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Nursing Home Operators Can't Have It Both Ways

The Washingtion Examiner
By Brian Lee, OpEd Contributor
June 2, 2011

A recent Washington Examiner editorial was correct in pointing out the irony of nursing home owners seeking an exemption from the new federal health care requirements.
The new rules require employers (of 50 or more employees) to pay for minimum health benefits for their employees. But, as someone who is intimate with the way these homes operate, I believe the irony The Examiner identified is actually deeper than realized.

In the Examiner commentary, the focus was on a small, mom and pop operation and correctly recognizes the problems that small operators (who would likely already be exempt) face. However, that is nowhere near the typical nursing home or ownership situation.

As outlined in a recent Government Accountability Office report, the vast majority of nursing homes in America are run by large and even multinational corporations, as well as private investment firms.

These megacorporate owners are, despite their pleadings to the contrary, extremely profitable. Take for example independent analyses such as those coming from the industry trade journal, Senior Care Investor, which is posting recession-defying headlines like "Senior Housing Performance; Profits Are Up" and "SNF Bed Prices Hit Record."

Further, newswire postings are replete with high-fiving releases about strong growth, exceptional earnings and profit taking.

But here's the real irony; these homes are not operating under a normal free-market environment, nor are they like actual businesses that compete in an open marketplace.

Nursing homes in America exist in a socialized system where competition is limited by the government, where payments are guaranteed -- regardless of quality -- and where a steady stream of "clients" is also guaranteed.

In fact, if the service is poor (and most people are shocked to realize this), there is no legal mechanism by which a resident or the payee (most often a governmental entity) can get their money back. And to put the final cherry on the pie, a centralized governmental body controls access and limits consumer choice.

In a normal free-market business or capitalistic environment, such restrictions would normally also limit profits (low risk = low reward.) Instead, we see an industry with low risk and high reward -- all at taxpayer expense.

The irony is richer when we consider that this same sector of the government-run health care system now says it doesn't want to participate in a key part of the new government-run health care system. Unbelievably, nursing homes blame the very payments they receive from that same government as the cause of their woes.

And now, here comes the amazing part. With the money the nursing homes supposedly do not have in their coffers to pay for the basic health care for their employees, they somehow find a way to procure the services of high-powered lobbyists to beseech Congress for more money in reimbursements.

As The Examiner noted in a follow-up column, the nursing home industry has contributed $12.4 million to members of Congress in the relatively recent past. This does not include lobbying fees (over $350,000 this year alone in my home state of Florida), nor does it include donations to state-level politicians. And the industry is crying poverty?

You couldn't make this stuff up!

Nursing homes can't have it both ways. They can't live off the government's dole, enjoy the government's protections from the free market and enjoy fantastic profits by playing the government's game but not play by the government's rules.

Brian Lee is executive director of Families for Better Care, a Tallahassee, Fla.-based citizen advocacy organization dedicated to quality nursing home care.