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National Chains Earn Poor Inspection Reports

Jul 28, 2002 | Atlanta Journal-Constitution Four of the nation's largest nursing home chains run many of the worst homes in Georgia, judging by state inspection reports.

Their homes also appear to have the largest operating margins in Georgia -- an average of $784,000 per home, compared with about $93,000 for other for-profit facilities, according to an analysis of Medicaid cost reports by the Journal-Constitution.

These national health care companies -- Kindred, Beverly, SunBridge and Mariner -- operate 46 nursing homes in Georgia. State records show a fifth chain, Integrated Health Services, also stands out for poor inspection results, but a third of its 23 Georgia homes report losing money.

State inspectors wrote up the five national chains' homes for substandard care 65 percent more often than they cited other for-profit homes over the last four years, according to an analysis of inspections.

Many Georgia nursing homes run by smaller chains and independent operators earn high marks from inspectors for their care, provided in many cases on shoestring payments from government programs. But financial reports show these homes usually spend almost every dollar that comes in the door on care for their residents.

It's a different story at the national chains' homes.

At a Savannah home run by the Kindred Healthcare chain, staff did not call a doctor for more than 36 hours after a resident began vomiting violently. The man died in September, the day after he was taken to the emergency room with a broken hip, possible bowel obstruction and high white cell count. State inspection records say this was one of 80 citations for actual harm in the last four years at Kindred's Georgia homes.

At a Jonesboro home run by Beverly Enterprises, state inspectors in May found a woman with numerous bedsores lying in linens soaked with urine and feces that had contaminated her wound dressings. The home's staff did not immediately change the woman, even after an inspector pointed out the problem. Beverly homes were cited 78 times for harm to residents over the last four years.

At a Rome home run by SunBridge Healthcare, the administrator did not call police or thoroughly investigate a resident's report that a staff member twice came into her room at night, drew the curtains around her bed, and kissed and fondled her. Inspectors found harm to residents in SunBridge's Georgia homes 68 other times in the last four years.

The frail and elderly suffer from incidents of neglect and abuse in many of the state's nursing homes. The nursing home industry frequently blames substandard care on a tax-supported system that pays too little to look after patients properly.

But the homes' financial reports, which were analyzed by The Atlanta Journal- Constitution, suggest many could afford to spend more on their residents.

"These guys are just laughing all the way to the bank, and we've got people in those nursing homes who are suffering," said Steve Lomax, president of the United Food and Commercial Workers, Local 1996, which represents nursing home workers.

Each year, nursing homes must report to Medicaid on how much money they bring in to take care of nursing home residents, and how much they spend on that care. The Journal-Constitution used these figures to calculate an operating margin for each home in Georgia. This was done by subtracting all costs reported by the home for taking care of its residents from the revenues it received. For this analysis, administrative costs were subtracted if they were considered allowable under Georgia's Medicaid rules.

These calculations show that four of the five national chains with significant operations in Georgia have operating margins far greater than other Georgia for-profit homes. According to the AJC analysis, the $1 million operating margin at the average Kindred facility dwarfs the $93,000 margin that is typical for the state's other for-profit providers.

The reports show that dozens of homes with above-average profits save money by maintaining staffing levels described as dangerously low in a recent federal study. Some of these homes fall short of the minimal staffing standards required by Medicaid, but they have not been punished because Georgia does not enforce the requirement.

Lawyers for the nursing home industry say gross profit figures in the Medicaid reports may be skewed because of recent bankruptcies and the omission of some legitimate expenses. "The profits of many homes are grossly overstated, particularly for the facilities operated by the national chains," Glenn P. Hendrix, an attorney representing the Georgia Nursing Home Association, said.

But even after these adjustments are made, nursing home chains can show higher operating margins. Kindred Healthcare Inc. provided the Journal-Constitution with its own profit calculations that adjusted for the chain's 2001 emergence from bankruptcy. These adjusted figures reflected an average profit of $891,022 for the chain's seven Georgia homes.

Advocates for nursing home residents argue that some companies place profits before patients, and that the government health insurance programs that pay predetermined rates do little to discourage these operators.

"If you provide good care or horrendous care, you get the same exact rate," said Toby Edelman, a Washington attorney on staff at the Center for Medicare Advocacy, a national consumer organization. "That needs to change. They need to be held accountable."

Large chains' homes cited

Some homes run by national chains in Georgia routinely fail government inspections, placing residents at risk of serious injury, illness or a life with little dignity.

Four of Kindred Healthcare's seven nursing homes in Georgia have been threatened with losing Medicaid funding since 1998 because of dangerous conditions. Kindred said the four homes each cleared more than $679,000 in fiscal year 2001.

The Jonesboro home operated by Beverly Enterprises reported one of the higher operating margins in Georgia in fiscal 2001. But inspection records show the home has one of the worst records in the state when it comes to harming its own residents.

SunBridge Healthcare operated six Georgia nursing homes with average daily staffing levels that fell below Medicaid's mandatory minimum for an entire year. Five of the six had operating margins of $300,000 or more.

In Griffin, the SunBridge Care and Rehabilitation facility gained national attention last month after Carol Carr was accused of entering the home and shooting two of her sons who were suffering from Huntington's disease. The nursing home's administrator said the brothers were getting attentive care, but Carr's family said the home neglected the men.

"I went down there two days before that happened and Randy was sitting there, naked, just laying in urine," said James Scott, brother of the two men.

Well before Carr's sons died, state inspectors had noted that the Griffin home was understaffed more often than any other home in the state. It could have been fined but -- like other Georgia homes that maintain low staffing -- it never was. Instead, the state paid SunBridge tens of thousands of dollars in bonuses as a reward for keeping nursing costs low.

That's where Omalee Whitaker's husband, the Rev. William Edward Whitaker, spent his final days. At 50, Edward Whitaker was too young to need wheelchairs and nurses and bedpans. But a brain tumor when he was 45 forced him to give up his Christian ministry, a construction business and helping to raise the couple's seven children.

Whitaker had nursed her husband full-time at home, thankful for each day that he outlived doctors' predictions. They had visited nursing homes together as part of his ministry, and she did not like the idea of sending him to one. Finally, last fall, she placed him in the Griffin home after he had been hospitalized for pneumonia, hoping he could recover and then return home.

Whitaker said she was immediately disappointed. The home was always short-staffed. The same menus were served over and over. Her husband's belongings would disappear. Aides would hurriedly turn and move her husband in his bed without even talking to him.

"They made me feel like I brought him to a place to die," she said.

But Omalee said she was stunned at what she saw when the aides came to change her husband one day. As the aides undressed and turned him, Whitaker was shocked to see large, painful bedsores. "His bottom was raw," she said. "There were patches, blisters as big around as a baseball."

Chains change the industry

Like gas stations, pharmacies and burger joints, nursing homes are no longer the province of the local mom-and-pop operator. Large for-profit chains -- sensing big profits in the needs of an aging baby boom population -- went on a buying spree during the 1990s and transformed the industry.

Today, three of four Georgia nursing homes are run by national or regional chains. Georgia and other Sunbelt states have some of the highest concentrations of for-profit homes in the country.

This transition has been a tumultuous one. Advocates say the furious expansion of nursing home chains put patients at risk, because companies grew too fast and couldn't devote enough attention to patient care. After a period of adulation from Wall Street, the industry went bust in the late 1990s with a spate of bankruptcies largely blamed on cutbacks in Medicare payments.

Patients also began to hit many of the largest companies with a flood of lawsuits related to poor care, resulting in skyrocketing liability insurance premiums. And federal agencies investigating fraud and inadequate care reached multimillion-dollar settlements with several chains; Beverly Enterprises alone agreed to pay $175 million in penalties.

Publicly traded nursing home companies have bounced back this year, with the help of increased Medicare payments and elimination of some crushing debts through bankruptcy reorganization. The faltering economy has also helped the industry find more low-wage workers.

But analysts say the publicly traded companies still must win over Wall Street. The industry relies almost entirely on government payments, and the federal government and some states are considering cutting back payments for patient care.

"Things are getting cloudy again," said Nancy Weaver, an industry analyst at Stephens Inc.

Georgia's private nursing home companies have been more stable. Many are still family owned and do not have the demands for high returns that every public company faces.

But even as the industry has begun to stabilize, public documents that show relatively high operating margins and poor inspections raise questions about whether large chains are putting profits ahead of patients.

The top official overseeing Medicaid in Georgia acknowledged that the Journal- Constitution's findings were troubling.

"If you couple high profits with poor outcomes, that's not a result we believe is appropriate," said Gary Redding, commissioner of the Georgia Department of Community Health.

Some advocates believe care suffers when nursing home owners are in remote corporate offices instead of down the hall from the nurses and the residents. "When you are dealing with a big corporation, their client . . . is going to just as likely be the shareholder as the resident," said Becky Kurtz, Georgia's long-term care ombudsman.

New York does not allow publicly traded health care companies to operate nursing homes in the state. "They are accountable only to shareholders and have no explicit commitment to residents or the community," said Scott Amrhein, executive director of the Center for Continuing Care at the Greater New York Hospital Association.

Industry representatives strongly disagree. Whether nursing homes are nonprofits, private for-profits or publicly traded companies, they are in it to deliver good care, said Dr. Charles H. Roadman II, president and CEO of the American Health Care Association, an industry lobbying group.

"There are an awful lot of angels out there," Roadman said.

Roadman said the biggest impediment to quality care is not the profit motive, but government health programs that pay too little and a system of inspections that does not measure results. Low payments mean nursing homes can't invest in capital improvements, technology upgrades or a stable work force. Congress is considering reductions in Medicare payments that will make things even worse, he said.

"Am I worried about the companies? Of course I am," Roadman said. "But I'm more worried about the patients."

Changes in the works

Most nursing home companies contacted by the Journal-Constitution refused to be interviewed for this series. However, executives at SunBridge Healthcare and Beverly Enterprises said they are committed to quality care and they are addressing problems with new management.

"We are a completely different company than we were a year ago," said William A. Mathies, president of SunBridge since March.

Mathies said SunBridge now has quality care at the top of its agenda. Employees from nurse's aides to management staff are being trained, key personnel changes are being made and the company is investing to improve care and upgrade buildings, he said.

"We believe if you have the right employees that have the right skills, we'll be able to deliver the right patient care," he said.

Chuck Brown, administrator at the Griffin facility for just over a year, doesn't deny that the home had serious problems. But he said it's undergone a major turnaround in the past year, with a completely new management staff, a focus on training and a physical face-lift.

"Progressively, we've gotten better and better and better," Brown said.

The state has not conducted an annual inspection recently to measure Brown's progress, but officials say inspectors who have investigated complaints there have noticed improvements.

"Our new administrator is really good -- he cares about us and he sits and listens to us," said Marie Stephens, a 72-year-old who has lived at the Griffin home for six years. She met her husband at the home, where he was also a resident. They married in the dining room four years ago.

Stephens, president of the home's Resident's Council, said the facility could still use more staff and that she'd like to get out occasionally, preferably for a shopping trip to Wal-Mart.

"Sometimes I get bored," she said.

Care at a $600,000 loss

Quite a few Georgia nursing homes can point to sterling inspection records. Twenty percent have earned 11 or fewer violations during the last four years, far below the state average. Most of these homes are for-profits, but only one is operated by a national chain -- Integrated Health Services' Hart Care Center in Hartwell.

These facilities post good results even though Medicaid does not reward good inspections or even pay for the full cost of care that many homes believe is necessary.

The nonprofit nursing home at Presbyterian Village, a picturesque retirement community in Cobb County, lost more than $600,000 last year. But that was all part of the plan.

The home's governing board decides how much money it needs to hire enough qualified staff, to prepare good food and to offer a well-kept facility and activities. What the state doesn't pay, the facility makes up with income from investments and charitable donations. The nonprofit is welcomed into Presbyterian churches for its annual fund-raising programs and capital campaigns.

Many homes would love to hire more staff or serve better food, said Rich Armentrout, chief financial officer of Presbyterian Homes of Georgia. But most for-profit operators spend only what they earn from Medicaid, Medicare and a small group of patients who pay out-of-pocket or with long-term care insurance.

"We are privileged in a sense that we are charity-based and can do some things that others can't do," Armentrout said.

Presbyterian Village spends 70 percent more on nursing care, per resident, than the SunBridge-Griffin facility, and nearly twice as much on food. It also has one of the best inspection records in the state, earning only three minor citations in four years.

For Carolyn Smith, Presbyterian Village has been a godsend. She did not want to place her husband, John, in a home. But when his Alzheimer's advanced, she had little choice.

Presbyterian Village has enough staff to give personal attention to her husband's needs, she said. Her husband used to sing and can still whistle, so one of the nurse's aides makes a point of whistling with John.

"I came down the hall one day and it was the two of them whistling and it turned out to be 'In the Sweet By and By,' " Smith said.

Smith said the facility's willingness to go beyond providing physical care, and to seeing each resident as an individual, has made it easier. Presbyterian Village has a full-time chaplain to support the spiritual life of residents and family members, she said.

"I have felt so blessed that Presbyterian Homes is there," Smith said. "When I'm in tears, they hug me too."

'At someone's mercy'

What Carolyn Smith found at Presbyterian Village was what Omalee Whitaker wanted for her husband in his final days. Edward Whitaker's brain tumor gradually slowed and finally stopped a life that revolved around good works inspired by his Christian beliefs, his wife said.

A Pentecostal minister who also ran a construction business, Edward Whitaker was devoted to helping other people, Omalee Whitaker said. They took calls at all hours from people who needed food or help with other problems. He organized a "Jesus Festival" on his property. He preached with an intense, fire-and-brimstone style but had a deep, gentle singing voice that reminded his wife of Elvis Presley's gospel recordings.

"He was a fireball when he was preaching, but he was a loving, tender guy," she said.

He was her second husband, and the love of her life. He treated her like a queen, she said, and their days revolved around family and the ministry.

"He preached, we sang, we just had a wonderful, wonderful life," she said.

After caring for her husband for five years, Whitaker has some sense of what it's like to be completely dependent on someone else for virtually everything -- eating, drinking, going to the bathroom, even turning in bed from your back to your side.

"People that are sick like that are at someone's mercy," she said.

Whitaker said she was prepared for her husband's death, and she was grateful to have had him with her for as long as she did.

But she's still bothered by the knowledge that his final precious weeks were unnecessarily difficult and painful. And she's saddened at the thought that nursing homes, once filled with compassionate people, could become so cold and uncaring.

"These people out there," she said, "are not angels anymore."

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