The Importance of Words & More About the “Elder Justice Past, Present and Future 2022” Conference in Albany, New York

By:

Dave Kingsley

“Words Matter!”  Has This Important Message Become Trite and Banal?

Words do matter but does anyone in the “nursing home system” really care about the importance of linguistics in the political process – a process crucial to how we care about people in skilled nursing facilities. Let’s take the terms “resident,” “home,” “memory care,” “the elderly,” and “low net income,” as examples of commonly used words and phrases injected into the stream of communication about Americans institutionalized for lengthy periods in medical facilities. 

In leveraging government on behalf of special interests, lobbyists commonly use words, phrases, and aphorisms as major instruments for moving legislators to give them what they want and to quell resistance from adversaries.  The terms I mentioned above pertaining to skilled nursing facilities are inappropriate for describing reality. Nevertheless, advocates, media, and the public in general have failed to appreciate the potency of these terms in guiding politicians’ voting and oversight activities.

I do want to reiterate what I told attendees at the Albany conference last week – the so-called “nursing home” system is all about politics.  To call institutions for long-term medical care “homes” is to engage in a political act.  At the very least it is an act that validates and legitimizes political acts undergirded by propaganda.  To ignore a meaningless and misinforming term like “low net income” is to reinforce the use of corporate finance terminology for justification of inhumane and medically unethical treatment of human beings.

The 800-Pound Gorilla in the Room that We All Too Often Ignore

The all-important political process and the blatant use of propaganda by a powerful and wealthy industrial lobbying system is the 800-pound gorilla in the room that is commonly ignored by media, advocates, and professionals.  To be fair, professionals working for government agencies such as CMS are constrained by the increasingly corrupt nature of politics and the pressure from legislators that can be brought to bear on them if they stray into taboo territory.  Nevertheless, I think that professionals in these regulatory agencies are far too compliant and passive in the face of industry political pressure and the cheating, lying, and stealing it generates.

The American Health Care Association (AHCA) as just one piece of the conglomeration lobbying congress on behalf of SKN profiteering is extremely well-funded.  With an annual revenue of $30 million and the better part of a century of practicing propaganda, the AHCA can summarily steamroll advocates in Washington and in the statehouses of the 50 states.  They have borrowed the “big lie” principle from Goebbels – tell a lie so big and so preposterous that the masses believe a person wouldn’t tell it if it weren’t true.  What is the main big lie?  It is this: “Although it is a losing proposition financially, highly sophisticated investors are investing in Medicaid funded SKN and need more government help to survive.”

Although I put quotes around the above lie by practiced liars like Mark Parkinson, AHCA CEO, that is not exactly how they phrase this masterfully scurrilous lie.  But a continuous implication that operators are making a very low to nonexistent return on their investment, can only lead to an inference that SKN on a long-term basis is not a good investment.

The Need for an Advocacy Narrative & Strategy

For the past decade, I have been hectoring my colleagues in the LTC/SKN advocacy community to develop a narrative and political strategy of their own because they have none now.  Legislative hearings, publications, media, and other forms of communication I have observed suggest to me that those of us attempting to change the god-awful, “nursing home” (so-called) system need to come together and design the frames and narratives for countering industry propaganda and legislator corruption.

For instance, I have yet to see coherent, effective, frames and narratives regarding the industry’s financial prowess employed by anyone at legislative hearings.  The industry only needs to continue its “low net” big lie for justification of how we treat patients in facilities because an opposite narrative is nonexistent.  There is no doubt that plentiful amounts of capital are flowing into the system – much of it from taxpayers – and excessive amounts of cash are flowing out at the expense of decent, humane care. 

I will continue to hector leading advocates, activists, and professionals to take the necessary steps to consider the importance of narratives and political strategies and to take further steps to work together to develop narratives and effectively utilize them in the political process.  I may be whistling in the wind, but if you continue to watch this blog, I will be writing about propaganda, narratives, and the politics of poor medical care.

A right-wing religious PAC just received a $1.6 billion donation, and the medical-industrial complex will now be a whole lot harder to fight.

By:

Dave Kingsley

Leonard Leo and the Marble Freedom Trust

As head of the Federalist Society, Leonard Leo has had a major role in picking Catholic right-wing Supreme Court justices such as Alito, Roberts, Kavanaugh, and Barrett.  Leo is himself a fanatic, right-wing, Catholic who has no respect for the separation of church and state.  This brand of Catholicism works well with the Christian Nationalist Movement[1] that cuts across most fanatical, fundamentalist, Protestant sects.  

Although the Federalist Society is an organization for the promotion of legal conservatism and includes a variety of far-right believers in a sort of faux libertarianism and assorted other rightwing philosophies, Leo has locked in the Notre Dame law school theocrats as a powerhouse in the grooming and promotion of suitable candidates for future government legal positions and jurists.

Barre Seid, a Chicago industrialist, and ardent libertarian, has donated his entire company – Tripp Lite – to the Marble Freedom Trust, a 501(c)(4) political entity controlled by Leonard Leo.  The Marble Freedom Trust sold the company to the Eaton Corporation for $1.6 billion. This intersection of radical, libertarian, industrialists and the assortment of theocratic movements does not bode well for those of us who are working to deindustrialize healthcare, and other government functions.  The religious right shares many values of super-rich, self-proclaimed libertarians such as the Koch brothers. They believe that wealthy industrialists are godly insofar as they either share or are willing to tolerate the Christian Nationalist value system.

History has taught us that major religious institutions and industrialists are willing to accommodate regimes and politicians that serve their interests no matter how corrupt, anti-democratic, and debasing to the public interest.  The Supreme Court’s decision in Citizens United has already placed corporate political activities in a protective bubble.  We can look for corporations threatened with movements for reform to look to the current lopsided court and politicians on the make to protect their interests.

Therefore, Marble Freedom Trust money will be directed toward politicians and court actions that place property over people, profit over health, capital over labor, and the super-rich over the broad mass of citizens.  This will make changing a life-shorting, inhumane nursing home system far more difficult.  Gouging the public for life-saving medications and denial of medical care to the uninsured will be difficult to end. Let’s face it, we cannot ignore politics in our quest for social justice. 


[1] Christian Nationalism has been studied and reported on by journalist Katherine Stewart.  In her book, The Power Worshippers, she discusses this movement’s belief that the U.S. is a Christian Nation, and that the U.S. should be ruled in accordance with what they consider “Christian values.”  The values they endorse include are anti-gay, anti-democratic, pro-super wealthy, and freedom from government, except when they want to leverage government for imposing their radical beliefs on the rest of society.

The “medical industrial complex” is not capitalism, so let’s change the narrative.

By:

Dave Kingsley

Genuine Capitalist Enterprises are Not Operating in Anti-Competitive, Government Rigged, Systems.

As a proponent of capitalism, I resent the U.S. privatized, government-funded, health care system and the implication that it is a suitable representative of a capitalist system.  It is not.  The system of nursing homes, hospitals, and clinics through which patients pass for care is a financialized[1], corrupt, rigged, system.  Furthermore, some services important to society should not be industrialized under the farcical notion that return on capital will drive quality care.

Reformers have failed to create a narrative to defeat the financiers’ mantra that privatizing appropriate government services will increase quality and productivity.  History has taught us a very clear lesson:  industrialization and privatization of medical care and a host of other government services are unproductive and lead to excess extraction of capital, lower productivity, and reduction of innovation and reinvestment.

You Can’t Shame the Shameless

There is an unfounded belief that exposing bad operators in sensational mainstream media articles will force a change for the better in nursing homes and hospitals.  The misguided view that the medical-industrial complex will be moved by horror stories reminds me of an old T-Shirt in my closet with the following silkscreened on it: “We Don’t Care, We Don’t Have to Care, We’re EXXON.”  You could substitute the words medical-industrial complex, The American Health Care Association (AHCA), Ensign Group,” Welltower Corporation, Centene, United Health, and thousands of other corporate associations and entities for EXXON on such a T-Shirt.

Nursing home and hospital corporations don’t care about the shaming they deserve because politicians in federal and state legislatures have their backs.  Furthermore, they have captured the agencies charged with regulating them.  The Center for Medicare & Medicaid Services, and 50 state agencies are dominated by the industry and their well-financed lobbying organizations (not to mention the FDA, the FTC, the CFTC, etc.).  You can shame private equity as a business model, scurrilous operators, low wages/salaries, understaffing, and other outrageous practices, but financiers in the healthcare business are, for the most part, shameless. 

For at least a decade, I have been urging advocates to form a narrative and political strategy.  Playing rope, a dope with an industry that has a very well devised, effective, and well-funded narrative will change nothing.  The nursing home industry has a narrative based on falsehoods, which are comprised of frames related to the hardships endured by noble businessmen and investors.  Frames in which the industry purports to be suffering from low Medicare/Medicaid reimbursement, and low net income (profits) are blatantly false and misleading.  Regardless of how unbelievable the frames comprising industry propaganda, they are never seriously challenged by the constellation of nonprofit and government entities representing the elderly.  Furthermore, do-gooder commissions charged with studies of nursing homes, hospitals, and other health care subsystems generally whitewash and paper over the unethical, inhumane, and anti-democratic nature of the entire medical-industrial complex.[2]

Let’s Get Technical

I propose that advocates create frames that can be integrated into and support this narrative: “The privatized U.S. healthcare system is not fair, capitalistic, or ethical.”  Frames accusing industrialists of manipulation of markets, financial machinations, pay offs/bribes to legislators, and covering up corruption through well-funded lobbying entities such as the AHCA (nursing home lobby) are necessary but risky for professionals who want to go along to get along.

Industry moguls and their minions in government know from 70 years of history that their propagandistic efforts work well. They have been able to convince the public that privatized, for profit, services are better than non-profit and government services.  This mantra has gained traction and is embedded deeply in the American zeitgeist.  It will take a concerted effort across a broad array of nonprofit advocacy organizations to destroy a narrative based on industry lies and complex financial maneuvers.

However, before advocates can suitably frame messages for the media and legislators, a considerable amount of research, data collection, and analysis must be undertaken.  Data and evidence related to “rent seeking,”[3] “net operating income,” and “cash flow,” is necessary for debunking the “low net,” “thin margins,” and other hardship frames of the industry.  The nursing home system must be unraveled and explained as a network of capital flows from taxpayers and other sources through Real Estate Investment Trusts (REITs), private equity firms, LLCs/LLPs, and C-Corporations.

It is necessary to show how excessive capital flows through nursing homes and hospitals to investors and executives.  REITs have been existing under the radar and never discussed at legislative hearings (See my blog post: “Real Estate Investment Trusts (REITs) are Big Players in the Nursing Home Industry:  That Should Concern All of Us” February 13, 2021).  We must recognize how the entry of private equity and REITs around 2000 literally transformed the industry.

Advocacy research must include data from cost reports submitted by facilities to CMS and state agencies.  Falsehoods in these reports are pervasive.  Nevertheless, it is important to organize the data to make a case and support our frames pertaining to corruption and excessive extraction of capital at the expense of care.

We Are on It!

A team of people across the U.S. have come together to initiate solid, evidence-based, research.  With some help from the LTCCC and a lot of volunteer work, a group of us have been organizing data from cost reports and digging into financial machinations, ownership, and the flow of capital from various sources (including taxpayers) to investors, executives, and family wealth. 

We want to direct attention to more than horrendous examples of nursing home abuse and neglect.  The industry justifies poor care with a well-honed, richly funded, propaganda campaign. We should not respond to their “woe is me pleas for increased funding.”  Rather we should follow the money and make the trail available to legislators and journalists that we know will utilize it (think Senator Elizabeth Warren).  I don’t want to engage them in their claim that investors in the nursing home industry are suffering.  My only response to that is investors are not stupid.  If returns were no good in public-funded, skilled nursing care, investors would be investing somewhere else. 


[1] By labeling the system “financialized,” I mean that financial maneuvering for extracting cash takes precedence over increased productivity and quality of services.  Shareholder value is the primary mission of most healthcare private corporations.  Stakeholders are of secondary importance.  Often stakeholders suffer for the sake of enhancing and protecting shareholders’ interests.

[2] While COVID was surging in the Spring of 2020, CMS convened an “independent” commission the management of which was outsourced to the Mitre Corporation.  The report of this commission was a whitewash and papered over general neglect by the nursing home industry which resulted in 200,000 patient and employee deaths.  Contrary to suggesting accountability for lack of infection control and no preparation for a pandemic that scientists had been warning about for decades, the final report recommended more financial assistance for the industry.  Recently, a commission under the auspices of the National Academy of Sciences, Engineering, and Medicine (NASEM) in operation for a number of years entitled “National Imperative to Improve Nursing Home Quality” issued a report of their work. This commission tiptoed around the corruption, deceit, and excessive extraction of capital at the expense of quality care.

[3] “Rent seeking” has evolved in the field of economics to describe corporate efforts to extract wealth without a correlative increase in the production of goods and services.  The nursing home, finance, real estate, lobby is constantly hectoring legislators for an increase in reimbursement without any real, scientific, evidence that the cash flow and return on their investment is inadequate.

The Nursing Home Industry Lies, Cheats, and Steals with Government Help:  It’s Time to Stop the Wankery and Demand the Truth!

By:

Dave Kingsley

Wankery:” Definition: (Noun; Vulgar Slang British)  “Pretentious, contemptible, stupid, behavior or material.”  https://www.lexico.com/en/definition/wankery

A Message to Advocates, Activists, Journalists, & Politicians

Over the years, I have observed many legislative hearings regarding nursing home abuse and neglect. In practically every hearing, industry lobbyists claim that Medicaid reimbursement is too low. Therefore, they conclude, the public, patients, and their family members can’t expect better care.  Usually, they pull out their standard narrative of “low net” or “a thin margin.”  In essence, they are claiming that the industry is made up of incompetent businesspeople who have a tendency to invest in losing businesses.

Unfortunately, leading advocates and scholars invited to testify invariably fail to confront the industry’s hardship plea as a lie, which it is.  Basically, Medicaid is fueling a real estate industry undergirded by at least $300 billion worth of revenue producing commercial real estate.  Revenue flowing through thousands of facilities (buildings) is enhanced by a plethora of other businesses billing Medicaid and Medicare for therapies, pharmaceuticals, labor contracting, dietary provisions, management services, and anything else providers can dream up as a cost to taxpayers and as a flow of cash to one of their businesses.

Here is how it works:  the corporate entity (LLC, LP, etc.) with the license to operate a facility, i.e., provide care, also pays for services to other corporate entities owned by the same investors who own the licensed facility.  These are called “related parties.”  The LLC with the license is making a lease payment to the LLC which owns the property.  Often, nurses and nurses’ assistants are provided by a labor contractor – another LLC.  Management of a licensed facility is often provided by a management firm owned by the owners of the licenses, the properties.  This is a form of theft, but it’s legal thievery because the industry has a powerful lobby.

Payments to these related party entities increase operating expenses, lowers net operating revenue, and often result in net operating losses.  Net income therefore is often far lower for each facility because parent corporations are sucking out a huge proportion of revenue through an array of corporations.  So, lobbyists will deceitfully tell legislators that the overall “median” net income percentage (net income divided by total revenue) is a half percent or some such nonsense.

Furthermore, people not well-educated in corporate finance (which, understandably, is most people) won’t know that net income isn’t a valid metric for determining capital flowing from customers – in this case, the government – to shareholders.  A host of accounting gimmicks hide cash flow that certainly does not appear in net income.  However, that is a discussion for a later blog post.  Suffice it to say, low nets and thin margins are the warp and woof of industry propaganda – swallowed, or at least not confronted, by most everyone from advocacy groups to scholars, to journalists.

What Could We Afford if Excess Extraction of Taxers’ Money by the Nursing Home Industry Were Identified & Stopped?

We know that the nursing home business is lucrative for investors, shareholders, and executives.  We know from financial reports submitted to the Securities & Exchange Commission by publicly listed nursing home corporations that executives receive millions per year in compensation and Wall Street investors such as BlackRock and Vanguard are the largest shareholders in publicly traded nursing home stock. 

BlackRock and Vanguard are the leading asset managers on the Planet.  They would not be investing your pension, college endowment, 401K, or other assets in an industry with a track record of paltry returns. 

Some my research colleagues and I have been investing a huge amount of time compiling financial reports (otherwise known as cost reports) to various state agencies.  These reports are pervasively false, misleading, and often fraudulent.  Invariably state agencies fail to audit these documents and legislators seem oblivious to pervasive industry deception. 

Excess cash pouring out of Medicaid and Medicare through licensed skilled nursing/long-term care facilities into investors hidden behind a veil of secrecy could be utilized to keep people out of these God-awful places in the first instance or to make life comfortable for those of us who will be or are now institutionalized under horrible conditions.

The number one duty of advocates is to tell the truth to power and to force the industry to stop lying, cheating, and stealing money that could be directed toward decent, humane, treatment of disabled Americans needing assistance with basic, every day, living.  It is time to get our messaging in order.

Medicaid is a Disgrace

By:

Dave Kingsley

The Medicaid Program Has Roots in Segregation & Racial Hatred

Among economically wealthy and technologically advanced countries in the world, Medicaid is a medical system unique to the United States.  The program was conceived and forced on the American people by segregationists in the Democratic Party during the Johnson Administration.  Segregationist Congressman Wilbur Mills, powerful chairman of the House Ways & Means Committee in the 1950s and 60s, was able to hold President Johnson’s Medicare legislation hostage until he agreed to a poverty medical care system which gave states considerable power over administration of programming and qualifying criteria.

Segregationists from states such as Arkansas, Alabama, Georgia and other states of the deep South saw poverty medicine for which people would have to prove to a state agency that they were eligible, as a means for keeping poor people – especially poor African Americans – from receiving health care. In the 1960s, the segregationist South was still the agricultural South which relied on cheap labor.  Furthermore, intense Jim Crow hatred of Southern African American citizens was incompatible with anything that might raise their status above a level of serfdom and humanize them. (See Jill Quadagno One Nation: Why the U.S Has No National Health Insurance, 2005, pp. 13-14; Gerard Boychuk, National Health Insurance in the United States and Canada:  Race, Territory, and the Roots of Difference, 2008, pp. 59-79; 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, Anti-Poverty Measures in America, 2019).

Medicaid is means-tested.  Americans must prove that they are impoverished to qualify.  This characteristic of the program has made state agencies and their bureaucrats the gateway to medical care for poor people who are required to experience the humiliating process of proving that they are too poor to get health care without government welfare.  One’s poverty must be so deep that only the poorest of the poor can qualify. In most states, the program is stigmatizing as legislatures and bureaucracies pile on humiliating barriers such as “proof of looking for work,” drug testing, and other criteria that should have nothing to do with receiving needed medical care.

Funding for Long-term & Skilled Nursing (Nursing Homes)

It is often said that placing nursing home funding in Medicaid for individuals unable to self-pay the daily rate in most facilities – or have spent down their life savings until they are impoverished – was an afterthought – that there was no purpose or rationale to making it a Medicaid program.  That was the position taken by Bruce Vladeck in his excellent but now outdated history of the system. (Unloving Care: The Nursing Home Tragedy, 1980).  I don’t believe that. 

It is my opinion that legislators like Mills and Senator Kerr from Oklahoma could foresee the major real estate industry that nursing home care would spawn.  Privatization (corporatization) was well on it way when Congressman Mill and Senator Kerr conceived and were able to get the Kerr-Mills medical program for seniors through congress in 1960.  It was also means-tested and was the precursor to Medicaid.  Nursing homes care was an integral component of Kerr-Mills.  Kerr had ties to the nursing home industry and Mills was an ardent believer in utilizing government funds and tax codes for incentivizing private economic expansion (as opposed to expansion of government, non-profit growth).

Medicaid has Become a Perverse Toxic Program that Enriches Investors & Corporate Executives

In December 2021, the Center for Medicaid & Medicare Services announced that Medicaid expenditures had reached $671 billion.  A large proportion of these funds reimburse corporations for nursing home care, which is mostly substandard and despicable.  Revenue for the industry includes not only the ample reimbursement member companies receive for patient care but also all of the capital gains from real estate which derives value from a license to operate a nursing home.

Although states and the federal government tolerate and even facilitate a veil of secrecy regarding finance and the flow of capital through lending institutions and from reimbursement, enough evidence can be found to suggest that substandard care is enriching corporations and executives.  For instance, Welltower, a major Real Estate Investment Trust and operator of nursing homes paid its CEO $20 million in 2020.  Investors in publicly listed nursing home related corporations have received high earnings during COVID.  Stock of the publicly listed corporations in the business has continued to increase while the markets have been decreasing.

A huge amount of capital flowing through the Medicaid system isn’t reinvested in a better health care system.  It is pocketed.  Much of what is pocketed can’t be seen because the government allows investors in privately held companies hide their finances.

Another Commission to Study the Nursing Home System Isn’t the Answer

People who are appointed to prestigious commissions to study the nursing home system aren’t given to speaking truth to power.  Indeed, appointing a group of academics and other professionals to a commission sponsored by the National Academy of Sciences and important foundations will not solve the problem we all have, i.e., dread of ever being in a nursing home.

It is very risky for most people on a commission to tell the truth, which is that the medical system in the United States is driven by greed.  Money in politics is resulting in domination of government bureaucracies and legislators by the very people who need to be regulated.  Money is power and has become an increasing factor in U.S. politics. 

Recommendations to tweak this that or the other thing in a system so corrupt and inefficient that nothing less than total transformation will change much of anything will likely only reinforce that system. Recommendations to increase staffing will be resisted by the industry and frustrate advocates, unions, and the public because any change will be window dressing.

I don’t want to see a recommendation for “more transparency.”  I want the privately held companies to open their books and provide the same information that publicly listed companies provide to the Securities and Exchange Commission.  The truth of the matter is that the nursing home industry, indeed the entire health care industry, has become financialized.  Taxpayers are not receiving the increase in productivity and quality that matches the tax dollars they are forced to pay for their own care.

Liz Fowler – New Top CMS Official – Is Too Deeply Enmeshed with the Medical-Industrial Complex

By:

Dave Kingsley

The Industry-Government Revolving Door

I remember a trip to the White House in 2012 with a group sponsored by the Committee to Preserve Social Security & Medicare. The purpose of the trip was to lobby against proposed cuts in SS and MC – two highly successful and popular government programs (funded mostly by the beneficiaries of the programs). President Obama had earlier almost caved into Republican demands for devastating cuts in both programs. Subsequently, the President appointed a commission (The Simpson-Bowls Commission) loaded with budget cutters and deficit hawks intent on recommending deep cuts to the programs.

We were in a room with all of the top Obama White House staff, which included Liz Fowler. At the time, I had not heard of Ms. Fowler. It didn’t take long for me to learn that she was President Obama’s point person on the Affordable Care Act. The route to that job, I soon learned, was from a John Hopkins PhD in Health Care Policy & Management, through the major health insurance company WellPoint, and then to the Senate Finance Committee under Chairman Max Baucus – a staging point for moving from government service to a high paid job lobbying – a revolving door between the Senate and K-Street.

It is my belief that Senator Baucus “put” Liz Fowler in the White House to insure that President Obama did the right thing vis a vis industry in the design of a health care program that would funnel enormous amounts of business to private insurers and pharmaceutical corporations. Indeed, she left the White House soon after passage of the law for a job with Johnson & Johnson – a major corporate beneficiary of Obamacare.

Liz Fowler’s Move Back to Government

Liz Fowler’s bio (posted by CMS) conveniently excised her first career at WellPoint (https://www.cms.gov/about-cms/leadership/center-medicare-medicaid-innovation). Furthermore, it says nothing about her years with J&J after leaving the Obama White House. It is interesting to note that the bio says, “She also played a key role drafting the 2003 Medicare Prescription Drug, Improvement and Modernization Act (MMA).” My question is, “Was she working for WellPoint at the time?” The MMA propelled the Republican mission of privatizing Medicare forward at a breathtaking pace. It also included a new prescription drug plan (Part D) in which government negotiation of drug prices with major pharmaceutical companies was disallowed.

Ms. Fowler’s new job at CMS is not insignificant. Indeed, as Deputy Administrator and Director of the Center for Medicare and Medicaid Innovation (CMS Innovation Center), she will have a say over the kinds of innovation in care we need to see in delivery of medical services in nursing homes, hospitals, and clinics. Financial innovation in the nursing home industry has been vast in the past 40 years while innovation in care for patients has been practically nil.

Advocates Need to Seek Liz Fowler’s Removal from CMS

Taxpayers deserve to be represented by government officials who best represent their interests. Innovation in government funded healthcare will require a considerable amount of financial innovation that is fair to patients and taxpayers, availability of data, and transparency. Let’s take the big one: negotiation of drug prices. The excessive costs of pharmaceuticals reflects a toxic, perverse, symbiotic relationship between government and industry. That is not capitalism – it is statism – a necessarily corrupt and debauched form of economics.

Nursing home innovation will require major changes in operations that will humanize treatment and raise standards of medical ethics – which are sorely lacking at this time. Those innovations will reduce the amount of excess capital flowing from treatment facilities to investors.

Much needed innovations include data collection processes that provide valid and reliable data for evaluating the effectiveness of industry’s utilization of tax dollars versus excessive investor extraction of taxpayer provided capital. Also, data will be of no use to advocates, scholars, and the public in general if it is not readily accessible. That is not the case now, which is inexcusable in a super-wealthy country with unlimited resources for providing something as simple as a sophisticated, easily accessed, data system.

Unless Ms. Fowler has had an epiphany and a conversion experience, she does not, as a top official, belong in an agency taxpayers and program beneficiaries depend on for regulation, patient protection, and systems for monitoring provider activity. The tactic of corporate shills in government is the “tweak,” which typically changes little and reinforces corrupt, inhumane, and costly programs. The U.S. healthcare system is a disgrace and an embarrassment because of a corrupt relationship between industry and government the likes of which have never seen in U.S. history. It is time to stop thinking that the system can be transformed or even improved while the revolving door continues to revolve.

.

Data Analytics, The Stock Market, & Healthcare Justice

By:

Dave Kingsley

Current public relations carried on by the hospital and nursing home
industries are based on bogus claims designed to mislead the public. The
variety of wealthy lobbying organizations for the medical-industrial complex
are promoting false narratives based on either an invalid interpretation of
financial data (intentional) or making claims of hardship, e.g. “low net
margins” that are not supported by solid, scientific, factual information
(also intentional).

Big and increasingly dominant hospital and nursing home corporations have
sophisticated data analytic departments on which they rely for management
decisions affecting cash flow and shareholder interests. These multi-billion-dollar
companies determine razor thin margins acceptable for minimal staffing, pay,
food quality, training, and equipment. Even the smaller chains are implementing
productivity enhancement efforts with software designed to determine maximum
acceptable acuity levels for billing and cash flow.

Unfortunately, providers of long-term/skilled nursing care (i.e. nursing
homes operators) are not applying advanced technology and data analytics to
quality of care. I follow industry trade publications and financial reports and
can find no evidence that providers are employing sophisticated analyses to
efforts for optimizing the health and quality of care at a cost that returns a
reasonable value to executives and shareholders rather than a return that can
pass muster with regulators and legislators.

Because much essential financial data pertaining to tax supported medical
care operations are hidden from public view or nearly impossible to wrest out
of government agencies, advocates for patient and employee justice in hospitals
and nursing homes are in an asymmetrical fight with lobbyists. Because the
nursing home industry is more of a real estate/finance industry than a
medical/patient care industry, the lobbying power in federal and state
legislatures constitutes a juggernaut that can only be defeated through an
organized advocacy effort that fights for transparency and fully utilizes what
is available now to feed into a truthful narrative for media, legislative, and
research actions.

What Is The Stock Market Telling Us About The Financial Condition of
Nursing Homes & Hospitals After Two Years of COVID?

Some data pertaining to the financial condition of nursing homes and
hospitals are readily available from the U.S. Securities & Exchange
Commission (SEC). I have been tracking the stock of publicly listed
corporations with operations in nursing homes and hospitals. Most nursing home
corporations listed on a public exchange are real estate investment trusts
(REITs) that are becoming increasingly powerful in the long-term care/skilled
nursing business (they trade and lease real estate but also operate
facilities).

The last three months have not been good for the equities market. Stock
prices have been falling precipitously. But that’s not the case for stocks of
corporations in the business of providing tax funded medical care.

Brookdale Senior Living & The Ensign Group

Let’s consider the two biggest nursing home operators listed on a public
exchange that are not REITS: Brookdale Senior Living and The Ensign Group.
Since late November, the DOW has dropped approximately 3%, the S&P has
declined by 6.5%, and the NASDAQ has fallen by 17%. But these nursing home
corporations have gone in the opposite direction.

Closing price of Brookdale November 29, 2021 – $6.30 Close on February 26,
2022 – $7.00

Closing price of Ensign November 29, 2021 – $77.20 Close on February 26,
2022 – $82.19

So, Brookdale stock is up by 11% and Ensign stock is up 6.5% during the same
period we’ve seen a drop in the markets like we haven’t seen since March of
2020 when they crashed due to COVID but recovered rather quickly.

Most of the REITs heavily involved in the nursing home business have seen
their stock rise during the time that the market has been falling rapidly.
Welltower, the big one, is up 1%. Ventas, the other big one, is up nearly 8%.

Publicly listed hospital corporations are doing well also. HCA stock has
climbed from $229 in late November to $253 at the close yesterday – a 10.5%
increase. Tenet jumped from $74.46 to $85.71 since November 29th – a 15%
increase!

Why is the stock of these hospital and nursing home corporations doing so
well when the market is in correction territory? The primary reason is this:
they are heavily subsidized by the taxpayers. Indeed, their prices are set by
state agencies much like like utility company rates are set. They submit their
costs and are reimbursed for those costs plus increases for inflation and
healthy percentage increases above costs. Furthermore, they are structured for
each facility to pay lease expenses and other ancillary expenses to other
corporations they own.

Don’t believe the industry’s hardship pleas. That is all a lie. It is a
scurrilous behavior indeed for the American Health Care Association – the
nursing home industry lobby – and the American Hospital Association to be
putting out false information to snow the taxpayers who are so generous with
their subsidies for executive pay and shareholder dividends.

A Simple Truth: Nursing Homes are Run By Financiers – Not Medical Professionals

By:

Dave Kingsley

Nursing Home Investors Care about Cash Flow. They are Not Into Charitable Care.

It’s amazing to me how far nursing home industry lobbyists are getting with their hardship pleas. At this time they are being rewarded by legislatures for letting their workforce deteriorate to a crisis level. There are some simple truths – perhaps simple logic – regarding why qualified, competent medical professionals are hard to find these days.

Let’s start with the cutting edge of corporate finance: the “time value of money.” Investors calculate their free cash flow over five years before investing their money. Their decision is based on yearly cash flow discounted to the present time. This means that they determine what a dollar is worth at the present time versus what it will be worth in 1, 2, 3, 4, or 5 years if invested in a project or business. I won’t bother my readers with the formula for determining “net present value,” but debt financing of real estate and tax arbitrage play a major role in that calculation.

In the case of the nursing home industry, real estate is debt financed. Reimbursement for capital costs such as depreciation and interest typically exceed payment on loan principal and flow into the cash channel that will be “earnings” pocketed by investors. At some point, principals will equal and begin to exceed returns from real estate and debt tax advantages. The property will be flipped at that point.

Keeping food costs low, paying substandard wages, dangerously low staffing, and putting sick, fragile, elderly and disabled people in a room with a stranger are techniques for increasing cash flow from Medicare, Medicaid, self pay, managed care, and whatever other form of third party payer reimbursing care.

Why Would Investors Be in The Nursing Home Business if It Weren’t A Profitable Business?

Because privatized, tax-funded, medical care is financialized (finance overrides medical care) decisions regarding care are frequently and generally based on financial metrics. The quality of care is confined within the parameters of expected cash flow (discussed above). Furthermore, with “cash as King,” immediacy of returns rather than long-term planning and reinvestment for a better medical care system in the future drives decision making about staffing and overall conditions in acute care, long-term, and skilled nursing facilities.

The problem is this: the public, the media, and legislators do not have a good overall view of how the nursing home system works from a financial perspective. Federal and state agencies have been derelict in making accessible, understandable, financial and ownership data available to researchers and the public in general. California is more advanced in this regard than other states but still has a way to go in making the system fully transparent in that state.

In the past few weeks, I reviewed 2020 cost reports of 205 facilities in San Diego, San Bernardino, and Orange counties. I entered data regarding revenue, net income, number of beds, and the proportion of revenue from various third party payers (e.g., Medicare, Medicaid, Managed Care, etc.). As opposed to the claim from a Kansas nursing home lobbyist that providers have a median net income of 1/2 percent, I’m finding a median of close to 7% even though many claims of losses look dubious to me. Furthermore, net income is not a reflection of earnings or cash flow. Depreciation and interest are expensed on the income statement even though these are not cash expenses.

Nothing in the cost reports will tell us how much cash is extracted through real estate transactions. Nor do they indicate how much cash is flowing into parent corporations and holding companies. We know how much that is for public listed corporations – most of which are real estate investment trusts – because we can easily access financial reports they file with the SEC. As my colleague Charlene Harrington and I have pointed out, they were not hurt by COVID in 2020 (“COVID-19 had little financial impact on publicly traded
nursing home companies “J Am Geriatr Soc. 2021;1–4. https://doi.org/10.1111/jgs.17288). We will soon have an article in The International Journal of Healthcare Research regarding the robust financial performance of The Ensign Group since issuing a IPO in 2007.

The late Roy Christensen, founder of both Genesis and The Ensign Group, and his family have become fabulously wealthy by channeling money out of their large chain of facilities into stock options, stock awards, and executive pay. The Ensign Group is rapidly acquiring facilities and undertaking financial maneuvers like spin offs for the purpose of moving property around without incurring capital gains and corporate income taxes. They have also channeled a large share of their hundreds of millions in stock over the years into a variety of family trusts, which keeps their wealth intact and away from the IRS.

Labor Shortages in Hospitals & Nursing Homes are Due to Greed. Now the Medical Industrial Complex is Pushing to Lower Standards to Fill Vacant Slots.

By:

Dave Kingsley

Irresponsible Hospital and Nursing Home Corporations Value Shareholders Over Medical Care

    Nursing home corporations and executives have pocketed a fabulous amount of wealth throughout the history of publicly funded long-term and skilled nursing care.  Their business model includes enhanced cash flow through suppression of labor costs.  Therefore, their labor relations have been based on fast food wages, poor working conditions, and high turnover.

    Rather than invest in a highly professional, stable, competent workforce, the industry has pervasively extracted excessive cash for the purpose of protecting and enhancing shareholder value.  Unfortunately, the public is unaware of the lucrative trade in real estate and sophisticated leveraging of tax codes that add to the wealth of high high-net worth individuals and corporations owning and operating nursing home chains.  In addition, rewarded through generous reimbursement from Medicaid and Medicare, most corporations paid high dividends and high executive compensation rather than invest in their employees.

    Acute care workers have been poorly treated also. Owners of hospitals have put their nursing staffs in untenable and abusive working conditions due to their paramount concern with shareholders over ethical medical care.  A colleague forwarded this video to me today – it is worth watching: https://www.nytimes.com/2022/01/19/opinion/covid-nurse-burnout-understaffing.html?smid=em-share.

The Kansas Legislature is Rushing to Lower Professional Standards in Nursing Home Employment to Accommodate an Industry that Has Failed to Develop a Professional, Stable Workforce

    Kansas House Bill 2477 has sailed through the House without any significant opposition today.  This bill allows operators to skirt training, licensing, and competency standards that some legislators and citizens won through years of hard fighting.

    The current Kansas advocacy community has failed to educate legislators, the public, and the press on the history of industry neglect of their workers while extracting a massive amount of wealth for investors.  There is no excuse for the irresponsibility demonstrated by well-reimbursed nursing home corporations, but they are not being held accountable and it appears that there is no demand that they be held accountable.

    Despite failing their patients and employees, the nursing home industry has had two banner years financially during the COVID pandemic.  Now they will be rewarded again with hardly a murmur from any quarter we should be able to rely on for speaking truth to power.

Why Are We Putting Up With Medical-Industrial Grifters And Politicians Who Collaborate With Them?

By:

Dave Kingsley

Who Pays for Medicare, Medicaid, and the Affordable Care Act?

The answer to this subtitle, “Who Pays for Medicare, Medicaid, and the Affordable Care Act?” is “You and I do. We all do.” We pay through our income taxes, payroll taxes, sales taxes, property taxes, premiums, deductibles, and co-pays. We pay more than enough to provide all of us with first class medical care from the prenatal stage of life to the end of life. I can provide an overwhelming amount of evidence to support a claim that I will make in this and subsequent posts: we are getting far less for our money than we deserve because of greed supported by government/corporate corruption and propaganda.

Furthermore, corporations paid with taxes to underwrite our healthcare are allowed by federal and state governments to display their disdain for us with bizarre and insulting ad blitzes featuring carnival barkers like Joe Namath, Jimmie J. J. Walker, William Shatner, George Foreman, and other clownish characters with no self respect and the same amount of respect for us. You are paying for this incredible insult to your intelligence. If you are wondering why Medicare Advantage (MA) costs the Medicare program more than traditional Medicare, this is one reason.

Medicare has evolved into an incomprehensible Rube Goldberg morass of traditional and MA components incomprehensible to ordinary people. Enrolling in the program involves a lot of good luck or expert help for avoiding traps that could haunt you down the road if your health status changes. Even worse, hardly anyone knows that the MA program is an ongoing effort (facilitated by both political parties) to end traditional Medicare and rig the system in the favor of big insurance over beneficiaries. It’s succeeding with a swiftness beyond the wildest dreams of the corporate sponsors of the cleverly named Medicare Modernization Act of 2003.

How Much Are You Paying For Government-Funded Healthcare?

In considering what you pay for federal/state collaboration with corporate America for medical care – which is practically all medical care in the U.S. – let’s consider the macro level numbers first and then discuss what it costs you – the resident/citizen/beneficiary. Annual expenditures for Medicare were approaching $1 trillion per year in 2020 and will no doubt reach that milestone this year. Medicaid expended $655 billion in 2020 and premium subsidies for the Affordable Care Act totaled $55 billion, medical care for post 9/11 veterans is estimated to cost $60 billion per year, tax deductions (expenditures) for employer sponsored health insurance is the largest tax expenditure at $227 billion, household out of pocket spending reached over $406 billion. With these expenditures and hospital, drug, physician/clinical services, the U.S. expended approximately $4 trillion for medical care in 2020 (https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet).

We can only estimate total expenditures but $4 trillion is an acceptable official estimate, which would be approximately $11,700 per capita and 18% of GDP. This is double the expenditures of U.S. peer countries in Europe and Asia, which have universal, single payer systems rather the U.S. privatized model that blocks millions of our fellow citizens and residents from medical care.(https://www.healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries/).

I believe however that when tax expenditures are considered, $4 trillion, or $11,700 per capita and 18% of GDP significantly underestimates the total expenditure for medical care in the U.S. corporatized, for profit system. Corporations receive significant streams of revenue through the tax codes, which burdens ordinary wage and salary earning Americans by increasing their tax burden while reducing the capital gains taxes of corporations and high net worth individuals. There has been no attempt to enumerate the total amount of benefits accorded to medical care corporations for real estate depreciation, interest on debt, executive compensation, and other forms of federal and state tax expenditures. I’ve already noted the $227 billion for employer provided health insurance and included that in the $4+ trillion total.

One Egregious Example Of Corporate Greed Among Many

It is past time that the American people were told about the excessive executive compensation, unnecessary increases in shareholder value through stock buybacks, stock splits, and other manipulation of stock prices. Taxpayers need to be clearly enlightened about how much of their money is going to medical care versus going to shareholders, executives, advertisers, and other wasteful expenditures that we can expect in a privatized public-funded medical care – technically known as the medical-loss ratio. The Centene Corporation is one of many examples of greed and corruption unquestioned by the people sent to congress to oversee our rights as taxpayers and citizens.

Centene, which derives its revenue from Medicaid – poverty medicine – paid its CEO Michael Neidorff $24 million in 2020. The total compensation for Centene executives and board members (which includes former congressman and HHS Secretary Tommy Thompson and former congressman Richard Gephardt) was slightly more than $64 million. Much of this compensation is paid in stock options and stock awards. The first $500,000 of executive compensation is tax deductible, hence tax maneuvers (tax arbitrage) through stock awards/option are beneficial to corporate earnings.

It is not uncommon these days for high paid corporate executives to have their stock awards diverted into individual and family trusts or some entity set up for tax avoidance. Having analyzed the proxy statements of several health care corporations, I’ve come to realize how fabulously wealthy many families and individuals have become in corporations earning most of their revenue from government funded medical programs.

What Should Excessive Government-Funded Medical Expenditures Mean to You?

It may escape peoples’ attention that the budget in their state is strapped because of the cost of Medicaid due to massive numbers of residents unable to obtain access to care through some form of insurance. State revenue is primarily derived from income, property, and sales taxes. In most states, consumers pay at least 4 or 5 percent sales taxes on everything they buy – including food and clothing. Some states like Texas and Florida have no income taxes and therefore have high sales taxes. The burden of sales and property taxes is inversely proportional to income and wealth. Higher income people have a lighter burden. Although poor people who have the greatest burden for taxes are funding poor peoples’ medicine while wealthy individuals benefit financially from Medicaid have a lighter tax burden. Furthermore, program beneficiaries are treated as second class citizens in the health care system. Indeed, millions of poor people can’t even qualify for Medicaid or the Affordable Care Act and are essentially uninsured.

What does it mean to anyone in a society in which some of their fellow human beings are forced to pay taxes but denied medical care or accorded only low tier medicine for no other reason than they are poor? The public’s acquiescence in and acceptance of this injustice is mind boggling and disturbing.

In addition to state and federal income taxes paid by wage and salary earners, most every worker pays nearly 3% of every paycheck for Medicare (1.45% deducted from wages/salary and 1.45% submitted by the employer). These payroll taxes fund the Medicare hospital trust fund (Part A). At age 65, citizens qualify automatically for hospital benefits but are charged a premium for physician services (Part B), which will be $170.10 per month in 2022 (deducted from Social Security). Coverage for drug benefits (Part D) will cost around $37.00 per month. In spite of these costs, a major medical catastrophe can bankrupt you.

Hundreds of billions of tax expenditures for depreciation, employer provided health insurance, and generous tax avoidance provisions too numerous to mention flow from income taxes deducted from wage and salary earners’ paychecks – labor is taxed heavier so that capital can avoid taxes.

Budget Deficit & Inflation Propaganda

The monied elites are undeservedly rewarded through privatized, government-funded (with your taxes), medical care. Consequently, these programs do add significantly to U.S. debt and deficits. However, debts and deficits don’t bother me as much as the blame heaped on programs that benefit the American people for “running up the deficit.” The power elite owns the media and controls legislators through obscene amounts of political expenditures and can perpetuate big lies for the purpose of cutting benefits and increasing their share of program expenditures.

Here is some truth: Of the total expenditures on Medicare in 2020, 57% was paid by beneficiaries through their payroll taxes, premiums, co-pays, and deductibles (See page 10, 2020 Medicare Trustees’ Report). I submit to readers that the corruption of privatization and politics accounts for the other 43%. For instance, the Medicare Modernization Act of 2003, which legislated the drug benefit into existence, prohibits negotiation of drug prices. Very little serious discussion occurs regarding excessive payouts to shareholders and executives and lack of price controls in all phases of medical care.

That budget deficits and debts – often blamed on Social Security and Medicare – are running up inflation is one of the big lies foisted on the American people through clever, highly paid, public relations firms. Not one cent of Social Security is paid out of the U.S. Treasury. All of it – 100% – is paid for by beneficiaries through taxes they pay while earning a wage or salary. As I explained above, less than half of the funds for Medicare is transferred from the U.S. Treasury. That would not be necessary if corporations, i.e. shareholders and executives, weren’t lining their pockets with your taxes.

Why Are the American People Putting Up With The Medical Industrial Complex & The Politicians Supporting Its Greed & Corruption?

We could write books about the incessant propaganda and conditioning heaped on the American public. Suffice it say at this point that “we the people” are victims of clever framing, narratives, and political strategies. The Medical-Industrial juggernaut has unlimited amounts of money to spend on lobbying, paying off legislators (both Democrats and Republicans), and grooming the media. Taxpaying citizens and residents are sitting ducks. Therefore, they have been conditioned to believe that they don’t deserve anything better and should thank their lucky stars for the kindness and beneficence of the elites for any healthcare they do have. And if they are paying taxes and have no healthcare paid for with their taxes, too bad. That’s life.

There is an answer to the sorry state of affairs in the U.S. medical care system. Citizens must become informed, organized, and force their legislators to answer for the money they are receiving from Big Pharma, the American Hospital Association, and every other big money, medical-industrial group, roaming the halls of legislatures and paying for political campaigns and other goodies for legislators.

Paid professionals as advocates need a narrative and political strategy that might be risky. Speaking truth to power necessitates exposure of powerful people such as Congressman Richard Neal, current chairman of the powerful House Ways & Means Committee and a poster child for medical-industrial graft. He holds hearings on the disgraceful nursing home situation in this country without any intention of seriously reforming the system. If you don’t believe me, just Google him.

The Tallgrass Economics Blog will be focusing on propaganda, framing, narratives, political strategies, and how citizens can fight the corruption in a government-funded medical care system they pay for. We believe that the Democratic Party, liberals, and progressives could step up their political communication skills. We also believe that the great people in nonprofits advocating for reform of tax funded medicine need to come together and call out the politicians who are helping corporations fleece the hard working, patriotic, people of America.