Audit Slams State Oversight of Nursing Facilities

State audit finds as citations for patient dangers increased, nursing home companies’ profits soared.  Photo Credit: Thinkstock

California’s skilled nursing facilities are increasingly putting their residents’ health in jeopardy, yet the state is failing to adequately crack down on the problem, according to a report released Tuesday.

Citations for substandard care at skilled nursing facilities statewide increased by almost a third between 2006 and 2015, according to the report from the California State Auditor. Over the same period, profits for the state’s three biggest private operators of nursing homes soared by tens of millions of dollars, even as the number of nursing facility beds barely changed, according to the report.

State agencies, particularly the California Department of Public Health, aren’t doing enough to make sure nursing homes are well regulated and residents receive quality care, the report said. State Auditor Elaine M. Howle chided the department, along with two other agencies, the Department of Health Care Services and the Office of Statewide Health Planning and Development, for failing to properly coordinate their shared oversight responsibilities.

“This report concludes that the State has not adequately addressed ongoing deficiencies related to the quality of care that nursing facilities provide,” Howle wrote in a letter accompanying the report. “We found that Public Health in particular has not fulfilled many of its oversight responsibilities, which are meant to ensure nursing facilities meet quality of care standards.”

The audit focused on three companies that dominate the privately run nursing home market in California: Brius, Plum Healthcare Group and Longwood Management Corporation. These corporations collect millions of dollars in healthcare payments from Medicare (the public health insurance program for seniors), as well as revenue from Medi-Cal (the state’s low-income health program), private insurers and patients themselves.

Between 2006 and 2015, annual net revenue for all three companies grew from less than $10 million to between $35 million and $54 million, according to the report. Medicare was a key source of these increasing profits, the audit stated. Company owners also boosted their incomes by purchasing goods and services from other businesses controlled by themselves or family members, the report noted, although they did so legally.

Meanwhile, citations for problems that put patients in danger of serious injury or even death jumped by 35 percent between 2006 and 2015, according to the audit.

The California Association of Health Facilities, which represents two-thirds of the free-standing skilled nursing facilities in the state, called the auditor’s findings “disappointing.” The trade organization said it represents Brius and Plum Healthcare Group, but not Longwood Management Corporation.

“(T)he state auditor failed to point out significant quality improvements and California’s national standing when it comes to the delivery of quality care,” Deborah Pacyna, the association’s public affairs director, said in an email.

“A summary of citations and deficiencies does not tell the whole story,” Pacyna wrote.

But Tony Chicotel, staff attorney for the San Francisco-based group California Advocates for Nursing Home Reform, said he wasn’t surprised by the state’s findings.

“It’s consistent with everything we’ve seen,” he said. “Nursing home quality has never been worse despite the fact that some chains out there are reaping historically high profits.”

Chicotel said the auditor would have found an even more striking increase in problematic care at nursing facilities if she’d taken into account customer complaints. Those skyrocketed to more than 10,000 last fiscal year, a 42 percent increase over three years prior, according to his organization’s analysis of state data.

The main complaints are about facilities that are understaffed, and patients being pressured to leave nursing homes before they’re ready because they’ve reached their Medicare coverage limit, Chicotel said. Thousands of complaints remain uninvestigated, his group claims.

Meanwhile, in a letter to the state auditor, the Director of the California Department of Public Health Karen Smith disagreed with the conclusion that the state’s oversight efforts have been ineffective.

“In fact, CDHP believes that the increased number of federal deficiencies cited demonstrates that CDHP has increased its enforcement activities,” she wrote.

In a separate letter, the Department of Health Care Services said it would work with the other two agencies to improve the coordination of nursing facility oversight.

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