Sweeping governmental oversight of private equity’s stake in senior housing may mean less engagement in this area of real estate from the “money folks”…Wenston DeSue
White House Releases Sweeping Nursing Home Reform Proposals, Takes Aim at Private Equity Ownership…
The Biden administration on Monday unveiled a sweeping set of proposed nursing home reforms, taking particular aim at private equity ownership.
While private-pay senior living providers have expressed some concern about the potential for greater federal regulation in the aftermath of the Covid-19 pandemic, the White House has focused its attention first very squarely on nursing homes. More than 200,000 nursing home residents and staff members have died from COVID-19 in the past two years, the administration pointed out in a fact sheet on its intended reforms.
The proposals include minimum staffing requirements among several other priorities and provisions. Steps toward reform were developed by the Department of Health & Human Services (HHS) through its Centers for Medicare & Medicaid Services (CMS), the White House stated.
Aging service organizations had mixed reactions to the proposed reforms.
The American Health Care Association (AHCA) President Mark Parkinson, while appreciative of the Biden administration’s ongoing effort to improve quality of care for residents, pointed out that more oversight without federal assistance would not improve resident care.
LeadingAge President and CEO Katie Smith Sloan said the organization was gratified to see the Biden administration prioritizing long-term care, but well intentioned reforms don’t “change the math,” referring to chronic underfunding of Medicaid for long-term care services.
President Joe Biden on Tuesday is expected to outline the plans for nursing home reform during his first State of the Union address.
Private equity as ‘dangerous model’
The White House specifically pointed to private equity firms buying up nursing home property, a trend that has “ballooned” from $5 billion in 2000 to more than $100 billion in 2018, according to a fact sheet on its proposed plans.
About 5% of all nursing homes are now owned by private equity firms, according to a March 2020 working paper published by the Center for Economic and Policy Research.
“Too often, the private equity model has put profits before people — a particularly dangerous model when it comes to the health and safety of vulnerable seniors and people with disabilities,” the White House noted in its fact sheet.
A November JAMA study cited in the fact sheet indicated the presence of private equity ownership actually led to an increase in Medicare costs despite a decline in resident care.
The study also found that residents in private equity-acquired nursing homes were 11.1% more likely to experience a preventable emergency visit to the hospital compared to for-profit nursing homes not associated with private equity.
A National Bureau of Economic Research working paper published in February found that over 17 years, private equity ownership increased excess resident mortality by 10% – that’s an additional 20,150 deaths associated with private equity ownership, an increase in prescription of antipsychotic drugs by 50%, and decreased direct care staff hours by 3%.
The working paper also discovered an increase in taxpayer spending per resident by 11% at such institutions.
Yet another study cited by the White House, this time from the Americans for Financial Reform Education Fund (AFREF), found COVID-19 infection and death rates at private equity-backed nursing homes were 30% and 40% higher than statewide averages, respectively.
“Without decisive action now, these unacceptable conditions may get worse,” the White House stated in its fact sheet. “HHS and other federal agencies will examine the role of private equity, real estate investment trusts (REITs), and other investment ownership in the nursing home sector and inform the public when corporate entities are not serving their residents’ best interests.”
Taxpayer dollars for ‘safe, adequate and dignified care’
The Biden administration is also calling for minimum staffing requirements for nursing homes, reducing room crowding by promoting single-occupancy rooms, and reinforcing measures to limit unnecessary treatments and medications, including antipsychotics.
Biden’s reforms, including staffing minimum requirements, will be developed and implemented by the Department of Health and Human Services (HHS). The agency will start with a new study to determine adequate staffing minimums, which will then be proposed one year later.
While most residents prefer private rooms, most current nursing home options involve shared rooms with one or more roommates, the White House stated.
Shared rooms increase a resident’s risk of contracting COVID-19, among other infectious diseases, according to the fact sheet.
“CMS will explore ways to accelerate phasing out rooms with three or more residents and to promote single-occupancy rooms,” the White House stated.
Other pandemic-related reforms mentioned in the fact sheet include continued testing support from HHS, promotion of vaccine boosters and primary series shots, as well as an increased number of infection prevention employees on staff.
The Biden administration also plans to strengthen CMS’ value-based purchasing program after witnessing ties between incentive funding for the program with quality performance.
“CMS intends to propose new payment changes based on staffing adequacy, the resident experience, as well as how well facilities retain staff,” the White House stated, indicating a correlation between submitted staff turnover and weekend staffing levels with quality of care.
Citing CMS’ National Partnership to Improve Dementia Care, the White House stated the industry has made progress in reducing the amount of antipsychotic prescriptions, but that there are still “problematic diagnoses.”
In other staffing reforms, the Biden administration aims to lower financial barriers to nursing aide training and certification, create a template for states wishing to tie Medicaid payments to clinical staff wages and benefits, and launch a nursing career pathway with the help of CMS, the Department of Labor and external entities.
Survey support, rigid penalties and transparency
Biden also plans to call on Congress to financially support nursing home health and safety inspections with a nearly $500 million bump on CMS Survey and Certification aid, amounting to a 24% increase.
Survey funding has remained flat for more than seven years, the White House stated, while the number of nursing home complaints has surged.
Among the Biden-Harris plan to protect seniors, the administration will also “expand penalties” for nursing homes with poor performance track records and “beef up” scrutiny of poor performers.
The Government Accountability Office (GAO) found 82% of all inspected nursing homes had an “infection and prevention control deficiency” during data collection between 2013 and 2017.
Facilities will move through the CMS Special Focus Facility (SFF) program more quickly under the reforms and face larger enforcement actions including termination from Medicare and Medicaid.
The dollar limit for per-instance financial penalties would increase from $21,000 to $1 million for poor performing facilities under the reforms.
In order to increase accountability for owners of nursing home chains, a “minimum corporate competency” will be required to participate in the state and federal programs too.
The final aspect of Biden’s nursing home reforms delves into corporate owner and operator transparency.
A new CMS database will track and identify facility owners and operators across state lines in an attempt to flag previous problems concerning resident health and safety, according to the fact sheet.
“Giving the public a resource to better understand owners’ and operators’ previous violations will empower states to better protect the health and safety of residents,” the White House stated.
Financial transparency will require more “robust” ownership and operating data collected by CMS too, made available on the Nursing Home Care Compare website.
Care Compare ratings will more closely align with verifiable data rather than self-reported metrics as well.
Article Cited: Senior Housing
Wenston DeSue is a realtor, organizational consultant, design, construct, build expert and developmental networker. Real estate is the business of exchange and affects every person on the planet. Real estate on all levels represents resources, access, purpose and often times, power. These articles represent aspects that affect the business of real estate.
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