Medicaid is a Disgrace

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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.

Don’t Believe the Propaganda: The Nursing Home Industry is Doing Very Well – Even in a Down Market

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Dave Kingsley

Stocks Have Been Dropping Rapidly Since the End of November – But Not in the Nursing Home Business. Why?

The nursing home industry has a well-funded, highly effective, lobbying-propaganda arm that has been effective in convincing the public that providers are not paid enough to provide decent, medically ethical care. That is a lie. The evidence is overwhelming that the industry’s hardship pleas are merely a propaganda effort at squeezing ever more money out of the taxpayers without providing a correlative improvement in care.

The stock market is one of the many sources of evidence supporting my claim that the nursing home industry is doing just fine during these economic uncertain times. Although the the Dow, S&P, and NASDAQ have dropped precipitously since the end of November, stock prices of the major players in the nursing home industry have held their own or have made major upward swings. For instance, the Ensign Group stock increased by nearly 10% during the same period that the DOW fell 7%, the S&P dropped 10%, and the NASDAQ declined by 17%.

The stability (see discussion of volatility below) and steady upward trend of stock overall in the public-funded long-term care/skilled nursing business suggests that the industry is not subject to the vicissitudes of the overall “market economy.” That is indeed the case because it is an industry that is not part of a market economy. The corporations in the nursing home industry listed on a public exchange are not capitalist enterprises. They are a growing part of the U.S. economy that is a partnership between government and corporations in which corporations have steadily gained the upper hand over government.

The characteristics of the government-corporation partnership – otherwise known as corporatism or statism – is guaranteed revenue, a restricted market, i.e. no competitive market in which prices are negotiated. Nursing home corporations are reimbursed for their costs plus adjustments for inflation. Furthermore, the underlying source of revenue is derived from commercial real estate, i.e., the facilities in which patients are maintained with minimal care.

The power of the industry over its government partner has allowed for financial machinations and accounting maneuvers that hide a significant portion of gains in revenue, operating margins, and, most importantly, cash flow from facilities to parent corporations. States are responsible for auditing cost reports submitted by facilities for the purpose of determining daily Medicare and Medicaid reimbursement rates. The auditing and financial oversight of cost reports are weak – allowing extremely flawed cost reports to pass audit review.

The lucrative nature of commercial real estate with a generous government guarantee of producing revenue plus a stable stream of government funds into medical services have not gone unnoticed by institutional investors such as BlackRock and Vanguard. The overwhelming voting shares in nursing home industry corporations are owned by these asset managers. Hence, pension funds, college endowments, and other large pools of capital have been invested in multi-billion dollar corporations that are setting the trends in long-term/skilled nursing care in the U.S.

Volatility is a Big Deal in the Markets: It Tells Us a Lot About the Past & Future of a Company.

Stocks have been mostly trending down in the past few months due to supply chain crisis, oil price fluctuations, conflict in the Ukraine, inflation hysteria, and uncertainties related to COVID. The market has also been highly volatile, which means stock prices are swinging widely in price. I won’t go into great detail about the technical aspects of volatility. Suffice it to say that a volatility of 1 means that the stock doesn’t move up and down much but a volatility of 0 means it never fluctuates – a theoretical situation that doesn’t happen.

Stock may trend up over time but it will tick down and up on the way up. If it swings widely that suggests that it is far more speculative and traders are buying and selling it at a rather rapid pace. For instance, stocks listed on the NASDAQ with recent IPOs tend to be more volatile because they tend to be risky tech stocks back by venture capitalists willing to take a chance on the next big thing.

Stock of a corporation with a guaranteed market in which competition is restricted and earnings are robust will increase over time with only minor day-to-day fluctuations. That is what is noticeable about the stock in corporations comprising the nursing home industry. Not all of its members have increased their stock price over the past few months, but even the few that have lost ground have not seen the kind of downward swings seen across the board on the Dow, S&P, and NASDAQ.

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

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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.

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What Does Ageism in the Media Look Like? Michelle Cottle’s Article re “The Villages” in the New York Times Today – That’s What It Looks Like.

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Dave Kingsley

The Villages Is Not a Place I Want to Be in Elderhood. No One I Know Wants to Be There Either.

Michelle Cottle, a member of the New York Times editorial board, has demonstrated the type of dangerous stereotypes regarding so-called “Baby Boomers” that recur frequently in mainstream media. In her article today with the blaring headline “The Nihilism of The Golden Years,” she generalizes from attitudes and behavior of a few elderly residents of a senior housing and entertainment enclave in Florida to a group of people born between 1946 and 1964 that now comprises most of the 65+ population in the United States.

I’ve seen a documentary on the Villages and am frankly somewhat embarrassed for my fellow elderly Americans who choose a second childhood over a life of productivity, societal contributions, and family and community leadership. If that is indeed a fair statement about the people who choose to move there in their retirement years. I’ve never been to the Villages, so all I know is what I’ve heard, seen in the media, and learned from the documentary.

Ms. Cottle presents the residents of The Villages as hedonistic and politically oriented toward Trump’s MAGA movement. Two-thirds of a full two page spread was filled with photojournalism displaying golf courses, golf carts, dancing to “Jimmy Buffet’s Margaritaville,” and MAGA demonstrations. This may or may not fairly describe the people living in The Villages, but the article drags the entire group of 65+ Americans into the negativism she focuses on people living there. For instance, toward the end Ms. Cottle writes, “Big Government is eyed with skepticism, even as the aging populace commands an increasing larger chunk of the federal budget for programs such as Social Security and Medicare.”

That article also states that “Baby boomers long accustomed to setting the agenda are being eased out of their slot atop the sociopolitical ladder – especially conservative white boomers.” According to Ms. Cottle, the underlying problem, in the final analysis, are aging Americans: “…the community is a distillation of the cultural crosscurrents at play in an America that is simultaneously graying and diversifying.” I don’t think I need to tell the readers of this blog post how many ugly stereotypes and ill informed generalizations are included in these types of statements.

Scapegoating the Elderly

“Isms,” whether they be racism, sexism, ageism, or any other type of ism such as those against sexual orientation, and religion, are dehumanizing and damaging to the victims of stereotyping. In many cases they are dangerous and can lead to physical harm – indeed often do. A psychological boundary is placed around groups of individuals who are themselves often very diverse and then misinformation is used to scapegoat them. For instance, an aging population or the elderly in general are not causing an increase in the cost of government. That is well accepted in the literature. I have debunked that myth in my own research. I would be happy to supply a list of references to support that.

Not one bit of Social Security is “on budget.” Approximately two-thirds of all Medicare expenditures are paid into the program through payroll taxes, premiums, and other out of pocket expenses. Traditional Medicare and Social Security have administrative costs equal to 1.5% and .9% of revenue respectively. So Ms. Cottle is ill informed and misinforming her readers. These two programs are a model of government run retirement and medical programs. If that doesn’t remain as such, it won’t be the fault of the beneficiaries.

“The Nihilism of The Golden Years” Does Not Represent the 65+ Population of the U.S.

The 65+ population is comprised of veterans, poor people, middle class people, people who have worked hard throughout their lives, and on and on and on when we talk about 70 million Americans 65 years of age or older. They have raised families, robbed banks, worked for corporations at a variety of levels. Some have made a fortune, some are living in dire poverty, some are struggling to live on pensions and Social Security. The variety of people 65 or older is so diverse that it would take a book or volumes to describe it. What we all have in common are needs for healthcare, housing, and basic other living necessities.

Turning a group of people born in an 18 year span of time into a “thing” with negative characteristics is a form of human thinking that has led to more human tragedy and suffering than any other mental disposition characteristic of homo sapiens. It is one reason that we can institutionalize elderly people in subhuman nursing homes and mistreat them. They are seen as a “silver tsunami,” a disaster, a problem. What else are we going to do with them?

Attitudes Need Work in The United States

At Kansas University Medical School, I taught class after class of marvelous graduate students headed into health care professions. I designed and validated an attitudinal survey to measure their attitude toward the elderly. In the next few blog posts, I will report some results from that survey and write about the need to change the way we think of aging. Here is a hint at the findings from my survey: To the item “In the next 20 years, the 65+ population will have the greatest impact on health care costs,” only 12 of 100 of the students responded strongly disagree or disagree. Two were uncertain and the rest either agreed or strongly agreed. This is false and scapegoating. It should concern us.

Data Analytics, The Stock Market, & Healthcare Justice

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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

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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.

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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.

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

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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 (https://data.cms.gov/covid-19-nursing-home-data). 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: https://coronavirus.house.gov/news/press-releases/select-subcommittee-s-year-end-staff-report-highlights-oversight-work-releases). 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: https://www.cmaj.ca/content/192/19/ES11; https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7899229; https://www.ncbi.nlm.gov/pmc/articles/PMC723424/; https://www.theguardian.com/world/2020/may/19/mps-hear-why-hong-kong-had-no-covid-19-care-home-deaths.)

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.

Which Politicians & Political Organizations Receive the Most Money From the Nursing Home Lobby?

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By:

Dave Kingsley

The AHCA/NCAL has invested $millions in politicians and the Democratic and Republican Parties in the past few years. This is an investment that returns large financial rewards and weak regulation to its corporate funders. This appalling corruption is costing lives of patients in long-term and skilled nursing care.

Summary of Overall Spending of Nursing Home Lobby in 2017-2018 is shown below. Later years will be posted soon. I don’t want to overwhelm readers with data in one post. The expenditures below total $1,221,772.

SectorDescriptionTotal Expenditures
AdministrativeMiscellaneous administrative$4,398
ContributionsContributions to federal candidates$623,617
ContributionsContributions to committees$317,000
ContributionsContributions to joint fundraising committees$121,000
ContributionsContributions to national parties$115,000
ContributionsContributions to state & local candidates$12,600
ContributionsMiscellaneous contributions$10,000
FundraisingFundraising fees$17,533
UnclassifiableUnclassifiable$624
From OpenSecrets.org:https://www.opensecrets.org/political-action-committees-pacs/american-health-care-assn/C00006080/expenditures/2018.

Politicians & Political Entities Receiving the Largest Donation from the Nursing Home Lobby:

RankVendor/RecipientTotal Expenditures
1Team Ryan$45,000
2Democratic Congressional Campaign Cmte$35,000
3National Republican Senatorial Cmte$30,000
3Democratic Senatorial Campaign Cmte$30,000
5National Republican Congressional Cmte$20,000
6McCarthy Victory Fund$15,000
7Hoyer’s Majority Fund$10,000
7Montanans for Tester$10,000
7Young for Iowa$10,000
7Committee for Hispanic Causes-BOLD PAC$10,000
7Friends of Sherrod Brown$10,000
7Support to Ensure Victory Everywhere PAC$10,000
7Friends of Jim Clyburn$10,000
7Nancy Pelosi for Congress$10,000
7Bridge Pac$10,000
7Friends of Chris Murphy$10,000
7Ameripac: the Fund for A Greater America$10,000
7James E Clyburn Research & Scholarship Foundation$10,000
7Heidi for Senate$10,000
7Scalise Leadership Fund$10,000
7Stabenow for US Senate$10,000
7People for Ben$10,000
7Victory by Investing Building & Empowering PAC$10,000
7Stivers for Congress$10,000
7Pac To the Future$10,000
OpenSecrets.org

Lobbying inside the Washington, D.C. beltway and all 50 state capitols is responsible for continuation of low quality care in America’s nursing homes. It’s that simple. The highly profitable industry is providing low quality and deadly care because they can. We will keep the data flowing to the public as long as this blog exists. The 2019-2021 AHCA lobbying data will be posted within the next 24 hours.

Thank You For Your Service! Now Go Rot In A Veteran’s Nursing Home!

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Dave Kingsley

As a veteran myself, I find the maudlin, mawkish, displays of affection for military personnel hypocritical and disgusting. Flyovers at football games, the shallow emotional “thank you for your service” cliché, and phony, baloney outpourings of appreciation through little privileges (first in line to get on an airplane) are no-sacrifice forms of super-patriotism that keep the real sacrifice of our troops out of sight and out of mind.

Elderly and disabled veterans in state run nursing homes are certainly out of sight and out of mind these days. We don’t know how many of these places are deplorable and full of neglect and abuse. However, I was initially alerted by family members about conditions in a very large state run veterans’ facility in New York. It appears that that their loved ones are not well treated, nor are they as family members. We are looking at COVID data in that facility and what we are finding is alarming. However, given the resistance of any state to come clean with the information advocates and family members need, we will need to keep fighting this out so that we can find out what really happened.

I’ve been reading the inspection reports for the Kansas Soldiers’ Home in Fort Dodge, Kansas. The staffing levels, condition of the facility, and treatment of patients are shocking. In the state of Missouri, we can’t see the inspection reports online. Missouri veterans’ facilities aren’t on Nursing Home Compare. We are told that we have to go into the facility and ask to see reports for those facilities.

We will stay on this issue. This is just the beginning of our investigation into what is happening to veterans in America’s nursing homes. Let’s not overlook the $788 billion defense budget that sailed through the Senate this week, which doesn’t even include the VA and military retirement benefits. Nor does it include the nuke stuff in the Department of Energy. Can’t we spend an adequate amount on veterans’ in nursing homes in a $trillion military budget?

Watch this blog. We will keep investigating and writing about how our veterans are treated.