Broken System

Broken System

The system is broken. Covid didn’t make it dysfunctional, but Covid showed that it was broken and dysfunctional. We are center stage, in the spotlight — whether we like it or not.”

-advocate Robert Kramer

Suzy Khimm is a national investigative reporter for NBC News based in Washington, D.C. She wrote a great article about “America’s system for long-term care is fundamentally broken in ways that will continue to harm vulnerable residents and workers, long after the pandemic has faded away.” It comes down to staffing and money. Khimm writes:

The biggest underlying problem? For all the billions of taxpayer dollars that the United States spends on a system meant to care for frail, elderly residents, not enough money is being invested in caregiving itself….

Elder care advocates want reform and transparency. We should know how nursing homes use our tax money. Transparency deters waste, fraud, and abuse.

Several studies have show short-staffing place residents at higher risk of Covid-19 outbreaks. Staff shortages also threatened the overall quality of care for residents, who faced confinement and social isolation from the pandemic. Hands-on caregiving is the backbone of what a nursing home provides. Most residents need assistance. Nursing homes pay nursing aides low wages, even though caregiving should not be considered unskilled labor.

Low pay, high turnover and tough working conditions made these positions tough to fill. In December, 30 percent of the country’s nursing homes reported shortages of nurses or aides, according to an analysis from the AARP, which advocates on behalf of older Americans.

Follow the Money

Dr. Rachel Werner is a professor of health care management at the Wharton School of Business. She said:

“We don’t know where all that money is going, but not enough money is being invested in the care delivered at nursing homes — and predominantly not investing in staff.”

Most nursing homes are funded by two programs: Medicaid, a public insurance system to support the very poorest Americans, and Medicare, a health insurance program for older Americans that offers nursing homes lucrative short-term payments.   The U.S. has no universal public system that covers elder care unlike most major industrialized nations. That is a major problem.

As the nursing home industry has consolidated, the ownership structure and finances of many facilities have become increasingly complex and opaque. Private equity investment was the growing trend which led to staffing cuts and lower quality of care, one study found.

The for-profit facilities spend a lower percentage of revenue on direct care and spend less nursing time per resident, according to a 2016 report from the Government Accountability Office.  Kaiser Health News found for-profit chains are more likely to be fined for serious health violations and have substantiated complaints of putting residents in jeopardy.

Opportunity for Change

“Are nursing home owners really struggling to keep their facilities afloat — or are they shortchanging the workers and residents?”

Many owners have created third-party contractors that they control. They divert funds into these “related party” transactions that allows owners to reduce liability and profit in ways that don’t show up on a nursing home’s balance sheet. There is strong evidence linking the use of related parties to lower quality of care. For profit facilities with related entities employ fewer nurses and aides per patient on average.

Advocates contend that the industry must open up its books before taking more taxpayer money. Current regulations require disclosure. However, inspectors do not enforce the standards. Full disclosure of budgets and related party transactions would increase transparency and accountability. Other proposed changes include: living wages for caregivers; safer staffing standards; and a medical loss ratio limiting revenue spent on “administrative” costs to related entities.

Biden’s plan promises to “ensure adequate staffing.” Long-term care workers should be treated “with respect and dignity” and earned “the pay, paid leave, career ladders, and other benefits they deserve.”  A living wage is necessary. The caregivers deserve it. The quality of care will improve.