Study Finds Largest For-Profit Nursing Home Chains Providing Lesser Care

By Brian Garavaglia, PhD

Posted on: December 29, 2011

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A recent study that examined the provision of care within nursing homes as it relates to the type of nursing home ownership cast some very sobering results on for-profit nursing care facilities. In a study published in the journal Health Services Research, University of California San Francisco lead researcher Charlene Harrington and her team found that for-profit nursing care facilities demonstrated statistically significant lower indicators of care as compared to not-for-profit and government based nursing care facilities.

Harrington's study states that the 10 largest for-profit nursing home chains often used reduction of staffing to lower costs to help enhance corporate net profit. However, in so doing, they suffered from "significantly lower quality of care" (Harrington, Olney, Carrillo, & Kang, 2011). By these companies using this type of strategy, "they are not making quality a priority" (Peterson, 2011). The 10 largest for-profit facilities mentioned in the study, which operate over 2000 nursing care facilities throughout the United States, are: HCR Manor Care, Golden Living, Life Care Centers of America, Kindred Healthcare, Genesis HealthCare Corporation, Sun Health Care Group Inc., Sava Senior Care LLC, Extendicare Health Services Inc., National Health Care Corp., and Skilled HealthCare LLC.

A critical area that was found to exist and contribute to the findings is that the for-profit facilities often had sicker residents that they had to care for. However, they also had considerably lower levels of staff, particularly in the area of nursing. In examining the data for facilities over a period that extended from 2003 to 2008, the for-profit facilities had fewer nurse staff hours on average, as well as fewer registered nurse staff hours in particular. In fact, when compared to their non-profit and government-based nursing care facilities, they averaged 30 percent fewer nursing staff hours. The researchers found that for-profit facilities fell below the national average for total nurse staffing as well as below the recommendations often made by experts in this area.

Researchers also found that the for-profit nursing care centers, in particular the top 10 chains within nursing home care, received 36 percent more deficiencies than those within the non-profit or government sector. Furthermore, the deficiencies were also found to be 41 percent greater in their severity (Harrington, Olney, Carrillo, & Kang, 2011). These significant findings, coupled with those findings in the area of nurse staffing, appear to be critical. Private equity companies were often instrumental in purchasing many of these companies and the level of staffing remained unchanged during the pre-purchase to post-purchase period. However, the level of citations and the severity of citations increased in some of the facilities during the post-purchase years.

The study does not cast a very positive appearance on large for-profit companies, especially those connected to private equity companies. At the very least more research has to be committed to this area. However, it may also be a very important awakening call for many of those organizations that are trying to maximize the bottom line at the expense of attempting to provide an optimal level of care for those that they service.

For many experts in the area of development, gerontology and long-term care, this study and its results are not all too surprising. For those that have continued to examine this important area of health care, we have been witness to many changes that have been happening in this area. Some changes have been for the good, and some, as has been demonstrated in this study, have not positive changes.

I for one have been an advocate for disavowing the traditional business model for health care organizations in general, and long-term care organizations in particular. The traditional business model that has focused on supplying customers with an inanimate product, and in turn attempting to maximize the profits of the corporation, has not been a business philosophy that has worked well in healthcare. However, now we have many individuals and private equity companies moving into the health care sector with the goal of using the traditional business model that they apply to selling widgets to human beings.

For sure, many important business concepts still apply to health care, such as attempting to achieve improvements in effectiveness and efficiency, as well as attempting to limit the levels of unproductive redundancy that often is found in many areas. However, profit maximization, an important goal for businesses in all areas, has to some extent be tempered by the type of business one is in. In this case, health care is dealing with human beings and not inanimate products. Therefore, yes we often would like to see positive numbers at the end of the accounting cycle, even in health care. However, our level of aspirations in the level and magnitude of these numbers in health care cannot be a priority. Providing health care that optimally services those that we are indebted to serve is the first and foremost responsibility. We also need to find out how we can improve our provision of health care and make it more efficient. However, making it more efficient should never be confused with minimizing the care that we provide or limiting the number of labor hours and professionals that we need to optimally service our clientele.

With many new groups coming into the long-term health care environment and purchasing many facilities with the myopic intent of it being a widget-based business that is predicated on maximizing the bottom line, this has created a misguided business and health care philosophy that deindividuates the nursing home clientele to a widget and furthermore levies a disingenuous type of service philosophy; one in which the cloak of care is covering up the true intent of the health care organization, which is to maximize their profit. Unfortunately, since many of those who are often part of the private equity company have little training in health care and are more concerned with the financial side of a business enterprise, this often creates a quandary, where their lack of training in health care management is unable to be reconciled with the greater emphasis on traditional business and for-profit enterprise. Therefore, they come to view running a health care organization similar to running any other business. They focus on maximizing the profit of the company and often the concerns of the core group that health care services, the patients and residents, now becomes secondary.

Ultimately, we have to stop deluding ourselves and come to understand that health care, and in this case nursing home care, needs professionals with administrative expertise that is often much different than is found within the automobile industry, the retail industry, or the financial industry. The study intimates some of this, as it has shown that many of the for-profit nursing care companies, especially many that have had private equity companies take them over, have actually fared worse than those not-for-profit or government based facilities, where the bottom line is not as magnified to the extent that it is often found within the for-profit industry.

With this being said, we will probably continue to see increasing movement of many private equity firms within this area. Furthermore, they will often hire CEO's, COO's, Vice Presidents of Marketing and Finance, that often have a very well documented traditional business background, but have very little in the area of health care management expertise. Therefore, many of these problems may continue to exist. However, hopefully this study has created more sensitivity among those in these positions to possibly reevaluate their business philosophy as it applies to health care.

References

Harrington, C. Olney, B., Carrillo, H., & Kang, T. (2011/Aug). Nurse Staffing and
Deficiencies in the Largest For-Profit Nursing Home Chains and Chains Owned by Private Equity Companies. Health Services Research. DOI: 10.1111/j.1475-6773.2011.01311.x

Peterson, K. (2011). Largest For-Profit Nursing Homes Deliver 'Significantly' Worse
Care, Report Finds. ChangingAging Blog Stream. November 29, 2011. http://changingaging.org/blog/2011/11/29/for-profit-nursing-homes-deliver-significantly-worse-care-report-finds/

Dr. Brian Garavaglia is a long-term care administrator, gerontologist, educator and consultant. He has worked in health care for approximately 26 years and has worked in all phases of health care including acute, subacute and long-term care environments. His area of specialization is older adults and the long-term care environment. He has continued to research, publish and be an advocate for the older adult population as well as teach at various colleges within the Detroit-metropolitan area.

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