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The logical outcome

October 1, 2007
by RICHARD L. PECK, EDITOR-IN-CHIEF
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I went through a set of whipsawing emotions recently. On September 20, I happily conferred the 2007 OPTIMA Award on Ballard Healthcare in Chicago. You read their story in last month's issue (“Sailing to Success,” p. 24). The ceremony included one of the most amazing displays of nursing home staff creativity I've ever seen—a virtual world tour in one hour, with staffers displaying the costumes, music, and dances of countries from a half-dozen areas of the world. This was in keeping with their program's “virtual world tour” theme of “Passage to Discovery.” I returned from Chicago on a bit of a high, grateful to have been part of the OPTIMA Award process for the past 12 years.

The hammer descended on September 23—a Sunday New York Times front-page article describing how private investment firms have been purchasing major nursing home chains and cutting costs allegedly to the point of serious decrements to quality and resident safety. The article cited CMS data indicating that nursing homes acquired by such firms before 2006 scored worse than the national nursing home rates on 12 of 14 quality indicators, including preventable pressure ulcers, infections, and falls. Yet corporate structures had been devised to insulate these firms against survey citations or legal prosecution for substandard care.

The article noted that private investment firms had agreed to purchase six of the nation's largest chains in recent years, accounting for 141,000—or 9%—of the nation's long-term care beds. These companies had, on average, achieved profits 41% greater than those of the facilities they didn't own.

Although most of the firms named in the article declined to comment, one did, under the well-known (to our field) name of Arnold Whitman, speaking on behalf of Formation Capital, recent acquirer of Genesis Healthcare. Whitman noted that private investment firms had in effect rescued nursing homes from an over-litigious society that was chintzy on financial support had, in fact, injected much-needed funding that no one else would provide in today's market. Later on, the trade organization for the major chains, the Alliance for Quality Nursing Home Care, said in a release that its members were fully on board with those recent quality initiatives that, as even the Times article noted, were making a noticeable impact on the field overall.

But I couldn't escape the feeling that the private investment industry's major takeover of the field—and major it is, with some of the most stellar names in long-term care involved—was nothing other than the logical outcome of the forces impinging on today's long-term care: the unstable reimbursement, the legal exposure, the regulation that often seems arbitrary and capricious. In a profit-making field—and there's nothing wrong with profits if they're used appropriately, as more than a few OPTIMA Award winners can attest—why wouldn't private investors attempt to control costs to the utmost while shielding themselves from society's negative firepower? We may not like it—in fact, may feel disheartened altogether—but it does seem logical.

If there was ever a signal for a more enlightened approach to American long-term care, we just might have received it.


RICHARD L. PECK, EDITOR-IN-CHIEF

To send your comments on this editorial to the author and editors, e-mail peck1007@nursinghomesmagazine.com.

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