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

Posted on by

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 (https://www.opensecrets.org/) 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 (https://www.kdads.ks.gov/), 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.

Executive Compensation for CEO’S of Major Nursing Home Chains did not Decline Significantly During 2020: For Most, it Increased by a Significant Amount

Posted on by

    The nursing home lobby operating in Washington and state capitals is continuing its long running financial hardship campaign.  An article in the latest issue of Provider (the main propaganda organ for the industry) claims that COVID presented such a serious financial blow to providers that enhanced financial assistance from government would be the only way to implement needed substantive reform. The reform needed, according to the article, is due to increasing demand in long term care services (Patrick Connole, “COVID Challenges Bring Opportunity for Systemic Changes,” June 2020, 9-10).

    The article states that “With the majority of nursing homes already operating on razor-thin margins, the cost of making improvement will not be possible without financial assistance.”  Perhaps the razor thin margins to which the author is referring apply to the LLC listed as the owner and not to all the other LLCs such as the property LLC, the management LLC, the rehab LLC, the medical transport LLC, etc.  Certainly, holding companies and REITs have not fared badly at all during 2020 and the height of the COVID pandemic.[i]

    One would think that the entities at the top of the financial food chain would have taken a major hit and pared back their CEO pay considerably if the razor thin margins at some point in the flow of capital diminished shareholder value.  However, as the table below suggests, CEO pay for major nursing home operator/real estate chains listed on a public exchange were either enhanced by a large amount over 2019 and 2018 or remained steady.

    The above table does not display the proportion of total pay that is due to an “incentive bonus.”  Nevertheless, in cases where a major increase year over year appears for an executive, a large amount is for performance, which one must assume is financial performance.  The loss of life throughout the companies overseen by the executives in the table was a historical first for institutionalized U.S. populations.  An estimated 132,000 to 140,000 people in the care of these CEOs unnecessarily lost their lives.

    The government funded companies headed by CEOs at issue in this blog post are increasingly powerful players in taxpayer subsidized long-term and skilled nursing. In blog posts ahead, I will be discussing the growth of their power and influence.  For instance, the ManorCare property sold off by the private equity firm The Carlyle Group is now owned by Welltower and operated through a Welltower-Pro-Medica joint venture.

In the future, I will be blogging about the convoluted ownership structures in the nursing home industry and the complexification of that facet of the business due to the creativity of corporate lawyers and financial experts. Without exposing the financial trickery employed by providers, the public will be victimized by falsehoods of lobbying groups such as the AHCA/NCAL and others.

NOTE: The data in this post were derived from proxy statements filed with the Securities & Exchange Commission. In the future, I will be discussing compensation for board members and other officers/executives of major LTC/SKn corporations.

[i] Kingsley DE, Harrington C. 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.1728

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

Posted on by

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:  https://leadingage.org/care-our-seniors-act).  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.

A Pandemic Hit Us in 2020 & Killed at Least 600,000 Americans: After a Century of Pandemic Experience, Our Government Was Derelict

Posted on by

By Max Skidmore*

Prior to the COVID-19 virus landing on U.S. shores, scholars in government policy, infectious disease, and epidemiology were warning policymakers about the inevitability of novel viruses that would put the health of Americans at grave risk. They were ignored. The following is an excerpt from an article I published in the Journal of Risk, Hazards, and Crisis in Public Policy 3:4 (December 2012) entitled “Anti-Government is Not the Solution to Our Problems; Anti-Government Is the Problem: Presidential Response to Earthquakes, Pandemics, and Violent Weather From San Francisco to Katrina.”

Presidents & Pandemic Policies In Our Past, & Future

Pandemics potentially form a greater threat even than storms and earthquakes.  They are nature’s rough equivalent of the neutron bomb that once was touted as a device that kills people, yet leaves the infrastructure relatively intact.  In 1918, an influenza pandemic killed some 675,000 Americans, more than died in World War Two, or even in the Civil War.  The wartime conditions ensured that men would be packed into crowded camps where disease would spread rapidly, while Democratic President Woodrow Wilson made matters far worse. His example demonstrates that it is insufficient for a president to be able and inclined toward activism. He must also give full priority to a crisis when it arises. Wilson rejected medical advice—even as the war was winding down—and continued to send troops abroad in crowded ships that ensured infection and became floating morgues.[1]

The Asian flu of 1957 was a far less lethal disease than the 1918 influenza, but it nonetheless led to some 80,000 flu-related deaths that year.[2] This is in contrast to a normal annual rate often reported to be about 36,000.[3] More recent estimates report a range, from around 3,000 to around 49,000, depending upon the type of influenza prevalent in a given season.[4] Regardless of which figures provide greater accuracy, they all demonstrate that even in a normal year influenza is hardly a benign disease. Nevertheless, in 1957—as a pandemic was known to be developing—Republican President Dwight Eisenhower rejected medical advice, concluding that the free market would be sufficient to provide safety for the population.  He considered a government-sponsored vaccine program to be unnecessary.[5]

Eisenhower’s reliance upon the “profit-driven marketplace” would have fit neatly into the post-Reagan ideology of American conservatives, and the results were the same for Ike that they later were for his successors, most notably George W. Bush. For Bush, as is well known, the move toward privatization of Medicare in the “Advantage” plans, instead of saving money led to greatly increased expenditures. For Eisenhower, the inherent inefficiencies of the market approach that he adopted caused a huge and unnecessary loss of life.  Those inefficiencies of the vaccine market included inadequate production, poor distribution, and a diversion of vaccine toward corporate employees to reduce sick days, and thus away from high-risk groups.[6]

Republican President Gerald Ford, in contrast to the passive Eisenhower and certainly to the militantly contrary Wilson, was quick to act when facing the threat of a pandemic.  He decided upon a massive immunization program in 1976 when a new influenza virus was discovered that seemed similar to the one that caused the 1918 catastrophe.  As a result of Ford’s speedy action, his National Influenza Immunization Program (NIIP) succeeded in immunizing some 50 million Americans in short order.  Because no pandemic developed, and because a few cases of Guillain-Barré syndrome arose among those vaccinated, the administration abruptly halted the program.  Ironically, it was the government’s sophisticated monitoring system that identified the incidence of GBS, which otherwise would never have been noticed.  It was not faulty vaccine, and the cause of GBS was (and remains) unknown, but those vaccinated did have a sevenfold chance of developing GBS as compared with the unvaccinated.[7]

The overwhelming reaction of the media and the public was that the NIIP was a fiasco.  Despite the negative perception, however, Ford’s program demonstrated that it is possible for government to act effectively; with the proper skill and will, it can move rapidly to counter influenza and other pandemics.  It is feasible for a public program to vaccinate massive numbers, even in the face of great obstacles.  If the pandemic had developed, even more people—far more—would have received the vaccine, and Ford would have been a national hero.  As it was, his critics—the media, Democrats in the successor Carter administration, and especially the Reagan Republicans—distorted the record and made him look foolish.  Of perhaps the greatest long-term consequence with effects still prominent today, the Republican conservatives, aided by compliant news media, portrayed government as impotent, if not actually pernicious.

Distance, though, should add perspective—even if that perspective has yet to develop. According to the World Health Organization, the world in late 2009 fell into the grip of another pandemic caused by an H1N1 flu virus (the 1918 flu was also an H1N1). Richard Wenzel, a specialist in infectious diseases at Virginia Commonwealth University, wrote in an op-ed in the New York Times that, although “the epidemic never became as deadly as we initially feared, it was not as mild as some experts now believe. What’s more, it exposed some serious shortcomings in the world’s public health response.” He pointed out that no virus should be considered mild that “was so devastating for young adults, along with pregnant women, obese patients and minorities,” and said that of 94 poor countries, only 26 had thus far received any H1N1 vaccine. He praised the actions of the Mexican government, but said that in the U.S., there were “huge infection-control problems.” Among these, “at times, health officials erred in their recommendations,” saying that children and adults could safely return to school or work after fever had disappeared, even though they remained infectious. Moreover—and this is a key point—here, “the virus struck at a time when Americans seemed particularly skeptical about our government and large institutions.”[8] The Reagan legacy, if anything, had intensified.

Fortunately, the recent virus was considerably less lethal than its 1918 predecessor, did not appear to have mutated toward greater lethality, and—if the predictions of experts are accurate—is unlikely to result in another great wave of infection. If indications at this writing (April 2012) are borne out, humanity escaped an enormous tragedy. In any event, the lessons of President Ford’s NIIP, both positive and negative, are there to provide instruction to future policymakers.  They should serve as a guide to a society that someday will certainly face another horrendous pandemic, perhaps avian influenza, that could well be even worse than the 1918 pandemic. To his credit, in this regard former President George W. Bush did take action. In December of 2005, Congress granted his request for “3.8 billion to develop new vaccines and stockpile anti-flu medications.”[9]

[1] See John M. Barry, The Great Influenza (New York: Penguin Books, 2005); see also Carol R. Byerly, 2005. Fever of War: The Influenza Epidemic in the U.S. Army during World War I (New York: New York University Press, 2005), 108.

[2] Mike Davis, The Monster at Our Door: The Global Threat of Avian Flu (New York: Henry Holt, 2006), 35-36.

[3] Centers for Disease Control and Prevention, “CDC Finds Annual Flu Deaths Higher Than Previously Estimated,” Press Release (7 January 2003), 3.

[4] Centers for Disease Control and Prevention, “Estimating Seasonal Influenza-Associated Deaths in the United States: CDC Study Confirms Variability of Flu,” http://www.cdc.gov/flu/about/disease/us_flu-related_deaths.htm; retrieved 23 April 2012.

[5] Davis, Monster at Our Door, 35-36.

[6] J. Donald Millar and June Osborne, “Precursors of the Scientific Decision-Making Process Leading to the 1976 National Immunization Campaign,” Influenza in America: 1918-1976, June Osborne, ed. (New York: Prodist, 1977), 19-22.

[7] See Arthur Silverstein, Pure Politics an Impure Science (Baltimore: Johns Hopkins University Press, 1981).

[8] Richard P. Wenzel, “What We learned From H1N1’s First Year,” op-ed, The New York Times (13 April 2010), Opinion page.

[9] Sarah Glazer, “Avian Flu Threat: Are we Prepared for the Next Pandemic?” CQ Researcher 16 (13 January 2006), 1.

*University of Missouri Curator’s Distinguished Professor (Emeritus)

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

Posted on by

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//doi.org/10.1111/jgs.17288.

Dave Kingsley

Senators Want to Give the Senior Housing Industry More COVID Relief Money. Fight It! It’s A Rip Off for Investors and Executives!

Posted on by

Senators’ Letter Is Not About the Quality of Senior Living:  It is About the Power of Finance, Insurance, & Real Estate

The senior housing industry lobby has convinced 20 U.S. Senators to sign onto a letter to HHS Secretary Becerra asking him to direct more of the $23 billion left from the CARES Act into corporations that, in my opinion, haven’t demonstrated a need for more financial assistance.  According to trade publication McKnight’s Senior Living, two powerful lobbying organizations, American Seniors Housing Association (ASHA) and Argentum have been pressuring legislators to persuade the HHS Secretary to direct more government largesse into corporations such as Ventas, Welltower, and Sunrise – all of which have already benefited nicely from a plethora COVID-19 relief programs (Bipartisan group of 25 senators supports additional COVID aid for senior living – News – McKnight’s Senior Living (mcknightsseniorliving.com).

Advocates and activists should do everything possible to stop any immediate injection of more federal dollars into an industry that has provided no empirical evidence that it has suffered financially because of the COVID-19 pandemic. Nor has the senior housing industry demonstrated that much of federal and state dollars channeled into senior housing corporations significantly improved care, wages, and working conditions.

The power of the lobby pushing for more government relief is immense.  The special interests pressuring senators and house members comprise a juggernaut of finance, insurance, and real estate – otherwise known as FIRE or Wall Street.  A massive river of money flows into campaigns and lobbying resources from real estate investment trusts, private equity firms, health care corporations, institutional investors, and other special interest groups acting on behalf of shareholders and executives.

Senior Housing Corporations Are Horizontally Integrated

According to the McKnight’s article, senior housing trade groups are claiming that all COVID assistance has been totally devoted to the skilled nursing (“nursing home”) segment of the industry.  That is false for a couple of reasons: (1) senior housing is dominated by large real estate investment trusts owning and operating the gamut of living/care spaces such as continuing care retirement communities (CCRCs), assisted living, and skilled nursing, and (2) Although the “nursing home” segment of the industry received a wider range of relief funds than most other types of corporations, direct grants and tax deferrals were available to all companies in senior living. 

Companies such as Sunrise Senior Living, Brookdale Senior Living, Sabra, Omega, Welltower, and Ventas are intertwined in a massive real estate industry with the objective of protecting and enhancing shareholder value.  My ongoing review of financial reports of publicly listed corporations involved in senior housing indicates that COVID did not present the same crisis for it that other industries incurred. Revenue, earnings, cash flow, and liquidity in general was in good shape for every public corporation with a wide array of senior housing services.

More detail pertaining to the finances of senior housing corporations will be provided on this blog in the days ahead.  As I locate and organize publicly available financial data of REITs and their operators, it is becoming increasingly clear that the senior housing industry is manipulating public opinion by providing misleading information about the impact of COVID on their financial performance.  The American Health Care/National Assisted Living Association (AHCA/NCAL), ASHA, Argentum, and other special interest groups in real estate and finance have been playing the public and legislators by claiming hardship while hiding the truth about how well they did in 2020.

If COVID Was So Financially Harmful to Senior Housing Corporations, Why Have Executives Been So Well Rewarded?

Former Welltower CEO Thomas DeRosa left the company last October with a 2020 compensation package of $14,589,584 (https://www.execpay.org/news/welltower-inc-2020-compensation-519).  Shankh Mitra, his replacement, received a total compensation package of $9,557,434. DeRosa’s 2019 compensation totaled $13,142,124; Mitra’s totaled $5,728, 143 in 2019 – quite nice increases for a company needing federal assistance (https://www.sec.gov/Archives/edgar/data/766704/000119312521118460/d49250ddef14a.htm).

Four of the five Welltower board members were paid from $300,000 to $352,000 (the lowest paid BOD member made $275,000).  In its 2020 10-K report, Welltower stated that its primary objective is to “protect and enhance shareholder value.”  Compensation packages for the board and officers indicate that the primary objective of the corporation was achieved in 2020, so why is more government assistance needed?

As proxy statements are released by major corporations in senior housing, it is becoming clear that CEOs were generously rewarded by their boards in 2020.  For instance, Ventas CEO Debra Cafaro’s compensation increased from $11,348,335 in 2019 to $12,628,714.  Ventas Executive VP and CFO’s compensation package took an amazing jump from $4,833,831 in 2019 to $13,116,202 in 2020! In the next few days, I will be highlighting the generous compensation packages received by CEOs that failed to protect hundreds of thousands of citizens in their care.  Executive compensation packages I’ve seen so far suggest that “incentive pay” is a sham concocted between executives and their boards.

Advocates & Activists:  Please Head Off Another Senior Housing Money Grab.

Any senior housing advocacy and/or activist group worth it’s salt should be all over this Wall Street money grab – aided and abetted by U.S. Senators.  Here is a list of the 20 Senators who have signed onto the letter (initiated by Senators Collins and Sinema):  Senators signing the letter in addition to Sinema and Collins include Michael Bennet (D-CO), Marsha Blackburn (R-TN), Tom Carper (D-DE), Bill Cassidy (R-LA), Chris Coons (D-DE), John Cornyn (R-TX), Kevin Cramer (R-ND), Steve Daines (R-MT), Dianne Feinstein (D-CA), Deb Fischer (R-NE), Bill Hagerty (R-TN), Mark Kelly (D-AZ), James Lankford (R-OK), Roger Marshall (R-KS), Jerry Moran (R-KS), Alex Padilla (D-CA), Tim Scott (R-SC), Tina Smith (D-MN), Jon Tester (D-MT), Thom Tillis (R-NC), Chris Van Hollen (D-MD), Todd Young (R-IN) and Amy Klobuchar (D-MN).

ASHA and Argentum are encouraging support of a similar letter in the House written by Reps. Abigail Spanberger (D-VA) and Anthony Gonzalez (R-OH). That letter is expected to close by week’s end.

My suggestion is that advocates and activists across the country come together and draft a letter to the HHS Secretary in which they insist that the finances of the senior housing industry be reviewed before any further COVID relief funding is made available to corporations providing assisted living, independent living, and skilled nursing.  Many of these companies are closely held and will not disclose their consolidated income, balance sheet, and cash flow statements.  Until they are willing to do that, the public should rebel against large injections of public funds into the senior housing industry.

Also, it is important to contact the senators on the above list and let them know that their support of more taxpayer funds that will most certainly reward investors and executives will prove embarrassing. As an increasing amount of 2020 financial data is discovered, organized, and reported, it is becoming clear that the American people are being played by an industry receiving undeserved subsidies. This is not about capitalism or the legitimate role of government.  Rather, it is about a corrupt political process and senior housing system that we ignore at our peril.

U.S. Elders are a Massive Market for Government Funded Corporations, but They do not Have a Strong Lobby for Protection from Exploitation

Posted on by

One-fifth of the U.S. Population is 65+

    The so-called “baby boom” which ranged from 1946 to 1964 was a phenomenal spurt in the U.S. birthrate.  In 1950, the U.S. population had reached 150.7 million, eight percent of which was 65+.  By 2029, when individuals born in 1964 will reach age 65, the U.S. population is estimated to be 350 million. Twenty-one percent or 73.5 million Americans will be 65+ by the end of the current decade.

    The two most expensive needs of the 65+ demographic are health care and housing.  As the elderly population has expanded, the Wall Street sector of the economy (finance, insurance, & real estate) and the health care sector have developed into 40% of the U.S. economic system.  Furthermore, the two sectors are intertwined and together account for $10 trillion of the $24 trillion U.S. economy. A major share of FIRE and Healthcare revenue is channeled through government funded programs.

A Free Lunch – Not a Free Market – for the FIRE/Medical Industrial Complex

    Because of the power of the FIRE/Healthcare lobby in Washington, D.C. and the 50 state capitols, these industries have the power to maneuver legislation in a manner that places the interests of the elderly far below the interests of investors and corporate executives.  Indeed, in long-term care, a major segment of senior housing, government and corporations have merged into a “corporatocracy.”  Prices are set and revenue is guaranteed, protected, and enhanced by government.  Competition is restricted through a licensing system.

    Although a patina of regulation is in place, conditions are debilitating and life-shortening due to cost-cutting for the sake of cash flow.  Although price controls exist, wages are allowed to float on a market in which labor is exceedingly weak and hourly pay is pathetically low.  Hence, low paid labor and understaffed facilities are bound to provide substandard care while the system is geared to enhance shareholder value through tax subsidies, ancillary services, triple-net leases, and patient arbitrage, i.e., upping the number of Medicare patients in relation to Medicaid patients.

    The senior housing system is designed to transfer middle class wealth to the very top income stratum.  For instance, any assets accumulated by ordinary American families needing long-term care can be quickly exhausted by daily charges.  These assets flow through complicated legal structures that provide generous tax benefits. 

    After the “spend down” on long-term care and a family’s assets are exhausted, welfare medicine (Medicaid) is the only option.  Government reimbursement for Medicaid is substantially lower than it is for private pay and Medicare and often the care is worse.  Nevertheless, $180 or $200 for a bed is better than an empty bed returning $0.  The industry always has its lobbying juggernaut in action making hardship pleas to legislators.  Lobbyists claim that reimbursement is too low and are constantly lobbying for increased Medicaid and Medicare rates. However, nursing home corporations are for the most part privately held and operate behind a veil of financial secrecy. Legislators and government agencies have done absolutely nothing about that anti-democratic practice.

The Power Relationship Between Advocates and the Industry is Asymmetrical.

    Industry lobbying groups such as the American Health Care Association are aggressive and well-funded.  They have a strategy and a narrative with plenty of money to carry them out.  The AHCA plays fast and loose with the truth. 

    It appears that most organizations claiming to represent the elderly are not willing to confront industry propaganda and fight with the same ardor as industry. Unfortunately, the AARP often steps in to play that role, but will often excuse, ignore, or explain away the industry’s egregious violation of human dignity and unfair treatment.  AARP representatives provide testimony at legislative hearings that is ill-informed, lacks substance, and avoids critical issues such as the opaque nature of the finances of corporations receiving Medicare and Medicaid dollars.

Lydia Nunez is Joining Us as A Blogger on Disability Issues

Posted on by

Lydia Nunez is a Knowledgeable & Experienced Colleague Who Has Joined Us to Provide Her Perspective on Assisted Living, Long-term Care, & Issues Pertaining to Americans with Disabilities. We’re Delighted to Have Her on the Tallgrass Economics team. Lydia’s bio is on the “Meet the Bloggers” page. Today her testimony to the Senate Finance Committee is posted.

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

Posted on by

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 COVID-Tragedy from the Perspective of A Leader in the Disability Community

Posted on by

Lydia Nunez Landry,

Certified Long-Term Care Ombudsman

disabled disability advocate

Submitted for the United States Committee on Finance record at a hearing on:
A National Tragedy: COVID-19 in the Nation’s Nursing Homes

Wednesday, March 17, 2021

Chairman Wyden, Ranking Member Crapo, and distinguished Members of the Committee,



My name is Lydia Nunez Landry and I am writing to you today not as someone the American Health Care Association and LeadingAge would reduce to the characterization (in their ‘Care for Our Senior’s Act’) of a “frail [or] elderly adult with underlying health conditions” at risk of dying from COVID “630 times higher than an 18 to 29” year old, that is, someone these lobbyists designate as prone to death. Rather, despite reductions of people like me—or any other marginalized group—to underlying health conditions or comorbidities or biased stereotypes, I write to you today as an alive and thriving disabled woman, one who lives in and contributes to her community, and as someone who questions the motives of those who attribute grave injustice toexploited or oppressed people’s own supposed deficiencies. Without a supportive partner to care for me in our home, I could as easily have died from neglect or COVID-19 in the average nursing home. My point here is to show that the long-term care industry is peddling this narrative simply to avoid responsibility for wrongdoing; that is, they want to pretend that people are dying in their facilities not because of the industry’s negligence, greed, or malfeasance, but instead because disabled and older people have a particular tendency to die en masse. The narrative in ‘Care for Our Senior’s Act’ is yet another example of the industry’s connivery and manipulation (I will append a brief example at the end of my testimony to show how they advance this narrative by playing with statistics).

    Generally speaking, when any group of people are marked as suspect or inferior in some manner, when they are segregated and denied the resources and liberties that others enjoy, their flourishing will indeed be impeded, and they will be at a greater risk of contracting infections or disease. This is evidenced throughout history from the decaying and dank tenement houses of the early 19th century, the horrific conditions of the Warsaw ghetto, to the abuses that occurred in state institutions for people with disabilities. Given a deadly pandemic combined with deplorable (or at best unsafe) conditions, where people are segregated and treated as fungible objects from which to extract government benefits (or cheap labor), even AHCA and LeadingAge lobbyists like Mr. Mark Parkinson or Mr. David Gifford might be at a mortality risk 630 times higher than 18 to 29 year olds not forced to endure similar circumstances. (The industry’s claims are rarely supported by evidence, and with brief examination, can be shown inaccurate. Their act is at best slipshod and indicates an arrogance reinforced by years of overindulgence and a lack of accountability.)

    In contrast to those who are key players on K Street or spend most of their time in boardrooms or lobbying in the halls of Congress, I want to emphasize that my perspective is informed by my advocacy work in nursing homes where I have spent a great deal of time. I form bonds with residents. I know many of their spouses and children’s names, where they were from, the hobbies they enjoyed, and the kind of work they did. All of this they generously shared with me. I learned what it was like working in a Pennsylvania textile mill in the 1930s, surviving a chemical plant explosion in Texas and the revolution in Cuba, and growing up in Mexico in the 1940s. I have heard stories from war brides from France and Vietnam or the time a woman had to sew thousands of sequins by hand on her daughter’s quinceanera dress. I feel myself privileged to be granted the opportunity to listen. And unlike CEOs who earn $1,427,192 for lobbying, state ombudsman programs rely on volunteers. I have dedicated my life to this issue and yet rare is the occasion that I am asked to contribute to this topic. I—and other disability justice activists—have not been lavished the same platforms to speak given to long-term care industry CEOs and lobbyists. As a result of this, the voices of significantly disabled people, those at imminent risk of institutionalization or those in institutions, are squelched by the industry narrative. When I initially started out as ombudsman, I applied the principle of charity to the industry’s narrative, but with careful appraisal of the incongruity between what residents, families, ombudsmen, advocates, experts, HHS regulators, CNAs, CMS, and the OIG evidenced compared to the industry’s slant, it became apparent that industry representatives either have a deficient understanding of the culture and operations their business practices engender, or worse, they are impervious to the suffering of disabled people. Choosing not to see injustice or corruption, however, seems contrary to their lofty mission statements and commitments they have made to taxpayers.

On occasion, circumstances force us to confront the ugliness and brutality that inevitably festers where we sequester vulnerable people; stories of abject cruelty rip away the veil of inattention we cultivate to block from our view the relentless mill of everyday abuse, neglect, and hopelessness. In these moments of outrage, we perceive the true nature of institutionalization and perhaps even what we must do, but those flashes of insights quickly fade. Soon those with vested interests haul out the timeworn reform narratives and “bad apple” scapegoats that persuade us to look away again, to participate in systemic neglect from afar. 

As a LTC ombudsman I could not simply look away from the toll of daily abuse and neglect residents experience or ignore their justified feelings of abandonment and the despair it begets. My ombudsman work bears out what ought to have long been obvious to any attentive person, namely, that segregating people in institutions can never foster or indeed ever permit equal treatment.[1] Nor—as over a hundred years of disability history attests[2]—can this model be fixed through reform. We cannot fix that which, by its nature, leads to systemic human rights violations. Severing people (like older and disabled people) from their homes and communities necessarily devalues them as persons and citizens. The diminishment is felt immediately. The freedoms they enjoyed vanish as institutional regiments constrict the courses of their lives. These utilitarian routines deprive them of their privacy and autonomy for the sake of efficiency and cost-effectiveness. Confined in these facilities without the projects and relationships that endowed their lives with meaning and shaped their social identities, they experience a kind of social death.[3] And so too their former communities, continuing on without them, lose the connection to them as full persons still deserving of the moral consideration and respect we are obliged to confer on those people in the community. Isolated, powerless, and dehumanized, people institutionalized inevitably suffer grave harms, not only from abuse and neglect, but from the very act of banishing them from the moral communities that granted the rights and benefits they are now denied.

To be sure, congregate institutions try to simulate community to hide these realities, but such ersatz contrivances are no substitute for genuine social inclusion and belongingness; the simulations are parodies. Such a model cannot produce “person-centered care” no matter how many CMS regulations we enact and enforce. Nor can quarterly congressional hearings and regulatory tweaks—informed by the usual actors they serve to benefit—amount to anything more than theater, political performances that strike those people who must endure the injustice as thoughtless cruelty.

Only a transformative shift in public policy can end these injustices. This shift will require scrutinizing narratives widely considered axiomatic. These include the beliefs that institutionalization is an unavoidable consequence of aging and disability, that institutions provide safer environments (a claim long used to rationalize the barbarity of social removal despite evidence demonstrating the contrary), that uprooting people from the homes, communities, and personal identities they spent lifetimes nurturing is compatible with our most revered social ideals, and finally that we can outsource our humanity—that is, our moral and social obligations to one another, including our disabled parents and children—as a revenue source for corporations and the workers they exploit and expect humane results. 

By now, we know these outcomes of the institutional model; it is a model that objectifies deeply human concerns and favors economic values and imperatives such as competitiveness, efficiency, and profit margins, values that tend to attract predatory actors. And yet we persist with it, and one must ask why. Why do we continue to allow neglect, abuse, and dehumanization to go unchecked? Why do we allow those same predatory actors to manufacture and control the narratives that frame these issues, and indeed provide them platforms in the halls of Congress and in the media to influence unwitting advocates? Why do we persist with this cultivated naivety in the face of so much everyday suffering? The poor human rights records of congregate care facilities long predate the COVID-19 crisis, but the crisis has laid bare the preexisting conditions that led to deaths of over 181,000 disabled people in these institutions.

The horrors I witnessed as an LTC ombudsman keep me up at night, but also inform my disability justice work. And both my insomnia and activism partly derive from frustration. In deference to the industry, the system defangs oversight.  I have fought countless nursing home attempts to involuntarily discharge residents only to have found that those residents, some with severe dementia, had disappeared the following week—to where, the nursing home curiously had (or at least offered) no clue. Sitting at their bedsides, I have held residents’ hands as they recounted instances of rape and abuse, often by staff. Residents have had limbs amputated due to a lack of wound care, understaffing, and poor training. I have seen residents gasp for air as nursing home staff rationed oxygen to save money. I have called Health and Human Services on multiple occasions for residents due to cruel instances of retaliation, only to leave the residents open for more of the same because they sought assistance from a deliberately debilitated regulatory system. Finally, I, myself, have been threatened on multiple occasions by staff and operators. Despite my notifying HHS regulatory and the Ombudsman Program, nothing of substance was done. To the industry, ombudsmen are gnats to swat away; they well know consequences will not be forthcoming. After all, there are few if any consequences for the negligent deaths of residents.

Culture change is impossible within the institutional habitus, particularly so when professional and agency advancement, corporate profit, race, age, and ableism are added to the brew. From the institutional point of view, the dehumanizing model is working as intended. Hence, pumping in ever more money to fund the same solutions and reforms will not bring about different results. As we have seen during the COVID-19 pandemic, nursing homes made record profits from taxpayer funded COVID subsidies, yet COVID cases and deaths, along with non COVID deaths resulting from inadequate infection control practices and severe understaffing, continued to rise.
    

There will be no substantive change until we end the Medicaid institutional bias by diverting taxpayer funds away from institutions and to programs that maintain or reestablish community integration. As I often explain, nursing homes are the most subsidized industry in the United States and increased monetary rewards serve only to entrench industry malfeasance. Diverting Medicaid dollars to fund HCBS not only reaffirms our commitments to the Americans with Disabilities Act (ADA), the Supreme Court’s Olmstead decision, and our professed democratic principles, it will also do more to soften the resolve of a recalcitrant industry (and similar nonprofits) than years of congressional hearings. In the long run, we will waste fewer resources on researching deficient industry practices and developing complex strategies to instigate change (only to be undone by lobbyists), on Office of Inspector General (OIG) and the U.S. General Accounting Office (GAO) investigations, on Ombudsman programs, on regulatory agencies to maintain the illusion of oversight, on healthcare costs resulting from the industry’s negligence, and on subsidizing the industry’s cost of doing business.

Sincerely,

Lydia Nunez Landry

Certified Volunteer Long-Term Care Ombudsman

Organizer for Gulf Coast Adapt

Appendix:

As promised, I want to briefly review a few of the rhetorical and statistical practices employed by the industry and their lobbyists to reframe the human catastrophe exacerbated by the negligent practices in LTC facilities. The author of Care for Our Seniors Act, which aspires to learn from “tragedy” and implement bold solutions, concedes that LTC facilities were the epicenter of the “once-in-a-century” pandemic’s ravage. The force-of-nature language distances the 170,000 deaths (now up to 181,286 deaths) from any culpable agent. And indeed, no one is to blame for the virus, just as we can blame no one for a major flood. But we can blame them for negligent and habitual substandard practices (such as not maintaining levees) that substantially worsen the toll. The author mentions “independent research” by “leading…experts” which shows that “COVID-19 outbreaks in nursing homes are principally driven by the amount of spread in the surrounding community.” The only actual research offered—conducted in May, 2020, long before the vast majority of cases occurred—did conclude that size and location of facilities were factors while traditional metrics such as star ratings and prior citation for poor infection control were not. (Most of the citations were articles from industry magazines, one of which mentioned the article just cited.) It’s unclear how this exonerates the industry. Moreover, the study, thus interpreted, becomes an outlier, as much more research has found direct links between poor quality ratings and significantly higher numbers of COIVD cases and deaths (see here and here).

Instead of dueling studies, we might focus on statistics. The author notes another force of nature behind the deaths, namely time: aging and the fragility of bodies. The virus just happens to target the frail and elderly adults with underlying health concerns that live in their facilities. The author incorrectly asserted that the average age of nursing home residents is 85, but correctly asserted that most residents have underlying conditions, as indeed most people over 65 years old have multiple chronic conditions, in and out of LTC facilities. First some numbers:

The U.S. has approximately 52 million citizens aged 65 or greater. Of them, 430,000 have died from complications of COVID-19 infections. Of those, 130,000 died in nursing homes—the author mentioned 170,000 deaths, but that includes congregate facilities the data from which is sparse, so I shall stick with the 130,000 in nursing homes (NHs). Thus, 300,000 died elsewhere than a NH. NHs warehouse approximately 1.4 million residents, ~ 90% of whom are 65+ years old. The total number of cases in NHs is, at the moment, 643,314, and, for non-NH people in the same age group, 2,666,625. Looking at the bare infection and death numbers, one might think that nursing homes did well—too well, in fact, for the author’s contentions.

But consider again that most people over 65 years old have chronic conditions and most people, even with their bleach wipes, have rudimentary infection controls in their homes. Now, 9.28% of the 1.4 million people in NHs have died from COVID; we can round that up to 1 in every 10. But if non-NH people in the same fragile age group died at that rate, we would have an incredible 4,342,857 more deaths than we do, as only 1 in 167 non-NH elderly people died from COVID. Indeed, examining only those infected, you are nearly twice as likely to die (20% vs. 11%) if you’re in a NH than not. Indeed, the infection rate in NHs is 46% vs. 5.3% for non-NHs fragile people. 

Now, ultimately, industry spokespeople will claim that the deaths occurred because all these people are interacting in close quarters, and so on. But this is not something that can be fixed, and so it underscores why we need to turn back to community integration instead of warehousing people in admitted death traps.

[1] See, for example, Liat Ben-Moshe, Decarcerating Disability: Deinstitutionalization and Prison Abolition (Minneapolis, MN: University of Minnesota Press, 2020).

[2] Sara F. Rose, No Right to Be Idle: the Invention of Disability, 1840s–1930s (Chapel Hill, NC: The University of North Carolina Press, 2017).

[3] Jana Králová, “What Is Social Death?” Contemporary Social Science 10, no. 3 (2015): pp. 235–248, https://doi.org/10.1080/21582041.2015.1114407.