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For-Profit Nursing Homes: Everyone Pays But Them

Thu 5 Feb, 2015 / by / Nursing Home Injury

In a recent study by the Centers for Medicare and Medicaid Services, there was an alarming finding: 19% of all for-profit nursing homes have actual harm or immediate jeopardy occurring to their residents. 1 in 5 residents!

What’s a “for-profit” nursing home? These are corporations that own many nursing homes, often in multiple states. They often short-shrift patient care – such as by staffing fewer nurses – in order to boost their profit margins. They pay less cost and overhead to operate the nursing home – so they collect greater profit out of what they are paid by patients (or Medicare).

One major problem with this approach? Studies show that overall medical costs per resident go down when nursing home spending goes up. And the reason? It costs more to treat people after they have problems, after they develop bed sores, pneumonia, broken hips, or other ills due to neglect. When nursing homes pay to staff more nurses, bed sores, pneumonia, and other problems are much less likely to happen. In other words, pay more now to have more nurses, and pay less later for expensive hospital treatment due to issues that happen from neglect. It’s simple, right? But that’s not what happens.

For profit nursing homes


The costs for treatment in hospitals for bed sores, broken hips, pnemonia, dehydration, or other issues of neglect – they’re all picked up by insurance companies, Medicare, or familiesnot the nursing homes themselves. They don’t have to pay for the cost of neglect (unless they’re sued and held accountable, that is). And that’s why they continue to run nursing homes in a way that will best boost their profit margin. There’s no incentive for them to pay to hire more nurses, because they save money by not doing so, and then they don’t have to pay for the costs to treat residents who don’t get enough good nursing care.

It’s a matter of financial incentive.

Don’t take our word for it: Medicare did a study. It can be seen here (CLICK). Here’s a quote:

The top ten for-profit chains had:

  • The lowest staffing levels;
  • The highest number of deficiencies identified by public regulatory agencies; and
  • The highest number of deficiencies causing harm or jeopardy to residents

If all nursing homes in the United States were operated on a not-for-profit basis:

  • 7,000 residents with pressure sores would not have them;
  • Residents would receive 500,000 more hours of nursing care each day.

Elderly man on death bed with money bag

A lot of attention has been given recently to a West Virginia lawsuit that slapped a $91.5 million dollar verdict against Heartland Nursing Home (a subsidiary of HCR Manorcare, many of which are in Illinois). An 87-year-old woman died after a short stay, during which she was dehydrated and malnourished. The nursing home didn’t do anything, including basically giving her a glass of water. It came out during the case that staffing levels and care were deliberately low – in order to boost profit. Much of the jury award was “punitive” – in other words, meant to deter, punish, and make an example of the nursing home’s intentional conduct.

elder abuse infograph

To be clear, there are other types of nursing homes out there, such as non-profit nursing homes (a local example in Peoria would be Lutheran Hillside Village) and government-run nursing homes. As in all walks of life, no type of nursing home is automatically perfect, and for-profit nursing homes can also be run quite well. The difference, in part, is that for-profit homes can choose as corporate policy to be run in a manner that puts revenue over residents.

When we investigate cases, one strategy available in Illinois
is to look at cost reports. They’re required to be made public and you can look at them here (CLICK), which includes quarterly reports on violations for all nursing homes in Illinois.. And don’t forget that U.S. News publishes rankings of nursing homes as well (probably a bit easier to read than budget reports), which you can see here.

For two years, we worked very hard on a case that completed with a near seven-figure settlement. A person suffered bed sores, sepsis, and lost a limb during a short stay in a for-profit nursing home. That’s not how any of us would want to end our lives. Still, the family is happy that the nursing home is held accountable- but during those two years on that particular case, we saw scores of others involving the same conduct and the same players. Please, educate yourself when choosing a nursing home.


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