the-counter supplements have no legal obligation to reveal the scientific truth about them.  The same is the case for television networks who are obviously earning a significant amount of advertising revenue from supplement frauds.  Moral obligation and corporate responsibility are another matter. 

    Please tell your nice friendly pharmacist that it is wrong to foist snake oil on the elderly.  Also, call your state attorney general and tell them to file an injunction against the company making Prevagen and the retail outlets selling it.

[1] See the discussion in the court referenced in endnote 2 regarding the Madison Study in which there was no significant difference in a double blind, placebo-experimental group design.  It took 30 post hoc analyses to find a subgroup with a significant difference on which the company (Quincy Biosciences) stakes it claim that it has been clinically tested.  The search for a significant p-value by repeatedly looking for subgroups in which a difference can be found is bogus.  Eventually such a difference will occur by random chance.

[2] https://www.ftc.gov/system/files/documents/cases/quincy_bioscience_complaint-filed_version.pdf; https://www.ftc.gov/enforcement/cases-proceedings/152-3206/quincy-bioscience-holding-company; https://www.lexology.com/library/detail.aspx?g=2f42c12e-180b-40f9-8597-e9371fc43324

[3] https://www.health.harvard.edu/blog/fda-curbs-unfounded-memory-supplement-claims-2019053116772

SOME NURSING HOME ADVOCATES & SCHOLARS ARE ACTING AS ENABLERS OF A CRUEL, CORRUPT AUTOCRAT

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Dave Kingsley

    Like autocrats throughout history, Donald Trump considers no body count too high, no cruelty too outrageous, and no lie too big in preservation of power and propagation of a warped ideology.  Denial of “real reality” and creation of a “fake reality” is a typical maneuver of anti-democratic strongmen like Trump. 

    Science denialism, venal political calculations, and ideological considerations has led to the preventable deaths of well over 50,000 nursing home patients and employees.  In an attempt to promote an image of caring and concern, the Trump regime has set up a bogus commission to “study” the issue of COVID-19 in nursing homes.[1] Advocates and the public should have two major concerns: (1) this commission is conducting business in secrecy, which means anything critical of Donald Trump and his minions will never see the light of day, and (2) Some nursing home advocates and scholars have been willing to sign a nondisclosure agreement and serve on this sham “secretive commission.” 

    Why would otherwise respectable and respected professionals place their imprimatur on the nefarious attempts by an autocrat to cover up his malfeasance? Anne Applebaum answered that question this way in her article in the latest issue of The Atlantic: “Each violation of our Constitution and our civic peace gets absorbed, rationalized, and accepted by people who once upon a time knew better.” (“History Will Judge The Complicit,” page 60,  https://www.theatlantic.com/magazine/archive/2020/07/trumps-collaborators/612250/). 

    As Masha Gessen said about Trump: “He was probably the first major party nominee who ran not for president but for autocrat. And he won.” (Surviving Autocracy, p. 16).  No autocrat in history has ever referred evaluation of his performance to an objective panel of citizens with the expectation that he would accept blame for a major program failure.  Why would nursing home advocates and scholars expect America’s current autocrat to be an exception? 

    Calling it a hoax, the Trump administration initially denied the reality of a COVID-19 pandemic and has attempted to propagate that lie from the time the virus caused the death of a nursing home patient in Kirkland, Washington to the present time. This current science denialism is reminiscent of Stalin’s promotion of Trofim Lysenko’s agriculture and genetics pseudoscience.  Anyone who disagreed with Lysenko was purged, imprisoned, or killed.  Trump can’t at this stage imprison or execute dissenters from his warped ideology, but he can purge and smear credible scientists. 

   Due to Lysenkoism and, consequently, crop failures, millions of people starved under the Stalinist and Maoist Communist regimes.  Donald Trump is not Stalin or Hitler, nevertheless he operates as much as he can in accordance with the strongman paradigm.  Driven by an extreme ideology, his attack on science has resulted in the death of nearly 150,000 Americans at this point. 

   Someone quoted Jill Lapore as saying, “Commissions allow governments to appear to be doing something, while actually doing nothing.”  A list of members of this sham Trump commission to whitewash the cause of a massive number of deaths in nursing homes, can be found through the link on the endnote below.  They either know the nature of the regime they are enabling or are seriously naïve.  Either way:  shame on them.

[1] Independent Coronavirus Commission for Safety and Quality in Nursing Homes.  Members of the commission can be found at https://sites.mitre.org/nhcovidcomm/about-us/.