Outsourcing Services to Corporations Linked to Nursing Home Owners
When we hear that nursing homes are underfunded and understaffed, are those problems actually a result of the facilities wanting to provide quality care failing to have enough funding to hire an adequate number of staff members? Or, as the article suggests, are these problems tied to the more disturbing reason that nursing home owners have business interests that come first above patient safety and quality care? According to The New York Times, an “increasingly common business arrangement” involves nursing home owners outsourcing “a wide variety of goods and services to companies in which they have a financial interest or that they control.”
More specifically, about 75% of nursing homes in the country (a percentage that totals more than 11,000 facilities) have owners who are engaged in “such business dealings,” which are “known as related party transactions.” A report from Kaiser Health News detailed these financial linkages in a recent report and indicated that “some homes even contract out basic functions like management or rent their own building from a sister corporation, saying it is an efficient way of running their businesses and can help minimize taxes.” Ultimately what this outsourcing does is take away funding that elderly residents need while supporting the financial needs of other corporations.
Nursing Homes Obtaining Profits in California
An underlying issue here is that of nursing homes getting profits. As the article underscores, when a nursing home outsources its needs, it can actually pay more than it needs to pay for services provided by a corporation in which the nursing home owner has a financial stake. Accordingly, the nursing home owner can obtain higher profits than she or he would have if relying solely on the marketplace. In total for 2015, related party transactions resulted in $11 billion in total nursing home spending, which the article reports is a tenth of the average nursing home’s operating costs.
This is a particular problem in California. Brius Healthcare Services, for example, is currently being examined by the state auditor. The company’s related party transactions and Medicaid reimbursements suggest that the quality of patient care suffered due to related party transactions. Indeed, according to the article, “nursing homes that outsource to related organizations tend to have significant shortcomings.” Those shortcomings include fewer nurses to attend to patients, more patient injuries, and higher rates of nursing home abuse and neglect complaints.
Learn More from a Rancho Bernardo Nursing Home Abuse Lawyer
If you need assistance filing a nursing home abuse claim, a Rancho Bernardo nursing home abuse attorney can help. Contact the Walton Law Firm today to learn more about how we can assist with your case.
See Related Blog Posts:
Stopping Oceanside Nursing Home Evictions
Elder Abuse and San Clemente Hospice Patients
(image courtesy of Jorge Lopez)