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For-Profit Nursing Homes
The for-profit ownership percentage of the US nursing home industry exceeds 70%, serving around 1.3 million residents [1]. While this ownership type helps many financially struggling nursing homes avoid closing, there are concerns over the quality of care for-profit nursing facilities offer.
This article will define these facilities, examine their legal and regulatory framework, and address common legal issues associated with for-profit companies.
What are For-Profit Nursing Homes
For-profit independent living facilities, which make up most of the country’s nursing homes, are senior living communities owned and operated by private entities that aim to generate profit. These nursing homes operate under a business model that prioritizes financial returns while providing care to residents, often reducing the quality of care.
Profit Motive vs. Patient Care
The prevalence of for-profit entities in the care industry has raised questions about the financial and quality issues these homes frequently encounter.
Namely, these facilities’ profit motives often conflict with the need to provide quality care. Since for-profit facilities aim to maximize financial returns, they may prioritize cost-cutting measures to increase profitability. This act can lead to understaffing, hiring fewer registered nurses, reduced investment in facility upkeep, or lower spending on care services.
Legal and Regulatory Framework for For-Profit Nursing Homes
Nursing homes owned by private entities must comply with federal and state regulations to receive certification and keep their license. Here are the main regulations a private, for-profit operator must comply with.
Federal and State Regulations
For-profit companies in the nursing home industry must follow federal laws and regulations regarding patient rights and quality of care standards. These include:
- Nursing Home Reform Act (NHRA) of 1987
- Health Insurance Portability and Accountability Act (HIPAA)
- Federal Regulations (42 CFR Part 483)
Regulations vary by state. However, all states aim to regulate for-profit and not-for-profit organizations and hold them accountable for residents’ safety and well-being. State laws and regulations typically include the patient bill of rights and quality of care standards.
Licensing and Certification
State requirements for certification and licensing are often more strict than those set by the federal government. They involve the following:
- Initial licensing – Nursing homes must demonstrate compliance with federal and state laws, ensuring that the facility is capable of providing adequate care.
- CMS certification – Nursing homes must be certified by the Centers for Medicare & Medicaid Services (CMS) to receive Medicare and Medicaid funding. This certification involves meeting federal standards under the NHRA.
- Inspections and compliance audits – Nursing homes undergo regular inspections to ensure their medical care, staffing, and administration function properly. They also go through compliance audits, which check for financial transparency, adherence to patient care standards, and compliance with Medicare and Medicaid billing rules.
Nursing homes that fail to comply with regulations risk punishment, including penalties, fines, and license suspension or revokement.
Medicare and Medicaid Reimbursement
For-profit nursing homes receive reimbursement from government programs like Medicare and Medicaid, which are essential for serving low-income seniors.
Medicare covers short-term, post-hospital care for up to 100 days, with payments based on the resident’s needs through the Patient-Driven Payment Model (PDPM). On the other hand, Medicaid funds long-term care for low-income residents, with reimbursement rates set by each state.
Medicaid rates are generally lower than Medicare, making it more difficult to cover operating costs and maintain quality care.
Common Legal Issues in For-Profit Nursing Homes
For-profit corporations sometimes hire fewer workers than required to save money or reduce operating costs in a way that endangers care quality. In this section, we will look at common legal issues nursing facilities face.
Understaffing and Inadequate Care
For-profit operators may cut staffing funds to increase profits or remain attractive to private investors. They may hire fewer staff members than required or underpay their workers, which leaves them overworked and unable to attend to all residents.
This inadequacy leads to burnout, frustration, and high nursing staff turnover, which increases the chances of neglect, abuse, and poor care.
Profit-Driven Practices
Consumer advocates argue that profit-driven practices, such as cost-cutting measures, compromise resident care, health, and safety. Inadequate staffing levels make it impossible for caregivers to meet the needs of each resident, leading to issues such as:
- Poor hygiene
- Malnutrition
- Bedsores
- Inadequate incontinence care
- Insufficient mobility assistance
- Infections
- Falls and fractures
Senior living communities nationwide suffer from these issues, often resulting in penalties, fines, and lawsuits.
Corporate Ownership and Management
For-profit facilities often have complicated ownership structures. Nursing home ownership structures may include private individuals, private equity firms, corporations, or real estate investment trusts, which may own a single facility or multiple locations as part of a larger network.
Due to this complexity, it’s often difficult to determine who is ultimately responsible for decision-making and care quality. Moreover, fragmented ownership is often set up to maximize profits while shifting liabilities between entities.
Finally, families should be wary when a for-profit owner purchases a not-for-profit organization to “revive” it—this is usually difficult to do without cutting costs and reducing care standards.
Financial Exploitation and Fraud
Financial exploitation and fraud are not uncommon in for-profit nursing facilities. In some cases, staff or management misuse residents’ personal finances, including bank accounts, benefits, or pensions.
In other cases, they overcharge for services, bill for care not provided, or engage in upcoding to increase Medicare and Medicaid reimbursements [2].
Holding For-Profit Nursing Homes Accountable
Whenever a nursing facility engages in fraudulent practices, provides substandard care, or fails to prevent abuse and neglect, it should be held accountable.
Legal Rights of Residents and Families
Under the NHRA, residents are entitled to quality care, dignity, and protection from abuse and neglect. If these rights are violated, residents or their families can file complaints with state regulatory agencies, usually run by the Department of Health or the Department of Aging. They may also pursue civil lawsuits and seek compensation for tangible and intangible damages.
Role of Nursing Home Abuse Lawyers
Experienced nursing home abuse and neglect attorneys can help families and victims pursue legal action and manage the entire process with confidence and support. Here is what they can do:
- Gather evidence – A specialized attorney can examine witnesses, investigate medical records, staff reports, and other evidence to investigate the claim and build a strong case.
- Negotiate settlements – Insurance companies try to minimize damages, often in ways unsettling to families and victims. A skilled attorney can help you negotiate fair compensation.
- Navigate procedural requirements – Lawyers handle technicalities such as deadlines so you can focus on healing.
- Represent the client in court – If negotiations fail, an attorney can represent you in court and help you seek justice.
Types of Legal Claims
There are four main types of claims designed to hold a for-profit nursing facility accountable:
- Negligence – You can file a negligence claim when the facility fails to provide adequate care, resulting in injuries, falls, malnutrition, or bedsores due to staff neglect.
- Medical malpractice – These claims involve healthcare professionals providing substandard medical treatment or care, leading to injury or worsening health conditions. One common example is medication errors.
- Wrongful death – When a resident dies due to neglect, abuse, or substandard care, families can file wrongful death claims, seeking compensation for their loss.
- Breach of contract – This claim is filed when a facility fails to meet the care standards or services agreed upon in the admission contract, such as providing necessary medical care.
Compensation and Damages
Victims of neglect or abuse can be entitled to tangible, intangible, and, in some cases, punitive damages:
- Tangible damages – Past and future medical expenses, funeral expenses, and property damage.
- Intangible damages – Pain and suffering, emotional distress.
- Punitive damages – Awarded in cases of malicious behavior or gross negligence to punish the at-fault party.
Choosing a Nursing Home: Considerations for Families
Conducting thorough research before selecting a nursing home helps minimize the chances of abuse and neglect. Unfortunately, people sometimes move their loved ones from one home to another to protect them, and the new facility also fails to provide decent care.
Here are some factors to consider when choosing a place for your loved ones to stay.
Ownership and Management
Investigate who owns and manages the facility to understand how they allocate resources and maintain care standards. Also, look at the management’s track record, especially past violations or lawsuits.
Staffing Levels and Qualifications
The CMS website outlines each nursing home’s staffing levels, showing the daily average time nurses and aides spend with each resident. Pay attention to the staff turnover rate—the lower, the better. Also, ask about caregiver qualifications and screening procedures for staff and residents in the nursing home.
Reviews and Ratings
When researching nursing facilities, check their scores from federal regulators such as CMS and the ratings and reviews from residents and their families. There will always be some negative reviews, but an overwhelming number is a huge red flag.
Legal Consultation for Nursing Home Residents
Consult an attorney if you have concerns or suspicions about a for-profit facility’s practices. An experienced lawyer will help you protect your loved ones and other nursing home residents.
Secure Expert Legal Representation!
Speaking up about abuse or neglect against a corporation can be exhausting, especially when families need to focus on healing. Contact Nursing Home Law Center for a free consultation if you have any concerns about a for-profit provider.
Call us at (800) 926-7565 or complete our contact form.