The number of for-profit corporate nursing homes (as opposed to non-profit facilities) has risen sharply over the last several decades, complicating efforts to hold facilities accountable for substandard care. Worse yet, these centers have a higher rate of poor care because they tend to value profits over the vulnerable people in their charge. Beyond that, owners of these corporate nursing homes often have a stake in other companies contracted to provide goods and services to the patients – everything from physical therapy to drugs to management to staffers.
A recent analysis by Kaiser Health News and The New York Times explored how these “corporate webs” not only lessen the quality of care, but also make it more difficult for those seeking compensation for nursing home abuse and nursing home neglect.
Almost three-quarters of nursing homes in the U.S. have this kind of business arrangement, referred to as related party transactions. In some instances, facilities will contract out very basic functions, such as management of the facility or rent from their property. Those who run these organizations say it’s a means of simplifying operations and reducing corporate taxes. But of course, there is more to it. The owners of these facilities can score contracts they might not otherwise be able to land in a market that is more competitive, and from there, they can reap more profits that aren’t recorded in the nursing home’s financial records. While a typical non-profit nursing home might take home a profit somewhere in the neighborhood of 3 to 4 percent, owners of facilities with these related party transaction arrangements take home a profit margin of around 28 percent. Continue reading →