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Overview of Corporate Nursing Home Care

 

CONTENTS

  1. Introduction
  2. Two Worlds
  3. Nursing home funding
  4. History
  5. Post-Acute care
  6. Mergers and Acquisitions
  7. Market control
  8. Integration and Diversification
  9. The impact of Diversification on care
  10. Corporate Chains and Care
  11. Political Influence
  12. Regulatory failure
  13. Not for profit and government facilities
  14. Social Darwinism
  15. Sociopathy
  16. The New Medicare System
  17. Crackdown on fraud
  18. Pressure from the community
  19. Citizens take to the courts
  20. The nurses unionise
  21. Impact in the marketplace
  22. Bankruptcy and care
  23. A National Crisis ::The Role of government
  24. Nursing Homes Update :: June 2001 to August 2003
  25. References

Introduction

At a time when Republicans and Democrats alike are clamoring to let big business run everything from prisons to schools, nursing homes represent the nation's longest-running experiment in privatization-one that, after half a century, offers a graphic portrayal of what happens when private interests are permitted to monopolize public services.
(THE SHAME OF OUR NURSING HOMES; nursing homes allegedly treat patients poorly :: Millions for investors, misery for the elderly, Eric Bates, The Nation March 29, 1999)

This page was written in 2001 and an update section added in 2003. Itcontains a general review of what happened to the corporatised aged care system in the USA. The emphasis is on corporate US chains. It is a general review and does not address the conduct of any specific chain. The references which can be accessed from the bottom of the page are review articles although they sometimes use a particular chain to illustrate their points. Analysis of the conduct of several of the major chains is available on pages devoted to them.

Aged care and nursing homes in particular, provide a profound insight into the way in which corporations operate and the dynamics of the market when dealing with public funds and citizens who are disempowered. This is because the bulk of the funding is Medicaid and fixed at a relatively low level. Only a small sector paid well and it was vulnerable to exploitation by the unscrupulous. Profits from Medicaid were closely linked to the ability to contain costs. The main cost by a long way was nursing care and the only way to reduce costs was to reduce nurses. The standard of care of the elderly is closely linked to staffing. This has been known for a long long time.

Corporate chains are faced with a dilemma. To survive in a competitive market they must decrease costs. To decrease costs they must reduce staffing. Reducing staffing means compromising care. This page describes how the corporations addressed this problem and the consequences. While what would happen is obvious there is much to learn from studying the process.

Two Worlds

As you examine this material consider the two groups of people we are talking about. The first are pillars of society, the founders and senior executives of giant corporations, the bankers and the great financial institutions of the United States of America. This is the world of board rooms and golf clubs. They live in a world which leads the globe and sets the ideas by which we all live. Highly qualified and experienced in their own world. They have no doubts about the way the world is and what is good for it. They are enormously wealthy and this wealth is the badge of their status in the community and the world.

The second world is the world of the elderly, withering away physically, forgetful and often mentally clouded - the grandparents of the USA. Part of this world are the nurses and nursing assistants. They are among the most underpaid and overworked citizens in the USA. Many come from the lowest strata in the USA, often unemployed. Sometimes they have criminal histories. Also part of this world are the ordinary citizens of the USA, the sons and daughters of the people who live in nursing homes. These groups have almost no credibility and no power.

These two groups share one thing in common - an interest in the provision of aged care. To the first group it is a source of profit. They have no doubts that the best way to provide for the care of those who can no longer care for themselves is to ask the market to do so. They have no doubt that they are the best people to do so and that by making shareholders and themselves very wealthy high standards of care will be maintained. Market reports and analyses on the www reveal their thinking. They do not experience aged care directly.

The second group experience aged care directly and their experience and understanding of it differs radically from the groups which provide aged care in the USA. They have no interest in the profits generated in the marketplace. Their prime interest is in the care which the elderly actually receive, and they are far from impressed with this. They are also interested in working conditions and are unimpressed. They believe that the market has shortchanged the community and ruthlessly and selfishly exploited the vulnerability of senior citizens. The evidence available, some of it presented on this site clearly indicates that they are correct.

There is nothing new in powerful establishment groups setting themselves up as the arbiters of reality and claiming to know what is best for the majority. This is the story of history. The establishment have repeatedly created societies which reward the establishment richly at the expense of the majority. It has happened over and over again for thousands of years.

This is why democracy is continuously and repeatedly challenged and must be repeatedly reaffirmed. What is important about the corporatisation of health and aged care is the insight it offers into the processes. It provides an opportunity to understand and move beyond these cyclical historical phenomenon - to control rather than be victims. That in essence is what this site tries to do.

But building abstract theories whether in board rooms or academic institutions is a sterile exercise. They must be grounded in real life - what is actually happening. Much of this site therefore describes what is happening and the different understandings of it. We are always very uncomfortable when faced with understandings which both seem valid yet are totally contradictory. Being open minded is exploring these contradictions. Being closed minded is subscribing to one and shielding oneself from the others.

Either start by looking into the world of the aged care chains - or else come back and look at them. Most have web sites and they are worth exploring. Notice the images and the text - the impressions they convey. With so much adverse publicity these sites have been considerably toned down over the last few years and no longer have as many photographs of impressive and well suited executives. Accusations of fraud have taken the gloss off the more extravagant claims. Where the sites do give details of senior staff explore these pages and examine the credentials of the people involved. Here are links to some corporate pages.

Beverly Enterprises ...... Sun Healthcare ...... Kindred/Vencor
Integrated Health Services ...... Genesis Health Ventures ...... Mariner
Centennial healthcare ...... Extendicare ...... National Healthcare Corp.

Nursing home funding

"They're going to figure a way to make a profit. They're going to do it because that's what they have to do for their shareholders."
(Businesses react to cuts in Medicare, The Tampa Tribune November 15, 1998, by LINDSAY PETERSON)

In the USA Nursing homes have been paid by the states under the Medicaid system on a flat rate per patient. Federal government contributes 50%. Medicaid covers all those unable to pay - the majority of nursing home residents. Government's idea of increasing efficiency is to reduce the amount of money available. The care of these nursing home residents has consequently been poorly funded and the only way for profit oriented groups to increase profits has been to reduce care.

The federal Medicare system until recently paid per item of service, which made it easier for providers to make a profit. Medicare covered medical care for the elderly. It also covered nursing home care for a limited period of time. When it expired the patients became less profitable Medicaid patients - and often less desirable residents.

The most profitable residents were those who paid their own way. Their resources were usually exhausted after a year. They then became Medicaid patients and so less profitable. Although care was supposedly provided to all, a tiered system developed with Medicaid patients at the bottom. When profit became the driving force in care they were unwanted. There were often separate beds set aside for Medicaid residents.

Medicare and self-paying residents were at risk of discharge or transfer to another institution when their funding ran out. The resident's medical needs were often not considered. "Legitimate business" decisions took precedence over the interests of frail citizens. Vencor was for instance fined US $270, 000 for evicting 54 unfit Medicaid patients back into the community. To them this was simply a business decision. Here is how the policy was implemented.

Laura Morgan's marching orders were simple. As a social worker at a nursing home owned by Vencor Inc., she was to ensure that as many beds as possible were filled with residents covered by generous private insurance or by Medicare. Patients whose high-paying benefits expired, and who thus ended up on lower-paying Medicaid, were to be moved out as soon as possible.

One of her tasks was smoothing the way with relatives. "I had to sit across from family members and lie to them, manipulate them, tell half-truths," says Ms. Morgan, who resigned in June after alerting state authorities to the practices.
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Administrators of individual nursing homes were taught to rethink the entire admissions process with this in mind. A strategy memo passed on to Georgia homes urged administrators to plant the seed in the minds of prospective patients and their families that a stay would be short-term. "Begin concept upon admission," the memo specified, and while giving families tours of the home.

Mr. Barr, as chief operating officer, bore down on this in a memo to regional officials in the summer of 1997. "We determined months ago that we did not want to admit low-paying Medicaid only patients," he wrote. "Please let your administrators know that it's time to get on board or leave."

At Savannah Specialty Care Center, admissions director Hope St. Lawrence had to prepare a fresh patient census every morning, to be faxed to headquarters by 9:30. Then she rushed off to seek out new admittees from hospitals, clinics and elsewhere. She screened out as many as two out of three prospects. Just having insurance wasn't enough, she says. The insurance had to cover extensive therapy, and people already on Medicaid were excluded outright, says Ms. St. Lawrence, who resigned this summer.
(Bed News: The Business Potential Of Nursing Homes Is Elusive, Vencor Finds: Bid for High-Paying Patients Brings Firm Headaches, And It Has to Regroup: Medicaid Is Welcome Now; By Chris Adams and Michael Moss, The Wall Street Journal 24 Dec. 98)

The majority of nursing home residents were covered by Medicaid. A smaller number were covered by Medicare. A disproportionally larger portion of corporate profit came from Medicare. While only 10% of nursing home patients were Medicare patients, corporate nursing homes pursued these patients aggressively and some corporations managed to increase their Medicare numbers to 20 or even 30%.

History

More than 10 years ago, Congress heralded its passage of new laws to ensure humane treatment of people in nursing homes. Another institution, however, has quietly imposed its own standards:

Wall Street.

The nursing home industry, once a collection of individual operations, is dominated increasingly by companies that thrive only when they take care of shareholders. Their stocks have soared in the 1990s as Americans have poured money into the market
(Profits can come at high costs By LINDSAY PETERSON and DOUG STANLEY, The Tampa Tribune November 15, 1998)

Nursing home care was traditionally provided by not for profit church and community groups as well as "Mom and Pop" members of the community. During the 1960's and 1970's corporate groups saw the profit potential in the frail elderly - a captive group who could not reject the product offered. They started to buy and run nursing homes, building empires.

In the 1980's aged care became even more of a competitive marketplace. Corporations focussed on growth. Not for profit and Mom and Pop nursing homes were bought up. They became cogs in money making corporate empires. To survive not for profit groups had to compete by adopting corporate practices, particularly their competitive market activities. The staff, time, and money for this was taken from care.

The focus of nursing home care shifted from community to market - from care to profit.

In this market all for profit groups depended on Medicare funding to boost their profits. Most misused Medicare to build their bottom line. It seemed to be a bottomless pit filled with money. Care was provided because it was profitable, not because it was needed. Medicare was based on trust and this invited the unscrupulous to overservice and defraud. The coexistence of strong competitive profit pressures ensured that it would be.

Post-Acute care

One factor driving higher profit margins for these companies are their exemption from prospective payment and Diagnostic Related Groups (DRG) --government imposed caps that currently hamstring hospitals.
(Watch them grow, And grow,; Arlene Odenwald, New 'Mexico Business Journal, April. 1996 April, 1996 Vol 20; No 4; pg 15)

By 1980 overservicing and Medicare fraud in Acute care hospitals had become a serious problem. The system of Diagnosis Related Groups (DRG's) put an end to this in the early 1980's. With DRG's a flat rate was paid for each disease process. The sooner patients were discharged the more money was made from each DRG payment.

A number of nursing home entrepreneurs saw this as an a wonderful opportunity. They set up what they called Post-Acute care (also called subacute care or step down hospitals). This encouraged the early discharge of patients from hospitals into nursing homes. The DRG system had not been introduced into nursing homes. Here recuperating patients could be given a large number of therapies to improve their recovery. All of it could be charged to Medicare. Corporations like Sun Healthcare, Vencor and IHS built their nursing empires on the income stream generated from Post-Acute care and Medicare.

Mergers and Acquisitions

The strategy today is growth and expansion through mergers and acquisitions for Sun and Horizon as they jockey for position for tomorrow's consolidated long-term and subacute health care dollar. But the growth is not only in nursing home centers and post and subacute care units but in other ancillary services. Diversification is also the name of this game.
------------------------------------------
Sun and Horizon/CMS are growth companies; they do not disburse dividends. Instead, they reinvest their earnings in their respective companies and in future growth to place themselves in the best possible position for the next major merger, the next large acquisition.
(Watch them grow, And grow, Arlene Odenwald, New 'Mexico Business Journal, April. 1996 April, 1996 Vol 20; No 4; pg 15)

The market demanded profit and growth. Successful nursing home chains in the USA have for many years compromised care by understaffing. The larger and more successful (e.g. Beverly), the more likely that costs had been contained by understaffing and profits increased by enterprising Medicare billing or Medicare fraud.

The corporate chains used this income stream to raise loans for expansion. They built large unwieldy and unresponsive empires. No one doubted that the income stream would be maintained. Corporations accumulated large debts and financiers adopted a particularly cavalier strategy in their loans to these successful and credible organisations.

Market control

Of 63 respondents providing financial data for both years, the biggest companies were the least likely to post year-to-year improvements in net income. They were also the most likely to report a bottom-line loss.
(If the first are to be last and the meek are to inherit the earth, the post-acute-care industry may be ahead of its time., Modern Healthcare July 24,2000 Special Report)

There were thought to be many advantages to size. The health system had adopted managed care, and HMO's were looking at subacute care. Market dominance over large geographical areas was consequently seen as particularly advantageous. HMO's would have little option but to contract with the company which provided a broad range of services in the areas where their members lived. They would be in a strong bargaining position. Genesis in particular pursued this strategy. As it turned out the HMO's were luke warm. They did not take the bait and the strategy proved to be a costly mistake.

Care for the aged is a highly individualised and personal activity. It means responding humanely to the complex and different needs resulting from a multitude of different life times. Businessmen in their arrogance and self conceit believed that such care could be provided by massive and inflexible corporations. They made policies and entered into contracts in board rooms to provide care that had little to do with the needs of the aged thousands of miles away. Press reports and extracts on this web site testify to the unfortunate consequences.

The argument that bigger was better is flawed. The arguments on which it was based were made in a market context and not in the health care context. They were not valid. Size became an impediment.

Integration and Diversification

The bankruptcy filing last week by one of the nation's largest post-acute-care companies was the sharpest nail yet in the coffin of diversification.

Once a leading advocate of the one-stop-shop model for post-acute care, Integrated Health Services is now a leading example of aggressive expansion gone sour.

The Sparks, Md.-based company is the fourth publicly traded long-term-care firm in five months to seek protection from creditors under a Chapter 11 filing. All four were primarily skilled-nursing providers, but each also pursued several lines of business designed to complement its core operations.

And of the four, IHS may have been the most broadly diversified.

"With nursing homes, home care, home oxygen, rehab hospitals and the rest, (IHS) tried to put together a post-acute network of services," said Debra Lawson, a New York-based analyst for Salomon Smith Barney. "That sounds good and looks good on paper but hasn't worked out in practice."
(IHS expansion leads to Chapter 11, Modern Healthcare February 7, 2000, Monday)

Two other buzzwords related to the advantage of size were integration and diversification. By owning Home care, Assisted living, pharmacy, respiratory therapy, rehabilitation and a number of other businesses they would be able to control all the therapy given to patients and control the referrals. By integrating these services into a network patients could be moved through the system for maximum profit.

It was a wonderful way of wringing profits from Medicare by playing pass the parcel. The services given to patients were based on their profitability and unprofitable services like basic nursing care were neglected. Staffing was skewed to meet the potential for profit.

We are left with an image - unwashed, unkempt, undernourished and dehydrated residents with contractures and pressure sores lying in urine soaked beds receiving vast quantities of "therapy". State inspectors describe the former. Climbing Medicare costs suggest the latter.

The financial success of integration and diversification were largely dependent on Medicare funding. When the Medicare system was changed to stop rorting diversification became much less profitable. It rapidly started to unwind. Corporations sold off money losing sectors like Home care. The buzzword changed to "core business"

It is clear that integration for profit was not in the interest of citizens. I must make it clear that integration for profit is very different to integration for care and for standards. Integration has much to offer in a context where cooperation and service replace profit and competition as the driving forces.

Chains claim that decisions about care are made in the homes based on patients needs. It is clear however that policy decisions made at a corporate level because of market priorities have a profound impact on the sort of care which citizens receive. The behaviour of Vencor is typical. Consider also the impact on care when Sun Healthcare responded to the altered Medicare funding by firing 10,000 therapists.

The impact of Diversification on care

Nursing homes provide care for the frail elderly - those who can no longer look after themselves. This is their core function. This was not very profitable. Under market pressures nursing homes became a vehicle for generating profit rather than for care. Diversification sought to provide a large number of more profitable services in the homes. Subacute care was the catalyst. This was where most of the profits from diversification came from. Nursing chains were promising to provide basic hospital care at nursing home prices. The profits came from therapies not from basic care.

The sicker the patients the more therapies they could be given and the more Medicare paid. These patients often required far more nursing care than the elderly but the nursing complement was not increased to cope with this. Instead staffing was downsized and deskilled.

Nursing was drawn from the care of the elderly to the more demanding and remunerative subacute patients. They were physically and mentally more competent and so able to insist that their needs were met. The major complaints have not been about the care of the subacute patients but about the neglect of the frail elderly, people who need help toileting, feeding and drinking.

Inspectors describe malnourishment, dehydration, unwashed patients lying for long periods in their own waste, pressure sores and contractures. Most can be prevented by competently trained and motivated nursing care.

Another consequence of diversification was the attempt to provide a wide range of services to a wider range of patients within the confines of nursing homes. Mentally unstable patients were not excluded. There were insufficient staff and many did not have the training to care for these patients and protect other residents. As a consequence there have been an increasing number of instances of resident to resident homicide and assault in nursing homes. Many mentally compromised wanderers escaped and some died by drowning or from cold before they were found.

Corporate Chains and Care

In the glossy pages of corporate literature from Florida's largest for-profit nursing home chains there is a repeated image: a frail person gazing with trust and gratitude at a health care worker holding their hand.

The brochures promise compassionate care and healthy profits for the people who invest in their companies. But the reality of life in some of those nursing homes is another thing - quality care and big profits do not always go hand in hand.
(Money or mercy?, The Tampa Tribune November 15, 1998)

Without exception corporate chains claim that they market superior care and are committed to the care of their residents. They are angry and indignant when they are accused of neglecting the elderly. Andrew Turner and the administrative staff who surrounded him in Sun's headquarters believed that they were committed to care and that they were providing it. There have been many accusations that Sun promised superior care which it had no intention of providing and then deliberately understaffed. In spite of this Turner, who was offered inducements to stay but then dumped at the insistence of Sun's creditors still promotes himself as an expert in quality care.

Other corporations such as Genesis and Mariner set out with the idea of providing superior and ethical care. I believe that it is a mistake to doubt their good intentions or their belief that they were providing superior care. The market had other ideas and dictated the sort of care that would be provided. The problem was that they accommodated to this.

But his presence is felt throughout the company.

Workers, former and current, refer to him as "Andy," as if the founder of the behemoth company was part Friday night poker buddy, part father-figure whom they don't want to disappoint.

Andy selected the art that adorns the walls of the five-building headquarters complex.

Andy wants workers to remember why they are there, employees say.

Andy's "vision" drives the company, current and past employees say.

"Andy is the classic visionary," Goodman said. "It's important to Andy that we remember that we're here to take care of frail, elderly people."
(Sun's torrid pace lets some workers shine, burns out others, By Leanne Potts. Albuquerque Tribune October 08, 1998)

To me the most important lesson from the study of corporate aged care is the manner in which corporate staff responded to the pressure of the market and indulged in socially unacceptable conduct without experiencing discomfort.

They believed that they were providing the sort of care that they had promised. They believed their own marketing. They developed barriers and strategies to shield, confront and neutralise alternate and more rational interpretations. They had no doubts and consequently developed reasons for disregarding their critics.

The staffing disparity may be hurting patient care. The Daily News analysis found for-profit homes averaged twice as many serious health and safety violations than non-profits, and they are nearly four times as likely to have three or more serious violations.
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A nurse who quit working at a for-profit nursing home in Kettering this year said poor staffing levels there left as many as 43 patients in the care of a single nurse and nurse's aide.

"I've seen patients lying in urine overnight and stuck in wet diapers for most of the day," she said. "And many of them are not getting proper nutrition and hydration. You can tell just by looking at them - their skin is dry and flaky and their eyes are sunken."
(FRAIL ELDERLY AT MERCY OF SYSTEM :: Lack of affordable choices, low staffing lead complaints - - SERIES: WHO WILL CARE FOR THEM?, Dayton Daily News December 5, 1999)

If we can understand how and why these people developed their understandings and responded in the way they did then we will be a long way down the track to developing a health and aged system which works for citizens. There must be lessons that can be more widely applied.

Political Influence

But the industry's influence doesn't end there. Its lobbyists have the collective power to open almost any door in Tallahassee.

J.M. "Mac" Stipanovich, who managed Gov.-elect Jeb Bush's 1994 campaign and was chief of staff to Gov. Bob Martinez, represents the Florida Health Care Association.

Jim Krog, former chief of staff for Gov. Lawton Chiles, lobbies for Extendicare.

Prominent lobbyist and prolific campaign contributor Jack Cory represents Manor Care, which recently merged with Health Care & Retirement Corp.

Cathie Herndon, former House budget director, lobbies for Beverly Enterprises Inc.

Former state Sen. Curt Kiser has been retained by Genesis Eldercare Network, and former state Sen. Ken Plante represents Vencor Inc. Democratic fundraiser Tom Panza is a lobbyist for Integrated Health Services Inc.
(Some fear government remains too "cozy' with industry; VICKIE CHACHERE, The Tampa Tribune November 15, 1998)

Large corporations exert enormous influence in the USA. Marketplace success comes with credibility, status and influence. Nursing home leaders have been very successful and their views become highly credible. They become associates of the powerful on the golf course, at clubs and on committees.

Corporations cultivate politicians personally and financially. They make large political donations to parties and to individual member's campaigns. They spend lavishly to employ respected politicians as lobbyists in order to get their point of view up front when decisions are made.

No one doubts that this secures favoured treatment. In addition they spend vast sums marketing their political views to the public in order to frustrate poorly funded citizens movements seeking reform. This strategy is particularly effective. It was employed to destroy Clinton's health care reforms.

When health and aged care is under the reformers legislative microscope which occurs frequently then health and aged care donations exceed those from other sectors.

Corporate nursing home chains are holding government to ransom, threatening poor care, bankruptcy and the closure of thousands of nursing homes unless they get more money and the laws they want are passed. Governments are faced with the prospect of taking over, funding and administrating thousands of homes as corporations collapse. They do not have the resources to do so.

Regulatory failure

Meanwhile, the system for protecting nursing home residents is so heavily weighted in favor of the nursing home industry that bad homes are given repeated chances to stay in business. Shortcomings at the state agency that regulates nursing homes have further exacerbated the situation, records show
(Money or mercy?, The Tampa Tribune November 15, 1998)

It is clear that oversight and regulation failed to control corporate excesses. Regulators took the side of and shared the understandings of the large and credible corporations. Citizens who complained met a wall of resistance. When serious deficiencies were substantiated, full penalties were not enforced, penalties were forgiven and fines were reduced. (See 2001 article)

Florida's Agency for Health Care Administration, which bills itself as the toughest nursing home regulator in the country, has failed repeatedly to protect residents from dangerous conditions - including some that have turned deadly.

Even when a long pattern of neglect exists, the system to protect nursing home residents protects the industry instead, a review of scores of agency records has found. Often, nothing happens until there's a crisis.
(Regulation often fails residents; VICKIE CHACHERE, The Tampa Tribune November 15, 1998)

Ila Swan a Californian encountered these difficulties when she complained. She saw what was happening in the homes she visited and advised authorities without response. She collected thousands of death certificates which revealed why the elderly were dying. She showed that oversight was not working. A federal inquiry by the General accounting office (GAO) confirmed her findings and the failure of Californian authorities. Inquiries in other states found similar problems across the USA.

Even when the division has found violations causing death, it has not pulled a license since XXXX became director in 1990.

XXXX and his deputy, YYYY, were suspended last week after they reported that they were under federal investigation. They have not returned calls for comment. The FBI has asked former employees of the division about possible bribery in exchange for improved inspection reports.

XXXX replaced Mildred Simmons, who was hired by Gov. Roy Romer to crack down on problems and was then ousted, Simmons said, for being too stringent.

"They hired me to put in a strict enforcement program, so nursing homes would be in compliance," Simmons said. "Protection of the elderly was our prime purpose."

XXXX was Simmons' deputy when she arrived in 1987, but he soon transferred to another state department. "He thought I was too enforcement- minded," Simmons said. "He was hopeful that I wouldn't last long."

He was right. She lasted three years. XXXX replaced her and promptly changed policy.
(STATE SLOW TO SHUT NURSING HOMES, DESPITE VIOLATIONS LEADING TO DEATH, NO FACILITY HAS LOST ITS LICENSE SINCE 1988, DENVER ROCKY MOUNTAIN NEWS November 19, 2000)

A number of factors contributed to regulatory failure.

As a consequence of all this there was a process of attrition. Inspectors and regulators got little backing from their political masters and could be stabbed in the back. When they did their job they were involved in long and costly disputes which drained their resources and their wills. An unstable equilibrium developed, which allowed the nursing homes to provide the sort of care that suited them.

From the indignant response of regulators to the criticisms made by citizens it seems that they thought that they were doing a good job. We should not doubt them. We have seen corporate staff develop patterns of thinking that make what they did legitimate. We should not expect regulators to behave differently. Those unable to accommodate to the situation in which they found themselves would have moved elsewhere. We are looking at a deeper social process that operates in many contexts.

Not for profit and government facilities

According to the 1998 Texas Medicaid Cost Report - the latest available - daily per-patient spending by for-profit homes on direct care and food trailed that of their nonprofit counterparts. Nonprofits, on average, spend almost twice as much on employee benefits and have 28 percent lower staff turnover.
(Nursing home crisis escalating; Families decry conditions; industry fights to improve, The Dallas Morning News December 3, 2000, Sunday)

Not for profit and to a lesser extent a small number of government facilities have been expected to abandon their traditional financial strategy of stretching available resources to meet need. Instead they have been forced to compete with aggressive and acquisitive profit driven chains. To survive they have been forced to compromise their mission, conform to the market and compete with the giants. Many were unable to do so or lacked the heart. They were acquired. Sun Healthcare was known as the PACMAN of the aged care industry.

There also are problems among nursing homes not tied to shareholders. But government data show the care overall is better at those operations.

"All you have to do is look at the nonprofits to see what's happening," said Jean Venturino, a visiting nurse who sees patients in several area nursing homes.

"Maria Manor, Menorah Manor, in St. Pete, they're nonprofit. They have an ethic of caring," Venturino said.
(Profits can come at high costs LINDSAY PETERSON and DOUG STANLEY, The Tampa Tribune November 15, 1998)

Despite market pressures the not for profits, who have survived have been more restrained in their application of market principles and practices. They have not been forced to grow or die. They have bent but have not broken completely. They have maintained better staffing, better relations with staff and superior care. They met the needs of the elderly without going overboard for Medicare and postacute care. State surveyors find fewer problems in the homes they run.

Not for profits did not build expensive diversified and integrated empires. As a consequence they were more flexible and less vulnerable to the changes in Medicare when they were made. In the long run "smaller was better".

Social Darwinism

The market was consolidating rapidly, absorbing competitors, These included not for profit groups and privately owned companies as well as public companies. Between 1995 and 1998 the number of publicly traded nursing home chains decreased from 28 to 10 megacorps. Only the fittest in market terms survived.

Growing, growing
The steep learning curve stems from Sun's exponential growth, which has become the stuff of legend around Albuquerque. The growth is the primary shaper of corporate culture at the company that owns nursing and rehabilitation homes and provides contract care services.
(Sun's torrid pace lets some workers shine, burns out others, By Leanne Potts. Albuquerque Tribune October 08, 1998)

Those firms that failed to maximise Medicare income and reduce the costs of care were not competitive. They were taken over. It was not possible for market listed chains to provide good nursing home care, behave ethically and survive. A large income stream was essential for survival and this could not be obtained in this way. The future and standing of their founders was linked to the fortunes of the companies they founded.

Individuals and groups who were able to come to terms with their consciences prospered. Those who could not went elsewhere. In this environment individuals with what I have called closed minded or sociopathic personalities were successful. They became leaders. They developed a set of complex explanatory abstractions based on market theory. Evidence and common sense were ignored. They carried others with them. Typical was Andrew Turner's (Sun Healthcare) extensively supported assertion when referring to nurses, that there was "plenty of fat in the system".

This is well illustrated at a lower level by the behaviour of nursing home administrators who were required to indulge in socially unpalatable practices. They were directly confronted by the consequences of their actions. Good administrators who felt uncomfortable applying prescribed market principles went elsewhere. The least suitable stayed. The quote describing Vencor's conduct earlier also shows how socially conscious citizens resign when they are required to indulge in unacceptable conduct.

Middle managers suffocate in this kind of corporate culture.
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Overall, 40 percent of the administrators in the study, which focused on Indiana and Michigan, changed jobs at least once a year. The problem was worse in homes run by corporate chains than in independently owned homes and nonprofits.
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The administrators were driven away by a variety of things- - , but most dealt with not having the freedom to make their own decisions, the demands of their supervisors and differences between their ethics and values and those of the corporation.
(Nursing home solutions start at the top, The Tampa Tribune December 22, 1998)

To justify corporate objectives marketplace theories built around the concept of "efficiency" were developed. Fewer staff would not only cut costs but also improve care by increasing efficiency. It became a matter of faith that homes were overstaffed, overskilled and inefficient. This made the application of corporate thinking and practices not only legitimate but desirable.

It was an unchallenged assumption that by increasing efficiency care was improved. That there would be no time for the sort of empathic person to person interaction that makes nursing home life tolerable was not considered. Financial success was taken as proof of "quality care". They were supremely confident. Alternate points of view and contrary evidence were not considered.

Then at the actual bedside I think there is fat. Why do we have to have a registered nurse change a bedpan? That's primary care. Somebody had a theory that this would be better care. A licensed practical nurse or nurses aide could be used. We've gone way off the deep end in terms of that kind of thinking. There is tons of fat in the health care delivery system.
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I think we're going to see a significant reduction in costs. and I think the role of government is going to be dramatically diminished.
(Andrew Turner : Interview -- Andy Turner wants the government out of health care, Period, New -Mexico Business Journal. April. 1996)

The political process absorbed this nonsense and responded by reducing Medicaid funding and leaving the market to sort out efficient care.

The market system selected for the sort of people who were least suited to care for vulnerable citizens - people who were not responsive to the society around them. They made more money. It is not surprising therefore that health care is now the major area of fraud in the USA.

Because of its complexity and the vulnerability of the people served the success of the health and aged care system depends on trust - i.e. when viewed as a provider of care not as a provider of profit. The people selected cannot be trusted. They are likely to exploit the vulnerability of others and of the system. This is how the market works when it is strongly competitive.

Sociopathy

The cult of Andy
As constant as the change at Sun is the influence of Sun's founder Andrew Turner, who is the cultural touchstone for the company's headquarters staff.
(Sun's torrid pace lets some workers shine, burns out others, By Leanne Potts. Albuquerque Tribune October 08, 1998)

Many of the corporate founders had enormous energy and drive. They were driven by an imperative to realise themselves. They were supremely confident and had an inflated opinion of their worth. Others were persuaded of their infallibility. They were not constrained by the doubts which beset most of us. Their adoption of a system of belief meant that it was valid and success in the market was proof. They were charismatic and very persuasive.

The head of the biggest operator of nursing homes in New Mexico earned about $8 million in salary and bonuses in three years, according to a company document.

Robert Elkins, chairman and chief executive officer of Integrated Health Services of Owings Mills, Md., earned $2.3 million in salary for years 1996 through 1998, says the document filed with the Securities and Exchange Commission.

He earned nearly $5.8 million in bonuses for years 1996 and 1997, the document says.

Integrated also is making irrevocable contributions to a retirement trust for Elkins that is to hold $23.9 million by 2001, according to the document filed with the SEC.
(Integrated Chief Prospered Troubled Times in Nursing Homes,Albuquerque Journal August 1, 1999, Sunday)

The abstractions these charismatic entrepreneurs promoted were widely accepted in the marketplace -- and by politicians. It all fitted with prevailing economic ideology. It was what the political establishment wanted to hear. Financial success was automatically equated with social benefit.

The beliefs had no foundation in the health or aged care context. Reason and evidence were ignored. Steadily mounting evidence indicated that they were highly dysfunctional.

When applied in the health care context the beliefs have all of the features of what I have called successful sociopathy. By this I mean a widely supported and successful system of thought which is manifestly inapplicable in the context in which it is applied. It is unfair and exploits large sections of society. In this it is no different to Fascism, Apartheid, Communism, and other belief systems which have served society poorly.

The New Medicare System

In 1995, the Governmental Accounting Office reported that Americans were being robbed blind by the nursing-home industry. Taxpayers were being charged for care that was never delivered, and shell companies had been set up for the sole purpose of bilking the government.
(FOR-PROFIT NURSING HOMES: REAL CRISIS IS RESIDENT CARE, THE ORLANDO SENTINEL May 3, 2000)

In 1997 the US federal government finally put a stop to the rorting of Medicare. It changed Medicare to a capitation system like Medicaid. Both now operated in much the same way as managed care. It rewarded nursing home chains for not providing services, for understaffing and for under-resourcing. This made it more difficult for not for profit groups to provide the sort of care they would have liked. A form of rationing became necessary. In this competitive climate the pressures dictated that rationing was based on cost and not on need.

We took six months to study nursing homes statewide. We found that homes run by large, publicly traded companies had more problems, on average, than nonprofits and homes run by for-profit companies that didn't sell stock.
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So, what was it about having stockholders that changed a company's behavior?

The quest for profits seems to be the obvious answer, but it's more complicated than that.

It's not so much that money is siphoned away from patient care. In many cases it is, but there's another factor. The daily life of a publicly traded company is so intense, as stocks rise and fall minute by minute, the questions of how to nurture workers and care for residents fall by the wayside.
(Nursing home solutions start at the top, The Tampa Tribune December 22, 1998)

For profit groups particularly market listed groups found a capitation system even more difficult. Not only did they have to pay for services but they also had to generate a continuous profit stream for their shareholders and pay off their loans. Competitiveness and other market activities demanded that personal and financial resources be allocated to market activities and profit before attention was given to care. Rationing was consequently for profit and necessary services such as home care, which were no longer profitable were simply discontinued.

Crackdown on fraud

Recently there has been a great deal of public discussion of the fraud and abuse investigations of health care companies conducted by the Office of the Inspector General of the Department of Health and Human Services, with significant fines and settlements handed to companies found guilty of fraud and abuse
(Banking: financing trends in an acquisitive health care market - focus on long-term care. Gordon, Lawrence J.; Bressler, Andrew, Journal of Health Care Finance June 22, 1998)

Two other factors compounded the problems for for-profit nursing homes. The first of these was a crack down on Medicare fraud by the US government. By itself this was relatively harmless as the chains controlled the data needed for prosecution. They reckoned without whistleblowers.

Of the 1.5 billion fraud recovered by the US government during the year 2000 over half came from health care fraud and US $1.2 billion came from whistle blower initiated suits. *

Corporate practices had so disenchanted some employees that many had collected documents not readily available to authorities. These whistleblowers took advantage of the Qui Tam laws to anonymously commence actions against the corporations on behalf of US citizens. Australia does not have Qui Tam laws.

By joining these whistleblower actions the government acquired evidence and sometimes an undercover agent. Corporate fraud was exposed and several of the most successful nursing home chains were faced with fines totaling hundreds of millions of dollars. This turned off a lucrative source of profit for some of the chains.

Pressure from the community

By 1997 citizens had become incensed at the neglect of their parents. Government surveillance had been lax. Community groups collected evidence and put pressure on government. Ila Swan a Californian, whose mother fell foul of the corporate system collected death certificates in that state and analysed them. A federal government investigation confirmed her findings and showed that oversight in California had been lax and penalties had not been applied.

A series of investigations followed. These revealed similar problems across the USA. Pressure was applied on state inspectors who became much more rigorous in their inspections. More funding was provided. Penalties were enforced and there has been a strong move to legislate for minimum staffing levels. This is very threatening to the bottom line and corporations strenuously oppose this. They have lobbied strongly with considerable success.

Citizens take to the courts

The litigation issue is especially acute in Florida and Texas, where strong patients' rights laws have invited a flurry of lawsuits on behalf of nursing home residents. In Florida, the law allows for the recovery of attorneys' fees in addition to punitive damages if a court finds that the nursing home infringed on the rights of the elderly resident. "Those two states started the crisis, and the fear from nursing home operators and insurers is that this will ripple throughout the nation," said Bourdon, who prepared the study with Sharon C. Dubin, assistant vice president and actuary.
(Driven Out; Brief Article --- As nursing home liability costs soar, exiting carriers spur market crisis., Best's Review March 1, 2000)

Disenchanted by government inaction citizens groups identified substandard nursing homes. They persuaded the families of neglected residents to take to the courts in large numbers. Exposure of the horrific consequences of corporate practices in open court led the juries to award massive, and sometimes crippling punitive penalties. Some state laws were more accommodating than others.

This is claimed to be the only measure that has been effective in improving staffing and care. This is because it cut into profits. The cost cutting strategies, which were once so successful in increasing profits are now very risky. They are costing the companies dearly.

The corporate response has been to create a crisis threatening bankruptcies and deteriorating care due to this additional drain on funds. They are spending vast sums across the USA lobbying politicians to change the law. Could it be that this is less costly that staffing properly and providing the services senior residents need?

The nurses unionise

Marketplace wisdom saw nursing care as unskilled and inefficiently provided. The human needs of the residents were not considered and no time was allowed for this. Homes were considered to be overstaffed even though there was no evidence of this. Most chains followed Andrew Turner by "cutting the fat".

The downsizing and deskilling of staff in nursing homes and the consequent deterioration in care during the 1980's and early 1990's resulted in a progressively demoralised work force.

One nursing home chain, Genesis Health Ventures, has been the focus of heavy media attention after the release of "A House of Cards," a report issued by the Service Employees International Union (SEIU),
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In the report, Genesis - which bought 10 McKerley nursing homes in 1995 - is reported to have cut staffing levels while increasing the number of Medicare patients, who need more complex medical care. In the two years following the acquisition, several Genesis facilities saw marked increases in the number of deficiencies cited by HCFA surveyors, and a marked decrease in the nursing and Certified Nurses Aides hours per patient per day.
(The Ailing NH NURSING Homes Industry, Business NH Magazine March 1, 2000)

Nurses lost status. Their salaries were reduced and their perks were removed. Their efforts were not rewarded by acknowledgment and there was no reinforcement of their sense of mission. They were so overworked that it was no longer possible to provide the care which patients needed.

Chains dragged the dregs of society off the streets, gave them minimal training and put them to work for a pittance. Many had criminal records, some for violent crimes. Assaults and rapes of the elderly by their nursing home carers have become a serious problem. Hidden video cameras, placed by relatives tell the story. There is now a strong move from the community to allow relatives to place "granny cams" in resident's rooms to monitor their care.

Working conditions became intolerable and trained staff went elsewhere. Whistle blowers were fired and if they persisted pursued. There was nothing to entice nursing staff to stay.

In a separate dispute in August, the National Labor Relations Board cited 106 instances of anti-union activity by the company (Beverly) at 26 facilities in 15 states.
(NURSING HOME FIRM FACES MORE PROBLEMS; THE OWNER OF A WINTER PARK UNIT THAT MUST BE SOLD IS ALSO UNDER FEDERAL SCRUTINY., THE ORLANDO SENTINEL October 29, 1998)

The U.S. Court of Appeals for the Seventh Circuit has approved a corporate-wide, cease-and-desist order by the National Labor Relations Board against Beverly California Corp. The decision, issued on September 13, is the culmination of two Board proceedings consolidating numerous unfair labor practices committed at Beverly facilities around the country that have been litigated since 1987.
CIRCUIT COURT APPROVES NLRB CORPORATE-WIDE ORDER AGAINST NURSING HOME CHAIN (BEVERLY), FOR IMMEDIATE RELEASE (R-2405) Friday, September 15, 2000 202/273-1991 www.nlrb.gov

Not surprisingly the nurses joined unions, a process bitterly resisted by corporate chains. The unions could act for nurses, protect whistle blowers and force chains to reinstate employees unfairly terminated. Not only could they bargain for their members putting them on an equal footing but they could collect data which demonstrated substandard care and publish it. Bitter and protracted disputes between the chains and the unions followed.

By 2000 and 2001 employers were faced with a well-organised and angry but depleted work force. General unemployment had fallen. No one was queuing up to wash bottoms and empty bedpans. Regulators and the public were demanding improved staffing.

The unions are insisting on better pay and working conditions. They are prepared to strike. Not surprisingly trained nurses now established in less arduous work have no interest in coming back. There are few new recruits. Because of their past misconduct for profit chains are having most difficulty in securing staff and they are in serious financial trouble.

Chains do not accept that it was their own conduct, which was largely responsible for poor care during times when staff were available. It was their mismanagement which was responsible for the depletion of the labour force and for the unpopularity of aged care nursing. They now blame the shortage of staff on the current employment situation in the marketplace. They blame the poor care in their facilities on this. They are being forced to pay more for staff.

Before receiving revealing data from pollster Celinda Lake, learning about the latest trends in caregiving from Maryann Timon of Genesis ElderCare , and hearing about new markets in elder care from analyst Bill Benson. -- (describing the summit meeting agenda. Note that after emerging from bankruptcy Genesis has spent most of 2002 and 2003 trying to unload its failed eldercare nursing home business - so much for its "latest trends"!)
(Maryland Lt. Gov. Kathleen Kennedy Townsend Convenes National Solutions Summit on Elder Care, U.S. Newswire May 31, 2000, Wednesday)

Corporations now sit piously on a number of committees investigating the nursing shortage. Credibility dies hard and they are still taken seriously. They are pressing for a system which restores their profits. Chains claim that because of the funding cuts they cannot afford to offer better salaries. They expect the public purse to give them money to employ nurses and in some states politicians have done so. Reports from 2 states suggest that this money did not reach pay packets. It would be more economical for government to take over the homes and run them properly.

Impact in the marketplace

The staffing disparity may be hurting patient care. The Daily News analysis found for-profit homes averaged twice as many serious health and safety violations than non-profits, and they are nearly four times as likely to have three or more serious violations.
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"I've seen patients lying in urine overnight and stuck in wet diapers for most of the day," she (nurse) said. "And many of them are not getting proper nutrition and hydration. You can tell just by looking at them - their skin is dry and flaky and their eyes are sunken.
(FRAIL ELDERLY AT MERCY OF SYSTEM :: Lack of affordable choices, low staffing lead complaints -- SERIES: WHO WILL CARE FOR THEM?, Dayton Daily News December 5, 1999)

As a consequence of all these developments the corporate profit stream started to fall in 1998. It continued downward. The chains renewed their efforts to reduce costs, particularly staff. They fired many thousands of therapists who were no longer profitable.

The for-profit market chains were unable to meet the demands of their shareholders or their creditors. The profit stream needed to service their loans disappeared. Share prices tumbled, companies were delisted from the stock exchange and most of the spectacularly successful chains sought protection in voluntary chapter 11 bankruptcy.

In the past six months alone, six other national health care providers filed for bankruptcy protection -- a list that includes Vencor Inc., Sun Healthcare Group Inc., Mariner Post-Acute Network Inc., Lenox Health Care Inc., Frontier Group Inc. and Newcare Health.
(Health care companies say federal cuts hurt industry; Government report shifts blame from changes in Medicare; THE BALTIMORE SUN , February 3, 2000)

(Note:- Add two of the largest to the list above. IHS declared bankruptcy and Genesis entered Chapter 11 soon after)

While not for profit groups have found it difficult their mission of care did not include empire building and this kept them out of debt. They were more concerned for their staff, less likely to exploit the vulnerability of their residents and less likely to indulge in fraud. As a consequence not for profit, and Mom and Pop nursing homes more successfully maintained their financial viability, their staffing and their standards of care.

In the long run "small was better". The Merger and Acquisition mania based on the "bigger is better" concept was a costly aberration - particularly costly for the vulnerable elderly. They were the ultimate victims and they have paid a high price.

Bankruptcy and care

Some of these problems - shrinking government payments, mostly - have depressed nursing home stocks and piqued the concerns of the analysts. They want signs the companies will adjust to the new payment system to keep profits growing.

Those expectations can be powerful
(Profits can come at high costs LINDSAY PETERSON and DOUG STANLEY, The Tampa Tribune November 15, 1998)

Bankrupt nursing homes have assured regulators and the public that care will not be compromised. Government regulators have also reassured the public but at the same time have intensified oversight at bankrupt facilities.

The corporations are caught is a catch 22 situation. Government has been kind and increased funding to some extent. They have also been extremely benign in enforcing fraud settlements. Chains have not even had to pay back the money they stole. Politicians are terrified of the backlash if homes close and thousands of frail elderly are thrown onto the streets.

Payments are nevertheless limited. The only way to get more money is to cut costs and so services. Their facilities have already been stripped beyond the bare minimum in order to push profits and growth. There is little room for more. The evidence emerging is confusing but we should expect care to deteriorate further.

Corporations have elected to dump their shareholders and enter chapter 11 bankruptcy. Shareholder's shares became worthless and had no value when the companies emerged from bankruptcy and started trading shares again. Creditors now own the companies and have forgiven substantial debt in order not to lose their whole investment. Assets have been sold off but they continued to operate and most eventually traded out of bankruptcy.

Creditors appoint management that will return the company to profit. They have no particular interest in how this is done or the social consequences. The pressure for profit remains and is intensified when the new company, often with a new name starts trading on the sharemarket.

A National Crisis
The Role of government

Nursing homes have been squeezed for several reasons. Labor costs, which make up 75 percent of their budgets, have soared as the economy booms and nurses, frustrated with increased workloads, demand higher pay or look elsewhere.
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But the biggest problem, nursing home executives say, is Medicaid. The state-run health insurance plan for the poor pays only an average of $130 a day per patient, about $20 per patient per day below costs, said Scott Plumb, executive vice president of the Massachusetts Extended Care Federation, which represents most of the state's homes.
(NURSING HOMES SQUEEZED BY COSTS OPERATORS BLAME MEDICAID PAYMENTS Anne Barnard, The Boston Globe April 7, 2001)

It is unfair to blame the nursing home chains for everything that has happened. They are the product of prevailing marketplace, economic and political belief systems - a philosophy which places a disproportionate emphasis on small government, privatisation, efficiency and market place competition. Claims that better health and aged care could be provided at less cost by increasing efficiency and reducing staffing fell on receptive ears. Governments responded by reducing funding for health and aged care at the same time as market pressures for growth forced corporate chains to take more money from care. An increase in the aging population compounded the problem.

The state funded Medicaid system which pays for the bulk of nursing home care has been steadily eroded. It has not kept up with increasing labour costs, nor with the increasing needs of nursing homes which were admitting sicker patients. Both not for profit and corporate homes have depended on the 10% of patients paid by the much more generously funded federal Medicare system and on wealthy self paying patients to make up the shortfall in Medicaid funding. Corporate chains aggressively compete for these patients, rejecting poorer Medicaid patients. This reduced the number of economically viable patients entering not for profit homes. Their humanitarian ethic forced them to shoulder the increased load of Medicaid patients.

The corporate chains misused the system to the extent that the federal government changed it in 1997. It became much less remunerative. While this was disastrous for the heavily indebted corporate chains, the not for profit homes also suffered. They were no longer able to pad their Medicaid losses with the money made from Medicare. Those that insisted on providing good care by employing more staff, paying them better and providing improved working conditions have fared the worst. Many are now closing. Already poor standards of care have fallen dramatically over the last several years.

Inquiries in state after state across the USA have unveiled a massive crisis in care and in staffing. Billions of dollars are needed to address the problem which is now out of hand. Politicians, who have staked their careers on a belief in smaller government and reduced taxes, have conditioned the electorate to expect lower and lower taxes. For them to raise taxes to meet this desperate need would be political suicide.

There are many inquiries and vast amounts of hot air but only token increases in funding have been made. No attempt has been made to address the waste of resources and the exploitation of vulnerable people integral to a marketplace system that takes profit from the system before it provides care.

Australian politicians have adopted a similar philosophy. As an election approached in November 2001 they denied mounting evidence of falling standards and understaffing. They competed in promising the electorate lower taxes.

The rate of payment for Medicaid from the state of Massachusetts is so ridiculously low that we cannot remain in business,'' said Mr. Flanagan. We went to the Department of Public Health and told them that, but those discussions did not yield any results. This is not something we wished to do. We have owned and operated this facility for 22 happy years.''
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The system is broken, and it's unfortunate,'' Mr. Flanagan said. Massachusetts Medicaid is just not paying enough for the type of round-the-clock care that is necessary. This is a sad day.''

(Two homes for elderly set to close; Low Medicaid rates are blamed for losses Jim Bodor, TELEGRAM & GAZETTE April 06, 2001)

Nursing Homes Update
June 2001 to August 2003

State inspectors wrote up the five national chains' homes for substandard care 65 percent more often than they cited other for--profit homes over the last four years, according to an analysis of inspections. Many Georgia nursing homes run by smaller chains and independent operators earn high marks from inspectors for their care, provided in many cases on shoestring payments from government programs. But financial reports show these homes usually spend almost every dollar that comes in the door on care for their residents.
"THE BOTTOM LINE OF CARING: National chains earn poor inspection reports The Atlanta Journal and Constitution July 28, 2002
"The biggest insult of the whole experience has been that had this happened in my own house, I would have been investigated. I would have been prosecuted, and I probably would have been put in prison," she (Barbara Becker, daughter in law of patient) told senators. WITNESSES RECOUNT NURSING HOME ABUSE Pittsburgh Post-Gazette (Pennsylvania) March 5, 2002

Since I wrote the overview of aged care in 2001 many of the companies have emerged from chapter 11 bankruptcy and are making profits thanks to temporarily increased Medicare funding in 1999 . This was intended to help companies make the changeover to a new system with a lower profit stream. This funding was slated to gradually decrease back towards the levels originally calculated in 1997 starting in October 2002. Not surprisingly the companies have made an enormous fuss about this and have mounted an energetic public relations campaign to persuade everyone that without more funding they can't employ more nurses and that patients will suffer,

This has considerably blurred the issues and the divisions between rival groups because neither the nurses, nor the advocates for the elderly are going to oppose the allocation of more funds to aged care. The corporations have found it easier to organise and fund front organisations to push their cause. There is certainly no doubt that there is an acute nursing shortage, that the people who are employed to provide care are not properly trained nor are they always the sort of people who will do so with dedication and empathy. The argument for more funding to address this is clear but whether the big chains are the people to address this is a totally different question. Their ongoing track record of poor care and understaffing indicates quite clearly that they are not.

Most of the business community and many of those writing quick popular articles have drowned readers with the corporate point of view. The governments own assessment is that funding is adequate for the provision of care, but obviously not for building giant corporate empires at public expense. Several other analyses confirm this.

Thorough and comprehensive investigations: The other major development is a whole series of thorough investigations which have looked at what is happening. The figures now confirm what has been obvious about the for profit market listed chains for a long time. Care is extremely poor when compared not only with not for profits but with privately owned companies. This failure in care is largely due to deliberate understaffing, much of it in order to increase profits.

These investigations include a study by an academic, Charlene Harrington, who is a professor from California. In depth state newspaper studies have been done by Phillip O'Connor and Andrew Schneider from the St Louis Post Despatch, by CARRIE TEEGARDIN from The Atlanta Journal and Constitution, and by BILL SIZEMORE from the The Virginian-Pilot. These have been published as a series of articles in their state newspapers. The studies were done in Oklahoma, Virginia, Illinois and Missouri. There are also a number of other good in depth articles. This material is well worth reading and I have taken the liberty of including a large number of extracts on a new reference page.

What is clear is that staffing and care were poor and remain a major problem. There has been little if any improvement. Senior executives still quite openly run health care like fast food chains. In spite of the large number of excellent studies political priorities and political support are tightly wedded to the corporate market model. Ideological economic beliefs dominate policy. This is not surprising in a regime which views anti-Americanism and terrorism in simplistic terms such as "axis of evil" and "freedom is beautiful" - presumably President Bush is talking about the sort of freedom in the corporate dominated western world.

Information about individual nursing homes

I am often asked where to go or for recent information about individual homes. I don't have this information.

Many states in the USA have web sites giving state inspection data about nursing homes. In addition most US states have nursing home advocacy groups or elder abuse groups. These people know where the problems are. The Bush administration in April 2002 claimed to have set up a web site with information. I don't now how accurate it is. <www.medicare.gov and through a toll-free telephone number, 800-Medicare (800-633-4227)>. The web pages also provided links to state sites.

In addition the following MemberoftheFamily web site tries to maintain up to date information about nursing homes. It is not tied to government or beholden to anyone financially. It is a good place to start. <http://www.memberofthefamily.net/usmap.htm>

References

In analysing corporate aged care in greater depth I have taken extracts from published material and allowed them to tell the story. I have simply written a short introduction and a few comments to give perspective and explain the context of some extracts. Most of the articles are long reviews laced with many examples of corporate business conduct and of failures in care. I have tried to select short sequences and sections to illustrate what I feel are important points or which reveal the thrust of the article. There is inevitably repetition as articles give different perspectives. The articles are arranged chronologically so that while the content is disjointed the flow of events is revealed. Many more references are attached to individual corporate pages.

The extracts on these pages are from copyright material. They are reproduced here for educational purposes and to stimulate public debate about the provision of health care. I consider this to be "fair use" and in the public interest. They should not be reproduced for commercial purposes.

Disclaimer: - The material is selective and not all-inclusive. The extracts do not necessarily reflect the full perspective of the original. Corporate denials and explanations have not been included. No claim is made that all of the matters referred to are true. The intention is to give the flavour of the material and an idea of the extent of the allegations.

Because of the volume of material I have put them into three web pages.

CLICK HERE to go to PAGE I of the references -- 1996 to 1999

CLICK HERE to go to PAGE II of the references -- 2000 and 2001

CLICK HERE to go to PAGE III of the references -- June 2001 to August 2003 Update
 . . . . . . . . . . This page contains extracts from a number of excellent reviews and studies.

LINKS TO MAPS
Central Map ..... Initial Map ..... USA Map ..... Australian Map ..... International Map ..... Corporate Practices Map..... (to print)
Path
  Home Page .......... US Corporate page .......... Aged Care
Overview Reference pages
1996-1999 ..... 2000-June 2001..... 2001-2003
The corporate chains
Sun Healthcare ... Beverly ... Vencor/Kindred ... IHS ... Genesis ...
Mariner ... Extendicare ... NHC ... Centennial ... Guardian
This page created March 2001, updated Aug 2001 by Michael Wynne
Some editing and additional update section August 2003