SAN FRANCISCO: AB 2104, a bill authored by Assemblyman Matthew Dababneh (D-Encino) passed the Assembly Health Committee by a vote of 18-0 last week. What’s remarkable about this vote is that AB 2104 would open up two very important public and non-profit health financing mechanisms to for-profit nursing home corporations.
AB 2104 would expand the California Health Facilities Financing Authority and the California Health Facility Construction Loan Insurance Fund to include for-profit corporations that operate skilled nursing facilities in California, allowing them to acquire or build new facilities or expand current facilities.
AB 2104 sets the priorities for such funding to include:
(1) Skilled nursing facilities for which at least 95 percent of their patients are Medi-Cal beneficiaries.
(2) Skilled nursing facilities that will construct a new facility or increase bed capacity at an existing facility.
(3) If funding is available and all skilled nursing facilities described in paragraphs (1) and (2) have been provided funding, to skilled nursing facilities for which at least 65 percent of their patients are Medi-Cal beneficiaries.
While there just might be a nursing home or two that have 95% Medi-Cal occupancy- it is doubtful. Thus, it is clear that most of the funds would go to those for-profit corporations that wish to build or expand their current facilities. Clearly the legislature is operating under the misinformation fed to them by the nursing home industry: that the number of nursing home beds will not keep up with the “demand.”
Meanwhile, study after study has shown that nursing home occupancy rates since 2001 are declining or remaining flat due to consumer demand for alternatives; and that consumers are not “demanding” nursing home beds, but home and community based alternatives such as in-home care and assisted living.
The mission of the California Health Facilities Financing Authority (CHFFA) is to help eligible and credit worthy nonprofit and public health facilities reduce their cost of capital, and promote important California health access, health care improvement and cost containment objectives by providing cost-effective tax-exempt bond, low-cost loan, and direct grant programs. The California Health Facility Construction Loan Insurance Program (Cal-Mortgage Program) is administered by the Office of Statewide Health Planning and Development (OSHPD) and insures loans taken out by operators of nonprofit and public health-related facilities.
The for-profit corporations and real estate investment trusts that own and operate skilled nursing facilities in California are some of the most profitable entities in the country, bringing in millions of Medicare, private pay and Medi-Cal dollars every year. Without even taking into account the inflated corporate salaries and the numerous ways in which profits are “hidden” in administrative, lease back and management costs, their profit margins are more than ten times that of the non-profit margin of .28%.
Allowing these programs intended for public and not-for-profit health care entities to be raided by for-profit nursing home corporations is not only a travesty, but also a betrayal of the taxpayers of California and of the mission of both programs.