Nursing Home Residents Caught Between Corporate Greed and Government Malfeasance

Last week I commented on the scandal reported by the NY Times involving the exploitation of frail elders in nursing homes by Wall Street investment bankers. (See Sept 24 post). These "Captains of Capitalism" have pooled hundreds of millions of dollars to buy up for profit nursing homes that were losing money. These investors figured out how to turn these terrible places into gold. Their solution: Cut back on already inadequate care by ignoring federal and state regulations. They get away with it by creating a confusing maze of dummy corporations, making it hard for the regulators to catch them until the care gets so bad that the facilities are charged with criminal neglect by family members of the residents.

After their criminal behavior was exposed last week, a spokesman for these investment bankers insisted that they deserved praise, not criticism. “We should be recognized for supporting this industry when almost everyone else was running away,” he said.

While these corporate elder abusers should be prosecuted for their criminal behavior, Americans should know that their government is an all too willing partner in the ongoing degradation of nursing home care for the most vulnerable.

While those who can afford to pay for the care they need can avoid nursing home placement, the overwhelming majority of nursing home residents rely on Medicaid, a program for very poor Americans that is often confused with Medicare, to pay for their care. Since nursing home care is often less expensive than care at home, especially for those who need round the clock care, when frail elders run out of money they are often given no choice by Medicaid...it's the nursing home or nothing.

An independent study released today calculates that Medicaid underfunds long term care by $4.4 billion nationally.

The states with the greatest disparity between the cost of care and Medicaid reimbursement are Illinois, New Jersey, Wisconsin, Minnesota, Vermont, New Hampshire, Missouri, Delaware, Washington,and Massachusetts.

The new study reports that, when considering both Medicare and Medicaid, the long term care industry operates with a 2.5% negative margin.

When it comes to the most vulnerable of our population there appears to be consensus among the federal and state governments and Wall Street investment bankers. Cutting corners on the quality of care is the way to go.