REVIEW REFERENCES
CORPORATE NURSING HOME CHAINS
PAGE I (1996-99)

There are a large number of lengthy reviews describing what has been happening in the "Nursing Home Industry"-- its enormous financial success, its fraud, its meteoric plunge into bankruptcy and most important of all the neglect and misuse of the frail aged in order to fuel corporate profits. I have several thousand and these references are representative. The articles listed on these two page are lengthy and laden with examples describing the financial misjudgement, the fraud, and the poor care given to individuals or by individual facilities.

I have selected broad reviews for this page and have taken extracts which illustrate the broad thrust of the dramatic events and the arguments used. I have not selected extracts describing individual corporations. Separate pages on this site give a description of the major corporate chains and references to individual chains can be found there.

Because of the volume of the material I have divided it into two web pages.

This page covers the years 1996 to 1999.
Page II continues the story and covers the years 2000 and 2001.
Click Here for PAGE II.

This page is designed to give depth to the site, the reviews, and the interpretations. It can be skimmed by those wishing to confirm or challenge the views I have expressed - or learn more. It is chronological rather than subject based and therefore illustrates an unfolding saga. For the serious scholar it provides a selection of references and an indication of the contents. He or she can then decide which articles to access elsewhere.

It is easy to get too involved in the actual conflicts, the political processes, the business decisions and the solutions proposed in the USA. We can start thinking like an American! By doing so we may not see the wood for the trees.

We are studying one of the oldest and most tested examples of corporate health and aged care in the world. It has had years to sort itself out? What lessons can we learn? Do we want an aged care market in Australia.

Please stop and think about the consequences of this market system for the grandmothers and grandfathers of the USA - the people who fought two world wars for freedom and democracy. Vast numbers of elderly have developed unneccessary complications, suffered pain, lacked mental stimulation, and died prematurely while their life was still worth living. The market has actively pursued practices which greatly increased the misery of growing old and dying.

I suggest that you stand back and ask yourself whether this is the sort of system which we should be promoting to care for our elderly in Australia? Is this a system which can be corrected by regulation or by tweeking the economic strings which make the corporate puppets move? Is the thinking and fundamental principles of the market (competition for money} primarily responsible for what has happened?

Is it possible to effectively regulate and control a system when the pressures in the system drive it to circumvent every effort at control? Is the USA simply patching a rusting bucket when it should be having a radical rethink? I suggest that it is.

Is it socially acceptable to use the frailty of the elderly as a source of profit, or should their care be a community service in which we involve ourselves as a community? If resources are limited is it legitimate to ration care for the profit of shareholders and the bloated salaries of executives? Would Australian's countenance the government's aged care policy if it was put to them in these terms.

Is the sort of system described in these articles the sort of sytem we want in Australia? Our government has made every effort to turn our aged care system into an aged care market. Are we going to allow this?

The first two articles describe corporate and marketplace thinking in the early 1990's. They set the stage for what happened later. This is followed by an article describing the response of a large not for profit corporation which is bending before the forces of the marketplace. Not for profits were once the dominant providers of aged care. They set the ethos of the system, an ethos which the market has replaced.

There is a 1998 article analysing the market in detail, This was shortly after government had changed Medicaid funding and the consequences of the changes were not yet apparent. This is followed by a series of 1998 articles from the Tampa Tribune describing the impact on care of the publicly traded corporations and marketplace competition. Remember that the care descibed was at a time when the chains were making vast sums of money. Consider this when you read their subsequent explanations.

The articles then follow in chronological order. The unfolding saga is revealed in all its macabre detail.

Further information and further extracts are attached to the pages dealing with individual corporations. They fill out the details and provide large numbers of examples.

COMMENT:- The next article describes patterns of thinking in the corporate marketplace. It is an interview with Andrew Turner, founder and chairman of Sun Healthcare. It gives such a profound insight into corporate thinking and marketplace practices that I have put the complete article on a separate web page. This article provides a key to understanding what happened to aged care in the 1990's

Andy Turner wants the government out of health care, Period,
New -Mexico Business Journal. April. 1996 April. 1996 Vol 20; No 4: pg 10
Albuquerque: NM US: Mountain

CLICK HERE to read this article. (HINT:- open in separate window)

COMMENT:- The next article is a review of the history of the two companies Sun Healthcare and Horizon. It gives a graphic insight into the thinking of the marketplace at the time. Much of this thinking persists despite subsequent events. If we understand the enthusiasm and the frenzy with which the market pursued profit from the frail aged, we can begin to understand what happened subsequently. This article is so revealing that I have reproduced it in full and given it a separate page.

Watch them grow, And grow.
New 'Mexico Business Journal, April. 1996 April, 1996 Vol 20; No 4; pg 15
Arlene Odenwald - - - - - Albuquerque; NM

CLICK HERE to read this article. (HINT:- open in separate window)

COMMENT:- Humanitarian not for profit, community, and Mom and Pop nursing homes were the backbone of aged care in the USA until the government turned aged care into a competitive marketplace with Medicaid and Medicare (about 1965) funding. It was this money which attracted the entrepreneurs. Groups providing nursing home care primarily for profit have steadily increased their hold on aged care, expanding very rapidly in the last 20 years. They now set the tone and the prevailing practices in the sector.

The next article describes the aged care system and also how a large not for profit group is adopting a market based approach to care. Note the difference in its approach and that its business policies are still tempered and restrained by its primary mission of care.

As is well illustrated in this case not for profit labour relations, acquisition activities and standards of care have remained more benign. As a consequence it has bent to the pressures of the market but ethics and care have remained important. In general services by not for profits have bent before market forces but the adverse consequences have been more restrained than in for profit facilities.

Understaffing, poor care and financial excesses have been less severe. Not for profits have not got themselves into debt. The large market listed corporations crumbled when Medicare funding changed. In contrast most not for profits have not been burdened by debt, community anger and a disenchanted work force. They survived.

GOOD WORKS, GOOD BUSINESS: NOT-FOR-PROFIT NURSING HOME GIANT PREPARES FOR HARD TIMES
Modern Healthcare Nov. 10, 1997 Page 42 News
Charlotte Snow

The nation's largest chain of not-for-profit nursing homes says the old cliche "no margin, no mission" best describes its approach to the business of good works.

If that's true, the Good Samaritan Society is ready for one heck of a mission.

In an industry dominated by proprietary companies, the society stands out as a not-for-profit with more financial savvy than many of its for-profit competitors.

"We've found that you need to be as nimble as you can in the finance area no matter what your mission," said Charles Balcer, interim president and chief executive officer of the Sioux Falls, S.D.-based society.

The society has recorded profit margins averaging 4.7% over the past decade. Its total current debt is $309.7 million, and its estimated net worth is $404.3 million.

Even as business pressures increased, it managed to sock away $29 million on revenues of $629 million for a 5% profit margin in 1996. By comparison, Fort Smith, Ark.-based Beverly Enterprises, the nation's largest for-profit nursing home operator, posted a 2% profit margin in 1996.
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Like most nursing home operators, the society is particularly vulnerable to reductions in Medicare and Medicaid reimbursement, which represent more than two-thirds of all payments to long-term-care companies.

State Medicaid programs accounted for 46.8% of the society's revenues in 1996. Some 33.5% of its revenue dollars came from private-pay sources; 8.7% from Medicare payments; 4.6% from ancillary services; 2.1% from interest income; 0.5% from unrestricted contributions; and 3.8% from other sources.

For now, analysts say the society's size, wide geographic spread and service diversity are helping it weather cutbacks in state and federal reimbursement programs.
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The society was founded Sept. 29, 1922, in Arthur, N.D., by August Hoeger, a Lutheran minister. The society since has grown from one six-room home for the disabled to a national company operating 238 facilities in 26 states. Of these, 214 provide skilled-nursing care, 24 offer assisted-living apartments and 74 offer independent-living apartments. The bulk of the society's facilities are located in rural areas in Iowa, Kansas, Minnesota, Nebraska, North Dakota and South Dakota.
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According to the 1997 MODERN HEALTHCARE Multi-unit Providers Survey, the society is the nation's eighth-largest nursing home chain based on its total number of U.S. beds. It's almost 10 times the size of its nearest not-for-profit competitor,- - - - - .

For the most part, the society has avoided large, high-profile acquisitions and built its holdings by acquiring stand-alone nursing homes or adding complementary services to existing operations.
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"Every decision we make we ask, `How does this fit into our mission of taking care of the frail elderly?' " Balcer said. "We are a unique, mission-oriented society. We don't want to go into areas that are already being served and where the community doesn't want us."

The society's nonaggressive acquisition approach has helped it maintain a rather low profile. Its employees are not unionized, so it has avoided the orchestrated worker uprisings that have plagued other industry leaders, such as Beverly, for years.

The society's reputation for patient care has varied from facility to facility, as is the case with most large long-term-care chains.
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"If they had had any health or safety violations, then we would have taken action against them and that's not their history," said Joann Erickson, a supervisor of the state's healthcare facilities surveying team.

Fred Gladden, chief of the health resources section of the North Dakota Health Department, said the society traditionally has been viewed as a national company whose 13 facilities in the state have strong ties to the communities they serve. But, he says, that perception soon may change.

"They are making the transition from a mom-and-pop operator to a very sophisticated big business," Gladden said. "I think they are recognizing their position. They are emphasizing more direction from the corporate office and the standardization of admission and patient-care policies."
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Faced with increasing pressure to control costs, the new leader likely will have to make some tough calls. Balcer said the not-for-profit is questioning how big it wants to get. In some cases, the benefits of expansion no longer appear to outweigh the costs of additional staffing, he said.

Although the society has embarked on some new construction, including an $11 million research and information center at its headquarters, it is budgeting conservatively for the next year in light of reimbursement changes, Balcer said.

COMMENT:- Market theory decreed that "bigger was better". There were economies of size and financial advantages in market dominance. There were profits in owning all of the services provided and in having an integrated system. This ensured referrals within the chain and citizens could be passed from one service to another to maximise profits.

A large number of extracts of the following copyright article have been included because it so extensively reviews the marketplace and the thinking which determined the way in which care was and still is provided to a large sector of the US population.

Stop and think for a moment. What they are talking about is the care of the frail and vulnerable elderly - people who can no longer look after themselves and who are no longer capable of controlling their own lives. It is clear that the market is totally blind to everything except its own dynamic structure and its own priorities. What chance do these vulnerable citizens have?

How can the care and needs of individual citizens be met by an impersonal giant in a distant board room dictating policy based on the marketplace dynamics described below? This is June 1998. Time will show that "bigger was better" should have been "the bigger the more vulnerable" and "the bigger the worse for residents".

Banking: financing trends in an acquisitive health care market - focus on long-term care.
Journal of Health Care Finance June 22, 1998
Gordon, Lawrence J.; Bressler, Andrew

Introduction

The merger and acquisition (M&A) frenzy sweeping the health care industry has been particularly intense in the long-term care sector. As a result, the financial community - both lenders and investors - now views this sector differently and the approach to long-term care financing has changed. based on our experience, we focus on six factors driving consolidation in the sector and - through the use of four transactions as a platform - discuss the key credit issues and risks faced by long-term care companies today.

Industry background

Long-term care refers to a broad range of medical, social, personal care, and supportive services. - - - - - The incidence of these chronic conditions increases with age; elderly individuals represent the majority of users of long-term care services.

Long-term care spending (nursing home expenditures plus home care expenditures) represents approximately 11 percent of total national health expenditures. In 1996 this amounted to approximately $ 120 billion - - - with nursing homes accounting for $ 84 billion of the total. It is believed that the number of elderly persons requiring long-term care services will grow from approximately 7 million (1.7 million reside in nursing homes) to over 9 million by 2005.(1) By 2020, this figure is likely to increase to between 12 and 13 million.(2)
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Dramatic change

Consolidation and integration have driven the dramatic change in the long-term care industry in the 1990s. Table 1 shows the top 10 chains at year end 1997 (by 1996 bed count). Rehabilitation hospitals and facilities, skilled nursing homes, assisted living facilities, intermediate care facilities, home health services, and other specialty care services have all grown significantly in size and number in the last 10 years. - - - - - These services are expected to grow as the demographics shift toward the aging population continues.

The role of government

Medicaid and Medicare account for 52 percent and 12 percent, respectively, of all nursing home spending. Medicare now represents 12 percent of the total federal budget, - - - - and this percentage is expected to grow to 18 percent by the year 2007.(3) Total Medicaid spending is expected to grow by 7.5 percent annually from $ 159 billion in 1996 to $ 350 billion in the year 2007. Already Medicaid consumes almost 20 percent of total state budgets, and this percentage is growing.

With such a high percent of long-term care revenue funded from government sources, it is important to note that the margins earned from providing government-financed long-term care services are well below the margins obtained from private pay and managed care business. In fact, Medicaid margins average only 2-4 percent, compared with 10 percent for Medicare and up to 30 percent for managed care contracts and private pay.

Recent long-term care M&A activity

M&A activity in the long-term care sector has affected many companies in the industry. In addition to "horizontal" mergers, many long-term care companies seek to develop full post-acute care networks (exemplified by Integrated Health Services' movement into the home health service segment). However, as shown in Table 3, most of the transactions are the result of horizontal combinations. According to Irving Levin and Associates, there were 121 M&A transactions among long-term care companies in 1996, almost double the level in 1995. Indeed, the acquisition boom accelerated toward the end of 1996 and all through 1997 as long-term care stock prices were depressed due to a combination of concerns about Medicare and Medicaid reforms and an overall slump in health care stocks in mid- to late 1996.
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Drivers of Long-Term Care Consolidation

Legislative reforms

Following several years of starts and stops, Medicare reforms are finally a reality - -

Effect of PPS

Larger, low-cost nursing home chains should prosper under PPS. Under PPS, nursing homes will be reimbursed on a flat fee per day for Medicare patients. High cost nursing homes and facilities that provided excess ancillary services to Medicare patients will likely record losses. Conversely, larger, more efficient nursing home chains that effectively manage costs below the average Medicare PPS per diem rate could see a meaningful improvement in profitability.
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As a new era of prospective payment commences, some smaller, less-efficient companies may decide to either sell their assets or - - - discontinue service to Medicare patients, providing growth opportunities for larger participants in this sector.

Introduction of financial buyers as a source of equity capital

Investment by financial buyers in the consolidating long-term care industry represents a needed source of additional equity to complete larger transactions. Financial buyers likely will continue to play an important role in the consolidation of various fragmented health care industry sectors, including long-term care.

Strong reimbursement environment

Most states enjoy strong economies with slow growth in welfare and Medicaid enrollment. This environment, coupled with many state budget surpluses, has led to a healthy reimbursement climate for most nursing homes.

Increasing role of managed care in long-term care services

As managed care penetration continues to grow (especially among Medicare recipients), long-term care companies are beginning to develop contracting relationships with health maintenance organizations, point of service plans, and preferred provider organizations. In order to contract effectively with managed care companies, successful long-term care providers will develop greater regional scale and market share as well as additional "one-stop-shop" services. All of these managed care issues are likely to generate additional acquisition activity among long-term care providers.

Long-term care companies and post-acute care services

Long-term care companies are expected to continue to develop and acquire a continuum of post-acute care services. These services are effected through the acquisition of home health care, assisted living, rehabilitation, and therapy services. In particular, Integrated Health Services has been a leader in this strategy,- - -

Select Transactions

Four of the larger transactions completed during 1997 in the long-term care sector provide a good road map for evaluating key credit issues in this changing health care market.

(The following groups used as examples here are examined on their own web pages)

Genesis Health Ventures' acquisition of Multicare for $ 1.4 billion
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Extendicare's acquisition of Arbor Health Care
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Sun Healthcare's acquisition of Regency Health for $ 589 million
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GranCare's acquisition (supported by Apollo Advisors) of LCA
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The increased M&A activity in the health care sector during 1997 profoundly affected health care-related lending, particularly in long-term care. The considerable increase in total leverage necessitated the extension of final maturity dates to enable companies to amortize significant amounts of principal during the later years.

As senior debt multiples associated with these leveraged loans continued to rise, the financial buyers and lead lenders more frequently structured transactions with higher levels of "back-end" amortizing, institutional debt tranches. The "B" and "C" term loan tranches are senior obligations that bear interest rate premiums to traditional revolving credit and "A" term loans, and carry longer final maturities.

These B and C tranches became commonplace in long-term care transactions in the second half of 1997. The robust growth of these various sources of institutional funding (for example mutual funds and collateralized loan obligation vehicles) has represented an important component of the successful structuring of these and other leveraged financings.
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Synthetic leases

Another financial product appearing more frequently in long-term care credit facilities is a synthetic lease. A synthetic lease allows a company to purchase or build a facility (for example, a nursing home) to meet its needs, lease it from a third party trust for a finite period of time, and have the right (but not the obligation) to purchase the facility later. The lease is secured by the underlying property and is usually guaranteed by the borrower along with other collateral. The lease is classified as "off-balance sheet financing" and provides the company with certain tax advantages - in particular, public companies can classify the financing as a lease for generally accepted accounting principles reporting purposes and as a loan for tax purposes - by increasing book income and lowering taxable income.

As stated earlier, strategic co-investments involving both financial and strategic buyers are increasingly commonplace.
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Credit Analysis

Corporate lenders structure covenant packages for each transaction compatible with the financial and operational practices of the individual companies.
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With regard to senior leverage, Sun was the most levered transaction at the time of closing at 4.4:1.0, while Extendicare was the least levered at 3.0:1.0. However, Sun leases most of its facilities; in contrast, Extendicare owns the majority of its facilities. In addition, different financing structures play an integral part in these varying strategies - - - -
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The introduction of straight and synthetic leases allows long-term care companies with different financial strategies to use each (and frequently both types of leases) to achieve their operational goals. Leverage ratios, albeit an important component of the credit analysis, should be viewed within the context of a company's operating and financial strategy.

Transaction Risks

Although statistics and ratios provide a barometer of a company's current financial position, they are not a full measure of credit worthiness.
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Reimbursement

Reimbursement risk can affect entire business lines of long-term care companies, such as the skilled nursing segment's shift from a cost-based system to a PPS.
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Payer mix

Payment concentration risk can expose the company to influences from state and federal legislation or rising costs in a capitated environment. While several long-term care companies may have comparable proportions of private pay, Medicaid, and Medicare payer sources, they may not necessarily share the same risk profile.
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Product/service mix

The long-term care sector has been marked by a trend among companies to diversify revenue sources and to seek higher margins by offering more services on the continuum of care as well as other ancillary services. Thus, a company's fundamental strategy and its service mix should be evaluated. Strategically, some long-term care companies, such as Sun, target an acute level of patient care, which yields higher per diem rates at the expense of occupancy. Others, such as Extendicare, manage their businesses based upon occupancy by targeting a lower acuity level with a longer-term nursing profile, enabling the company to integrate more ancillary services.
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To reduce reliance on low margin Medicaid business, long-term care companies are targeting Medicare and the even more profitable private pay and managed care business. The high managed care margins reflect the large cost savings realized by payers that utilize sub-acute care services in long-term care facilities, compared with significantly higher rates in an acute care hospital setting. In addition, as managed care companies increase control over larger volumes of patients, their bargaining power increases when contracting for services, enabling them to focus on lower-cost alternatives. To counter the consolidated purchasing power of the managed care organizations, an increased need exists for larger, more integrated networks that cover greater territorial area.

Expanding the breadth and depth of ancillary services provided by a long-term care company clearly presents greater profit opportunities; however, greater exposure to integration and regulatory risks (such as salary equivalency) must also be managed.
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Compliance issues

Recently there has been a great deal of public discussion of the fraud and abuse investigations of health care companies conducted by the Office of the Inspector General of the Department of Health and Human Services, with significant fines and settlements handed to companies found guilty of fraud and abuse. The potential risk to a company's credit quality has made it imperative that every company in the health care industry receiving reimbursements from government programs have an effective compliance program in place.
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Integration

As long-term care companies undertake increasingly large acquisitions, more significant execution and integration risks must now be considered. Among the structural and corporate issues to be addressed are the transition of upper level management and the potential need for downsizing, the merging of different corporate cultures, and potentially different billing procedures and reporting processes.
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The internal and external influences on the long-term care sector have caused rapid change during the past two years, and likely will continue for several years. A thorough understanding of a client's strengths and vulnerabilities has become increasingly important. The stakes have never been higher.

Appendix

NationsBank's Credentials in the Health Care Sector.

NationsBank Corporation, the third-largest U.S. bank with $ 290 billion of assets, is a leader in health care finance. The bank has a dedicated Healthcare Finance Group staffed by a 23-person team with over $ 10 billion in commitments bankwide to the health care industry, of which 15 percent is committed to the long-term care sector. NationsBank has been the leading financial institution in terms of agenting syndicated bank credits for the health care industry for the past three years(1) with $ 5.7 billion, $ 9.1 billion, and $ 12.3 billion in 1995, 1996, and 1997, respectively. It is one of the only banks to have a dedicated industry research analyst supporting the client management team.

COMMENT:- In November the Tampa Tribune published a series of articles under the tittle of "Money or mercy". These were based on their own research. These are an excellent exposure of what was happening in nursing homes in Florida. The full articles can probably still be accessed on the www.

We should not doubt that the corporate executives believe the image which they market to potential nursing home residents and their families. This is how the market saw the industry. They became angry when it was challenged. These reports relate to what happened before the 1997 changes to Medicare and changes in the labour market. Chains subsequently blamed both for poor care in their homes. Corporations never acknowledge this earlier poor care

Money or mercy?
The Tampa Tribune November 15, 1998

In the glossy pages of corporate literature from Florida's largest for-profit nursing home chains there is a repeated image: a frail person gazing with trust and gratitude at a health care worker holding their hand.

The brochures promise compassionate care and healthy profits for the people who invest in their companies. But the reality of life in some of those nursing homes is another thing - quality care and big profits do not always go hand in hand.

A six-month Tampa Tribune investigation has found that residents of for-profit homes had higher than average rates of reported neglect and abuse. Homes owned by four large chains - Beverly Enterprises Inc., Integrated Health Services Inc., Vencor Inc. and Mariner Health Group Inc. - were more likely to fall below state standards than other homes.

Meanwhile, the system for protecting nursing home residents is so heavily weighted in favor of the nursing home industry that bad homes are given repeated chances to stay in business. Shortcomings at the state agency that regulates nursing homes have further exacerbated the situation, records show.

COMMENT:- The next two articles reveal the consequences of providing care in the manner described in the previous article. I have deleted large sections but the extracts show what is happening. They give a much more realistic view. It is clear that there are two aged care worlds and only one of them is a real world. This is 1998. The care reported on was largely provided in 1997. This was a time when corporate profits were booming and the new Medicare funding had not yet impacted on profits.

Profits can come at high costs
The Tampa Tribune November 15, 1998
LINDSAY PETERSON and DOUG STANLEY

Corporate chains increasingly run the nursing home industry, and research shows they have a large share of problems in Florida.

Mary Johann died alone.

She lay on a plastic sheet that covered her bed at a nursing home, her neck pinned between the mattress and bed rail. The same thing had happened 10 days earlier, but a worker had found her before she strangled.
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More than 10 years ago, Congress heralded its passage of new laws to ensure humane treatment of people in nursing homes. Another institution, however, has quietly imposed its own standards:

Wall Street.

The nursing home industry, once a collection of individual operations, is dominated increasingly by companies that thrive only when they take care of shareholders. Their stocks have soared in the 1990s as Americans have poured money into the market.

The six largest nursing home companies in Florida are traded on Wall Street. They control the lives of roughly 20,000 people, about one-third of the state's nursing home population.

More than three-fourths of the people in Florida nursing homes can't button a blouse or put on a pair of pants alone. Half need help to eat. Many are in their last days.

Caring for them requires attention and tenderness. And many nursing homes are filled with people who chose the hard work because they love and revere older people.

But many of their bosses have other priorities, such as satisfying investors who expect steadily rising profits.

State and federal records show business profits can come at a high human cost.

About one-quarter of Florida's nursing homes fell below state standards during annual inspections between January 1997 and March 1998. Among four of the state's six major chains - Beverly Enterprises Inc., Integrated Health Services Inc., Vencor Inc. and Mariner Health Group Inc. - the substandard rate was 32 percent to 40 percent.

Federal data show these chains had higher-than-average rates of reported neglect and abuse, as did many smaller companies with publicly traded stock.

Only one had substantially lower rates: Health Care & Retirement Corp. , which recently merged with Manor Care.

There also are problems among nursing homes not tied to shareholders. But government data show the care overall is better at those operations.

"All you have to do is look at the nonprofits to see what's happening," said Jean Venturino, a visiting nurse who sees patients in several area nursing homes.

"Maria Manor, Menorah Manor, in St. Pete, they're nonprofit. They have an ethic of caring," Venturino said.
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"Investors look at the short term. Investors look at returns and dividends. They're not looking at quality of care," Bell said.
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When the company (Vencor) took over PersonaCare of St. Petersburg in mid-1997, nurse Rhonda Poinelli saw the number of nurses and nurses aides drop.

Working in the evenings, Poinelli said, she found supply cabinets locked, and she searched from floor to floor for bandages and catheter bags. Often she couldn't find them, which meant patients did without.

Frequently alone with as many as 40 people, Poinelli would find some wet or hungry, pleading for help, she said. But she couldn't detour to help them or her patients wouldn't get their medications on time.

The nursing director's job had become a revolving door, she added. "It seems like I had a new boss every day. ... I started having nightmares."
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Some of these problems - shrinking government payments, mostly - have depressed nursing home stocks and piqued the concerns of the analysts. They want signs the companies will adjust to the new payment system to keep profits growing.

Those expectations can be powerful.

In 1995, Beverly Enterprises came under scrutiny after some high-priced purchases.

"We have been concerned for some time about the prices (the company) paid for the recent pharmacy acquisitions and the company's ability to cut costs quickly enough to achieve a reasonable and timely return on these investments," wrote two stock analysts in a 1995 news release.

Ten months later, Beverly boasted to business reporters it would bring in its highest nursing home profits in years, crediting an increase in high-cost treatments and "tight internal cost controls."

From 1995 to 1996, the number of Beverly homes cited for harming or endangering patients in Florida doubled from 13 to 27.

In early June 1996, the one where Mary Johann died, Wellington Specialty Care, landed on the state's substandard list. State inspectors had found a string of problems in March; the home was dirty and understaffed.
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State inspectors descended on the home Feb. 5, then again Feb. 13. They found six residents at risk of getting caught in their bed rails. Others suffered from dehydration and advancing bed sores. Again, the inspectors found too few workers. The Wellington administrator was replaced in June 1997. But when inspectors returned in December, they found the home still understaffed.

Under almost daily scrutiny from regulators in 1998, the home passed inspection in May. But by September, it had problems again.

Wellington is one of five Beverly homes on a list released by the state in September of 18 Florida homes with repeated, serious problems.
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Health care regulators aren't the only ones challenging Beverly. In July, the U.S. Justice and Health and Human Services departments said they were investigating the company for possibly illegal billing of Medicare from 1990 to 1997.
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But O'Brien said the problem is not only that people die unnecessarily; it's the lack of warmth when a home is understaffed or has rapid employee turnover.

After a corporation took over one of the homes where O'Brien worked recently, the new administrator immediately cut staff.

One of the first moves was to reduce kitchen workers' weekly hours from 40 to 36, O'Brien said. Many quit. Some had worked there for years, knew the residents and often made special foods to encourage them to eat.

A stable crew of aides and nurses is vital, O'Brien said. They know who likes to sleep until 9 a.m., who prefers a bath in the morning and tea in the evening.

It takes strong, caring managers to build a strong, loyal staff, she said. But many corporations treat administrators like interchangeable parts. In many nursing homes around Tampa Bay, management stays for less than two years.

"I'd like to see these companies slow down on the constant changing of administrators and DON's (directors of nursing). It's really hard on the residents and the staff," said Ron Milliner, administrator of Tampa's Lakeshore Villas, a family-run home that has had superior ratings.

But it seems the only constant in today's nursing home environment is change. There have been dozens of corporate mergers and takeovers in the last two years.
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Analysts predict even more consolidations as companies struggle with the cuts in Medicare. That's what happened 15 years ago when Medicare cut its payments to hospitals.

"There was an upheaval. That's when our big layoffs began," said Cheryl Harrell, a social worker formerly with University Community Hospital who helped place patients in nursing homes.
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A Tampa Tribune analysis of the latest inspections, up to April 1998, showed five of the six largest nursing home companies in Florida had a higher than average number of deficiencies when compared with all nursing homes in the state.
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Homes owned by five of the six largest companies, which are all publicly traded, had a higher than average number of deficiencies that caused "actual harm" to residents.

COMMENT:- This is a long article which documents the failure of both the state and federal regulatory systems. It describes a large number of instances. Information from other states indicates that the regulatory system has failed citizens across the USA.

Regulation often fails residents
The Tampa Tribune November 15, 1998
VICKIE CHACHERE; ; of The Tampa Tribune;

Florida's nursing home regulation system is mired in weakness, much of which appears self-inflicted. The agency in charge pledges reform.

Florida's Agency for Health Care Administration, which bills itself as the toughest nursing home regulator in the country, has failed repeatedly to protect residents from dangerous conditions - including some that have turned deadly.

Even when a long pattern of neglect exists, the system to protect nursing home residents protects the industry instead, a review of scores of agency records has found. Often, nothing happens until there's a crisis.

Often, someone has to die.

Then, in a flurry of tough talk and news releases, regulators impose punishments that often are watered down in subsequent months as a home's owner files appeals or brings the business to minimum standards.

As a result, Florida's 71,000 nursing home residents lack the safety net they have been promised against abuse or neglect.

COMMENT:- There are two important business activities which the chains devote much time and expend large sums on. Controlling politicians and the laws they pass can have a vast impact on profits. Getting regulators to compromise their mission by identifying with the legitimacy of the business priorities of the marketplace. The regulatory response to Vencor's conduct illustrates this well -- see later

Some fear government remains too "cozy' with industry;
The Tampa Tribune November 15, 1998
VICKIE CHACHERE

Politics and connections play roles in the nursing home regulation system.

State Rep. Carl Littlefield dubs it the "unholy alliance" - the relationship between Florida's largest nursing home trade association and the agency that regulates the industry.

Littlefield, a Dade City Republican, recalls sensing something amiss when he asked regulators a question and got the answer an hour later in a call from nursing home executives.

"I just know there is so much interplay between the agency and the association that I'm not sure it's healthy," said Littlefield, chairman of the House Government Services Council, which oversees nursing home regulation.
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In Tallahassee, the power of wealthy nursing home companies to influence government is no secret. Some legislators say the industry controls regulators, while some of the bureaucrats say it controls the politicians.

Each side has a point.

Top employees have jumped between the regulating Agency for Health Care Administration and the industry's Florida Health Care Association. Both acknowledge a close working relationship.

Some of the largest nursing home chains, with deep pockets and powerful lobbyists, also claim legislative attention.

AHCA officials have complained that efforts to close troubled nursing homes can be met with end-runs by the businesses to legislators, warning of lost jobs in their districts.
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But the industry's influence doesn't end there. Its lobbyists have the collective power to open almost any door in Tallahassee.

J.M. "Mac" Stipanovich, who managed Gov.-elect Jeb Bush's 1994 campaign and was chief of staff to Gov. Bob Martinez, represents the Florida Health Care Association.

Jim Krog, former chief of staff for Gov. Lawton Chiles, lobbies for Extendicare.

Prominent lobbyist and prolific campaign contributor Jack Cory represents Manor Care, which recently merged with Health Care & Retirement Corp.

Cathie Herndon, former House budget director, lobbies for Beverly Enterprises Inc.

Former state Sen. Curt Kiser has been retained by Genesis Eldercare Network, and former state Sen. Ken Plante represents Vencor Inc. Democratic fundraiser Tom Panza is a lobbyist for Integrated Health Services Inc.

COMMENT:- Once again the points are illustrated by a large number of examples. Aged care is simply another example of regulatory failure. What is at issue is whether regulation and penalties is the correct way to address the problems of poor care? Surely it would be better to look at why poor care is provided and address that. The reasons are obvious.

Fines don't bite businesses hard;
The Tampa Tribune November 15, 1998
VICKIE CHACHERE

Financial pain is applied rarely to problem nursing homes. Government fines often are little, reduced or unimposed.

Resident No. 6 was little more than skin and bones by the time state regulators came to Windsor Woods Convalescent Center in the early days of 1996.
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While she wasted away, however, state regulators waited 10 months to fine the business $ 700. Its corporate parent, national nursing home chain Vencor Inc., appealed and dragged the process out for another five months.

Finally, in April 1997, the $ 3.2 billion corporation relented. But it didn't pay the fine until September, when the state sent a letter threatening a civil lawsuit.

It was far from swift and sure punishment, but that's the routine at Florida's Agency for Health Care Administration, records show.

A review of scores of cases from the last three years found inspectors often identify deficiencies in nursing homes and then wait, sometimes more than a year, to reinspect and issue fines.
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Instead, AHCA surveyors in Hillsborough and Pinellas counties took an average of five months to make reinspections. And it took about 16 months from the time a problem was identified to the time nursing homes paid the fine.
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But that system, too, is fraught with lengthy delays that lead to diminishing fines, records show.

The HCFA similarly allows months for homes to clean up problems, and even slight improvements can bring sharp discounts in fines.

Since 1995, the state has recommended the federal government impose $ 5 million in civil penalties against nursing homes, but less than $ 300,000 has been collected, records show.
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Still, nursing home fines often don't cost the companies anything.

Imagine how drivers would like this system: A state trooper pulls you over for speeding down the highway. He notes your car was traveling too fast, but since you have stopped, it technically isn't speeding anymore. He tells you if he catches you speeding again, you'll get a ticket.

It wouldn't be much of a deterrent, but that's how the state goes about fining nursing homes.

With few exceptions, homes simply can promise to fix problems to satisfy the state for a while. As long as they keep the promises, they won't get fined - no matter the violation.

Businesses react to cuts in Medicare
The Tampa Tribune November 15, 1998
LINDSAY PETERSON

Nursing homes seemed like such a good bet.

It was the early 1980s, and Medicare was cutting payments to hospitals, forcing them to discharge patients sooner.

Because it was cheaper to care for patients in nursing homes, many nursing home executives jumped at the opportunity. They planned to build new facilities, take in discharged hospital patients and boost revenues with Medicare payments for special treatments and therapies.

But to create their empires, they needed investors. And the business dynamic changed.

"Investors put in $1, they expect to get $ 1.20 back," said Scott Bell, who worked for nursing home chain Beverly Enterprises Inc. before forming his own company two years ago.

Running a big business means big expenses, though. And it's not just the cost of care; there's the army of accountants, lawyers and lobbyists doing the figuring, acquiring and arguing.

One thing they argue is that nursing homes are struggling.
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But he and others say little about the money they get from residents paying privately and from Medicare, which provides 10 percent to 25 percent of most nursing home revenue.
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Under new rules, they'll get one fixed payment per resident, determined by a government standard assessing more than 100 physical and mental indicators.

Payments per resident will vary between $100 and $500 a day.

Some industry leaders say the changes will slash revenues. Others warn patient care will suffer as they fight to contain costs.

"They're going to figure a way to make a profit," Bodo said. "They're going to do it because that's what they have to do for their shareholders."

COMMENT:- During the last 20 years there has been an ongoing outcry about poor care by citizens. These have now been confirmed by the findings of a federal hearing in Washington. The US response is to regulate. Increased regulation and oversight certainly makes it more difficult for corporations to cut costs at the expense of patients but it fails to address the problem. It increases the total costs of care. The US mind will not grasp the nettle by asking why this is happening and then addressing the causes. The answer challenges fundamental beliefs in the American way of life.

GOOD NURSING HOME CARE INCLUDES GOOD REGULATION
The Palm Beach Post November 25, 1998

With more and more Floridians facing decisions about putting themselves or relatives into nursing homes, more and more nursing homes are becoming part of large chains. As the trend continues, the state will have to spend more and more time on regulation.

The nursing home industry was once a collection of individual operators. After recent mergers and acquisitions, however, 10 publicly traded companies control 20 percent of the nation's 1.8 million nursing-home beds. Florida's six largest nursing-home companies are traded on Wall Street. This creates the same kind of potential conflicts between the state's 676 homes and for their 71,000 residents as exist between managed-care companies and their patients. How will the need for profit affect care?
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How does ownership affect care? About 25 percent of Florida's homes fell below state standards during annual inspections between January 1997 and March 1998, the Tampa Tribune reported last week. Among four major chains - Beverly, Integrated, Vencor and Mariner Health Group Inc. - the failure rate was higher.

When Medicare began paying homes a fixed amount rather than for each service, a Vencor home in Tampa tried to cut its losses by dumping patients on Medicaid, the plan for poor people. Medicaid pays less than $ 100 a day, lower than average daily costs. Families sued, the agency imposed fines, and the home backtracked. But it's not the only company accused of cost-cutting measures that threaten patient care.

The Tribune series raised other issues: Do the Agency for Health Care Administration and the industry lobbying group, the Florida Health Care Association, have too close a relationship?
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Nursing homes, like hospitals, are complex, 24-hour-a-day operations that aren't easy to run or regulate. When they fail to run well, however, Floridians will have to hope the state has some tough regulators.

COMMENT:- Another major factor putting pressure on market listed companies is the way in which citizens are using the courts to assert their right to damages and punitive penalties when their relatives are misused.

Getting Sued by Seniors: Verdicts growing in suits citing poor nursing home care
ABA Journal December, 1998

Joyce Lang didn't know a lot about nursing homes when she had to choose one for her 83-year-old mother in 1994. She picked Cedars Health Care Center in Lakewood, Colo., hoping its new Alzheimer's ward would provide the right care.

Lang got a quick education, and she didn't enjoy the lessons. She claims the home was thinly staffed and ill-maintained. Puddles of urine stayed on the floor for days. Her mother fell frequently, didn't eat regular meals and was not taken to the bathroom regularly.
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Lang's mother -- Lydia Dill, now 88 -- is one of four plaintiffs who hope to represent 600 or more past and present Cedars residents in the first class action lawsuit against a nursing home. Salas v. GranCare Inc., No. 96-CV-4449.
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Dill's innovative lawsuit is just one skirmish in an escalating battle between seniors and nursing homes. Experts say an aging American population is spurring more suits against the homes and, recently, bigger verdicts.

In February, a Florida jury awarded $ 6.3 million to the family of a man who wandered from the grounds of a nursing home and drowned in a pond. In March, a jury awarded a California woman $ 95 million -- later reduced to $ 3 million -- for a fall in which she broke her hip and shoulder.
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Baby boomers moving their parents into homes are either more assertive or more litigious than previous generations. "They come out of the Ralph Nader era, the consumer-led causes of the '60s and '70s," Bennett says. "They're saying, 'We're not going to accept bad care.'"
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Not so in 1998. Juries are putting a higher price on the pain and suffering of the elderly, says Steven Levin of Chicago, co-chair of the nursing home litigation group of the Association of Trial Lawyers of America. "As our population ages, people more easily say, 'There but for the grace of God go I.'"

When deciding whether to accept cases, plaintiffs lawyers look for trends in the way residents become sick or injured. Is there an unusually large number of falls? Or of dehydration cases? They compare a nursing home's performance with promises made in its brochures, and in contracts with Medicare and Medicaid.

Federal government lawyers have also gotten involved, filing lawsuits under the False Claims Act against nursing homes that bill the government for care that Medicaid and Medicare recipients never received. A winning suit can bring $ 10,000 per false claim, plus treble damages. And a whistleblower who tips off the government can get a piece of the recovery.
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Even so, nursing homes seem to oblige the plaintiffs bar with a steady flow of mishap and scandal.

The U.S. General Accounting Office reported in July, for example, that almost one-third of California's nursing homes had been cited for serious care problems. Because oversight is weak, many more problems may go undetected, the report said.
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Calls for Reform

The federal government has taken a strong interest in nursing homes this year.

In July, President Clinton called for regulators to crack down on nursing homes that break the law. In October, the U.S. Health Care Financing Administration unveiled a Web site (http://www.medicare.gov/NHCompare/home.asp) with information comparing homes. And the Senate Select Committee on Aging has been looking at ways to promote criminal background checks of nursing home employees.

The ABA also is looking at the issue. The Commission on Legal Problems of the Elderly recently published a book on ways to mediate nursing home conflicts. And the Young Lawyers Division plans to debate proposals encouraging states to adopt patients' bills of rights, to guarantee pain-and-suffering claims for nursing home residents, and to put cases involving elderly litigants on a fast track.

COMMENT:- The next article beautifully picks out the consequence of a conflict of two worlds on those who must live in both. Nursing home administrators are forced to confront the consequences of the actions, which a dominant culture expects them to take. They experience acute dissonance when confronted by the world inside the homes. Some are unable to compromise and walk away. Those who are able to compartmentalise their concerns or explain them away (I have called them "closed minded") meet corporate expectations and are successful. They are rewarded with status and financial incentives. The system selects for the most unsuitable people.

Nursing home solutions start at the top
The Tampa Tribune December 22, 1998

This past spring, however, a different dimension of the profit question arose as we learned about the plans by a company called Vencor to evict its Medicaid residents from a home in Tampa.
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Vencor is a $ 3.2 billion company that sells public stock. At the time of the evictions, stockholders were upset because of reports that government health care spending cuts would cut company profits.

This brought up a new question about the effect of stockholder demands on nursing homes.

We took six months to study nursing homes statewide. We found that homes run by large, publicly traded companies had more problems, on average, than nonprofits and homes run by for-profit companies that didn't sell stock.

So, what was it about having stockholders that changed a company's behavior?

The quest for profits seems to be the obvious answer, but it's more complicated than that.

It's not so much that money is siphoned away from patient care. In many cases it is, but there's another factor. The daily life of a publicly traded company is so intense, as stocks rise and fall minute by minute, the questions of how to nurture workers and care for residents fall by the wayside.

This is particularly true when residents aren't seen as "customers." And for the most part, they're not customers. They're not in a position to get up and walk out if they get bad care.

Middle managers suffocate in this kind of corporate culture.
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Overall, 40 percent of the administrators in the study, which focused on Indiana and Michigan, changed jobs at least once a year. The problem was worse in homes run by corporate chains than in independently owned homes and nonprofits.

This can be devastating to a nursing home. Several studies have linked unstable management and poor care.

The administrators were driven away by a variety of things, the Andrews researchers said, but most dealt with not having the freedom to make their own decisions, the demands of their supervisors and differences between their ethics and values and those of the corporation.
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As my colleagues and I studied the nursing homes in Florida with the worst problems, we would see the parade of administrators. In some cases, they stayed less than six months.

We saw that the problems in nursing homes go way beyond money, to the core of how corporations operate.

We saw that corporations bring on many of their own troubles.

COMMENT:- This article is about Vencor but extracts are included here because it is so representative of corporate thinking. The chasm between the world of the executives who make decisions and the real world of human beings in the nursing homes is well illustrated by Vencor's conduct.

Bed News: The Business Potential Of Nursing Homes Is Elusive, Vencor Finds: Bid for High-Paying Patients Brings Firm Headaches, And It Has to Regroup: Medicaid Is Welcome Now
The Wall Street Journal 12/24/98
By Chris Adams and Michael Moss

SAVANNAH, Ga. -- Laura Morgan's marching orders were simple. As a social worker at a nursing home owned by Vencor Inc., she was to ensure that as many beds as possible were filled with residents covered by generous private insurance or by Medicare. Patients whose high-paying benefits expired, and who thus ended up on lower-paying Medicaid, were to be moved out as soon as possible.

One of her tasks was smoothing the way with relatives. "I had to sit across from family members and lie to them, manipulate them, tell half-truths," says Ms. Morgan, who resigned in June after alerting state authorities to the practices.
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When Vencor, an operator of specialized hospitals, announced the acquisition of a big chain of nursing homes three years ago, it billed the move as a master stroke: The company would have an integrated health-care network, providing a broad range of care to America's growing population of elderly people.

Instead, Vencor over the past year has found itself grappling with management turmoil, sinking profits and investigations of its admissions policies and its care. So poorly has its high-payer admissions strategy panned out that the company now finds itself caring for fewer private and Medicare-insured residents than when it was just entering the business. Meanwhile, Medicaid now supplies 47% of its nursing-home revenue, the most ever.

A critical component of Vencor's strategy was offering high-quality care, to attract patients who could afford to go anywhere they wanted. But its record on care is slipping, too. A Wall Street Journal analysis of government inspection records shows that the number of times Vencor homes have been cited for staff shortages, medication errors or other care problems has grown in the past year.
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Vencor officials talked about their plans openly, deriding rivals' strategy of filling their beds with the plentiful Medicaid patients. In most nursing homes, patients who use up their private insurance or Medicare coverage stay put, and, if they have exhausted their assets, simply flip over to Medicaid coverage. But Vencor wanted to discharge such patients, so it could fill the beds with others who had high-paying insurance coverage.

Administrators of individual nursing homes were taught to rethink the entire admissions process with this in mind. A strategy memo passed on to Georgia homes urged administrators to plant the seed in the minds of prospective patients and their families that a stay would be short-term. "Begin concept upon admission," the memo specified, and while giving families tours of the home.

Mr. Barr, as chief operating officer, bore down on this in a memo to regional officials in the summer of 1997. "We determined months ago that we did not want to admit low-paying Medicaid only patients," he wrote. "Please let your administrators know that it's time to get on board or leave."

At Savannah Specialty Care Center, admissions director Hope St. Lawrence had to prepare a fresh patient census every morning, to be faxed to headquarters by 9:30. Then she rushed off to seek out new admittees from hospitals, clinics and elsewhere. She screened out as many as two out of three prospects. Just having insurance wasn't enough, she says. The insurance had to cover extensive therapy, and people already on Medicaid were excluded outright, says Ms. St. Lawrence, who resigned this summer.
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But a few miles away at Savannah Rehabilitation & Nursing Center, the eviction strategy went into full swing starting in April 1997, says Ms. Morgan, who was the facility's resident social worker. At weekly meetings, she says, she would be asked to explain what she was doing to move out the patients the home no longer wanted. "They would say, 'So and so has 10 more days left on Medicare, and she can't stay here. What do you plan to do?' "

When residents threatened to call a lawyer, they were allowed to remain, she says. But for the most part, she adds, they weren't aware that the state's Medicaid rules, while allowing homes to be selective about whom they admit, don't permit discharging people just because they have gone over to Medicaid coverage.

Sitting at her kitchen table on a recent evening, Ms. Morgan explains why she eventually alerted state officials to the evictions. Leafing through her records, she spots the receipt for a $100 bonus she says she received for discharging a couple she says were evicted improperly. From another pile she pulls out a note in which the couple's children thanked her for her helpfulness during the transfer. "They don't know what really happened," she says.

To make it appear the home was complying with state rules, Ms. Morgan says, she would falsely indicate on certain records that families had requested a discharge.

COMMENT:- If market solutions are not working then clearly we need more market solutions. When companies are in trouble because of acquisitions and mergers, then we need more of them. Isn't the logic clear?

Industry Buzz (Beverly and Genesis)
Forbes January 11, 1999
John Ransom, Raymond James & Associates

* Earnings uncertainties will plague the longterm-care sector as it continues to adapt to lump-sum Medicare reimbursement. Expect more mergers in this sector. Beverly Enterprises and Genesis Health Ventures are possible takeover candidates.
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"All health care sectors are fighting payor pressure, tight labor and a more adversarial government environment. The best companies have operated through these issues. There's been a tropical storm, and the beachfront condos took a hit."

COMMENT:- While the article below refers to hospitals it is clear from other reports that it also describes what is happening in nursing homes.

Cost-Containment Measures Reduce Quality of Care Reports RN(R) Magazine's Survey of Hospital Nurses
PR Newswire January 19, 1999, Tuesday

Quality of care in hospitals deteriorated last year because of cost-containment decisions, say nearly three out of four hospital-based registered nurses responding to a survey by RN magazine.

Staff cuts were the most common cost-containment measure reported. Of the nurses surveyed, 77% said that staff at their facility had been cut in the preceding 12 months to contain costs -- up from 65% in 1988, when the magazine conducted its last ethics survey. Respondents report that the cutbacks have led to such measures as mandatory overtime for nurses, closing units that aren't full and sending the nurses home and patients to other staffed units, and the increased use of ancillary and float staff.

"The large increase in nurses' patient loads is potentially very dangerous," said Marianne Dekker Mattera, editor of RN magazine. "When nurses are stretched to the limit, not only do the amenities like backrubs disappear, but medications aren't delivered on time, lab reports don't get acted on promptly, and changes in a patient's condition aren't picked up as quickly as they should be."

The second-most common cost-containment strategy reported by survey respondents is early discharge: 63% say patients are discharged from the hospital too soon, often resulting in readmission a few days later. According to a private hospital-based nurse in Ohio, "It's an ongoing struggle dealing with the decreased length of stay and increased rate of recidivism."

On the plus side, 79% of respondents say that they did not see patients' admissions delayed as a cost-containment measure, up from 73% in 1988. And, although 46% of respondents say that supplies or equipment at their hospitals are lacking, and 30% say outdated equipment isn't replaced, that's little change from a decade ago.

Fruits of nursing home reform are yet to be seen
SERIES; THE TARNISHED YEARS: WHO WILL PROTECT OUR SENIORS?; 5 & LAST
THE INDIANAPOLIS STAR January 28, 1999

Troubled by evidence of bad care and lax enforcement, state and federal officials are striving to address chronic problems in nursing homes.

Nationwide, federal officials are requiring tougher penalties for poor-performing nursing homes and more frequent inspections - changes announced by President Clinton in July.

Indiana officials announced their own reforms that same month, in response to an investigative series published in June by The Indianapolis Star and The Indianapolis News. More reform efforts, in the form of legislation, have been proposed in the General Assembly.
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Nancy-Ann DeParle, administrator of the federal Health Care Financing Administration, said an aggressive yet fair regulatory scheme should help reduce health and safety violations over time.

Tougher enforcement will provide incentives for nursing home officials to "do what is needed at the outset for quality," she said.
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Lawsuits "could have a very powerful deterrent effect and send a chilling message to the industry," DeParle said.

Nursing home officials in Indiana question the need for tougher enforcement measures.

"I think the current fine structure is sufficient to achieve whatever punishment or deterrent level you need," said Art Logsdon, president of the Indiana Health Care Association, which represents for-profit nursing homes.

A massive HCFA study, however, found a need for stricter government oversight.

The study, released last summer when the federal reforms were announced, called regulation "the primary bulwark for quality assurance" and advocated more vigorous enforcement.

States play a key role in those efforts, Wiener said.
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Consumer advocates doubt that the Indiana State Department of Health, the state's principal regulator of nursing homes, adequately fulfills those duties.

"We haven't seen any serious effort to address their basic responsibility to enforce minimum standards that will make a difference in the quality of care in this state," said Paul Severance, executive director of United Senior Action.
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Gov. Frank O'Bannon and Indiana lawmakers already are pressing for additional reforms.

The governor wants to double state fines that can be imposed on nursing homes and allow some penalties to be imposed more readily.

State legislators have proposed other changes, including enhanced staffing requirements and much steeper fines.

Support for tougher sanctions was fueled by the newspapers' June series, as well as more recent Star/News findings that conditions in area nursing homes have deteriorated.
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As the newspapers reported earlier this month, rules used by the department water down penalties stipulated in state statute.

And the department has made limited use of one of the greatest tools at its disposal: its authority to grant or revoke licenses.

While several facilities have closed in recent years after serious problems were documented by the department, the agency has not revoked a license in at least five years. It rarely denies a license application or renewal.
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Feldman acknowledged that the agency has not fulfilled its announced plans to hire more attorneys who could help the agency pursue the licenses of poor nursing homes and take other enforcement action.
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That system calls for formidable penalties, including fines up to $ 10,000 a day, denial of government payments for new nursing home admissions, or even termination from those payment programs.

But in its June series, The Star and The News reported that few central Indiana nursing homes felt the brunt of those penalties because facilities often had weeks or months to make corrections.

As a result, they had little incentive to provide consistently good care.

Recent federal reforms call for greater penalties and oversight.

In announcing the reforms last summer, federal officials released a 900-page report indicating that nursing home inspections were too predictably timed - allowing facilities to prepare for them - and probably under-reported malnutrition and other serious problems. The Star and The News also found that the timing of state inspections was fairly predictable.
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In an effort to improve the enforcement system, federal officials announced a variety of initiatives.
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The U.S. attorney in Philadelphia already has used lawsuits to force major concessions from problem nursing homes.

A suit filed in February 1996 against a subsidiary of Geriatric and Medical Companies Inc. alleged that several residents of a nursing home paid primarily by Medicaid had received improper nutrition and developed bedsores because they received inadequate care.

In a settlement the same month, the company, known as Geri-Med, agreed to pay $ 575,000 and to abide by wound care and nutrition guidelines for all 18 nursing homes it operated in Pennsylvania and New Jersey, said David Hoffman, an assistant U.S. attorney who brought the suit.
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In Indianapolis, Assistant U.S. Attorney Tim Morrison said federal officials are pursuing civil cases against troubled Indiana nursing homes. As yet, no lawsuits have been filed.

The Indiana attorney general's office, which has similar authority, also intends to pursue lawsuits against nursing homes that deliver poor care.
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Even nursing homes that face fines can file an appeal, she (National Senior Citizens Law Center) said, and the backlog of those cases is so great that facilities can avoid paying for years.

The backlog could grow as the federal government imposes tougher penalties, Edelman said.

Neil Kaufman, chief administrative officer of the Departmental Appeals Board, the federal agency that hears nursing home appeals, acknowledged that more than 600 cases await a hearing or are the subject of settlement talks that could eliminate the need for a hearing.
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Consumer advocates have praised the system used in Washington, which imposes penalties soon after problems are discovered, not after facilities have had an opportunity to fix them.

Indiana also can take prompt action under its enforcement system. But state rules limit the penalties outlined in the law.
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Days after publication of the newspapers' June 1998 series, the department also pledged to consider recommending an increase in state fines and to implement a variety of other reforms.
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While consumer advocates applaud those changes and the department's support of doubling state fines, they much prefer sweeping reform legislation proposed this year by Rep. John Day, D-Indianapolis.

Day's legislation would impose mandatory fines of up to $ 10,000 a day and a ban on admitting new residents until serious problems are corrected. Facilities also would face lump-sum fines of up to $ 20,000.

The legislation also calls for more specific staffing requirements for nurses; implementation of staffing ratios for nurse aides, and more training for those workers; quicker response by the Department of Health to consumer complaints; and a requirement that facilities post notice of violations on outer doors.

COMMENT:- Vencor illustrates corporate thinking. Vencor was more blatant, more arrogant and more open about its policies than its competitors. That it could be so open is a reflection of the way thinking like this was found to be acceptable in the aged care marketplace. Note how even the regulators accepted the legitimacy of Vencor's thinking.

PREPARED STATEMENT OF ROBYN GRANT ON BEHALF OF THE NATIONAL CITIZENS' COALITION FOR NURSING HOME REFORM BEFORE THE HOUSE COMMITTEE ON COMMERCE SUBCOMMITTEE ON HEALTH AND ENVIRONMENT
Copyright 1999 Federal Information Systems Corporation
Federal News ServiceFEBRUARY 11, 1999, THURSDAY
Hearing on H.R. 540 - The Nursing Home Resident Protection Amendments, 1999

Summary

My name is Robyn Grant and I represent the National Citizens' Coalition for Nursing Home Reform (NCCNHR). NCCNHR is a non-profit consumer organization that seeks to define and achieve quality for residents in long term care facilities. For 8 years I served as the Indiana State Long-Term care Ombudsman. During my tenure as state ombudsman, the Vencor corporation evicted flail elderly residents from Wildwood Health Care Center simply because their care was paid for by the Medicaid program. I am here to share with you the devastating effect of the corporate decision to withdraw from the Medicaid program on residents, and their families.

NCCNHR strongly supports H.R. 540 which would prohibit nursing homes that accept Medicaid reimbursement from transferring or discharging residents solely because they are Medicaid beneficiaries. The proposed legislation is urgently needed to ensure that residents on Medicaid are not arbitrarily evicted by providers who wish to accept only residents who pay privately for their care or whose care is paid for by the Medicare program - both providing higher reimbursement than Medicaid. The Nursing Home Resident Protection Amendment would ensure that Medicaid eligible nursing home residents do not have to live their lives in fear of being evicted due to their payment status and would guarantee that nursing home residents do not become disposable pawns in corporate games to maximize profits.
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Nursing homes often attract potential residents precisely because they participate in the Medicaid program. In fact, many facilities assure private pay individuals that they can remain even after they have become Medicaid eligible.
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The Devastation Experienced By Residents Evicted From Their Homes
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Beginning in January 1997 residents on Medicaid at Wildwood Healthcare, a Vencor facility in Indianapolis, Indiana, were singled out and told that they were being transferred to other nursing homes solely because they were Medicaid recipients.
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The residents I talked with said that everywhere they looked, they saw other residents crying inconsolably at the news. The people, many of whom had lived there for several years, explained to me that this facility had become their home. As we all do in our homes, they had put down roots. They had established important friendships with other residents in the facility and strong relationships with staff. They told me that the nursing home was like a family. Indeed, for some, it was their only family. Being forced to move destroyed their family.
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Complaints to the state survey agency were of no help. In fact, that agency stated that deciding not to keep residents on Medicaid was a business decision, which the facility had every right to make. It was only as a result of outspoken residents and family members, the work of United Senior Action, a citizens' advocacy organization in Indiana which is a NCCNHR member group, and attention from the media that Vencor reversed its policy and agreed to stop the Medicaid evictions.
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On a poignant note, they (past residents in Vencor home) told me they missed the gazebo that they had worked so hard to pay for in the other facility. As active members of the resident council they had themselves raised the money to build an outdoor gazebo at Wildwood. The gazebo that they had so loved and of which they were so proud served as a sad and lonely reminder of all that they had had to leave behind and could never recapture.

The effects of forced eviction of residents on Medicaid also are far- reaching and insidious. I recently spoke with a daughter whose mother is in a different Vencor nursing home in Indiana. The daughter told me that she is afraid to raise any concerns about her mother's care because her mother is on Medicaid and she is fearful that complaining in any way could lead to eviction.

Public Outrage Stopped the Spread of Corporate Insensitivity While the efforts of residents, families, and a strong citizens advocacy group, combined with media coverage, ended in a consumer victory that time round, it was certainly too late for many Wildwood residents.
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Unfortunately, being involuntarily transferred from their home is just one of numerous discriminatory practices that Medicaid eligible residents face. Often it is difficult for a resident on Medicaid to gain admission to a nursing home or to remain in a home because the facility has chosen to limit the number of Medicaid beds available. In other instances, facilities assess the finances of potential residents and will only admit them if they have enough money to pay privately for a certain period of time.

COMMENT:- As indicated in the article below corporate chains have enormous political influence. They believe that they are entitled to large profits - this is why they provide the services.

This article is the beginning of an intense lobbying battle in Florida over two issues. Citizens and regulators want laws requiring minimum staffing levels, more oversight and more penalties. Corporations oppose this increase in staffing costs and oversight bitterly. Instead they want legislation to limit the drain on their profits occasioned by the costly law suits. Citizens bitterly oppose this intrusion into their rights. This battle will ultimately spread across the USA. The article describes the corporate response to a law, which would require improved staffing levels.

The article gives some insight into the power and influence of the corporate lobby in the USA. Citizen's groups believe that this is the prime reason why regulation is so ineffective. Regulator's appointments are made by politicians who receive large donations from corporate chains. If they make themselves unpopular they may lose their jobs.

The same things happen in Australia. Members of a widely admired committee controlling the sale and price of drugs in Australia were recently replaced by a representative of the pharmaceutical industry with whom the health minister had close relations.

Crist feels heat over nursing home bill;
The Tampa Tribune February 1, 1999

TAMPA - Rep. Victor Crist says he's been told he's committing political suicide with his tough nursing home bill.

State lawmakers don't begin their annual session for a month, but a fight already has begun over legislation to reform Florida's nursing homes.

Industry representatives have blasted the most far-reaching of the proposals, written by state Rep. Victor Crist, as a hostile effort to punish a business struggling with overzealous regulators and greedy lawyers.

"It is so, so unacceptable," said Ed Towey, for the Florida Health Care Association.

The proposal Crist outlined in December deals with the most contentious of the nursing home issues: staffing and inspections. Towey said the bill would cost the industry at least $ 457 million a year. Crist, a Republican from Temple Terrace, said the actual price tag is less than half that, and he's proposing the money come from the tobacco settlement.

"If they're so hot under the collar because of the staffing increases, then work with me to get the money," Crist said.

Opposition began to form the day Crist announced his bill in December. Towey said it was outrageous that Crist didn't consult the industry.

"The industry had zero input," Towey said.

In addition to increasing staffing requirements, the bill would raise state fines and require regulators to develop an "early warning system" to alert them to nursing homes on the decline. It also would give residents the right to choose their own pharmacy.

Crist said lobbyists have said he'll be buried politically if he continues to push his proposals.
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Ten nursing home corporations gave at least $ 269,000 in campaign contributions in Florida last year. About $ 139,000 went to the Republican Party; about $ 86,000 went to the Democratic Party. The remaining $ 44,000 went directly to candidates.

The Florida Health Care Association, a Tallahassee-based lobbying group, spread at least $ 33,000 among 50 candidates.

To hear the industry objections, Crist called an early January meeting of industry and consumer representatives. Prominent lobbyist Jack Cory was there, representing Manor Care, which recently merged with Health Care & Retirement Corp. So was former state Sen. Curt Kiser, representing Genesis Eldercare Networks.

One of Cory's first complaints was about the staffing requirement. Another lobbyist complained about the beginning of the proposed bill. The first eight pages are essentially a litany of nursing home ills in Florida.

"WHEREAS, the Attorney General's Medicaid Fraud Control Unit has investigated over 1,300 cases of alleged Medicaid fraud in the past five years, and ... WHEREAS the Long-term Care Ombudsman councils received approximately 5,000 complaints in the past fiscal year concerning conditions at nursing homes," the bill begins.

"They didn't like this at all, but it's all true," said Betty Camblor, long-term care ombudsman coordinator in Pinellas County, who was at the meeting. "They hated the staffing requirement, but that's the most important thing in the bill. That's the worst problem we see."

The atmosphere in the room was tense as Crist went through the measure's provisions. Suddenly, Cory stood up, shut his briefcase and announced he and Crist had nothing more to discuss.

Crist said it was the most unprofessional behavior he has seen in his seven years as a state lawmaker. But Towey defended Cory, saying Crist was refusing to compromise. "When there is no room for common ground, it becomes a pointless discussion."
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The increased staffing requirements are expensive, "but we need to do something," Argenziano said. "I want to try to get (nursing homes) more money and I want to make sure it goes to staffing.

"The nursing homes talk about how much this will cost. I'm concerned with the profits being made. They don't seem to realize that these nursing homes are where people live."

COMMENT:- Sun Healthcare is a good example of what is happening. Notice that the corporations all blame the new funding system. No mention is made of Sun's large debt. Independent analyses will show this to be the prime problem.

Note the extent to which Medicare was used/misused. Note also the marketplace claim that without profit no one will build new homes. What about need and the response of the community to the needs of its members.

One of the things that is missing from all of the articles is any assessment of how much Medicare paid therapy is actually "needed". The sole factor determining whether therapy is given seems to be the amount of money Medicare pays and the profit which it provides.

Facing Tough '99, Sun Healthcare Cuts Jobs, Costs
Albuquerque Journal February 07, 1999, Sunday
Elizabeth Keest Sedrel Assistant Business Editor

Albuquerque-based Sun Healthcare Group was flying high a year ago. With a record $2 billion in revenue, it had a $65 million headquarters expansion under way and was looking for new acquisitions.

Now, the third-largest nursing home operator in the country is scrambling to slash costs as its revenues drop and its stock price plummets.

Sun's stock slid from $20 a share last February to less than $2 on Friday. The company has eliminated 7,500 jobs and imposed a companywide wage freeze.

And Sun expects $200 million less in revenue this year because of a new federal formula that is rocking the nursing home industry by cutting reimbursement for Medicare patients.
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Shrinking profits

"What's happening in our industry is our profits are clearly shrinking," Wimer said. "We don't think the rates are adequate for the service we're providing. And from what we're hearing anecdotally from our competitors, they're in the same boat."

While all long-term care operations say they are taking a big financial hit because of the payment formula, analysts say some will suffer less than others because they moved more quickly to reduce costs.

"Everybody is being hit. The relative degree of (financial) pain is tied to a number of factors," said analyst John Ransom with Raymond James & Associates in St. Petersburg, Fla. One factor is how many occupational, speech and physical therapists the company has. "And they (Sun) have a ton."

The second factor is what the company spends on Medicare patients. Some companies saw the reimbursement drop coming and reduced their costs to about $270 per patient per day. Those companies are doing all right, he said.

But companies with per-day costs of about $380, like Sun, are in trouble, Ransom said.

The average daily reimbursement for a Medicare patient at Sun has dropped from $500 to $325.

"That's about a 10 percent reduction in our revenue, which is extreme by anyone's definition," Wimer said.

The third factor is whether a company has a lot of its revenue tied to Medicare patients (Medicare revenues make up almost 30 percent of Sun's inpatient revenues), and the fourth issue is how much is spent on maintenance and rent for nursing homes.

Rent payments alone for Sun are about $225 million a year, and most of those rents are locked in at lease rates the company expected to cover at the old, higher Medicare reimbursement levels, Ransom said.

"I would say Sun along with Integrated Health Services, Mariner (Post-Acute Network Inc.), Vencor Inc., they are all victims of one or more of those factors. And Sun has all of them."
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Rates, cost and people

The long-term care industry's troubles began with the Balanced Budget Act of 1997, which called for a new payment system for Medicare patients. Under the old system, nursing homes were reimbursed according to actual costs. Under the new system, nursing homes get a set amount of money per patient. Those amounts are based largely on costs in 1995.

Laura Fenwick, a spokeswoman for the American Health Care Association, said the new rates "are not at all representative of the (cost of) care patients are getting."

At the same time, Wimer said, the level and cost of care Sun patients need have risen over the past decade or so. Hospitals switched from a cost-based Medicare reimbursement formula in the mid-1980s and, to save money, began shortening hospital stays. That bolstered the need for the "post-acute" services -- care and therapy for patients who have just been released from hospitals -- which Sun provides.

Sun officials could not be specific about the company's average daily cost to provide long-term care, because individual cases differ greatly. But they say the new rates are simply too low.
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"We have to reduce the cost of taking care of (Medicare) patients," Wimer said. "We're going to actually decrease the amount of service that we provide to Medicare patients." Compounding the effect of the cut in Medicare reimbursements is the fact that Medicaid reimbursements have not kept pace with increasing health costs.
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Profit margins in the nursing home business are small to begin with, Ransom said. "So, all Sun can do to cut costs is to cut personnel. And there is a limit (to) what you can do there. You have to provide a minimum level of care," he said.
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But if the Medicare payment system isn't changed, Wimer said, no one will want to invest in nursing homes, and no new ones will be built.

"Then who will meet that need?" he asked. "This is an industry problem. In fact, I think it's a society problem."

COMMENT:- This article describes what is happening. There is a great deal of rationalisation in order to tie it all in with previous practices and market behaviour. Note that no one is asking whether the market in health and aged care is different. That would mean asking whether market principles are relevant and functional for health care. Once the question was asked the answer would be obvious and difficult to refute. This would be very challenging.

MADNESS COMES A MONTH EARLY: FEBRUARY WAS CHOCK FULL OF CORPORATE RETRENCHMENTS, BROKEN DEALS AND RED INK
Modern Healthcare March 01, 1999
Ann Saphir

Get back to basics.

That's the lesson some healthcare companies are drawing from the month of February, when a slew of retrenchments, split-ups and sliding profits announced by some of healthcare's biggest players signaled a change in game plan.

Last month wasn't the first time that overextended companies have turned to a back-to-basics strategy, but the magnitude and impact of February's activity were startling.

''(February was) a confluence of a lot of bad things, but nothing that hasn't been building for several months,'' said Rob Mains, an analyst for Advest, a Hartford, Conn.-based investment firm.

Among the adverse events cutting across the healthcare industry last month, long-term-care giant Integrated Health Services announced continuing divestitures, several hospital systems backed out of mergers, and physician practice management company MedPartners and HMO giant Kaiser Permanente reported huge losses.
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Retrenchment across the board. The month saw a particularly stunning number of pullbacks, and the pace may only be picking up.
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Mains blames many of those negative events on the implementation of a Medicare prospective payment system for skilled-nursing facilities, which threw a wrench into growth plans for many long-term-care companies.

''Some of the expansion that companies may be regretting was done before anyone realized how bad the PPS was going to be,'' Mains said.

Several other major long-term-care companies that have grown fast and furiously in the past year announced trims and losses in February:
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Back to job one. Healthcare companies in all lines of business are honing in on their core competencies. Last month, HealthSouth Corp., Birmingham, Ala., announced a back-to-basics plan, along with a $1 billion stock buyback designed to telegraph confidence to financial markets.
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''The urgency of coming together and staying together just isn't there as it was five years ago,'' said Steve Hatch, a consultant with Northbrook, Ill.-based Arista Associates.

Reimbursement pressures may have led hospital systems to overlook cultural differences in the past, Hatch said, but under what he called a benign managed-care reimbursement environment, those pressures have let up.

An anticipated trend toward capitated payments never materialized, the University of Minnesota's Johnson said, so mergers that were ''bolted together'' under pressure may no longer see the need to stay together.

Cherilyn Murer, a healthcare consultant in Joliet, Ill., said the changes are simply part of the maturation of the healthcare business.

''We've had five years of merger mania, and now it's a natural course to refocus on the organizational costs of mergers and their strategic goals.''

COMMENT:- In the market one person's misfortune can be another's opportunity. A cluster of associated businesses will be affected by the misfortune of nursing home chains. Financiers who are owed money and the owners of REITS which lease facilities to the chains are particularly anxious. Others are looking for bargains.

Buyout Firms Impacted By Medicare Changes
BuyOuts March 08, 1999

While the government's new Medicare reimbursement plan already has created opportunities for buyout firms targeting the health-care industry, it could prove a bitter pill to swallow for those groups that already own long-term care providers.
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New Policy Opens Up Fertile Ground

As a result, long-term care providers are looking to cut costs as their revenue from reimbursement will decline. Foster City, Calif.-based Fox Paine & Co., LLC and other firms believe these centers will be forced to outsource some services and are looking to capitalize on that trend by buying third-party health-care providers.
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Stiff Bill for Firms in Health Care

Meanwhile, buyout firms that have been part of the trend of acquiring long-term care providers over the last several years may need to work harder on their portfolio companies.
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Long-term providers hope an increase in the number of long-term patients as the U.S. population gets older will help offset the impact of PPS.

LONG-TERM CARE HIT WITH DOWNGRADES
Modern Healthcare March 08, 1999

The nursing home industry continued to nosedive last week, as rating agency Standard & Poor's downgraded debt held by several companies. One of them, Sun Healthcare Group, said its assets were overvalued.

Standard & Poor's lowered ratings on $8 billion of debt held by four nursing home companies, citing the impact of Medicare's prospective payment system for skilled-nursing facilities. The rating agency had placed most of those companies on CreditWatch with negative implications last November.

Skilled Nursing Facilities Show Signs of PPS Strain.
Medicine & Health March 8, 1999
COPYRIGHT 1999 Faulkner & Gray, Inc. Subscription: $ 525 per year as of 1/97. Published 50 times/year. Contact Faulkner & Gray, Inc., Healthcare Information Center, 1133 Fifteenth St., NW, Suite 450, Washington DC 20005. Phone (202) 828-4148.

EXTRACT ONLY
It added that "since November, earnings reports, company announcements, and reviews with corporate management have confirmed Standard & Poor's position that developing operating conditions will severely test the financial strength of industry participants." The Dallas-based consulting firm Campbell Wilson recently estimated the average SNF will see a 23 percent to 63 percent drop in Medicare payment once the full impact of PPS is felt in four years.

COMMENT:- Note how readily loans were given to corporate chains. There was no secrecy about the new PPS system. What would happen should have been clear but nothing is as blinding as success. No one making lots of money looked.

Long-Term Care Providers Ail Healthcare Sector
Bank Loan Report March 15, 1999

After driving more than half of all leveraged loan issuance in 1997, health care credits-specifically in the long-term or post-acute care sector-are making investors more than a little queasy. The reason? A new restrictive Medicare payment method known as the prospective payment system, or PPS, has dramatically increased the asset volatility in the sector, sending market yields on new healthcare loans smashing through the roof and their trading values crashing through the floor.
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"Healthcare companies may start to see a drop-off in revenue of 20, 25 or 30 percent," said John Sico, an analyst at S&P. "This is a transition period. It's a difficult period."

Difficult, indeed. Such "transition" has certainly been seen in the secondary market, where as of last week, according to Credit Suisse First Boston, the likes of Sun Healthcare was being bid for a paltry 60, while Genesis Health wasn't faring much better at 70.
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"Borrowers had difficulty in accurately projecting the harshness of its (the PPS) impact," he said.

Lucine Kirchhoff, a health care specialist in the lending group at BankAmerica, said that a year and a half ago, when many of these deals were made, borrowers and lenders alike had no reason to suspect problems like PPS.

"Originally when a lot of these deals were done people thought that for a lot of good performers, they would be break-even or of positive impact," she said. "People felt very good about the stability of the cashflows-it's a very necessary to have care for elderly family members. So banks believed them based on growth and cash flow and asset coverage."

But according to Michael Rushmore, head of floating-rate capital markets at NationsBanc Montgomery Securities, with leverage in the long-term sector currently as high as eight times earnings when normally highly leveraged transactions are less than five times, such levels could swamp the entire sector.

COMMENT:- Another factor impacting on profits is the increased militancy of the nursing unions. Nurses are disenchanted by corporate excesses and their cost cutting. They are uniting to resist the onslaught on their profession. They have flocked to join the unions. Bitter battles ensued as the unions sought to expose deficiencies in care and improve the lot of their members.

The approach of the corporations to nursing care was well set out by Andrew Turner (Sun healthcare) in a 1996 interview. The predictable consequence of Turner's policy of cutting the fat and the way it was done was a flight from nursing and a deeply alienated residual work force. Others followed this lead. Little wonder there is now an acute shortage of nurses.

CLICK HERE to read Turner's interview.

Labor's next recruits
St. Petersburg Times March 15, 1999

Health care workers, from $ 7.35 an hour aides such as Atkins to the upper tier of doctors earning six-figure salaries, need the potential clout that unions offer as they battle corporate owners intent on slicing costs, organizers figure.

"This is a real David and Goliath situation," said Monica Russo, executive director of Unite for Dignity, a joint nursing home organizing effort between the Union of Needletrades, Industrial & Textile Employees and the Service Employees International Union. "It's about power for nursing home workers."

There are early signs of success. Unite for Dignity has signed up 25 nursing homes in South Florida. The service employees union won one of labor's biggest victories in decades with a landslide vote last month to represent 74,000 health care workers in Los Angeles County.
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But nursing home operators aren't about to sit still as unions come to town. Many have already employed union-busting lawyers to stop the movement onto their turf.
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Cutbacks by nursing homes because of Medicare and Medicaid reimbursement reductions may exacerbate short staffing, resulting in even harder work for the remaining employees. Spiraling of worker shortages and discontent may