July 16, 2013
ARE AMERICAN NURSING HOMES IN TROUBLE?
Law Suits Affect the Ability of Senior Home Owners to Adequately Care for their Patients
There is a high rate of civil lawsuits being filed around the country alleging a negligent standard of care in regard to patient treatment in senior care assistance homes across the country. Many of these suits arise because of inadequate staffing or overcrowding. In fact, a recent GAO (US Government Accountability Office) study in California showed “that over 30% of facilities in California failed to comply with standards to such an extent that a significant risk of death or life-threatening harm existed.” The root of this issue and subsequent lawsuits can be found in the lack of proper financing and resources. For instance, “Medicaid is the biggest single provider for nursing home care, accounting for almost 2/3 of all dollars spent.” Furthermore, “Congress has been deeply concerned with the quality of nursing home care since 1986, when it held hearings that led to the Nursing Home Reform Act of 1987. However, Congress has also been preoccupied with limiting expenditures. It has never appropriated sufficient funds to enforce the provisions of the Act or funded the personnel and training necessary to inspect nursing homes frequently and intensively.”
Government Programs Dictate the Ebb and Flow of Senior Care Facilities
Because Government policy does much to determine the return available to nursing home investment, the profitability of the nursing home industry has been a subject of controversy since Government agencies began paying a large portion of the Nation’s nursing home bill. Controversy appears at several levels. First is the rather narrow concern, often conceived in accounting terms, of the appropriate reimbursement of capital-related expense under Medicaid and Medicare. Second is the concern about how return to capital affects the flow of investment into nursing homes, leading either to inadequate access to care or to over-capacity. Third is the concern about how sources of return to nursing home investment affect the pattern of nursing home ownership and the amount of equity held by owners since the pattern of ownership and amount of equity have been linked to quality of care.
In order to limit liability, maximize the use of government payments, and manage senior care facilities that operate in an appropriate manner it is important to work from a healthy base. Cambridge Realty Capital Companies offers a variety of programs and financing structures for senior housing and healthcare properties. This allows us the flexibility to review each deal on an individual basis and provide a financing solution that benefits everyone involved in the transaction.