Owner Siphons Funds

During the pandemic, payments were diverted into real estate, management, and staffing companies related or linked to nursing home owners. Nationally, nearly 9,000 for-profit nursing homes outsource services such as nursing staff, management, and medical supplies to affiliated corporations, known as “related parties,” that their owners own, invest in or control. See NPR article.

In 2020, these affiliated corporations collectively amassed profits of $269 million. Average profit margins of 27% while the nursing homes suffered staff shortages.

For example, the owner of The Villages of Orleans Health & Rehabilitation Center paid $16 million in rent to its landlord. The problem is that he is paying rent to himself. At an exorbitant rate. And our taxpayer funds reimburse the owners. The lease that The Villages had with Telegraph Realty required the home to pay up to $1 million in profits on top of the costs of debts and $50,000 a month for rent. Incredible.

The “landlord” was a company owned by the same investors who owned the nursing home. The attorney general alleged that the owners paid themselves and other investors more than $18 million from rent profits, management fees, and proceeds from refinancing the property. From those siphoned funds, the owners paid themselves and family members nearly $10 million.

This saddled The Villages with higher debt. Meanwhile, vulnerable adults developed bedsores, missed medications, and sat in their urine and feces because of a shortage of aides.