ICYMI: At Hearing, Warren Calls for Greater Ownership Transparency of Nursing Homes and Accountability for Corporate Owners' Patient Safety Failures

Hearing

Senator Elizabeth Warren: Nursing homes are where the most vulnerable members of our communities live. It is our duty to ensure that they are safe. But some of these facilities are in horrendous condition due to the greed of their corporate owners, and it is families that end up paying the price.

Private equity firms have targeted nursing homes for decades. And now new investment vehicles, Real Estate Investment Trusts, or REITs, are in the game too, snapping up nursing homes as lucrative investments. For these profiteers, their interest in nursing homes has less to do with providing care to those in need, and a lot more to do with money.

Now research shows that private equity and REIT-owned nursing homes are associated with higher Medicare costs, increased emergency department visits and hospitalizations, fewer registered nurses, and 40% higher COVID mortality rates.

Regulators need to be able to hold nursing homes accountable for patient safety. But corporate owners use all kinds of tricks to avoid identity. Ms. Bliss, It is the job of the Inspector General's office to investigate waste, fraud, and abuse in nursing homes to make sure that residents are safe and taxpayer money is being used wisely. How easy or hard is it for your investigators to identify the owner of a private equity or REIT-owned nursing home?

Erin Bliss, Assistant Inspector General for Evaluation and Inspections, Department of Health and Human Services, Office of Inspector General: Thank you for that important question. It can be very difficult to identify nursing home owners and management, and really uncover who are the responsible parties to be held accountable when something goes wrong. That's something that comes up in our oversight and our enforcement cases.

Senator Warren: Okay, so hard to enforce the law, can't figure out who's on the other end of this. So the way this gets so tangled up is that private equity and REIT owners set up these complex legal arrangements to avoid transparency and to try to evade responsibility when something goes wrong. And also by the way to make money. One trick is that when the company that owns the nursing home also has a stake in another company that sells supplies and services to the nursing home.

Now, Ms. Bliss, the Inspector General's Office is looking into this issue, which is known in government language as related party payments. If a nursing home owner is making money on both sides of a transaction like this, do you have concerns about whether or not taxpayer money is being used wisely?

Ms. Bliss: We do. We have concerns about the use of taxpayer funds and we have concerns about the impact on the residents in those nursing homes. As you noted, we do have ongoing audit work that is looking into these arrangements and payments, they are often called related party transactions, where the nursing home is making payments to contractors with whom it may have some financial stake. And we're looking at whether those payments may be inappropriately inflated and potentially diverting funds away from patient care.

Senator Warren: Okay, so it's really important that taxpayer funds be protected and I appreciate your work on that. But of course, the main thing too is we want to make sure that patients have a safe, healthy place to live.

Ms. McMahon, you are a state ombudsman, which means you are on the front lines when it comes to identifying and preventing problems in nursing homes. So can you tell us what trends you've noticed when a for-profit company, such as a private equity firm or a REIT, purchases a nursing home?

Leah McMahon, Director, Colorado State Long-Term Care Ombudsman Program: Thank you, Senator Warren. I have observed first hand over the years, and typically what we see is staffing cuts. In particular, nursing staff, which are critical to the health, safety and welfare of residents.

The Ombudsman Program will see an increase in complaints from families who report the inadequacies of care and their concerns when they visit their loved ones in nursing homes. Residents who are bedridden and develop open wounds because staff are not changing protective undergarments. They are languishing. They're not receiving their medications timely or as prescribed. They're not getting basic needs such as food or water. Due to these types of concerns, residents become dehydrated, they lose weight, endure painful bedsores, oftentimes the size of your hand, that can happen. This can lead to hospitalization and in worst cases death.

We see a fast deterioration and systematic stripping down of the operations of the facility to the bare bones to make a profit at the expense of residents' lives. Residents go from thriving to just surviving.

Senator Warren: That's a terrible list. And I just want to say to both of you, to all of you, I appreciate the work you're doing and trying to keep nursing home residents safe.

The Affordable Care Act requires facilities to disclose ownership and related party information. But the nursing home industry lobbied furiously to make sure that these provisions were never implemented.

In February, the Biden administration took a step to change that. I urge CMS to finalize its proposed rule on ownership disclosure to ensure that consumers can make informed choices and so that regulators have the information they need to hold these owners accountable and to keep patients safe.

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