"Nursing home industry fights reforms"
By SAMUEL LOEWENBERG
5/27/08 5:05 AM EST
Facing a new wave of congressional scrutiny, the nursing home industry is mobilizing some of Washington’s most well-connected lobbyists to fend off tough reform-minded legislation.
At a recent hearing in the House, state and federal investigators and outside experts issued strong prescriptions for change as a gaggle of industry lobbyists took notes and plotted strategy.
Among the lobbysts was a representative of The Carlyle Group, the politically connected private equity firm that recently bought Manor Care, the nation’s largest nursing home chain, for $6.3 billion.
The entrance of private equity firms into the nursing home business has ramped up a long-running debate about quality of care for the nation’s vulnerable elderly.
“In spite of existing oversight mechanisms, we continue to see examples of horrific treatment of nursing home residents,” testified Lewis Morris, general counsel for the Department of Health and Human Services’ Office of the Inspector General.
The lobbyists are carefully watching the Senate, where legislation introduced by Iowa Sen. Chuck Grassley, the ranking Republican on the Senate Finance Committee, and Wisconsin Sen. Herb Kohl, the Democratic chairman of the Senate’s Special Committee on Aging, could significantly increase oversight and enforcement of the industry.
The senators are expected to try to attach the legislation to the upcoming Medicare payments package.
The industry lobbyists are fighting provisions to fully disclose ownership of nursing homes — a concern of the private equity sector — and to establish outside monitors to review patient care.
Additionally, penalties would be increased to as much as $100,000 if a patient is harmed or dies due to poor care. The penalties, which have not been changed in two decades, are now capped at $10,000.
In a letter to the bills’ authors, Bruce Yarwood, the head of the American Health Care Association, which represents nursing homes, criticized the legislation for “enhancing a ‘gotcha’ mentality and system.”
Instead, the industry is backing legislation it deems more friendly, sponsored by Sens. Gordon Smith (R-Ore.) and Blanche L. Lincoln (D-Ark.).
Nursing home donations to campaigns and leadership political action committees totaled $91,750 to Smith and $141,200 to Lincoln, according to the Center for Responsive Politics.
To gird for the increased regulation, the industry is using a half-dozen of Washington’s most politically potent lobbying firms on both sides of the aisle, especially on the Democratic side.
“It is going to be pretty much battening down the hatches, because we’re not going to have a fair shake with a Democratic majority,” said a nursing home industry lobbyist who spoke on the condition of anonymity.
Among the insiders registered to work for the industry are veteran Democratic power broker Tony Podesta; Sean Richardson, former chief of staff to Sen. Amy Klobuchar (D-Minn.); and Harold Ickes, who was a deputy chief of staff in the Clinton White House.
Powerful Republicans include Drew Maloney, who was a top aide to then-House Majority Leader Tom DeLay (R-Texas); top GOP fundraiser Loren Monroe; and Tom Scully, who was previously the Bush administration’s chief Medicare official.
Although they are actively opposing the Grassley-Kohl legislation, lobbyists for the larger companies say they are treading carefully and meeting with the senators’ staffs to see if they can win some concessions.
This election year further increases the pressure on the industry, its lobbyist said. “Anytime somebody talks about abuse in nursing homes in an election year, when you are courting elderly voters, it is going to be pretty tough,” the lobbyist said.
Some of the legislative jousting springs from a larger battle between private equity firms and labor unions. The Service Employees International Union has mounted national and state-by-state campaigns against The Carlyle Group over working conditions at its nursing facilities across the country.
Since Carlyle took over Manor Care, some homes have reported significant patient care problems, said SEIU spokeswoman Julie Eisenhardt.
Carlyle referred questions to Manor Care.
“Nothing has changed” since Carlyle bought the company, said Manor Care spokesman Rick Rump. “Carlyle is not involved in managing the day-to-day operations of the company.”
Meanwhile, on Capitol Hill, lobbyists for The Carlyle Group are making the case that there is no evidence that private equity ownership negatively impacts care.
Both the Government Accountability Office and the Senate Finance Committee are currently investigating the effect of private equity ownership on nursing home quality.
The issue is at the heart of one of the most controversial parts of the Grassley-Kohl legislation: a requirement that the sometimes-twisted ownership structures of nursing homes be made more transparent.
Industry advocates say the effort is misguided.
“The focus should be on staffing and decision making, instead of who owns the building,” said David E. Hebert, former chief of staff for then-Majority Whip Roy Blunt (R-Mo.) and now a lobbyist for the American Health Care Association, which represents nursing homes.
But congressional staff and advocates for the elderly say that private equity firms often establish layers in ownership structure as a way to dodge responsibility and legal liability.
One advocate said the bill’s transparency language does not go far enough. “It is nice to know, but then what?” said Toby Edelman, senior policy attorney at the Center for Medicare Advocacy. “How do you get these people to be not only identified but accountable?”
Federal and state regulators have problems on multiple fronts, from failing to correct dangerous facilities to allowing abusive care workers to be hired, according to testimony by investigators before the House Commerce Subcommittee on Oversight and Investigations.
The investigators told the panel that government regulators had collected less than half of the $81.7 million in penalties it levied against nursing homes.
And GAO reported how federal government regulators often miss signs of abuse and care deficiencies, ranging from failure to ensure “proper nutrition and hydration and [prevent] pressure sores” to serious deficiencies that could lead to “actual harm and immediate jeopardy.”
Still, the industry has been slow to compromise.
“They’re not going to sign up for bad regulation in order to make the stories go away,” said a longtime K Street hired gun who lobbies for the industry.