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The Shut Out: Why have Humboldt County’s skilled nursing facilities stopped accepting patients

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The North Coast Journal
Linda Stansberry
July 09, 2015

Geoff Spenceley speaks with a warm, resonant accent, a remnant of his youth in England. The 93-year-old veteran of World War II has lived in Humboldt County for a quarter century. He has been married to his wife, Queenie, for 70 years. Queenie (her real name, she was born a few weeks before Queen Elizabeth II) was a factory worker during the war. She and Geoff met at a service dance, had a cup of tea, and sparked a courtship that led to a long, devoted marriage. They may spend their remaining days 680 miles apart.

Queenie has been turned away from every skilled nursing facility in Humboldt County. It’s not because she’s ineligible: The facilities accept MediCal, MediCare and private payment. It’s not because they’re full: Our research revealed plenty of open beds. It’s not because she’s too sick: Skilled nursing facilities are intended to serve patients with medical problems such as Queenie’s. And it’s not for lack of trying. Her husband, with the help of caseworkers, has repeatedly petitioned all six facilities to find a place for his wife. His only remaining choices are to drain their savings by having home health workers attend to his wife at a residential care home, or to send her to a facility in Huntington Beach, where their daughter lives.

“We have a house we’ve been in for 25 years,” Spenceley said. “It’s impossible for me to move out of it right away. I really don’t want her far away from me. I’m desperate.”

Spenceley’s experience is not an anomaly. According to a statement from St. Joseph’s Hospital, the organization that owns five of the six local skilled nursing facilities recently informed the hospital that the facilities would no longer accept its patients. (A sixth facility, Jerold Phelps in Garberville, has only eight beds and a long waiting list.) The company also severed its contract with the Program of All-Inclusive Care for the Elderly (PACE), leaving the program with nowhere in-county to place clients with needs too great to remain at home. Patients who need skilled nursing are being sent to Redding, Santa Rosa, even to Oregon. Individuals and organizations have been given any number of reasons for the shut out: not enough beds, not enough staff, the facilities are “just not admitting.” But the real reason appears to be a game of financial chicken between the Partnership Healthcare Plan of California, the organization responsible for administering MediCal, and a nursing home mogul with a dubious reputation. And in this case, Partnership swerved first.

Due to privacy laws, it is difficult to quantify exactly how many people have been turned away, and how far back the problem goes, but the Journal spoke to patients who had to leave the area as far back as January. Suzi Fregeau, program manager for the longterm care ombudsman program at Area 1 Agency on Aging, said she has received at least a dozen calls from concerned family members who didn’t want to send their loved ones far away. She is one of many who believe that the company that owns 449 of the county’s 457 MediCal-certified skilled nursing beds has leveraged its monopoly into a higher rate of reimbursement from Partnership.

“They’re essentially saying, ‘Give us what we want, or we’ll take our bat and ball and go home,'” said Fregeau.

Attempts to reach administrators at the facilities or at the main office of their management company, Rockport Healthcare Services, were unsuccessful. Samantha L’allier of the Fortuna Rehabilitation and Wellness Center confirmed that it’s “not admitting at the moment,” but refused to say why, directing us to public relations representative Sallie Hofmeister. Hofmeister said her client could not comment. Hofmeister also did not respond when asked why individuals and organizations had been told that there was a bed shortage, despite our counting 27 open beds between just two of the facilities.

The rumored bed shortage is just one of the excuses the company has offered. At least one caregiver was told the facilities could not provide the wound care her friend required, despite the fact that is exactly the kind of care they are federally certified and mandated to provide. Rumors have also spread about a staff shortage, which given the county-wide problem of attracting skilled medical staff, is not improbable. Staff turnover in skilled nursing facilities is high; wages are low. If a facility couldn’t maintain the amount of licensed staff necessary to meet the needs of its patients, it would make sense to reduce workload in order to meet the mandated ratio of staff time per patient. If that is the case, however, Rockport isn’t talking.

The Journal was unable to determine whether non-MediCal patients are still being admitted, although nationally there is a documented trend of such facilities prioritizing higher-paying, shorter-term MediCare patients. In some cases, clients are told there is a “limited number” of MediCal beds, which is illegal. If a facility is MediCal-certified, every bed is a MediCal bed. However, as in any other business, skilled nursing facilities have the right to refuse service to anyone they choose, without stating why.

On June 25, after several days of discussion with Rockport and other companies, Partnership announced it had increased reimbursement by 2 percent for long-term care providers across 14 Northern California counties. Partnership declined to say whether the rate increase was connected to what Fregeau has called “essentially a strike,” but in a phone call Robb Lane, Partnership’s director of governmental and public affairs, said Rockport had asked for something specific that he could not disclose. Lane said that the meeting and the rate increase were a “strategic intervention” that had been discussed at all levels, and that Partnership was committed to “supporting skilled nursing facilities and to making sure they make enough to run their business.”

When asked whether the shut out pressed Partnership’s hand, Lane said only, “Our goal has been and always will be to release people in close proximity to their families. I think this rate increase reflects that.”

Lane also clarified that once the money reaches the facility, Partnership has no oversight over how it is spent. Those who know the owner of these facilities may be cynical as to how much money will actually be reinvested in patient care.

Until a few months ago, one of the first words to hit your eyes when you typed Shlomo Rechnitz’s name into a search engine would have been “philanthropist.” The Los Angeles-based multi-millionaire is well-known for his charitable donations. But after a multi-part exposé by Sacramento Bee reporters Marjie Lundstrom and Phillip Reese, a less complimentary word has begun following Rechnitz: “lawsuit.” Rechnitz is the largest provider of nursing homes in California, an “empire” under increased scrutiny by the media, state and federal regulators. In 2014, 23 nursing homes owned by Rechnitz received notice of 50 serious deficiencies — areas where the facilities were out of compliance — by the federal government. Included among Rechnitz’s 81 holdings are the five Humboldt facilities that have closed their doors to new patients: Seaview, Granada, Pacific, Eureka and Fortuna Wellness and Rehabilitation Centers. But tracing the line of ownership is a long slog, some say by design.

Although the five facilities share a common management company, each is sheltered by multiple tiers of ownership, beginning with a Limited Partnership (ex. Granada Rehabilitation and Wellness Center LP), then its own Limited Liability Company (Granada Rehabilitation and Wellness Center LLC), with a convoluted path back to Rechnitz. The practice is not uncommon in the industry. Many owners use a long chain of custody to protect common holdings from being decertified or fined if one facility falls afoul of regulators. But the websites for Rechnitz’s holdings in Humboldt give little to no information about their common owner, nor does the California Department of Public Health’s individual records for the facilities. Those looking to place their sick and frail loved ones would have no idea that their only option is to put them in a home owned by an operator the California Department of Public Health has called a “serial violator” of state and federal regulations.

In August 2014, the California Attorney General’s Office filed an emergency motion to block the sale of 19 bankrupt facilities to Rechnitz, citing a pattern of violations among his facilities. The violations, which span Rechnitz’s holdings statewide, include widespread infectious disease and several patient deaths due to neglect.

In interviews, Rechnitz has painted his tactic of buying up bankrupted facilities as a charitable act, a way to “rescue” failing businesses and return them to profitability. But elder care advocates describe an opportunist and profiteer who sustains his bottom line by siphoning money from MediCal and MediCare patients, and not investing back into his facilities’ crumbling infrastructure. In addition to his charitable organization and nursing homes, Rechnitz also holds stock in the medical supply company he founded, TwinMed, LLC, a leading supplier of medical and personal care items to nursing homes. The Journal was not able to obtain information about whether TwinMed supplies to Rechnitz’s holdings in Humboldt, although this practice has been substantiated in at least one other of his homes in California.

Rechnitz’s company, Brius Healthcare Services, purchased its near-monopoly of skilled nursing in Humboldt in 2011, when a class-action lawsuit against the previous owner, Skilled Healthcare, prompted a fire sale of sorts. Brius bought all five facilities, allowing them to neatly sidestep the court’s injunction that they be subject to tougher audits of its facilities. (See “Vulnerable”, August 4, 2011.) The original lawsuit led to an award of more than $677 million in damages for inadequate staffing of facilities, but after settlement negotiations, only a fraction of this money went to the families whose loved ones had been harmed by inadequate care. In our investigation, the Journal found no indication that any of the facilities have been dinged for low staff levels since the change in ownership. But we did uncover tales of neglect, abuse and deteriorating infrastructure — all too familiar themes with Rechnitz’s institutions.

The California Department of Public Health visits skilled nursing facilities annually to make sure the facilities meet state and federal guidelines. A failure to meet guidelines is called a “deficiency.” The state also visits to investigate complaints lodged by patients, family members, advocates or staff members. The CDPH records all complaints, deficiences and enforcement actions, such as legal steps or fines, on its website. The following are excerpts from the CDPH’s annual surveys of three Humboldt facilities.

A resident at the Eureka Rehabilitation and Wellness Center was hospitalized in January 2013 after a nurse found her to be “pale and cold to the touch.” Upon admission to the hospital, physicians diagnosed her as near-catatonic due to overmedication. Staff had noted her deteriorating condition over the course of two years, noting she was “very agitated and confused,” and walking the halls “close to falling,” but seemingly failed to consider that these might be adverse reactions to a high dose of psychiatric medication apparently used to calm the patient when she became agitated and “wanted to go home.” When the hospital stopped the medication, the resident regained function. The state did not investigate until March 2014, at which point the facility was fined $20,000.

The Department of Public Health did note multiple fire code violations in 2013, including a failure to maintain electrical equipment and wiring. The facility racked up 20 survey deficiencies. The state took no enforcement actions.

In 2014, Granada Rehabilitation and Wellness Center failed to report an incident in which a licensed staff member with a criminal record verbally and physically threatened an 81-year old man with dementia, saying, “I will break your fucking neck.” The Department of Public Health found that Granada kept the employee on staff after the incident, and that the resident was afraid to leave his room. Complaints about failures to prevent pressure sores and facility cleanliness were also substantiated in 2013. Despite 19 survey deficiencies in 2013 and 28 in 2014, the state took no enforcement actions.

In 2014 the state discovered that a resident at the Fortuna Rehabilitation and Wellness Center had been overmedicated at four times her prescribed dose of anti-psychotic medication over three months, putting her health at risk. Another resident had her dentures misplaced and was unable to eat properly for two weeks. The state recorded 24 survey deficiencies. The state took no enforcement actions.

In October 2014, the California State Auditor released a report condemning the California Department of Public Health for poor oversight of skilled nursing facilities in California. According to the report, 102 complaints marked by the Santa Rosa-Redwood Coast district office as high priority (posing a threat to an individual’s life or health) stayed open an average of a year. When the department does investigate a complaint, it must substantiate it using witnesses or case notes. The path from a complaint being lodged, by a patient’s advocate, family members or staff themselves, up the chain of administration to the state appears to be a slow one. And complaints lodged with administrators or advocates may be a fraction of the actual abuse, neglect and dysfunction that take place.

“They’re scared,” says John Heckel of skilled nursing residents. A volunteer ombudsman with the Area 1 Agency on Aging, Heckel visits facilities weekly to speak with residents, hear their concerns and advocate for them. He says many of his clients are reluctant to complain for fear of retaliation from staff, and for fear of the unknown. “Most people are just one check away from homeless anyway. If you get discharged from a hospital to skilled nursing, your money is no longer going towards rent at an apartment. If you get kicked out of the skilled nursing facility, you have no place to go to. Asking them to complain is asking them to participate in their own transience.”

Despite the best efforts of Heckel and other advocates, residents in skilled nursing facilities seem to have little agency over their fates. Often they are in the last years of their life, isolated from family, alienated from communities, sharing rooms with strangers and under the care of overworked staff who have little time to help them navigate their benefits or rights as patients. Despite the intended purpose of skilled nursing to rehabilitate some patients back to health so they can return to their communities, Heckel reports that many residents who have been misclassified as “long-term care,” meaning they are no longer receiving physical therapy. A word that comes up often is “warehousing:” storing human beings away for as long as they can pay, spending as little money on them as possible, medicating the troubled, the loud and the agitated into compliance, until the day they die and their bed passes on to the next warm body.

High on Humboldt Hill, framed by fog and tall trees, Seaview Rehabilitation and Wellness Center offers a limited glimpse of the sea. Inside, staff in scrubs scurry, clocking in, clocking out. They barely offer a second glance as we sign in and look at the staffing manifest on the wall. They’re busy. Even at 26 beds below capacity, staff levels just meet the bare-bones state requirement of 3.2 hours of care per patient, per day.

The halls smell like piss and industrial cleaning solvent. The activities room with its colored paper decorations is dim and deserted. A woman in a wheelchair with dark, glittering eyes glares at us.

“Hey! Hey!” she shouts, asking us to come over and help her. She wheels after us as we turn down another hallway, telling us not to walk away.

A pretty aide tucks her hair behind her ears and in gentle tones asks a tall man sitting on a bench not to try and get up.

“You haven’t walked for a long time, do you remember?” The man looks angry, then confused and finally sad.

Sheets of paper with a child’s word puzzle sit on the laps of the confused and the catatonic. This is the activity director’s attempt to meet their requirements for mental stimulation.

A man in a wheelchair wearing a baseball cap that identifies him as a veteran screams at the departing back of one staff member.

“I fought in a goddamn war and you can’t give me a walker? What did I fight for?”

On the way out we notice a sign on a closed door: The kitchen is closed. Meals are prepared in a trailer in the parking lot. Later, we ask John Heckel about this. The kitchen has been closed for close to six months, he says. The laundry room was also closed down for five months last year. State guidelines require that each bed have three sets of linens: one on the bed, one in the closet and one out for wash. Heckel opened the linen closet to empty shelves. If a patient soiled his or her bed, there were no clean sheets to replace the dirty ones. He asked the administration why the sheets weren’t being replaced. The administration said that the laundry had gone to a different skilled nursing facility in the chain and there was a backlog. Why didn’t they send them out to a linen service? Because, administrators said, they weren’t qualified to do the laundry according to state guidelines. So Heckel called a local linen service himself. “Of course we’re qualified,” they told him.

“Then I got mad,” Heckel said. “Because I knew I’d been fucking lied to.”

To date in 2015, Seaview has been found to have 44 survey deficiencies and one substantiated complaint of improper infection prevention, with no enforcement actions taken.

In November 2014 Rechnitz chose to close down his troubled Wish-I-Ah facility in Fresno after it was de-certified by the state. One patient had died due to an infected wound. Infrastructure issues dogged the facility, including multiple plumbing problems. Rather than bring the facility into compliance, Rechnitz shuttered it and redistributed its remaining patients to his facilities throughout the state. Twenty-five ended up in Seaview Rehabilitation and Wellness Center, 450 miles away from home. Suzi Fregeau confirmed that at least one is still there, an elderly man whose primary language is Spanish and who was only recently informed that he has the right to an interpreter.

Fregeau said she received several frantic calls from friends and family in the Fresno area trying to locate loved ones. This story may offer clues as to why the “strike” was effective, and to why these facilities have continued to rack up compliance issues without being shut down or decertified. As poor as conditions in the facilities may be, a widespread exodus of patients from the region would have deep and profound impacts on patients and their families.

Sara Senger, a lawyer who specializes in elder law, has been following the situation in Humboldt closely. She and others were surprised that the state actually closed Wish-I-Ah and two other Rechnitz holdings.

“Usually the Department of Public Health will bend over backwards not to do that,” Senger said. “It places a huge burden on a community to absorb all the people in the nursing home; there’s no place else to put them. They’ll try to bring them into compliance instead.”

In an email, Corey Egel of the California Department of Public Health did not answer our question about the legality of a skilled nursing monopoly. He did say Partnership “continues to maintain a contract with and place beneficiaries into these facilities” and that the CDPH “has no oversight authority regarding the actions these facilities have taken regarding their contracts or regulatory powers regarding who they contract with.”

According to Egel, the high number of compliance issues in Rechnitz’s facilities is a statistical given.

“The more facilities that an entity owns or operates, the higher number of compliance issues that entity is likely to experience in the aggregate, even assuming the best possible management and operation,” he said.

Egel was unable to supply us with information about state inspections of Seaview. The information is missing from the CDPH’s website and, despite several substantiated complaints about quality of life and care in 2014, it appears that the facility was not marked out of compliance in that year.

Mike Connors of California Advocates for Nursing Home Reform calls the conditions at Seaview “alarming.” CANHR has been seeking a meeting with the State Department of Healthcare Services regarding the shut out.

“This kind of thing would not happen if the operator did not have a monopoly. Why the state allowed the facility to have a monopoly is a question as well,” said Connors. “If they are refusing to admit clients because they say they don’t like the MediCal rate, they’re being discriminatory. State and federal government should be putting a stop to it.”

Connors said that it is difficult to identify a gold standard for best practices in the industry. Several similar-sized facilities in Redding do have notably smaller numbers of deficiencies and complaints, although ideally no one in Humboldt should have to travel that far to receive the care they need.

“This is a basic service we should be able to provide locally,” says Joe Rogers, Executive Director of Hospice of Humboldt. “It puts a big hole in our healthcare system when we can’t. Healthcare is a whole continuum of care from hospital … to end of life services, and a big piece has dropped significantly.”

Rogers’ organization has been working with clients whose critically ill loved ones face long trips to out-of-the-area facilities. These patients are uniquely vulnerable to a condition known as “transfer trauma,” commonly seen in dementia sufferers when they move from their homes to assisted living. Besides the shock of travelling hundreds of miles, sometimes in an ambulance, patients leaving Humboldt County will also have to adjust to reduced contact with family and friends.

It remains to be seen whether or not the increase in reimbursement rates will result in facilities accepting more patients. Partnership did confirm acceptance of two MediCal patients in the last month. Several others have moved onto waiting lists.

When we spoke to Geoff Spenceley in late June, the veteran said his wife was “fading.” The last time he visited, she was asleep for most of the time, waking briefly to hold his hand before he left.

Spenceley said he is doing everything he can to make her comfortable, and that he is still hopeful that they will find a place for her, although he has received “no satisfactory answer” as to why there are no openings.

“Every time we turn a corner it gets worse, never better,” he said.