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


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:

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.

House Subcommittee on the Coronavirus Ignores Nursing Home Deaths. That is a Human Rights Violation.


Dave Kingsley

U.S. House Committee Eliminates 141,000 Patient and 2,177 employee Nursing Home Deaths From Reality: Nothing to See There.

According to the Center for Medicare & Medicaid Services (CMS), 141,084 nursing home patients and 2,177 employees have died from the Coronavirus pandemic ( The House Select Committee on the Coronavirus under the leadership of Congressman James Clyburn – one of the three most powerful Democrats in the House – addressed 249 deaths in meatpacking plants but totally ignored nursing homes.

I have carefully read the Subcommittee’s recently released report More Effective, More Efficient, More Equitable and can find absolutely nothing about the biggest loss of life in an institutionalized population in the history of the United States (see: Adobe Acrobat PDFs have a search function. Having utilized that function on the report, I can say with certainty that words such as nursing homes, long-term care, skilled nursing, nursing home industry, or any other word that would suggest that elderly and people with disabilities institutionalized in these facilities were of any concern whatsoever to the subcommittee.

How can 141,000 patient and 2,177 employee deaths in one institutionalized population – which constitutes about one percent of the U.S. population in any one year but nearly 20 percent of the COVID-19 deaths since the pandemic appeared in 2020 – be erased from reality? Whose interests are being served by these types of hearings in Congress? Indeed, there has, in fact, been no real serious investigation by the U.S. Congress or any state legislature into the nursing home coronavirus tragedy (at least none that I have found).

The Nursing Home COVID Tragedy Was Avoidable. Therefore, It Is an Atrocity and a Human Rights Violation.

Elderly and disabled Americans were allowed to die because an industry failed to spend the money necessary to save them. The U.S. government has turned over the care of frail and disabled people to an industry well paid to care for them. It is well known and scientifically proven that the industry charged with responsibility for patients in nursing homes has consistently placed shareholder value above medical care. That fact has been demonstrated repeatedly and consistently for the past 70 years that federal and states funds have supported a privatized long-term care and skilled nursing system.

Here are the facts:

Epidemiologists and other scientists renowned in the field of emerging diseases have warned for decades that pandemics like we have experienced in the 2000s would become worse (e.g. See Laurie Garrett, The Coming Plague).

SARS taught the world a lesson about pandemics and the vulnerability of nursing home patients. Hong Kong and other Asian countries took steps to counter future pandemics. The Hong Kong Guidelines were well known throughout the world and yet the U.S. nursing home industry and government regulatory agencies ignored those guidelines while the industry created sophisticated legal and financial structures to drain ever more tax and reimbursement dollars out of the system for the benefit of executives and shareholders (See:;;;

Political contributions suggest that the nursing home industry has tremendous sway over congressional and agency oversight. For instance, of the top 100 2019-2020 contributions to Congressman Clyburn – which total over $1 million dollars – approximately half came from corporations and lobbying groups with a vested interest in nursing home finance.

The American Health Care Association – the nursing home corporation lobbying organization – contributed $10,000 to Congressman Clyburn in the 2019-2020 cycle, but it is important to recognize that the nursing home industry is primarily a finance-insurance-real estate as well as a medical industrial complex with interlocking interests between real estate, finance, and medical sectors of the economy. Therefore, consider the following donations to Chairman Clyburn in 2019-2020:

American Healthcare Association (nursing home corporation Lobby): $10,000

National Association of REITs: $10,000

National Bankers Association: $10,000

American Hospital Association: $10,000

National Association of Realtors: $10,000

Johnson & Johnson: $10,000

KMPG: $10,000

Investment Corporation Institute: $10,000

USAA: $10,000

CVS Health: $10,000

Capital Financial: $10,000

Deloitte: $10,000

Abbot Lab: $10,000

Eli Lilly: $10,000

Bank of America: $10,000

Pfizer: $10,000

Pensare Acquisition Group: $10,000

Prudential: $19,000

AFLAC: $34,925

Government & Industry Abuse of An Institutionalized Population is A Human Rights Violation Causing A Massive Number of Fatalities. Government Officials Must Be Held Accountable. But there is No Organized Political Movement to Force that to Happen.

The U.S. government has a long history of looking the other way while widespread abuse and neglect continues pervasively throughout a privatized nursing home system funded with taxpayers’ hard earned dollars. Furthermore, over that 70-year history, an aging enterprise has been spawned by the Older Americans Act and do-gooder contributions to 501C3 organizations. We have Area Agencies on Aging, all sorts of aging-related professional organizations, gerontology professional groups, advocacy groups, the AARP, and countless other special interest organizations have settled into a comfortable relationship with government agencies responsible for regulating nursing homes and the industry itself, which has a high powered PR machine. An ongoing game of rope-a-dope between the industry and advocates over minor tweaks to a system that should be ended not mended takes place ad nauseum, ad infinitum in legislatures across the land.

Nursing home neglect and abuse continues on a regular basis while shareholders and executives get fabulously rich from Medicaid and Medicare funded commercial real estate. It appears, however, that a coalition of so-called senior advocacy organizations cannot mobilize to force congress to take a hard look at the COVID-19 nursing home tragedy that didn’t have to happen.

The New York Times Slams CMS & The 5 Star Rating System for Nursing Homes


Dave Kingsley

A Much Needed Expose of What Some of Us Already Know

In a prominently displayed, above the fold, article today entitled “How Nursing Homes Hide Their Most Serious Lapses,” New York Times writers laid out a case against the CMS process for inspecting and rating nursing homes on their 5-Star rating system (with 1 being the worst and 5 the best). Those of us dealing regularly through research or advocacy with nursing homes, state agencies, and CMS are not surprised by what these investigators uncovered and I, for one, am happy to see the public informed about the sham 5-Star system.

Essentially, the NYT investigative journalists concluded that serious infractions uncovered in inspections often do not appear in reports on the CMS website “Nursing Home Compare,” and frequently immediate jeopardy and actual harm findings are appealed by the operators in a secretive administrative hearing process from which families are excluded. So what you see on the CMS website is often not what you get. Even if serious infractions make it into the public inspection reports on NHC, they often don’t affect a facilities 5-Star rating.

The Most Important Take Away: Agencies of Government Are Under The Thumb of The Industry

The nature of the appeals process in which owners can hang up a finding for a year or more behind a veil of secrecy often keeps the public in the dark about some very serious negligence and abuse cases in facilities in which our loved ones reside or are about to be placed. A former CMS attorney quoted in the article said this: “Once I realized that people wouldn’t see cases that are on appeal, I thought, why would anyone ever look at this again.” Presumably, he is saying you might never know that an inspector found your frail elderly mother laying in a pool of blood in the parking lot, or that a the staff placed a patient with a positive test for COVID in the room with your grandfather.

Here is the dirty little secret about government agencies such as CMS and the various state agencies charged with regulating nursing homes and protecting patients and looking after the interests of the taxpaying public: they work for the industry. That is who they protect. I have spent years trying to pry needed – and what should be public – information out of the Kansas Department of Aging and Disability Services (KDADS), CMS, and other various and sundry regulatory agencies. They will stonewall like no agency of government that has gone before them has stonewalled. I swear, if you called KDADS and asked for their address, they would tell you to file a Kansas Open Records request. If you ask for anything more serious than that, even a KORA won’t get it for you.

I have heard staff members at KDADs claim that the industry isn’t reimbursed well enough and is struggling financially, which is absolutely false – that is why these agencies hide financial information from the public. But public information you can find tells a totally different story than what you hear from the industry and their shills in government.

Flaws in The Article: The Writers Didn’t Talk to The Right People And A Less Than Serious Research Claim

Only a couple of “experts” were quoted in the article: the former attorney for CMS mentioned above and Dr. David Gifford, the medical director for the industry and a corporate shill. The people I respect and the people with real knowledge of how the system works are experts like Professor Charlene Harrington (UCSF), Richard Malott with the Long-Term Care Community Coalition, Lori Smetanka with the National Consumer Voice, Lydia Nunez – an Ombudsman from Texas, Margaret Farley and Lenette Hamm with Kansas Advocates for Better Care and others who fight nursing home inspection/quality problems day in and day out.

The NYT writers claimed that “researchers have found a connection between better inspection results and greater profits.” That makes absolutely no sense to me. Given the solid financial data we have – which is only for publicly listed companies – that is not what I would conclude. Some very profitable operations are providing very poor care.

Furthermore, the article indicated that “The Times analyzed nursing homes’ financial statements from 2019 and found that four- and five-Star facilities were much more profitable than lower-rated facilities.” I would like to know where they found the needed financial information from closely held corporations to make that determination. Did they see an income statement, balance sheet, and cash flow statement? If they did, I would like to know where they found them. I’m very skeptical of this research. Using a qualitative, ranking measure as a predictor of profit – a measure with equal intervals – is sketchy to say the least. The ranking data from inspections give noisy data a whole new meaning.

Nevertheless, I was happy to see the article appear in the NYT. We need to debunk so much of what is purveyed by the industry and the government in regard to the safety and health of patients in nursing homes.

Justice Delayed Is Justice Denied for A Nursing Home Whistle Blower & Taxpayers


Dave Kingsley

In 2011, a nurse employed in two nursing homes owned by Consulate Health Care, LLC, a notoriously bad nursing home chain in the state of Florida, filed a whistleblower lawsuit against the company. She filed the suit for what she saw as the company’s obvious fraud in billing the federal government.  It was not until 2017 that a jury awarded a $347 million judgment in favor of Medicare and the whistle blower.  That is an eyepopping amount.  Because fraudulent billing is so pervasive throughout the nursing home industry, it is not unusual to see $30, $40, or even $140 million settlements between DOJ and nursing home corporations.  But this outfit must have been into some big-time fraud.

    However, the story does not end well for taxpayers footing the bill for healthcare in America.  A federal judge threw out the jury’s award.  The appeal judge’s reasoning is dumfounding and shocking. According to The News-Press of Fort Myers, Florida, the judge “overturned the jury’s verdict, citing lack of evidence of a corporate scheme and noting that state and federal regulators appeared to view the disputed practices with ‘leniency or tolerance or indifference, or perhaps with resignation.’”  In essence, the judge stated that the government just didn’t care if the company was engaging in obvious fraud!

    Although an appeals court reinstated $255 million of the judgment, in the final analysis, the company was able to engage in a legal maneuver by taking a part of the company into bankruptcy.  This month – 10 years after the lawsuit was initiated – the whistleblower and the government settled for a mere $4.7 million. 

    I will be following this story and discussing the outcome of the bankruptcy.  The judgement is filled with legalese and jargon.  But it appears that Consulate will be moving forward with little more than a minor glitch in its operations.  The company didn’t even get a slap on the wrist – it was more like a kiss on the cheek.  And that part about the government didn’t seem to give a damn doesn’t surprise me at all.  Having interacted extensively with state and federal agencies ostensibly regulating public funded healthcare corporations on our behalf, I’m jaded enough to believe it.

The U.S. “Nursing Home System” Is Exceedingly Corrupt: Advocates, Activists, and the Media Need to Focus More on That

Faux Capitalism Fueled by Political Contributions: “The Mother’s Milk of Politics”

Due to his aphorism that “money is the mother’s milk of politics,” most of us involved in California politics in the 1960s and 70s will never forget Jesse Unruh – the powerful leader of the California Assembly at the time. Little could we know to what extent that brutally honest insight would come to dominate American political processes.  Nor could we know that Eisenhower’s warning about the military-industrial complex would eventually be relevant to the medical care industry.

The so-called nursing home system is an exemplar of industry patronage dispensed to legislators for the purpose of cash extraction at the expense of quality care – care that all Americans deserve for the taxes they pay.  Unfortunately, this reality is not a factor in public political discourse. And it will not be a factor unless advocates and activists do more to press the issue.

The public is fed several myths about the fundamental nature of government funded long-term care in the United States.  The myth that providers are operating in a competitive, free market, system drives the propaganda disseminated by trade associations such as the American Health Care Association/National Center for Assisted Living (AHCA/NCAL).

The truth is that licensed providers – both privately held and publicly listed – are entities in a faux-capitalistic system in which prices are guaranteed by federal and state governments while wages and working conditions remain weakly regulated.  Price controls are advantageous to the industry.  Conversely, the lack of wage controls and employment protections are a disadvantage for workers.  Weak federal and state regulation of care is harmful to patients.

At Congressional Hearings, Advocates are Testifying to Legislators Who Receive Money from the Industry:  Both Democrats & Republicans

The toxic and perverse form of capitalism represented by the industrial medical system is maintained through a political juggernaut in the form of finance, real estate, hospital, nursing home, and other industrial lobbying groups often mistakenly called the medical-industrial complex.  Actually, those of us who advocate for enlightened skilled nursing care, are up against the Finance, Insurance, Real Estate (FIRE)-Industrial Complex.

Wall Street and its affiliated trade associations (e.g., AHCA/NCAL) distribute immense amounts of money to legislators to maintain the highest prices for the least amount of care in skilled nursing facilities.  Evidence to support this situation can be found through several sources.  For example, the website OpenSecrets ( does an outstanding job of exposing the flow of money through Washington, D.C.

Democrats are Favored by the AHCA/NCAL

In 2018 cycle, the AHCA/NCAL PAC distributed $610,616 to federal candidates (American Health Care Assn PAC Contributions to Federal Candidates • OpenSecrets).  Democrats received $401.616 (65.77%) and Republicans received $209,000 (34.23%). 

The top recipients of the industry’s patronage are some powerful legislators.  The top 10 contributions were dispensed to the following legislators:

Vernon Buchanan (R-Fla)$10,000
James E Clyburn (D-SC)$10,000
Ben R Lujan (D-NM)$10,000
Frank Pallone Jr. (D-NJ)$10,000
Nancy Pelosi (D-Calif)$10,000
Peter Roskam (R-Ill)$10,000
Steve Stivers (R-Ohio)$10,000
David Young (R-Iowa)$10,000
Carlos Curbelo (R-Fla)$8,500
Cathy McMorris Rodgers (R-Wash)$8,500
Top Recipients of AHCA/NCAL PAC Donations

A $10,000 contribution swings a lot of weight.  Both Democrats and Republicans receiving these contributions are among the most powerful members of the U.S. Congress.  If you go through the entire list, your idealism regarding some of the more liberal members of the House and Senate might be shaken somewhat.

In the next few posts, I will be sharing more data regarding AHCA/NCAL distribution of money to lobbyists and how the revolving door advantages providers over patients.  Staffers and former legislators make much better money on K Street than they can make serving the public.

Professional Conflicts of Interests

As I perused the list of donors to the PAC, I recognized some of the contributors.  For instance, I noticed that Medicalodges, a mid-size, closely held, chain in the Midwest, made repeated contributions.  I’m familiar with Medicalodges for several reasons.  Some of their facilities are located in Kansas – a state in which I have done a considerable amount of LTC ownership research.

The Medicalodges board of directors includes Professor Gayle Doll – head of the Kansas State University Gerontology Program.  This inappropriate paid service on a provider board of directors is not the only conflict of interest in which professor Doll is engaged.  She is also managing a State of Kansas Grant known as the PEAK program, which dispenses Medicaid bonuses for facilities that can demonstrate development of a “home-like culture.”

She should have no role in evaluating providers for the purpose of Medicaid uplifts.  The last time I checked the Kansas Department of Aging & Disability Services (KDADS) website (, no adequate evaluation of the PEAK program was available to the public.  I called professor Doll about this and was told to speak KDADS.  KDADS told me to speak to professor Doll’s office.  Nursing home employees I know tell me that the program is a sham.  Providers do a little window dressing, make no substantive changes, and still receive rather hefty uplifts on Medicaid reimbursements.

Corruption is Pervasive and Deeply Ingrained in the Faux-Capitalistic Long-Term Care system

I have only scratched the surface in connecting some dots related to the corruption rife in the “nursing home” system.  With collapse of the medical-moral-ethical underpinnings of our healthcare system, legislators have become corrupted by money and professional conflicts abound due to a developing weltanschauung of self-interest over the public interest. 

Many more dots can be connected. We will do that as we “follow the money” in future posts. People who need long-term care are not consumers and the industry will not bother to market to them. The industry’s customers are legislators in federal and state legislatures. That is who they need to sell.

The “Care For Our Seniors Act” is a Ruse Used by the Nursing Home Industry to Up Reimbursements

LeadingAge & the AHCA/NCAL are Engaging in Harmful Propaganda:  They Need to Stop It!

Lobbyists for the nursing home industry, LeadingAge and AHCA/NCAL are promoting what they call “Care for Our Seniors Act,” which sets forth some laudable reforms they would like to see implemented along with an increase in funding (see:  I’m all for increasing Medicaid funding.  I’m all for some of the reforms they are pushing such as enhanced infection control preventionists, 24 hour registered nurses on staff, minimal personal protective equipment – all of which should have been in place before COVID. These are reforms that providers could have and should have provided and should now provide without more taxpayer funding that will be dedicated to increasing yield for investors.

Medicaid funding increases proposed by LA & AHCA/NCAL are all designed to increase reimbursement, e.g., “Enhanced Federal Medical Assistance Percentages (EFMAP).”  One of their ruses to get advocates on board is the proposal for a shift to private rooms by developing “a national study producing data on conversion costs and a recommended approach to make this shift.”  The study may happen, but the shift won’t unless the taxpayers are willing to pay for it – even though investors are extracting enough excess cash now to pay for these changes and still earn a respectable return on their investments.

The most despicable aspects of this proposal are the falsehoods used by LA and AHCA/NCAL for political framing.  For instance, their propaganda in the link cited above totally exonerates the industry and blames staff and government – not the real owners, i.e., investors, for lack of pandemic preparedness.  They fail to mention the generous COVID related federal and state subsidies provided to the industry, which were funneled into stock dividends and executive compensation.  This statement appeared in the latest issue of Provider, the industry’s trade publication: “With the majority of nursing homes already operating on a razor-thin margins, the cost of making improvements will not be possible without financial assistance.”

The nursing home industry and their lobbyist propagandists are treating advocates, activists, scholars, legislators, and the public in general with extraordinary disrespect. That needs to stop! If the industry is not willing to provide evidence to support their “razor thin margins” nonsense and stop treating us all like imbeciles, then their proposals should receive absolute zero credibility and no support from any of us.

The U.S. Nursing Home System Incurred Massive Fatalities Due to System Failure. Will We Forget it Happened?

What Does the Death of 132,000 Institutionalized Patients Mean for the Past and the Future?

Officially 132,000 patients in the care of government funded and regulated skilled nursing facilities succumbed to the COVID-19 virus. The question with which we must now grapple is this: “Why did an unprecedented mass fatality occur to a specific institutionalized group of Americans?” Prior to COVID, the largest pandemic related sweep of death through an institution occurred in the military during WWI. Of the approximately 60,000 U.S. military deaths during the first World War, 40,000 were due to influenza.

Infectious disease experts warned us for decades that periodic pandemics would become the norm. In regard to COVID and the pandemics that preceded it, here is what Dr. Michael Osterholm and Mark Olshaker said in the preface to their new edition of Deadliest Enemy:

They all came as a surprise, and they shouldn’t have. Nor should the next one; and rest assured, there will be a next one and one after that, and on and on. And as we have outlined in this book, one of them will be even bigger and one or more orders of magnitude and more serious than COVID-19. Most likely, as we’ve written, it will be a novel influenza virus with the same devastating impact as the 1918-19 Great Influenza pandemic that killed between fifty and one hundred million people, but playing out in a world with three times the population, international commercial air travel, tinderbox. Third World megacities, encroachment of natural habitats that have brought animal reservoirs of disease to our doorsteps, hundreds of millions of humans and host animals living cheek by jowl, and a planet-wide just-in-time supply chain delivering everything from electronics and auto parts to lifesaving medicines without which the most advanced hospitals cease to function.

Michael Osterholm & Mark Olshaker, Deadliest Enemy, New York: Little, Brown, Spark

What Does One of the Few Few Experts on Presidents & Pandemics have to Say?

Max Skidmore, an expert on U.S. presidents, as well as my colleague and fellow author on this blog has written a book entitled Presidents, Pandemics, and Politics. Like so many other experts who tried to tell us what was likely to happen, Professor Skidmore presciently wrote this in 2016:

Presidents and Pandemics will argue that we must learn from past experience – mistakes and successes – in preparation for the future, and that future preparation vital to the maintenance of civilization, here and elsewhere. As critical as terrorism is in the modern world, including bioterrorism, an even greater threat comes from natural causes. It will be necessary to overcome the tendency to respond only to the most dramatic danger – the obscenities, say, of a scowling enemy decapitating a helpless captive, attacking innocent school children, or snarling evil intent that might take place here – as opposed to preparation also for what assuredly will take place here: ever more virulent pandemics.

Max J. Skidmore, Presidents, Pandemics, and Politics, New York: Palgrave Macmillan.

The U.S. Nursing Home System Was Warned and Didn’t Pay Heed to the Warning: That is Inexcusable

There appears to have been no preparation – no set of guidelines in place and enforced – to deter the rate of COVID-19 fatalities that occurred in U.S. skilled nursing facilities. If providers and agencies charged with regulating them didn’t know about guidelines for preventing mass fatalities due to a pandemic, they should have known.

Officials in Hong Kong knew about the devastation wrought by the 2003 SARS outbreak and took steps to prevent it from happening again. They issued a set of guidelines which required the following: (1) All facilities have an infection control officer, (2) Conduct annual outbreak drills, (3) Have a permanent 1- to 3-month stockpile of personal protective equipment (PPE) use, and (4) Establish visitation rules that address hygiene and PPE use, and procure technology to facilitate communication with families in case of an outbreak. Provisions were also made to externally quarantine infected residents and staff. (See: George A. Heckman, MD, et al., “Proceedings From an International Virtual Townhall: Reflecting on the COVID-19 Pandemic: Themes From Long-Term Care,” JAMDA, 28 April 2021, p. 2)

Seven Hundred and Sixty skilled nursing facilities in which 76,673 patients are ensconced are located in Hong Kong. It appears that approximately 30 patients in these facilities died because of COVID-19. In the U.S., it was not uncommon for a single facility to have 30 fatalities (e.g. Riverbend Rehab and Care in Kansas City Kansas owned by the Ensign Group, which had a phenomenally good year financially during 2020). Companies such as Life Care Centers of America, the Evangelical Lutheran Good Samaritan chain, and the Ensign Group had multiple facilities with 30 or more deaths. Fifty patients were killed in the Life Care Care Centers facility in Farmington, New Mexico, but there were many others in which excessive deaths occurred.

If There is No Accountability, the Next Natural Disaster in the Form of a Virus Will Result in Mass Fatalities of Institutionalized Skilled Nursing Patients

These days we are not hearing a call for a commission or even a strong move on capitol hill for serious investigative hearings. That is horrifying. The nursing home industry was well rewarded financially, but failed to discharge its responsibilities to care adequately for patients. My colleague Professor Charlene Harrington and I have conducted in depth research into the financial performance of publicly listed corporations deriving their revenue from public funds. They did quite well during 2020 and have as of yet not been called before congress to answer for their performance during 2020. We will continue to conduct that research and disseminate the results. (see: (See: Kingsley DE, Harrington C. “COVID-19 “Impact on publicly traded nursing home companies,” J Am Geriatr Soc. 2021; 1-4. https//

Dave Kingsley

Moving on from The COVID-19 Tragedy: Dangers Ahead for Disabled Americans

Medically Vulnerable Americans Should Have Been Protected from COVID: They Weren’t

During the 1918 flu pandemic, younger, healthier adults were the most likely people to die from the scourge sweeping across the world. During the COVID-19 pandemic the weakened immune systems of the frail elderly and other age groups with illnesses impacting immunity were the most likely to die from the disease.

Unlike 1918, by 2020 a major industry based on institutionalization of disabled individuals – most of whom are elderly – had developed. The euphemism for these institutions is “nursing homes,” but they are medical facilities designed for the care and treatment of individuals who need long-term skilled nursing care. The long-term care business is highly financialized and extractive. The primary objective of corporations providing skilled nursing is to protect and enhance shareholder value. Therefore, suppression of labor and other costs takes precedence over the quality of care provided to patients.

No real preparation for preventing the scourge from sweeping through long-term care facilities was undertaken by providers nor by the federal and state agencies responsible for regulating the industry. By virtue of the how these so called nursing homes are designed and managed, patients in them were more vulnerable than they would have been in their own homes. It is not surprising that approximately 30 to 40 percent of the 560,000 deaths from COVID in the U.S. have been patients in long-term care. Steps could have been taken to prevent what is no doubt one of the two largest mass mortalities of institutionalized individuals in U.S. history – the other being U.S. military troops during the 1918 flu pandemic.

As the COVID Pandemic Recedes Due to Vaccine, There is Little Interest in Accountability

The tragedy of mass mortality in long-term care institutions along with lack of interest in a major investigation into why it happened and who is responsible for it are directly related to the value placed on the lives of disabled Americans. Elderly people in general are among groups of U.S. citizens considered of little value to the economic system and to society in general. The same can be said about younger people with disabilities.

Therefore, institutionalizing people seen as noncontributing members of society places them in grave danger. This is especially the case when they are “out of sight and out of mind.” Corporations are paid plenty to provide them with an optimum quality of life, but through financialized management in a system they dominate they are able to extract cash from debilitating and life shortening care. That they have been able to carry on that business with impunity and cause the death of hundreds of thousands of people in their care should cause grave concern for the future well-being of disabled Americans.

Because the lives of elders and people with disabilities are devalued, there is no moral hazard to executives who neglect patients for the sake of cash flow. They will see no reason to seek innovation in care that would provide a healthier life for people in their care. Indeed, they will discover ever more innovative ways to enhance and protect shareholder value. Unfortunately, this will happen through collaboration with agencies of government.

The Long-Term Care Industry COVID Narrative: A Barrage of Unsubstantiated Claims & Falsehoods

The Scope of the COVID Long-Term Care Tragedy & Lack of an Outcry for Accountability Is Horrifying

Compared to our peer countries in the advanced industrialized world, the United States has been a complete and utter failure in the protection of vulnerable long-term care patients from COVID.  At this time, we can only estimate the total loss of life in skilled nursing institutions, but the number of patient deaths has probably reached 200,000. 

Except for centuries-long assaults on the health of African Americans and Native Americans, and the flu pandemic of 1918, these deaths comprise the biggest medical tragedy in U.S. history.  Certainly, they constitute the most massive loss of life in one demographic group in such a short period of time. If experiences of other countries around the globe are any indication, a large proportion of these deaths were preventable. As I stated in an earlier blog, for instance, S. Korea has had less than 400 deaths from COVID in its long-term care facilities (more about other countries’ COVID losses will be on later posts and one accompanying this post).

An industry was entrusted by the federal and state governments with the care of at-risk elderly and disabled patients.  For the most part, the industry failed.  In addition to cross-cultural comparisons, evidence suggests that the industry was either incompetent, or greedy, and derelict. Nevertheless, there has been not been an outcry from the public, legislators, and regulatory agencies for accountability through some type of 9/11 commission.

The Industry Is on Offense. But What Exactly Does a Claim of $35 Billion Loss in Revenue Mean?

Passivity on the part of individuals and organizations one would expect to speak out about industry dereliction is not only horrifying, but it has also left the media playing field to the industry.  Consequently, the industry’s narrative, based on misinformation and no information, is designed to escape culpability as well as to squeeze a higher level of funding from Medicare and Medicaid.

Having observed industry television interviews, press releases, and print reports in publications such as the New York Times, I am beginning to surmise that the industry’s objective is to depict operators and, consequently, parent corporations, as victims of a natural disaster over which they had no control.  Their propaganda ignores preventative measures that could have been taken while it is focuses on exaggerated financial losses.  

 On February 10th, Alex Spanko reported in Skilled Nursing News that the American Health Care Association (AHCA) had made dire projections of financial losses incurred by the industry throughout the 2020 and 2021:

Nursing facilities will lose a total of $22.6 billion in revenue during 2021, according to a new projection from the American Health Care Association, as occupancy – the primary driver of income for facilities – remains low.

On top of an $11.3 billion decline already seen in 2020, that would brings [sic] the COVID-19 financial toll to $34 billion, or a decline of 24%, even as expenses related to staffing, personal protective equipment (PPE), sit at an estimated $30 billion per year for 2020 and 2021.

Nursing Home Industry Projects $34B in Revenue Losses, 1,800 Closures or Mergers Due to COVI – Skilled Nursing News

Let’s put these claims into perspective. If indeed, total two-year revenue loss of $34 billion could empirically be demonstrated as valid, the impact of that would be de minimis on an industry with revenues of hundreds of billions per year.  However, we need to see evidence supporting the AHCA claims.

More importantly, in evaluating corporate financial performance, factors other than total revenue are essential: (1) Net income may still be robust or even higher in conjunction with a reduction in revenue, and (2) Cash flow, the real metric investors are looking for, may actually be improved in a year in which revenue has dropped.  Furthermore, skilled nursing is often embedded in corporations in the broader senior housing industry. For instance, real estate investment trusts, private equity firms, and other corporations typically own a broad senior housing portfolio of continuous care retirement communities (CCRCs) in which independent and assisted living are combined with a skilled nursing facility, and stand-alone facilities providing apartment housing, assisted living, and skilled nursing.

I love to listen to Dr. Anthony Fauci speaking on behalf of the Biden Administration these days say, “let’s look at the science, let’s look at the data” regarding vaccines. It is a refreshing change from the previous administration.  Hopefully, we can do the same thing when we examine the financial impact of COVID on the long-term care industry.

You Can’t Trust Industry Research Reports

We are lacking sufficient information to substantiate industry claims while at the same time misinformation is distributed across the world of finance.  I do not claim to have my mind wrapped around the entirety of the long-term care industry – it is, after all – an industry that operates behind a veil of secrecy.  However, the data that I’m collecting suggests that the highly subsidized (maybe most subsidized) industry providing skilled nursing is doing well (see my post re: The Ensign Group today).

“Doing well” is my description of consolidate financial statements, including, but not limited to:  revenue growth over a period of years, net income, equity, and cash flow (liquidity, cash/equivalents, lending facilities, etc.).

You can find industry financial information that sells for a very high price.  Take it with a grain of salt.  For instance, IBISWorld, one of the leading sellers of industry information revealed its analysts’ ignorance of the long-term care industry by claiming that Genesis HealthCare, Inc and HCR ManorCare are the “biggest companies” in the “nursing care facilities industry in the U.S.” Beside that claim is a red lock icon, which means if you pay an excessive fee, you can see the data backing the claim (

.  Don’t waste your money. Genesis is a zombie company that probably won’t survive much longer and has been reduced to a contract managing firm – its property and operating entities are now owned by a Real Estate Investment Trust (REIT).  Like Genesis, HCR ManorCare was bankrupted by a private equity firm and its property was sold to a REIT. These companies don’t represent the industry and analysts indicating that they do are providing bad information.

By Dave Kingsley

Real Estate Investment Trusts (REITs) Are Big Players in the Nursing Home Industry: That Should Concern All of Us.

REITs Are the “New Kids on the Block,” and they Swing a Lot of Weight

You may be wondering how the Carlyle Group unloaded 338 facilities in 2010 as it dismantled HCR ManorCare and pocketed over $6 billion from the sale of real estate.  You also may be wondering why that’s important.  I’m suggesting in this post that it’s important because legal entities known as “real estate investment trusts” (REITs) have purchased significant amounts of senior housing properties in the past two decades and are fundamentally changing the structure of the industry. Indeed, HCP (now Healthpeak), an REIT, picked up the HCR ManorCare properties from Carlyle.  Because of these kinds of deals, REITs have been integrated into the fabric of for-profit nursing care in a big way.

PE takeovers and massive sell-off of long-term care property in the first and second decade of the 21st Century ushered in a new REIT era in nursing home ownership. REIT’s and PE firms have been a “hand and glove” phenomenon in what amounts to a revolution in nursing home ownership.  As I will demonstrate in this and later blog posts, REITs are the new, and now the big, kids on the block in the nursing home business.

Furthermore, the growth of REIT ownership of skilled nursing property has been fueled by well-established chains such as Brookdale that are selling property for an infusion of cash.  These chains typically sell their property to REITs and hold themselves out as management companies. REITs create LLCs as operators (100% owners) and place each property in a newly created LLC and contract with companies like Brookdale to manage the facility. 

What is an REIT?

I’m writing this post to make a very important point that will be expanded, illustrated, and clarified in the months and years ahead on this blog: the primary mission of the nursing home industry is not medical care, nor is it real estate; rather, the corporate function driving the business of long-term care is financial engineering. Finance is not an ancillary function of REITs – it is the function.  The same can be said about the rest of the industry – whether the ownership structures of facilities are embedded in REITs, private equity portfolios, family trusts, family offices, limited liability companies, publicly listed holding companies and privately held corporations in their various legal forms, the mission of providers is extraction of cash as expeditiously as possible.

The financialization of the American corporation has roots that can be traced beyond the take-off period of Reagan-Thatcher neo-liberalism and Chicago School theories of corporate management.  REIT’s became part of the U.S. financial landscape with President Eisenhower’s signature on legislation creating publicly listed real estate trusts.

This legislation provided an opportunity for the “average American” to invest in real estate trusts, which prior to that time was limited to wealthy investors.  REITs as corporations could issue IPOs, raise capital, and gain a listing on a public stock exchange.  There are considerable tax advantages to the REIT as a corporation because these entities pay no corporate income tax on net income distributed to shareholders.  They are, however, as REITs, required to distribute 90% of their income to common stockholders.

When REITs Entered the Senior Housing Industry

Until 1999, REITs were legally authorized to own, lease, and trade in real estate.  They could not create wholly owned taxable reit subsidies (TRSs) for the purpose of owning and managing licensed skilled nursing facilities.  That changed with passage of the “Ticket to Work and Incentives Improvement Act of 1999,” which was ostensibly “intended to amend the Social Security Act to expand the availability of health care coverage for working individuals with disabilities, to establish a Ticket to Work and Self-Sufficiency Program in the Social Security Administration to provide such individuals with meaningful opportunities to work,and for other purposes” (https://www.congress.go/bill/106th-congress/house-bill/180/text).

Often, major pieces of legislation include an assortment of items that have no relationship to the law at its introduction. Tucked into the “Ticket to Work and Incentives Improvement Act of 1999” was Title V (Tax Relief Extension Act of 1999), Subtitle C, Part II, subpart a – “treatment of income and services provided by taxable reit subsidiaries.” From the perspective of how the nursing home industry would be changed in the years ahead, this arcane piece of legislation is a big deal.

With this legislation, “healthcare REIT” entered the lexicon of long-term care. As a new legal corporate structure, healthcare REITs interacted with private equity and well-established chains in a way not yet comprehended by advocates, activists, legislators, and the public in general. A massive amount of skilled nursing real estate has been shifted to these entities that not only own property but also manage operations. Furthermore, financial engineering is in continuous motion with property acquisition and trading, formation of joint ventures, contracting with facility management services, and formation of ownership networks.

REITs Are Spreading their Tentacles throughout the Long-Term Care Industry

If you are familiar with the skilled nursing industry, you will recognize corporations such Sunrise Senior Living, Kindred Healthcare, Brookdale Senior Living, Genesis, and so forth. As you peruse the financial statements of the major REITS such as Welltower (the biggest), Ventas, Healthpeak and others, you will also see those well-know company names as managers of REIT facilities, as joint venture partners, and as buyers and sellers of real estate.

Furthermore, REITs entered the senior housing market in 1999 – not nursing home care alone. Many nursing home facilities are embedded in in Continuing Care Retirement Communities (CCRCs). Some of their properties and operations are stand alone assisted living facilities, or senior apartments.

Federal dollars Flowing into REITs Are Not Only From Medicare & Medicaid

It would be difficult to identify an industry that is as subsidized by federal and state government as the long-term care industry. REITs are subsidized through a steady stream of patients reimbursed through Medicare and Medicaid. With relief from corporate income taxes, and subsidies such as capital gains, depreciation allowances, and interest deductions, REITs are provided with major tax expenditures.

In future posts, I will explain why the amount of public funds flowing into REITs and other legal structures through Medicaid, Medicare, and tax subsidies enriches investors and executives but does nothing to improve conditions in long-term care facilities. It is important for advocates and activists to use financial information to rebut the industry’s claim that operators can’t afford to provide better care. It is probably the case that facility-level management can’t afford to provide higher quality of care. However, that can be attributed to extraction of funds by holding companies, REITs, and other endpoints in the flow of capital from the front door of the facility to the consolidated financial statements of the entities at the top of the chain.

By Dave Kingsley 2/14/2021