Md. weighs nursing home curbs

Bigger owners give poorer care, union study contends

June 16, 2008|By James Drew | James Drew,Sun reporter

Alarmed that the purchase of nursing homes by larger companies could cause a decline in care, Maryland is studying whether restrictions should be placed on ownership as regulators face criticism that private equity groups make it more difficult for the public to hold nursing homes accountable for poor care.

The goal of the two bills that Gov. Martin O'Malley recently signed into law is to determine if the type of ownership - ranging from small nonprofits to corporations with worldwide holdings - has a connection with violations of state and federal regulations at nursing homes, said Wendy Kronmiller, director of the state Office of Health Care Quality.

The driving force behind the effort is the acquisition of one of the nation's largest nursing home chains, HCR ManorCare, by the Carlyle Group for $6 billion in December. HCR ManorCare has 14 nursing homes in Maryland and 277 nationwide.

The Service Employees International Union, which represents 1,100 workers at HCR ManorCare nursing homes nationwide, including 200 in Maryland, released a study last year asserting that buyouts of two other nursing home chains have led to more violations of state and federal regulations, and new business structures to limit liability, reduce tax bills and make it more difficult to track how Medicare and Medicaid dollars are spent. Union officials have complained of violations of federal and state regulations at HCR ManorCare nursing homes in Maryland and of what they say is "inadequate staffing."

Kronmiller said a task force formed this summer would have a wider scope than ownership by private equity firms. The group, which will include representatives of consumer groups and nursing homes, will analyze data over two years to determine whether there is a link between type of ownership and poor care.

The state has anecdotal evidence that talented administrators and nursing directors, combined with little staff turnover, result in better care, but officials have not studied ownership, said Kronmiller, whose office is part of the Department of Health and Mental Hygiene.

Maryland has 233 nursing homes - about 60 percent for-profit and 40 percent nonprofit, state officials say. The study will try to determine how many are owned by private equity groups.

Of the two Maryland nursing homes that federal officials placed on a national watch list this year, both are owned by private equity groups: ManorCare-Rossville by the Carlyle Group and the Waldorf Center by Formation Capital, which last year acquired Genesis HealthCare. Genesis operates 22 nursing homes in Maryland. Manor Care-Rossville and the Waldorf Center will be inspected twice a year instead of once and face possible penalties.

Kronmiller stressed that problems at the two nursing homes were detected over three years and began before the acquisitions.

But SEIU officials warn that private equity groups hold companies in their portfolios "accountable to profits, but not quality of health care or how they treat their workers."

"Private equity is corporate greed on steroids; how that melds with patient care is hard for us to figure out," said Stephen Lerner, director of SEIU's private equity campaign.

HCR ManorCare, in a written statement, said Carlyle expects to make a profit by selling its investment.

"That's how Carlyle will make money ... not by cutting costs or staffing or anything else, but by helping make HCR ManorCare a stronger care provider," the statement said.

Advocates for nursing home residents in Maryland said they have not documented a link between ownership type and poor care, noting that the number of violations of federal and state regulations discovered during inspections varies within large corporate chains and that some nursing homes owned by nonprofits have fared poorly in recent state inspections.

"Each nursing home is a separate entity, and there are quite wide variations in care," said Bob Bronaugh, vice chairman of Voices for Quality Care, a nonprofit group based in Leonardtown.

Charlene Harrington, a professor in the School of Nursing at the University of California-San Francisco, said studies she has helped conduct since 2000 have found that for-profit nursing homes across the nation operate with lower costs and smaller staffs than nonprofits, which provide more staff and higher quality care.

"I am not sure they need to do another study," said Harrington, referring to Maryland officials.

Private equity firms began to buy nursing homes in 2000, according to David G. Stevenson, an assistant professor at Harvard Medical School in Boston.

Stevenson said a study he recently completed did not find that nursing home quality "worsens markedly" after purchase by private equity firms, but he said more research was needed.

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