Tag Archives: Lobbying

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

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    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

Mark Parkinson, Former Governor of Kansas, is a High Paid Propagandist for the Nursing Home Industry.

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Mr. Parkinson Goes to Washington. His Current Task is to Cover Up Corporate Responsibility for Massive Loss of Life Due to COVID

Mark Parkinson, Former Governor of Kansas & CEO of the American Health Care Association

When Kathleen Sibelius was appointed HHS Secretary by President Obama, her Lieutenant Governor, Mark Parkinson, became governor.  His first major act was to nullify one of his predecessor’s last acts. Governor Sibelius had denied a permit for a dirty, hyper-polluting, fossil fuel, power plant in Southwest Kansas. Parkinson reversed her decision and granted the permit.  That was probably Parkinson’s only significant act as governor.  He finished out what would have been Sibelius’s term and immediately left for a high paying gig in Washington, D.C. – as CEO of the American Health Care Association (AHCA).

The AHCA lobbies on behalf of its nursing home corporation members.  According to the organization’s 2019 IRS 990, it has annual revenues of $40 million – most of which is derived from member dues.  Parkinson’s 2019 compensation was reported on the 990 as $2.5 million. (https://projects.propublica.org/nonprofits/organizations/530260105). 

These days, Parkinson is busy converting AHCA corporate members from negligent providers of care to victims of COVID-19 by pleading hardship on their behalf for what could be 200,000 deaths in the so-called “nursing homes” of America. In the last few days, he was quoted in Skilled Nursing News bemoaning the poor financial outlook for the nursing home industry(Parkinson: Nursing Homes’ Financial, Operational Recovery ‘Completely Tied to Visitation’ – Skilled Nursing News).  As our past and current posts regarding earnings of publicly listed provider corporations have demonstrated and will likely continue to demonstrate, long-term care providers are in fact doing quite well.

The Rights of Nursing Home Patients and their Families are up against AHCA Corporate Members & Their Deep Pockets 

Make no mistake about it, the AHCA, with affiliates in all 50 states, swings far, far, more weight in Washington and state capitols than well-meaning advocacy and activist groups could ever hope for.  Indeed, the power relationship between the industry and advocates is asymmetrical.  That explains why regulation is weak and quality of care remains low.

For instance, according to Section B. of the AHCA IRS 990 (displayed below), $3,197,201 alone was spent on software and public relations/lobbying firms in Washington, D.C.  The software helps link 50 state chapters and coordinate campaign and lobbying activities.  The $2 million plus expenditure for “public affairs,” “audio visual solutions,” “communications,” and so forth in a single year is a component of the industry’s propaganda juggernaut. Much of the rest of the $40 million is spent on Democratic and Republic governor’s associations and other purchases of political influence.

What Does $40 Million Buy the Nursing Home Industry in One Year?

Immense amounts of cash, decades of lobbying expertise, and a high paid staff can guide legislation and regulation in a direction that benefits corporations at the expense of patients, families, and communities.  Stated differently, the AHCA is a well-oiled propaganda machine.

AHCA framing and narratives have been effective in creating a Panglossian viewpoint among the public, media, and even advocates.  Although it is common to hear negative comments about the industry such as it is “greedy,” “puts profits above people,” and other such disparaging remarks, a psychologically complex set of beliefs neutralize this disdain. Industry propaganda has undermined the public’s suspicion that greedy industrialists are pocketing excess amounts of Medicare and Medicaid funds through unjustified cost cutting.

The gargantuan amount of PR money spent by the AHCA and expertise in manipulating public opinion has instilled a subliminal belief among a wide swath of the public.  Their narrative is that the nursing home system is the best there is in the best of all possible worlds.  Stated differently, the industry would have you believe that Medicare and Medicaid reimbursements are too paltry for them provide better care and remain in business.  Their lobbyists and PR mavens brilliantly induce the belief that net earnings are so thin that humane care is financially out of reach.  This is a scurrilous lie.

By Dave Kingsley

Lobbyists for the Nursing Home Industry are Pleading Financial Hardship on Behalf of the Corporations they Represent: Advocates & Activists Need to Debunk that False Narrative

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Dave Kingsley

A Government Funded Service that Requires Heart & Soul has been Turned over to Businesses that have no Heart and no Soul

Corporations in the nursing home industry do what corporations do – they make as much money as they can for their shareholders.  Advocates and activists do what caring people do – they fight for patients with heart and soul against corporations that have no heart and no soul. Profit is profit and care is care, and “ne’re the twain shall meet.” 

In this age of little integrity, corporate behavior has little to nothing to do with social responsibility and everything to do with executives’ perceived obligations to their investors/shareholders and themselves.  In that endeavor, they have no qualms about deceiving the public with misinformation about their finances. A number of times I have attended legislative hearings and listened to lobbyists convince legislators that providers’ net income is so low they can barely stay in business.

Providing low quality care and excusing it with a claim of “running on a thin profit margin” is a typical maneuver of long-term care providers. This is a lie and deserves some intense and strong pushback. It is not hard to find evidence to rebut this falsehood.  For instance, it is my opinion that The Ensign Group is the biggest owner and operator of nursing homes in the United States. I’m claiming it is the biggest because unlike the other large operators it owns the 270 properties (at latest count) it operates, whereas companies like Brookdale have sold their facilities to Welltower and other REITs (they manage them on a contract basis).

The Ensign Group is doing quite well – even during the COVID pandemic. The table below displays the company’s income statement, which includes revenue and net income through the 3rd quarter of 2020 compared to the same period of 2019. Revenue has increased from $1.5 billion during the same period in 2019 to $1.8 billion in 2020. The company’s net income (profit) in the third quarter was $43.3 million compared to $27.8 million in the 3rd quarter of 2019. The 2020 year-to-date net income in the 3rd quarter was $125.2 million compared to $84.4 million in 2019.

It is important to note that net income on the income statement is after depreciation, amortization, taxes, and interest. Calculating earnings after these expenses isn’t the current accepted standard for evaluating corporate performance. Earnings before interest, taxes, depreciation and amortization (EBITA), would be much higher than net income and is a better reflection of the company’s financial strength. There is no point in getting into the weeds on this particular point – it is an important point however. Suffice it to say that the financial data we are able to obtain from publicly listed companies suggest that long-term care is an attractive investment.

Senior Housing will be a Vibrant and Appealing Investment Opportunity for at Least the Next Ten Years

The Baby Boom generation began entering retirement age in 2011 and will swell the 65+ population until 2029, when the last year of the 1946 through 1964 birth cohort enters the magic retirement age of 65. Demographers are predicting that the 65+ demographic will reach 80 million. Real estate and finance sectors of the economy have been granted generous tax advantages. Those are the main undertakings of senior housing/long-term care. Furthermore, guaranteed revenue from Medicare and Medicaid and a powerful lobby for keeping regulators at bay or under control will attract investors to this industry.

Don’t take my Word For it, Look at the Trade Publications

Although the movement for community and home based care will continue to intensify, demand for skilled nursing will remain high due to an increasing 80+ population and advancing medical technology. In a recent article in Skilled Nursing News (Skilled Nursing Continues to Outpace Senior Living in Near-Term Investment Outlook, January 21, 2020), Alex Spanko wrote the following:

With a combination of strong federal relief and a seemingly safe place in the wider health care continuum, skilled nursing facilities have repeatedly emerged as bright spots in an otherwise hazy financial outlook for players in the senior housing and care sector.

Fitch Ratings on Tuesday added to that trend in awarding a BBB- rating and stable outlook to unsecured notes issued by National Health Investors (NYSE: NHI), a major publicly traded landlord in the space (https://skillednursingnews.com/2021/01/skilled-nursing-continues-to-outpace-senior-living-in-near-term-investment-outlook/).

Publicly listed corporations in the long-term care business will be reporting their 4th quarter and 2020 annual reports in the next few weeks. We will be compiling essential information for all them and posting it on this blog. Combined, these companies own a significant share of the long-term care industry. If their financial statements don’t support the “hardship pleas” of their lobbyists, then advocates need to ask for evidence of their claims.