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Coronavirus: Should nursing homes be for-profit?

Written by Diane Archer

Matthew Goldstein et al. reports for The New York Times that most US nursing homes were losing money pre-pandemic. Not surprisingly, they were not well prepared for the novel coronavirus. The latest data indicates that one in three deaths from COVID-19 are nursing home residents or workers. Should nursing homes be for-profit?

Today, of the more than 15,000 nursing homes, about 70 percent are for-profit according to the Centers for Disease Control and Prevention. The majority of nursing homes are part of chains owned by companies trying to get as much money out of them as possible. In the process, they leave little money for patient care. A Kaiser Family Foundation report on chain nursing homes leads you to want to stay clear of them.

Often chain nursing home owners also own the nursing home real estate, which can be worth more than the nursing home. When they separate the nursing homes from their real estate, the nursing homes have less value and must pay rent. The nursing homes have fewer assets and less money to deliver care. Liabilities for these nursing homes can be twice their assets.

Nursing home owners often also own other companies that are vendors for nursing homes. That way, the owners can generate revenue from the nursing homes for their other businesses. The owners might not leave the nursing homes with enough money to care for their residents properly. The for-profit nursing homes have also been found not to deliver as good quality care as non-profit nursing homes.

A NYU business school report looked at private equity buyouts of nursing homes over 17 years. The researchers found a 2.4 percent decrease in nursing staff time and a 3.6 decrease in quality of care. At one facility, a nursing assistant reported that there can be as few as one certified nursing assistant for every 19 residents.

When the coronavirus struck, the for-profit nursing homes tended to be understaffed. And they did not have adequate personal protective equipment. This is likely why there have been so many COVID-19 deaths in nursing facilities. Still, many states are giving nursing homes broad immunity from lawsuits during this pandemic.

If you’re looking to compare nursing homes, Medicare rates nursing homes on nursing home compare based on a five-star system. You should avoid one- and two-star nursing homes. But, you should not assume that four- and five-star nursing homes deliver good quality care. The rating system is a farce; there’s plenty of gaming. Check out the Informed Patient Institute for more information on nursing home ratings as well as information on Pro Publica.

And, if you or someone you love is enrolled in a Medicare Advantage plan and needs nursing home care, beware. People in Medicare Advantage plans are likely to end up in lower-quality nursing homes.

Click on this New York Times link to see the number of COVID-19 deaths at different nursing home facilities.

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