FOR IMMEDIATE RELEASE, Thursday, February 14, 2008
CONTACT: Yoni Cohen, (202) 225-3202

WASHINGTON, D.C. – Representative Pete Stark (D-CA), Chairman of the Ways and Means Health Subcommittee, reacted to today’s introduction of nursing home legislation by Senators Herb Kohl (D-WI) and Chuck Grassley (R-IA).

“I applaud my Senate colleagues on the introduction of the Nursing Home Transparency and Improvement Act of 2008. I plan to work with colleagues in the House to soon introduce a companion bill.

“There is a woeful lack of transparency in the nursing home sector, with so many layers of ownership that it can be nearly impossible to know where the buck stops. If you don’t know who’s in charge or how they are running the operation, then there is no accountability, and quality of care for our most frail senior citizens can suffer. That is a huge problem.

“We cannot forget that this industry operates largely on the government dime, with nearly 80 percent of residents living in nursing homes that are supported by public funds at any given time. And nursing homes are making a healthy profit off of the Medicare program, with Medicare margins of 13 percent in 2006. We have a moral and fiduciary responsibility to make sure we know who those providers are and what they are doing, and ensure they are using government dollars to provide high quality care for our nation’s nursing home residents.

“That is why I strongly support the efforts of Senators Kohl and Grassley. I look forward to working with them and our colleagues here in Congress to enact legislation that brings much needed transparency and accountability to the nursing home sector.”

Background: The Ways and Means Health Subcommittee held a hearing to explore trends in nursing home ownership and quality on November 15, 2007. In recent years, several nursing home chains (both publicly traded and private equity-owned) have undertaken changes in corporate structure that can obscure the ownership and management of individual facilities. These reorganizations provide an opportunity to shield assets and limit liability, obscuring regulators’ efforts to find the responsible party and seek corrective action or collect monetary penalties. Beneficiaries are also then limited in their ability to seek remuneration for injury or neglect.

The heightened focus on profit maximization in the restructured organizations can result in staffing cuts, as staffing is the main cost in a nursing home. Staffing levels are directly related to patient care, so when cost cutting leads to reductions in staffing, patient care can suffer.

Reforms in the Kohl-Grassley bill include requiring disclosure of nursing home ownership relationships; creating basic requirements for nursing home provider agreements to ensure accountability, requiring reporting on expenditures for, and levels of staffing; updating the civil monetary penalty system; and improving information available to consumers on the Nursing Home Compare website.