Shareholder Value and the Performance of a Large Nursing Home Chain

Objective. To analyze
corporate governance arrangements and quality and financial performance
outcomes among large multi-facility nursing home corporations (chains)
that pursue stakeholder value (profit maximization) strategies.


Study Design. To
establish a foundation of knowledge about the focal phenomenon and
processes, we conducted an historical (1993–2005) case study of one of
the largest chains (Sun Helathcare Inc.) that triangulated qualitative
and quantitative data sources.


Data Sources. Two main
sets of information were compared: (1) corporate sources including
Sun's Security Exchange Commission (SEC) Form 10-K annual reports,
industry financial reports, and the business press; and (2) external
sources including, legal documents, press reports, and publicly
available California facility cost reports and quality data.


Principal Findings. Shareholder
value was pursued at Sun through three inter-linked strategies: (1)
rapid growth through debt-financed mergers; (2) labor cost constraint
through low nurse staffing levels; and (3) a model of corporate
governance that views sanctions for fraud and poor quality as a cost of
business.


Conclusions. Study
findings and evidence from other large nursing home chains underscore
calls from the Institute of Medicine and other bodies for extended
oversight of the corporate governance and performance of large nursing
home chains.

Nursing homes challenge regulators' authority to cut Medicare payments

 Leaders of the largest nursing home association in America are openly questioning the legality of federal regulators' proposal to reduce Medicare reimbursement levels by 3.3% in fiscal year 2009.

Officials with the Centers for Medicare & Medicaid Services are calling their proposed payment cut for fiscal year 2009 a "forecast error correction." They say the reduction will correct an error in forecasting budget neutrality for case-mix adjustments in refining the Resource Utilization Group system for fiscal 2006.

"We believe that the forecast error correction is unacceptable under the law and completely ignores the rise in the acuity of nursing home patients," said American Health Care Association President and CEO Bruce Yarwood in comments submitted to CMS. "We strongly recommend and ask that you remove this adjustment."

Norman DeLisle, MDRC
"With Liberty and Access for All!"
GrandCentral: 517-589-4081
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LTC Blog: http://ltcreform.blogspot.com/
Recovery: http://therecoveringlife.blogspot.com/
Change: http://prosynergypsc.blogspot.com/

The What, Why and How of Consistent Assignment

If you ever wanted a quick, clear, jargon-free way to explain consistent assignment to someone else – or if you’re not too sure about it yourself — you might want to check out the new two-page fact sheet (pdf) from the Advancing Excellence in America’s Nursing Homes campaign.

The fact sheet is part of a series that lay out the goals of the campaign. Consistent assignment, which is goal #8, is defined as ensuring that ”residents see the same caregivers (registered nurse, licensed practical nurse or certified nurse aide) or team of caregivers almost every time they are on duty” in order to “build and sustain relationships between individual residents, their families and friends and nurse aides.”

Norman DeLisle, MDRC
"With Liberty and Access for All!"
GrandCentral: 517-589-4081
MDRC Website: http://www.copower.org/
LTC Blog: http://ltcreform.blogspot.com/
Recovery: http://therecoveringlife.blogspot.com/
Change: http://prosynergypsc.blogspot.com/

Lawmakers hear testimony on nursing home arbitration clauses

WASHINGTON (Legal Newsline)-Federal lawmakers heard Tuesday that binding arbitration clauses in nursing home contracts provide a fair and timely resolution of patient disputes.

Arbitration agreements are "a viable option" for long term care providers and their residents to resolve legal disputes, said attorney Gavin Gadberry, representing the American Health Care Association and the National Center for Assisted Living.

"Arbitration is less adversarial than traditional litigation, produces quicker results and has been determined to be both fair and appropriate by our courts," he told members of the House Judiciary's Subcommittee on Commercial and Administrative Law.

The 12-member panel is considering legislation introduced by committee chair Rep. Linda Sánchez, D-Calif., who said she recently placed her father in a nursing home.

"Unfortunately, this debate is colored by anecdotes and misinformation perpetuated by high-profile trial attorneys who traditionally oppose any effort to bring balance to the personal injury playing field, and who give too little consideration to the harmful consequences on the long term care industry that follow from the high transaction costs of traditional litigation and the resulting financial drain on the system," Gadberry said.

The legislation, outlined in H.R. 6126, would render invalid pre-dispute arbitration agreements between a long-term care facility and a resident or anyone acting on the resident's behalf.

"When legal concerns arise, we believe that fair and timely resolution -the kind that is often the product of arbitration - is in the best interest of both the consumers and their care providers," Gadberry said.

The bill-the Nursing Home Arbitration Act of 2008-is supported by AARP, which represents older Americans.

Dr. William Hall, a member of AARP's board of directors, told the committee that pre-dispute arbitration clauses in nursing home contracts are "harmful" to residents and their families.

"These arbitration clauses force a Hobson's choice --waive the right to seek redress in the courts or get care in another facility, assuming there is one in their area without an arbitration clause," the Rochester, N.Y., geriatrician said.

While the quality of care in nursing homes and other residential care centers has improved since the enactment of federal nursing home quality standards in the Omnibus Budget Reconciliation Act of 1987, he said "much more" needs to be done to improve patient care.

"Many facilities do provide high quality care, but there are also too many facilities that show significant quality deficiencies that can cause harm to residents on their annual inspections," Hall said.

Arbitration clauses, he said, unfairly take away residents' and families' legal options. What's more is that many nursing home admissions are made unexpectedly, after a crisis.

"Clearly, most people seeking nursing home admission are focusing on the quality and range of services available, and are not thinking about possible future disputes," Hall said.

"When they are presented with admissions contracts, they often do not know that an arbitration requirement is buried in the fine print of the multi-page document," he added.


Norman DeLisle, MDRC
"With Liberty and Access for All!"
GrandCentral: 517-589-4081
MDRC Website: http://www.copower.org/
LTC Blog: http://ltcreform.blogspot.com/
Recovery: http://therecoveringlife.blogspot.com/
Change: http://prosynergypsc.blogspot.com/

Researchers: Nursing home residents attacking each other more often than expected

Nursing home residents are lashing out at each other verbally, physically and in other ways more often than previously believed, according to Cornell University-based researchers.

"Because of the nature of nursing home life, it is impossible to eliminate these abusive behaviors entirely, but we need better scientific evidence about what works to prevent this problem," said Karl Pillemer, director of the Cornell Institute for Translational Research on Aging at the College of Human Ecology.

Studies led by Pillemer and professor of medicine Mark S. Lachs, MD, at a large, city-based nursing home discovered 35 different types of physical and verbal abuse between residents. Screaming was the most common form, followed by pushing, punching and fighting.

Researchers also found in another two-week study period that 2.4% of residents said their were on the receiving end of physical aggression, while 7.3% said they had been verbally assaulted.

Norman DeLisle, MDRC
"With Liberty and Access for All!"
GrandCentral: 517-589-4081
MDRC Website: http://www.copower.org/
LTC Blog: http://ltcreform.blogspot.com/
Recovery: http://therecoveringlife.blogspot.com/
Change: http://prosynergypsc.blogspot.com/

Settlement Will Allow People with Brain Injuries to Move out of Nursing Facilities

Landmark Settlement for Individuals with Brain Injuries

SPRINGFIELD, Mass.--(BUSINESS WIRE)--Nearly 2000 individuals with brain injuries will be able to move out of nursing facilities and other institutions under a landmark settlement agreement signed today by state officials and attorneys for the plaintiffs.

The settlement resolves a class action lawsuit, Hutchinson v. Patrick, which was filed in US District Court in Springfield last year on behalf of five individuals, the Brain Injury Association of Massachusetts (BIA-MA) and the Stavros Center for Independent Living. The complaint charges that the Commonwealth is violating the Americans with Disabilities Act for failing to provide adequate community services.

"This is a historic moment for persons with brain injuries in Massachusetts, many of whom have been unnecessarily institutionalized in nursing facilities, often for decades," said Steven J. Schwartz of the Center for Public Representation, lead counsel for the plaintiffs. "As a result of the settlement, close to 2000 persons with brain injuries finally will be able to live in integrated settings, nearer to their families and their home communities."

Approximately 8000 people with brain injuries currently reside in nursing and rehabilitative facilities in Massachusetts. At least a quarter of them could successfully transition to integrated community settings if services were available, according to plaintiffs' co-counsel, Richard Johnston, a partner at Wilmer Hale Cutler Pickering Hale and Dorr.

"Today's agreement is a first in the nation for people with brain injuries and will serve as a model for other states," said Arlene Korab, Executive Director of BIA-MA.

The Centers for Disease Control report that 5.3 million Americans are living with disabilities as a result of traumatic brain injuries (TBI) - head injuries caused by external events, such as falls or accidents. Acquired brain injuries (ABI) - caused by internal medical events such as stroke, disease or poisoning - also are significantly prevalent: more than 700,000 Americans suffer new or recurrent strokes every year.

This case and the settlement agreement apply to Medicaid-eligible residents of nursing and rehabilitation facilities who have either kind of brain injury. It is the first lawsuit in the nation that seeks community services for persons with all forms of brain injuries, regardless of the cause.

Under the settlement agreement, which is still subject to court approval, the Commonwealth will create two new waiver programs designed to transition individuals with brain injuries from nursing facilities and other institutions to community residences. The programs must be approved by the federal government, which will pay half the cost of both programs. The first program, called the ABI waiver, will serve up to 300 individuals with acquired brain injuries who currently are living in nursing and rehabilitation facilities. The second, called the Community First Demonstration Project, will offer transitional services and provide community placements to 1600 persons with brain injuries in nursing facilities. The programs will be implemented over several years, but should result in approximately 200-250 persons a year leaving nursing facilities.

"When I first learned about the issues being resolved, I was so happy, I filled up with tears," Catherine Hutchinson, 55, the lead named plaintiff, wrote in a recent email. A mute quadriplegic as a result of a brain-stem stroke in 1996, she lived for more than a decade at the Middleboro Skilled Care Center. "I think about the residents [with brain injury] ... and I know what their empty lives are like," wrote Hutchinson, who recently moved to The Boston Home, a specialized care facility in Dorchester.

The agreement also requires the Commonwealth to create a new system of community services for persons with brain injuries, including new policies and procedures, a new treatment planning process, a new appeal process for individuals and families, and new quality standards for community services. People in nursing facilities will be offered a choice to receive services in the most integrated setting appropriate to their needs, including their own homes and apartments, or shared living arrangements. In addition, the Commonwealth will establish an education and outreach initiative to inform persons with brain injuries and their families about the new waiver programs as well as the benefits of community living.

Korab applauded the courage of the named plaintiffs who "have opened the door for individuals with brain injury to live independently in the community."

The majority of people with brain injuries spend weeks or months in acute care hospitals and rehabilitative facilities. Once the acute treatment ends, these individuals still need some level of assistance with personal care and activities of daily living rehabilitative care. However, due to the lack of community-based options for continued rehabilitative care, most of them have no choice but to be admitted to nursing and rehabilitative facilities to have their basic needs met.

When the lawsuit was filed May 17, 2007, Hutchinson described her decade-long institutionalization as being "in prison for a crime I didn't commit." In a written statement, she added, "We must find a way to allow people like me to live as independently as possible. I should not have to fight the system when each day I must already fight to communicate, to be understood, make choices and express my feelings."

The settlement agreement will provide transitional and community services to Hutchinson, the other named plaintiffs and all class members. "For them, the promise of the Americans with Disabilities Act will become a reality," said Schwartz.

In addition to Hutchinson, originally from Attleboro, the other named plaintiffs are Raymond Puchalski, 59, a Millers Falls resident who has lived for three years at the Kindred/Goddard Hospital's neurobehavioral unit in Stoughton; Glen Jones, 58, of Haverhill, who has resided at the Worcester Skilled Care Center since 1990; and Nathaniel Wilson, 55, of Springfield, who resides at Wingate of Wilbraham. A fifth named plaintiff, Jason Cates of Westfield, died last fall.

A preliminary hearing on the settlement agreement will be scheduled for mid-June before District Court Judge Michael A. Ponsor in Springfield. Judge Ponsor has been asked to set a final fairness hearing on the agreement for July 25, 2008.

Judy R. Roy
Independent Living Resources of Greater Birmingham
206 13th Street S.
Birmingham, AL 35233-1317
Phone 205.251.2223 ext 102
Email bhamilc1@bellsouth.net
There are only four kinds of people in the world: those who have been caregivers; those who are currently caregivers; those who will be caregivers; those who will need caregivers. - Rosalynn Carter

Norman DeLisle, MDRC
"With Liberty and Access for All!"
GrandCentral: 517-589-4081
MDRC Website: http://www.copower.org/
LTC Blog: http://ltcreform.blogspot.com/
Recovery: http://therecoveringlife.blogspot.com/
Change: http://prosynergypsc.blogspot.com/

House measure would outlaw nursing home arbitration clauses

Nursing home operators would be unable to subject residents and prospective residents to binding arbitration clauses under a bill introduced Thursday afternoon in the U.S. House. When a companion bill was introduced in the Senate in April, consumer groups enthusiastically praised it and provider advocates roundly criticized it.

"This legislation will not prohibit arbitration. Instead, it will simply ensure that residents have the choice whether to arbitrate a dispute after it has arisen," said bill co-sponsor Rep. Linda Sanchez (D-CA), whose father recently entered a nursing facility.

Sanchez said hosting three recent hearings on the Federal Arbitration Act as the chairwoman of the Subcommittee on Commercial and Administrative Law helped form her opinions on the topic. "The long term care industry is one stark example where businesses draft take-it-or-leave-it admission agreements for prospective residents that include pre-dispute, mandatory arbitration clauses."

Norman DeLisle, MDRC
"With Liberty and Access for All!"
GrandCentral: 517-589-4081
MDRC Website: http://www.copower.org/
LTC Blog: http://ltcreform.blogspot.com/
Recovery: http://therecoveringlife.blogspot.com/
Change: http://prosynergypsc.blogspot.com/

House Committee Holds Hearing On Concerns About Nursing Home Ownership, Inspections

The House Energy and Commerce Oversight and Investigations Subcommittee on Thursday held a hearing to examine the effects that the "increasingly veiled nature" of nursing home ownership and problems with inspections have had on the quality of care for elderly and disabled residents, CQ HealthBeat reports (Reichard, CQ HealthBeat, 5/15). According to CongressDaily, more than 50% of nursing homes are part of chains, with many of those owned by private equity firms that establish "layered entities" to operate the facilities, "making it difficult" for CMS, states and consumers to determine their owners and operators (Cox, CongressDaily, 5/16).

At the hearing, Lewis Morris, chief counsel to the Inspector General for HHS, said that CMS operates a database called "Pecos" that includes some nursing home ownership information but added that the system does not address the issue adequately. The database includes ownership information on 70% of the nursing homes that participate in Medicare, according to acting CMS Administrator Kerry Weems. He said that CMS seeks to "populate Pecos 100%" and link ownership information to quality data on the Nursing Home Compare Web site but added that the agency must have "usable" ownership information (CQ HealthBeat, 5/15).

Norman DeLisle, MDRC
"With Liberty and Access for All!"
GrandCentral: 517-589-4081
MDRC Website: http://www.copower.org/
LTC Blog: http://ltcreform.blogspot.com/
Recovery: http://therecoveringlife.blogspot.com/
Change: http://prosynergypsc.blogspot.com/

Antipsychotic Drugs Increase Risk Of Developing Pneumonia In Elderly - Nursing Home Patients At Particular Risk

Elderly patients who use antipsychotic drugs have a 60 percent increased risk of developing pneumonia compared to non-users. This risk is highest in the first week following prescription and decreases gradually thereafter. These findings are published in Journal of the American Geriatrics Society.

Antipsychotic drugs are frequently used in elderly patients for the treatment of psychosis and behavioral problems associated with dementia and delirium. This study is the first to show that the development of pneumonia is associated with antipsychotic drug use.

"The risk of developing pneumonia is not associated with long-term use, but is the highest shortly after starting the drug," say Drs. Rob van Marum and Wilma Knol, authors of the study. They caution that "all antipsychotic drugs may be associated with pneumonia in elderly patients."

Arbitration bill 'misguided,' lobbying group claims

Lobbyists for the long-term care industry on Friday voiced strong objections to the Fairness in Nursing Home Arbitration Act, a new piece of legislation that would prohibit the use of arbitration agreements at the time of a resident's admission to a long-term care facility.

The American Health Care Association and the National Center for Assisted Living argued that arbitration agreements allow nursing home and assisted living facility staff to concentrate on providing care to residents. They help ensure that Medicaid money will go towards improving care instead of paying off legal fees and settlements, the group claims.

But requiring prospective residents to sign pre-admission arbitration agreements intrudes upon their right to “access the civil justice system for redress of their potential claims,” said Sens. Herb Kohl (D-WI) and Mel Martinez (R-FL), who introduced the bill last week. Bruce Yarwood, president and CEO of AHCA, called the bill “misguided.